• Asian equity markets traded cautiously after the rally from the Brexit deal breakthrough petered out and as participants mulled over mixed Chinese data
• Chinese economic growth slowed to the weakest pace since 1992, although Q/Q and YTD GDP figures matched analysts’ forecasts, while IP surpassed estimates
• UK rebel Labour MPs were said to be considering backing PM Johnson's Brexit deal if workers' and other rights are written into UK law
• Looking ahead, highlights US Baker Hughes rig count, Fed’s Kaplan, George, Kashkari, Clarida, BoE’s Carney, Cuncliffe, ECB’s Coeure, BoC’s Lane, EU Council Summit Day 2
• Earnings: Schlumberger, Coca-Cola, State Street, Assa Abloy, Sandvik, Volvo, Yara

ASIA-PAC

Asian equity markets traded cautiously after the rally from the Brexit deal breakthrough petered out and as participants mulled over mixed Chinese data including GDP which printed at its weakest in nearly 3 decades. ASX 200 (-0.6%) underperformed with Consumer Staples and Tech frontrunning the broad declines across its sectors, while Nikkei 225 (+0.2%) edged a fresh YTD high as it benefitted from recent currency outflows as well as reports South Korea is willing to enter discussions to settle bilateral tensions with Japan on forced-labour issues. Elsewhere, Hang Seng (-0.1%) and Shanghai Comp. (-0.4%) were indecisive and eventually deteriorated following a flurry of tier-1 data releases from China which showed its economic growth slowed to the weakest pace since 1992, although Q/Q and YTD GDP figures matched analysts’ forecasts, while Industrial Production surpassed estimates. Finally, 10yr JGBs were relatively flat after a rebound from yesterday’s late selling pressure in which prices briefly tested 154.00 to the downside, while demand subdued as Japanese stocks remained afloat and with today’s BoJ Rinban operations at a relatively tepid JPY 150bln in the long and super-long end.

PBoC injected CNY 30bln via 7-day reverse repos for a net weekly injection of CNY 30bln vs. Prev. CNY 320bln drain. (Newswires)

PBoC set CNY mid-point at 7.0690 vs. Exp. 7.0711 (Prev. 7.0789)

China Global Times tweeted that China cut its holdings of US Treasury securities to the lowest level since May 2017 which experts suggest was aimed at diversifying its foreign reserves and preventing risks amid the trade war with the US. (Twitter)

China stats bureau reiterated that the domestic economy faces relatively large downward pressure, while it added the economy faces a complex and serious situation, as well as rise in external uncertainties. (Newswires)

Chinese GDP (Q3) Q/Q 1.5% vs. Exp. 1.5% (Prev. 1.6%)

Chinese GDP (Q3) Y/Y 6.0% vs. Exp. 6.1% (Prev. 6.2%); slowest growth in 27 years.

Chinese GDP YTD (Q3) Y/Y 6.2% vs. Exp. 6.2% (Prev. 6.3%) Chinese Industrial Production (Sep) Y/Y 5.8% vs. Exp. 5.0% (Prev. 4.4%) Chinese Retail Sales (Sep) Y/Y 7.8% vs. Exp. 7.8% (Prev. 7.5%)

Japanese National CPI (Sep) Y/Y 0.2% vs. Exp. 0.4% (Prev. 0.3%). (Newswires) Japanese National CPI Ex. Fresh Food (Sep) Y/Y 0.3% vs. Exp. 0.3% (Prev. 0.5%); slowest increase since 2017. Japanese National CPI Ex. Fresh Food & Energy (Sep) Y/Y 0.5% vs. Exp. 0.5% (Prev. 0.6%)

UK/EU

DUP's Wilson reiterated that the DUP are certainly voting against the deal on Saturday in which all 10 DUP MPs are united in their cause. UK rebel Labour MPs were said to be considering backing PM Johnson's Brexit deal if workers' and other rights are written into UK law, although senior Labour MPs were later reported to predict that fewer than 10 of their MPs will back the government on Saturday. (La Repubblica/Twitter/Huffington Post/BBC)

ECB's Visco said he does not think the negative interest rate environment is normal and suggested that they must be mindful of the side effects, while he also stated APP is more effective than negative rates and that he did not agree on all pieces of the September package. (Newswires)

USTR office confirmed in a notice to the industry that planned 10% and 25% tariffs on EU goods will take effect October 18th, while there were later comments from French Finance Minister Le Maire that the EU is ready to retaliate if the US proceeds ahead with tariffs. (Newswires)

FX 

DXY was subdued near the prior day’s lows around the 97.50 level due to the recent strength in its European counterparts following the announcement of the breakthrough in Brussels, which saw EUR/USD gain a footing above 1.1100 and GBP/USD approach just shy of the 1.3000 handle. Nonetheless, both pairs have since pulled back from their multi-month highs amid doubts on whether PM Johnson can get the deal passed in Parliament. USD/JPY traded lacklustre and JPY-crosses mostly held on to recent gains as they largely reflected their base currencies and following Japanese inflation data which showed Core CPI softened to a 2½-year low as expected. Elsewhere, antipodeans remained firm against the greenback following a stronger CNY reference rate and despite the mixed Chinese data with outperformance in NZD/USD after it broke through resistance at 0.6350 to print a fresh monthly high, while TRY also benefitted after US and Turkey reached a deal for a 5-day ceasefire to allow Kurdish forces to withdraw from the designated safe zone. 

COMMODITIES

Commodities were quiet overnight in which WTI crude futures pulled back below the USD 54.00/bbl but still held on to the majority of the gains seen in the prior session where prices were underpinned despite a much larger than expected build in EIA. Elsewhere, gold prices were steady with the precious metal kept float by recent weakness in the greenback, while the mixed Chinese data releases including its slowest economic growth since 1992 kept copper prices lacklustre. 

GEOPOLITICS US VP Pence and Turkish President Erdogan reached a deal to suspend the Turkish incursion in Syria for 120 hours to allow YPG to withdraw from the designated safe zone. US VP Pence said the US will not impose further sanctions with the implementation of the ceasefire and that President Trump has agreed to withdraw economic sanctions after the implementation of the deal, while he added that both US and Turkey are committed to a peaceful resolution of the safe zone. (Newswires)

Turkish Foreign Minister said this is not a ceasefire and suggested ceasefires are only between two legitimate sides. The minister also stated they agreed with the US on the collection of heavy arms from the YPG and the destruction of their positions, while he noted there were no guarantees to the US over the Kobani region. (Newswires)

US House Speaker Pelosi and Senate Democratic Leader Schumer said the US-Turkey agreement seriously undermines credibility of US foreign policy and that the House will pass a bipartisan sanctions package on Turkey next week. (Newswires)

US

The TPLEX settled little changed after a choppy day of trade. Participants initially sold the haven assets on the completion of the Brexit deal in early trade but pared losses throughout the rest of the session, lacking much conviction in late doors. Curve was little changed at settlement with yields up approximately up 1bp across the curve. US T-notes (Z9) settled 2+ ticks lower at 129-29.

Fed's Evans (Voter, Dove) said unemployment is not so low that high inflation is an urgent threat, while he suggested the Fed should cautiously probe for the true level of maximum employment. (Newswires)

Fed's Williams (Voter, Neutral) said the Fed will adjust the plan for money markets as appropriate and that the Fed has a lot of tools to address potential downturn such as asset purchases and forward guidance. Furthermore, Williams said recent rate cuts position policy to appropriately address risks from trade uncertainty, global slowdown and subdued inflation, while he added the economy is in a good place and policy will be set on a meeting-by-meeting approach. (Newswires)

US Energy Secretary Perry informed US President Trump he will be stepping down soon, while President Trump stated he is to nominate a successor to US Energy Secretary Perry soon, that he has already identified who it is and that Perry will stay until year-end. (Newswires)

US Acting Chief of Staff Mulvaney has admitted that military aid to Ukraine was withheld partly to pressure the country to investigate allegations on the Democrats and the 2016 election. (BBC)