• Asian equity markets traded mostly positive amid mild tailwinds from Wall St where all major indices edged higher and the S&P 500 above 3000
• US President Trump said China is purchasing US agricultural goods now and that any issues in phase 2 talks are in many ways a lot easier than the issues faced in phase 1
• UK government published the Withdrawal Agreement Bill on Monday night which will see its first vote at 1900BST on Tuesday
• Canadian PM Trudeau's Liberal Party is projected to form a minority government with latest count showing Liberal Party to win 156 seats vs. Conservative at 121 seats
• Looking ahead, highlights include Canadian Retail Sales, US Existing Home Sales, Richmond Fed and APIs, NZ Trade, RBA Assistant Governor Kent, vote on 2nd reading of WAB, supply from UK and US
• Earnings: McDonald’s, Procter & Gamble, Restaurant Brands, UPS, United Technologies, Kimberly Clark, Lockheed Martin, Biogen, Chipotle, Fifth Third, Hasbro, Harley-Davidson, Paccar, Snap, Travelers Co., Novartis, UBS

ASIA-PAC

Asian equity markets traded mostly positive amid mild tailwinds from Wall St where all major indices edged higher and the S&P 500 closed back above the 3000 milestone with sentiment underpinned as officials continued to suggest optimism regarding a trade deal, although gains were capped amid a light calendar, Japanese holiday closure and ahead of a busy week of earnings stateside. ASX 200 (+0.4%) was positive with the index propped up by strength in the commodity-related sectors aside from gold miners after the precious metal trickled further below the USD 1500/oz level, while corporate updates also provided a catalyst. Hang Seng (+0.3%) and Shanghai Comp. (-0.1%) were mixed despite a firm liquidity effort by the PBoC which conducted CNY 250bln of 7-day reverse repos for its largest daily net injection in nearly 5 months, with the mainland choppy ahead of upcoming earnings and with Hong Kong anticipating the announcement of further supportive measures for companies later today.

PBoC injected CNY 250bln via 7-day reverse repos for a daily net injection of CNY 250bln. (Newswires)

PBoC set CNY mid-point at 7.0668 vs. Exp. 7.0708 (Prev. 7.0680)

US President Trump said China is purchasing US agricultural goods now and that any issues in phase 2 talks with China are in many ways a lot easier than the issues faced in phase 1. Furthermore, Trump had also stated that a trade deal with China is coming along great and reiterated his hope to have phase 1 of the deal signed at APEC summit. (Newswires)

USTR Lighthizer reiterated the target is to have the phase one trade deal with China by the time of the APEC summit in mid-November but added that issues still remain. Lighthizer said deputy level call with Chinese trade team happened on Monday and a primary level phone conversation will be conducted with China’s Vice Premier Liu He on Friday. (Newswires/Fox)

US-China Business Council Executive said US companies are preparing for tensions with China to last beyond current trade discussions and have begun diversifying supply-chain investments away from China. (WSJ)

China Vice Foreign Minister Le Yucheng said China and the US should be partners for cooperation and that they achieved some progress in trade discussions, while he is hopeful of reaching an agreement and commented that the world needs openness and not decoupling or a new cold war. (Newswires)

China’s Vice Premier Liu He and EU Commissioner Katainen are to meet soon for high level talks about bilateral investment treaty and geographical indications, according to reports citing sources. (Handelsblatt)

UK/EU

UK government published the Withdrawal Agreement Bill on Monday night which will see its first vote at 1900BST on Tuesday, 1930BST will see the programme motion (approving the timetable) followed by a 3 hour debate on amendments. Wednesday will see 12 hours debating and voting on amendments from 1300BST. Thursday will host 8 hours of debate and a vote on the third reading. (Sky)

UK government is facing trouble on WAB and that whips warned the programme motion vote will be tight with up to 20 Labour MPs needed to see off Tory rebels, while a Rainbow alliance is forming to enforce customs union on the future relationship not the exit deal, according to The Sun's political editor. (Twitter/The Sun) UK rebel MPs were reportedly warned that PM Johnson is expected to abandon the Brexit legislation rather than accept a customs union or 2nd referendum. (Telegraph)

UK Minister Gove said there has been no formal response from the EU regarding UK PM Johnson's letters, while Gove added he must now take the correct steps to deal with the increased chance of a No-Deal Brexit. (Newswires)

FX

DXY was lacklustre but off the prior day’s lows amid a non-committal tone across its major counterparts with EUR/USD relatively unchanged around 1.1150, while GBP/USD notched mild gains and resumed a gradual approach towards the 1.3000 handle ahead of today’s Brexit-deal vote which is expected at 1900BST. USD/JPY saw mild upside amid the mostly positive risk tone but with gains limited by the lack of Japanese participants, and antipodeans remained afloat with outperformance in NZD/USD after it reclaimed the 0.6400 handle, while early strength in AUD/USD eventually waned after it hit resistance at the prior day’s highs near 0.6880 and as a fallout of the strength in its trans-Tasman counterpart in which AUD/NZD declined below 1.0700.

Canadian PM Trudeau's Liberal Party is projected to form a minority government with latest count showing Liberal Party to win 156 seats vs. Conservative at 121 seats with 85% of polls reported. (Newswires) 

COMMODITIES

Commodities were flat in which WTI crude futures stabilized from the prior session’s swings in which early pressure due to continued economic slowdown concerns was counterbalanced by trade optimism. Furthermore, the cautious gains in stocks did little to spur oil prices overnight, while Goldman Sachs also lowered its outlook for oil demand growth next and suggested scope for a future increase in OPEC output. Elsewhere, gold traded flat amid an uneventful greenback and copper also mirrored the idle trade across the complex amid the indecision in its largest buyer China. 

Goldman Sachs lowered its 2020 oil growth demand outlook to 1.3mln bpd from 1.4mln bpd and sees US oil growth expectations to be reduced, while it suggested there is room for OPEC output to increase beyond 2020. (Newswires) 

US

Yields were 4-5bps higher across the Treasury curve, and at settlement, major curve spreads were mixed. The downside was said to be a result of continued positive noises from US/China trade talks, while Brexit is moving in a direction that removes any cliff-edge exit, helping to mitigate a key global risk. This week, the US Treasury will this week auction a new 2-year note (USD 40bln, Tue), a new 5-year note (USD 41bln, Wed), and a new 7-year note (USD 32bln, Thu); Analysts at UBS note that there are around USD 84bln of cash flows at the end-month settlement (excluding SOMA holdings), including around USD 75bln of redemptions and around USD 9bln of coupons. US T-note (Z9) settled 13 ticks lower at 129-20.

US President Trump said he thinks it is a foregone conclusion that the House will vote to impeach him. (Sky News)