• Asian equities traded higher across the board, Chinese and Hong Kong markets were closed due to National Day holiday
• The RBA cut its cash rate by 25bps to 0.75% as expected, reaffirmed easing bias, but added that a gentle turning point appears to have been reached
• UK PM Johnson is said to release his final Brexit plan to EU leaders within 24 hours and will reportedly ask the EU to rule out further Brexit extensions as part of a new deal
• In FX, DXY printed fresh YTD highs, USD/JPY climbed above 108, Aussie and Kiwi underperformed
• JGB, UST and Bund futures slipped following a poorly received 10yr Japanese auction
• Looking ahead, highlights include Eurozone Mfg PMI and Flash CPI, UK Mfg PMI, Canadian GDP, Markit Mfg PMI, US Markit Mfg PMI, Construction Spending and ISM Mfg PMI, SARB Monetary Policy Review, ECB President Draghi, ECB’s Lane, Fed’s Evans, Clarida, Bullard and Bowman, RBA’s Lowe and supply from the UK

ASIA-PAC

Asian equities traded higher across the board after Wall Street wrapped up the third quarter with a session in the green ahead of principle-level US-Sino trade talks in Washington next week. In terms of Q3 performance, the S&P and DJIA both advanced for a third consecutive quarter, rising in excess of 1% each, whilst the Nasdaq dipped 0.1% Q/Q. Upside in the ASX 200 (+0.4%) was capped as base and precious metal miners bore the brunt of softer prices, whilst Nikkei 225 (+0.8%) cheered favourable currency moves and largely side-lined the planned sales tax hike which came into effect today. Elsewhere, the KOSPI (+0.6%) conformed to the risk appetite despite South Korean exports declining for the tenth straight month and semi-conductor exports slumping 31.5% Y/Y, albeit inflation metrics fell short of forecasts. As a reminder, Mainland China and Hong Kong markets were closed today due to National Day Holiday, although protests were underway in Hong Kong whilst China celebrated the 70th anniversary of the People’s Republic with a military parade. Finally, 10yr JGB futures were softer amid the risk-sentiment, however downside was more pronounced after the Japanese 10yr auction was received poorly as results showed a bid-to-cover at multi-year lows, which pressured UST and Bund futures in sympathy, Japan Securities Clearing Corporation then said an emergency margin call has been triggered on JGB futures.

Chinese President Xi said no force can stop the Chinese people and the Chinese nation forging ahead, must uphold path of peaceful developments. Xi added that the central government would “maintain long-term prosperity and stability of Hong Kong and Macao.” (Newswires/CNBC)

South Korea has urged Japan to re-examine its position on export curbs, added that the export curbs on three key materials for chips and display remain in place, not a single export approved for liquid hydrogen fluoride for chips since July 4th. (Newswires)

Japan’s sales tax increase to 10% from 8% went into effect today. (Newswires)

Japanese Tankan Big Manufacturing Index (Q3) 5 vs. Exp. 2.0 (Prev. 7.0) - Third consecutive decline, lowest since 2013. (Newswires) Japanese Tankan Big Non- Manufacturing Index (Q3) 21 vs. Exp. 20.0 (Prev. 23.0)

UK/EU

UK PM Johnson is said to release his Final Brexit plan to EU leaders within 24 hours, Telegraph reported. The proposal is expected to be based on the creation of an all-Ireland “economic zone” which would allow agricultural and food products to move between Ulster and the republic without checks at the border. Further reports stated that Britain is set to present a text to the EU on Thursday, whist the Telegraph noted that the formal text will be delivered after the Tory Party conference on Wednesday (echoes the report by ITV’s Peston yesterday). (Telegraph/Newswires) Furthermore, UK PM Johnson will reportedly ask the EU to rule out further Brexit extensions as part of a new deal. (Times) Daily Mirror's Crerar tweeted that there is "speculation among Tory MPs that PM could end up bringing back May’s deal with fig leaf after all". (Twitter) UK Cabinet members are divided on whether PM Johnson could delay his Brexit promise and delay the 31st October deadline, according to BuzzFeed citing sources (BuzzFeed)

The UK has proposed a string of "customs clearance centres" on both sides of the Irish border as a key part of its plan to replace the backstop, according to RTE’s Connelly citing sources. However, this was rebuffed by Sky News sources which stated that the UK has proposed a customs ‘mechanism’ whereby customs processes conducted at origin or destination of goods. The sources added that when inspections need to be conducted, it could be at the destination or at a dedicated premise away from border. There will not a "string of customs clearance centres". Furthermore, Irish Foreign Minister Coveney tweeted that the non-paper (leaked by RTE) is a non-starter, it is time the EU had a serious proposal from the UK government if a Brexit deal is to be reached this month. (Twitter)

UK Senior judges are said to be drawing up plans for an emergency legal challenge if the UK PM Johnson fails to seek a delay to the October 31st Brexit deadline. (Times)

Italian Economy Minister said the government wants to issue green bonds in 2020 to finance its energy transition. (Newswires)

Italian cabinet has reportedly approved its budget framework, according to local press. In related news, Italy has raised its 2020 Deficit/GDP target to 2.2% (prev. 2.1% in April), cut its 2019 GDP growth forecast to 0.1% (prev. 0.2% in April) and downgraded its 2019 forecast to 0.6% (prev. 0.8% in April), sources stated. (Newswires)

FX

In FX, DXY continued to extend on gains and briefly breached 99.50 to the upside to a fresh YTD high at 99.51 as a new month and quarter commenced and in anticipation of the US ISM Manufacturing PMI. EUR/USD and GBP/USD were modestly pressured by the firmer Greenback, albeit the pairs remained within yesterday’s ranges. EUR/USD meandered just below the 1.0900 mark whilst Cable hovered under 1.2300. Participants digested contradicting Brexit news-flow in which RTE’s leak of the UK non-paper was rebuffed by Sky sources, which stated that the UK has proposed a customs ‘mechanism’ whereby customs processes conducted at origin or destination of goods rather than “a string of inspection posts” on both sides of the Irish border (as reported by RTE). Moreover, reports stated that senior UK judges are readying plans for an emergency legal challenge amid fears that PM Johnson will ignore the Benn Act and fails to seek a Brexit delay, whilst separate reports noted that the PM is poised to ask the EU to rule out further Article 50 extensions as part of a new deal. Elsewhere, the JPY succumbed to mild pressure from the Greenback and the overall risk-on tone around the market with USD/JPY back above its 100 DMA (107.80) and north of the 108.00. Meanwhile, antipodeans were the marked underperformers with the NZD/USD retreating below 0.6250 as Business Confidence continued to deteriorate, whilst its Aussie counterpart initially spiked higher following the RBA’s expected rate cut as the statement added that a “gentle turning point appears to have been reached”, although gains later pared and AUD/USD stabilised near session lows as the Central Bank reiterated that it is reasonable to expect that an extended period of low interest rates will be required and it has room to further ease if needed.

The RBA cut its cash rate by 25bps to 0.75% as expected. RBA reiterated that it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. RBA added “A gentle turning point, however, appears to have been reached”. The Central Bank noted the low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector should all support growth, but repeated that the Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time. (Newswires) New Zealand NZIER Adj. Business Confidence (Q3) -35 (Prev. -34), Non-adjusted -40 (Prev. -34) (Newswires) 

COMMODITIES

WTI and Brent futures consolidated, albeit the benchmarks held onto a bulk of the prior session’s losses after downside was exacerbated amid reports that Saudi facilities have restored output following the attacks earlier this month, with eyes now turning to tonight’s API crude inventory release. Elsewhere, gold was pressured by the overall risk appetite coupled with the DXY advancing to fresh YTD highs, the yellow metal now eyes 1450/oz to the downside ahead of its 100 DMA at 1425/oz. Meanwhile, copper failed to benefit from the risk-on sentiment in the market as the red metal yielded to the rising Dollar.

Aramco Trading CEO said all oil capacity was restored to pre-attack levels on September 25th. (Newswires)

OPEC Survey stated that September oil output seen declining 750k BPD M/M to 28.9mln BPD; Saudi production seen falling 700k BPD to average 9.05mln BPD; Iran lowers production after pledge to boost compliance; Nigeria raises output slightly. (Newswires)

US

*US T-NOTE FUTURES (Z9) SETTLED 2+ LOWER AT 130-10: The T-Note pared losses throughout the US session, after a sell-off prior to the European equity open following stronger than expected Chinese PMIs and a White House pushback on a financial trade war, although a stronger greenback and disappointing Chicago PMI gave way to the bid; quarter-end flows/factors were also in the backdrop. By settlement the TPLEX was little changed with yields fractionally lower (<1bps).

US President Trump is said to have pushed Australian PM Morrison for information to discredit the Mueller probe, NYT reports citing sources. (NYT) Additionally, US Democrats have demanded records from the US President Trump's personal lawyer Giuliani regarding the impeachment inquiry, reports stated. (Newswires) US Secretary of State Pompeo is reported to have been a part in the phone call with US President Trump and the Ukraine President. (WSJ)

US objected the EU/Canada stopgap plan for resolving WTO disputes, Politico reported. (Politico)