Preheat oven to 500 degrees F. Season beef with salt and pepper to taste. Place in large roasting pan; roast until golden brown, about 30 minutes.
Reduce oven temperature to 325 degrees F. Place shallots around beef; roast until an instant-read thermometer inserted into thickest part of beef registers 130 degrees for medium-rare, 1 to 1 1/4 hours more, turning shallots with tongs after about 30 minutes.
Transfer beef to a plate; tent with foil. Transfer shallots to a shallow bowl (continue cooking if not golden brown). Toss with sugar and vinegar; season with salt and pepper. Cover with foil to keep warm.
Pour off fat from pan. Add wine; cook over medium heat until syrupy, scraping bottom of pan, 2 to 4 minutes. Add 2 cups water; cook until reduced by half, 4 to 8 minutes. Strain into a small bowl; whisk in mustard and any juices from beef. Season with salt and pepper; serve with beef and shallots.