• Major European Bourses are modestly lower, France’s CAC underperforms as Renault cut outlook
• Chinese economic growth slowed to the weakest pace since 1992, although Q/Q and YTD GDP figures matched analysts’ forecasts, while IP surpassed estimates
• Outside experts reportedly warned President Trump that continued escalation of US-China trade tensions could hurt economy and re-election
• 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

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 (-0.5%) 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 (-0.5%) and Shanghai Comp. (-1.3%) 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 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%) 

Japan's Government downgraded its view on production and corporate sentiment, flagging weakness in exports but still sees a moderate recovery; lowers assessment of economy in its monthly report. (Newswires) 

BoJ Deputy Governor Amamiya said the BoJ must continue powerful monetary easing. (Newswires) As a reminder, the BoJ MPM is on October 31st. 

US

US President Trump's Economic Adviser Kudlow reportedly arranged a briefing with outside experts who warned President Trump that continued escalation of US-China trade tensions could hurt the economy and re-election chances, sources state. (WSJ)

Fed's Williams (Voter, Neutral) 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 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)

GEOPOLITICS

Kurdish-led SDF accusing Turkey forces of targeting both civilian and military areas in Ras al ain town. (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 Secretary of State Pompeo says he had a productive meeting with Israeli PM Netenyahu, where they talked about countering Iranian influence in the region. (Twitter)

Japan has decided to dispatch its self-defence troops to the Strait of Hormuz, according to Asahi. (Newswires)

UK/EU

UK DUP's spokesperson Wilson says he will encourage Conservative lawmakers to vote against UK PM Johnson's deal with the DUP. Meanwhile, Former UK Conservative lawmaker Letwin believes around 17/18 former Conservative rebels will back UK PM Johnson's Brexit deal. (Newswires) 

BoE's Ramsden (Dove) said a smooth Brexit would put rate hikes on the table. (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

GBP - Sterling remains relatively strong, but in much more sedate trade awaiting the fate of the latest Brexit deal at the hands of MPs tomorrow, with the Parliamentary vote expected to be very tight. However, despite ongoing DUP opposition and little sign that the coalition party will be won round, Cable is nudging higher within 1.2840-1.2920 confines and Eur/Gbp remains depressed between 0.8660-15 parameters. For the record, option break-even pricing is around 2 big figures and the loftiest since the 2016 EU referendum, though this could be deemed quite conservative given even bigger swings in the Pound seen of late.

NZD/AUD - It’s been nip and tuck down under for the most part this week, but the Kiwi has overtaken the Aussie in wake of mixed Chinese data overnight, as Nzd/Usd breaches 0.6350 and the Aud/Nzd cross reverses further from post-Aussie labour report peaks just shy of 1.0800 through 1.0750. Nevertheless, Aud/Usd is consolidating gains above 0.6800 amidst general Greenback weakness with the DXY hovering around 97.500 ahead of the final pre-October FOMC Fed speakers and following mostly sub-consensus US data and surveys in the run up.

EUR/CAD/CHF/JPY - All narrowly mixed against the Buck, as the single currency maintains 1.1100+ status and in bullish mode alongside Cable, eyeing yesterday’s circa 1.1140 high that coincides with the 100 DMA and is close to a Fib retracement level. Meanwhile, the Loonie is sitting tight in a 1.3130-45 band, while the safe-haven Franc and Yen roam either side of 0.9875 and 108.60 respectively.

NOK/SEK - In contrast to the Antipodean Dollar dovetailing noted above, clear divergence has been more apparent in Scandinavia where Norway’s Crown is extending declines to new record lows vs the Euro and losing more ground relative to its Swedish peer. Thursday’s seemingly poor jobs data from Sweden has been largely shrugged aside due to sub-standard elements of the figures collated, while it remains a close call whether the Riksbank retains its tightening bias and/or the Norges Bank reaffirms and on hold stance after September’s 25 bp hike.

EM - Although rallies or recoveries against the Dollar are trending across the region, Usd/Try has reversed further than most other pairs (to circa 5.7500 at one stage) on the back of sheer Lira relief that the US has put sanctions on hold in acknowledgement of the 5-day ceasefire in Northern Syria forged with Turkey.

Major FX option expiries for today's NY cut

- EUR/GBP: 0.8600 (750M), 0.8700-20 (1BLN) ­- AUD/USD: 0.6765 (400M), 0.6780 (280M), 0.6790-0.6800 (1.5BLN) - USD/JPY: 107.85 (1.5BLN), 107.95-108.10 (1.6BLN) 

FIXED INCOME

Only time will tell, but for now Gilts continue to sag and drag core debt counterparts with them on the premise or perception that momentum may be gradually building behind the Boris Johnson version/vision of Brexit. Indeed, the 10 year UK benchmark is just off a new 131.43 Liffe low, albeit well above Thursday’s pre-DUP deal denouncement base, with Bunds and T-notes following suit to 171.41 and 129-25 respectively. Ahead, US LEI and the last words from the Fed pre-purdah, but perhaps more importantly a final UK Cabinet meeting before Saturday’s big event (England’s Rugby Quarter final face-off against Australia aside!).

COMMODITIES

Crude prices are drifting higher, although there is a lack of fresh fundamental drivers. ING note that factors possibly contributing to yesterday’s WTI (post-DoE) rise were inventory draws across all the other refined products. The key driver behind the draws seen across the products, argues the bank, was seasonal refinery turnarounds, with refinery run rates falling by 2.6 percentage points over the week to average 83.1%, the lowest level since September 2017. Looking ahead, the UK Parliament’s vote on PM Johnson’s new Brexit deal is likely the most notable weekend risk factor, albeit the docket includes a slew of Fed voters on US economy ahead of the Fed blackout period. Elsewhere, in metals, Gold prices have steadily declining on Friday morning, despite lower equities and the downbeat Chinese data. On which note, Copper prices remain under pressure, as data provided further evidence of a slowdown in its biggest market, China. Desks are citing the slowdown as more evidence of the negative effect of the US/China trade war on global growth. However, this week’s constructive tone on the state of US/China trade negotiations from both sides, combined with the agreement on a Brexit deal by the EU and UK has helped to cushion losses. Meanwhile, this week Dalian iron ore futures have suffered from one its largest weekly declines in two months. Analysts point to tightening restrictions on Chinese steel production over air quality issues and, more broadly, the slowing global demand for Chinese steel and iron ore.