Nov 23 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com BUND YIELDS TO FALL AGAIN IN 2022? (1224 GMT) Terminal rates have been pretty much in fashion recently as they can explain current low levels in nominal and real yields. HSBC Global Research analysts incorporated a range of terminal rate estimates in their forecasts, and say they expect 10-year Bund yields to "fall instead of rising in 2022" despite a monetary tightening from the European Central Bank. They argue that "the five-year maturity has the greatest sensitivity to the start date of an ECB hiking cycle from our scenario analysis; tenors longer than 10 years are increasingly sensitive to the terminal rate." "Unless we assume a higher terminal rate than anything inferred by the market in 2021, we don"t think fair value for (10-year) Bund yields should get above zero," they say. "Our current end-2021 forecast of -30bp (Germany’s 10-year yield) reflects a blend of early and cautious hiking scenarios," that the market will be slow to give up on, they add. Our end-2022 forecast of -50bp is a blend of our "cautious hiking" and "no-hike" scenarios. Economists estimate the terminal or natural interest rate, which is the rate that is consistent with full employment, capacity utilization and stable prices. The chart shows Germany’s 10-year government bond yield staying below zero level since May 2019. (Stefano Rebaudo) ***** FOURTH COVID WAVE RISKS : "SIZEABLE BUT MANAGEABLE" (1131 GMT) Investors shouldn"t fret too much about the possible negative impact on economic growth stemming from this fourth wave of COVID-19 infections across Europe. Goldman Sachs has run a analysis to conclude risks are "sizeable but manageable" under their baseline scenario. The U.S. bank estimates a potential hit to Euro area GDP growth of 0.2 pct points in both Q4 and Q1 relative to their current forecast, and about half as much in the UK. "A sizeable but significantly smaller drag than last winter," they note, adding that in each scenario activity is set to rebound in Q2 and Q3 as countries unwind restrictions. "We expect additional targeted restrictions in the big-four Euro area countries and (to a lesser extent) the UK, but do not look for a return to blanket national lockdowns..." it says. "Europe has significantly higher Covid immunity than last winter, which should help protect hospital capacity, especially in the South," it adds . GS downside scenario entails a repeat of last winter"s lockdowns, meaning 1.4% cumulative decline in Euro area GDP. (Danilo Masoni) ***** YEAR-END TARGETS ACHIEVED: NOW WHAT? (1007 GMT) The bull run that has pushed many European benchmarks to breach above analyst targets show clear signs of fatigue, and now that COVID-19 and rate concerns are taking the top spot in the market narrative, many wonder if there"s any upside left. For Christian Stocker, strategist at UniCredit in Munich, equities have already run their full course this year, but over the next 12 months, he"s upbeat. "European equity markets have reached or even slightly surpassed our year-end index targets for this year. Although we expect no new impulses in the short term, the environment remains constructive," he says. "We expect potential of up to 10% for European equities until year-end 2022, albeit the path towards higher prices might not be smooth," he adds. This means the Euro STOXX 50 could reach levels around 4750 and the DAX climb to 18000 points. And Stocker is not alone. JP Morgan, too, kept this week its constructive stance on stocks, "looking to use any dips to join" read more . Morgan Stanley said on Friday: "We see more upside but more volatility in 2022 given macro cross currents; our new MSCI Europe Index target has 8% upside." (Danilo Masoni) ***** SECOND INNING (0923 GMT) Jerome Powell"s second inning as Federal Reserve chair has brought out the U.S. dollar bulls in force. Money markets have advanced their expectations of a full quarter percentage point rate hike by June next year from September 2022, only a few weeks earlier. Ten-year U.S. Treasury yields are less than 10 bps away from 2021 highs while the U.S. dollar has barrelled past some important market levels against its rivals. What can spoil the party? An extended rise in bond yields can yank high-flying technology shares lower and weigh on the broader market, if last night"s price action is any indicator. Tech was the biggest drag overnight and growth shares were the biggest laggard after outperforming value stocks last week. Watch this space. (Saikat Chatterjee) ***** STOXX SLIDES TO 3-WEEK LOW (0855 GMT) European stocks are set for their worst session in nearly two months as growing number of COVID-19 cases and rate hike concerns knocked sentiment ahead of flash readings on euro zone business activity. The STOXX 600 (.STOXX) equity benchmark falls 1.5% to a 3-week low, with all sectors trading lower and tech stocks down a whopping 2.4%. More than 86% of the STOXX constituents were trading in the red. The worst performer is AO World, whose shares plummeted almost 30% in early trading after the company warned of product shortages and cut its fiscal 2022 profit outlook. read more (Joice Alves) ****** MIND THE (EUROPE-U.S.) GAP (0820 GMT) When advance prints of Purchasing managers" Indexes (PMI) land, focus will be on businesses" input cost increases and whether they show signs of easing. The readings may also reinforce the gap between robust U.S. activity and COVID-plagued Europe, potentially further depressing the euro, which plumbed new 16-month lows on Monday . Monday"s euro area consumer confidence indicator offered a warning, falling back below pre-pandemic levels. October PMIs showed bloc"s activity slowing the weakest in six months, while businesses" costs rose at the fastest pace in two decades. U.S. and British PMIs fared better but eye-popping price increases still featured. A price slowdown would vindicate central bankers" who have until now rejected surging inflation as transitory. But Fed Chairman Jerome Powell (re-appointed for another four years) spoke on Monday the corrosive impact of inflation. The United States may also unveil an emergency oil release later in the day to dent energy prices read more . Powell"s reappointment sent markets into a frenzy of policy-tightening bets; three U.S. rate hikes are priced for 2022, starting June read more . U.S. Treasury yields are higher again this morning after 5-8 basis-point rises on Tuesday, while the dollar has moved into a fifth straight week of gains against a basket of currencies . When does this become a problem for stock markets? Nasdaq-listed tech shares, vulnerable to higher rates, fell on Monday and are tipped for another lossmaking session . Even a 2% rally in bank shares (.SPXBK) did not prevent a weaker S&P 500 close. Futures signal weakness there and for European shares . Finally, El Salvador"s plans for a $1 billion bitcoin-backed bond doesn"t seem to have benefited the coin very much; it"s holding near one-month lows read more . Key developments that should provide more direction to markets on Tuesday: Tuesday, Nov 23 -E.ON to invest $30 billion for green transition read more -BOE MPC member Jonathan Haskel speaks -ECB speakers: ECB board member Pentti Hakkarainen -U.S. Treasury auctions 7-year notes, 2-year floating rate notes -Philly Fed Non-manufacturing Business Outlook Survey -Emerging markets: Nigeria central bank meets -U.S. earnings: American Eagle, Medtronic, Best Buy, Dollar Tree, Abercrombie and Fitch, Hewlett Packard, Nordstrom, Gap, Dell (Sujata Rao) *****