• Asian equity markets eventually traded mostly higher as the region shrugged-off the indecision from Wall St
• China is ready to sweeten deal by buying American goods in countdown to trade war talks according to SCMP sources
• UK MPs seeking to block a no-deal are reportedly examining ways to bring back a version of former PM May’s Brexit deal with a 2nd referendum attached
• US President Trump said he has removed National Security Advisor John Bolton and that he disagreed strongly with some of Bolton's suggestions
• Apple announced a new streaming service and health app, as well as new iWatch, iPhone and iPad models
• Looking ahead, highlights include US PPI & DoEs, OPEC Monthly Report, US 10yr supply

ASIA-PAC

Asian equity markets eventually traded mostly higher as the region shrugged-off the indecision from Wall St, which had been subdued by the continued global bond rout and tentativeness ahead of this week's ECB. ASX 200 (+0.1%) and Nikkei 225 (+0.8%) were higher but with gains in Australia capped as the outperformance in mining names was counterbalanced by weakness in tech, while Tokyo exporters continued to reap the benefits of recent currency weakness and after source reports suggested BoJ policymakers could be open to additional easing measures. Advances were also seen across the Apple supply chain in Japan and Taiwan following the tech giant’s launch event where it announced a new streaming service and health app, as well as new iWatch, iPhone and iPad models. Hang Seng (+1.4%) and Shanghai Comp. (Unch.) were mixed after a tepid PBoC liquidity effort in which the mainland failed to take impetus from China’s fresh efforts to further open its financial markets by dropping QFII and RQFII quota limits. Sources noted China is ready to sweeten a deal by buying US goods, however, the report added that a purchase agreement is no certainty and would be in exchange for a delay on tariffs as well as an easing of restrictions on Huawei. China’s Global Times Editor also later suggested China will introduce important measures to ease the impact from the trade war which would benefit some companies from both China and the US which briefly fuelled appetite for risk. Finally, 10yr JGBs were lower amid a continuation of the global bond rout which was partly attributed to this week's supply and heavy corporate issuances, with weaker results across all metrics in today’s 5yr JGB auction adding to the pressure.

PBoC injected CNY 30bln via 7-day reverse repos. (Newswires) PBoC set CNY mid-point at 7.0843 vs. Exp. 7.0870 (Prev. 7.0846)

China is ready to sweeten deal by buying American goods in countdown to trade war talks according to a source, although reports added even a simple purchase agreement is no certainty and that purchasing of US goods would be in exchange for a delay on tariffs and easing of restrictions on Huawei. Furthermore, China could offer more market access and better IP protection as well as cutting industrial capacity, but would be reluctant to compromise on subsidies, industrial policies and reform of SOEs. (SCMP)

China Global Times Editor tweeted 'Based on what I know, China will introduce important measures to ease the negative impact of the trade war. The measures will benefit some companies from both China and the US.'. (Twitter)

US Treasury Secretary Mnuchin said it is a grave concern for US President Trump's administration that the Chinese did not live up to its commitments to purchase US Agricultural goods and that this matter will be addressed in upcoming talks. (NY Times) 

UK/EU

UK PM Johnson reiterated to the Cabinet that he will not negotiate Brexit delay in Brussels on October 17th-18th and that his Brexit goal is unchanged by law passed by Parliament, according to ITV's editor citing sources. (Twitter)

UK PM Johnson is mulling plans for a regulatory border in the Irish Sea as he seeks a new Brexit “divorce” deal with the EU, according to The Telegraph. The move would see an all-Ireland zone for checks on most goods crossing between the north and south Ireland, thus removing the need for a backstop. (Telegraph)

A senior ERG source said if UK PM Johnson goes for an all-Ireland backstop that 'throws the DUP under the bus', the deal would not get through the Commons, while DUP leader Foster later stated that an all-Ireland backstop idea has been dismissed by UK PM Johnson. (Newswires/ITV/Twitter)

UK opposition Labour Party Deputy Leader Watson is calling for a Brexit referendum to be conducted before a snap election. (Huffington Post)

UK MPs seeking to block a no-deal are reportedly examining ways to bring back a version of former PM May’s Brexit deal with a 2nd referendum attached. Sources added that the cross-party motion is gathering strength as more current and former Conservative MP’s are accepting of the idea. (Guardian)

ComRes Poll showed a majority of the public back UK PM Johnson over Brexit according to Telegraph, while the poll also showed Conservatives with 30% (-1) of support and Labour with 29% (+2) of support. (Telegraph/Twitter)

FX

DXY was flat as price action remained contained within this week’s tight range amid the Fed blackout period and a lack of significant releases prior to tomorrow’s inflation data. The greenback’s major counterparts were also uneventful with EUR/USD stuck around 1.1050 ahead of the upcoming ECB meeting. GBP/USD traded sideways at the mid-1.2300 handle with Parliament suspended and PM Johnson reiterating he will not negotiate a Brexit delay in Brussels on October 17th-18th. Elsewhere, USD/JPY continued its gradual advances amid gains in Japanese stocks and with focus centred around today’s Cabinet reshuffle, while antipodeans were indecisive with early losses in AUD amid weaker Westpac Consumer Confidence and as NAB added to its RBA rate cut forecasts in which it now sees the Cash Rate Target lowered to 0.50% by February 2020 vs. Prev. forecast of 0.75%. However, antipodeans then gradually recovered which was exacerbated after the Global Times Editor tweeted regarding China measures to ease the impact from the trade dispute.

Australian Westpac Consumer Confidence (Sep) -1.7% (Prev. 3.6%). (Newswires)

COMMODITIES

Commodities were mostly higher in which WTI crude futures recouped some of the prior day’s losses which had been triggered by the US EIA downgrade of global oil demand and an unwinding of the geopolitical risk premium after news that US President Trump fired National Security Adviser and foreign policy hawk Bolton. Nonetheless, prices have since rebounded of their lows with WTI eyeing a reclaim of the USD 58.00/bbl level, helped by the larger than expected draw in API crude inventories. Elsewhere, gold was flat amid an uneventful greenback, while copper was gradually supported as the risk tone improved and after the encouraging tweet from China’s Global Times Editor regarding measures.

API Crude Inventories -7.2mln vs. Exp. -2.7mln (Prev. +0.4mln). (Newswires)

OPEC Secretary-General Barkindo said there are no alternative plans for OPEC+ agreement and that it is committed to taking the necessary decisions to ensure the stability and balance of the global oil market. (Newswires)

US EIA cut forecasts for 2019 world oil demand growth by 100K BPD to a 900k BPD Y/Y increase and cut 2020 world oil demand growth by 30k to a 1.4mln BPD y/y increase, while it sees 2019 US crude output to rise 1.25mln BPD to 12.24mln BPD and sees 2020 US crude output to rise 990k BPD to 13.23mln BPD. (Newswires)

A Senior US Energy Official said the US will continue maximum pressure campaign on Iran and will monitor the oil shipments as well as consider the designation of identified parties purchasing Iranian oil. (Newswires)

US White House invited biofuel company executives to meet regarding the stalled biofuel policy deal. (Newswires)

GEOPOLITICS

Saudi Arabia condemned Israel PM Netanyahu's plan to annex parts of West Bank and called for a meeting of the Organization of Islamic Cooperation foreign ministers to discuss the move. (Newswires)

US

Yields jumped across the curve by between 8-9bps at settlement, though major curve spreads were around 1bps narrower. Better risk sentiment -- where talks/between US and China are progressing, with some suggestions of compromises, while geopolitics regarding US/Iran is moving in a friendlier direction after the sacking of WH Adviser Bolton -- as well as hopes of stimulus from the ECB this week (and likely looser policy from the Fed next week, with sources suggesting the BOJ could join the party too) have lessened the need for safer assets. This week's supply and heavy corporate issuance were also said to have weighed on the complex. US T-notes (Z9) settled 22+ ticks lower at 130-05.

US President Trump said he has removed National Security Advisor John Bolton and that he disagreed strongly with some of Bolton's suggestions. (Newswires)