• European equities are firmer this morning on strong EZ data, following the slightly firmer Asia-Pac handoff
• FX complex sees a slightly firmer USD with the NZD the notable underperformer ahead of tomorrow’s RBNZ rate decision
• US President Trump is expected to delay the EU auto tariff decision for another 6 months., according to Poltico
• US President Trump is reportedly to have a 'constructive statement on China' in his remarks at the Economic Club of New York., Politico's Playbook
• Looking ahead, highlights include US President Trump to speak on 'Trade & Economic Policy' at the Economic Club of NY, Fed’s Barkin & Harker
• Earnings:Tyson Foods & Rockwell

ASIA-PAC

Asian equity markets whipsawed overnight following a similar indecisive lead from Wall St where there was a mild downside bias amid ongoing trade uncertainty, escalating Hong Kong violence and with volumes light due to Veterans Day. ASX 200 (-0.3%) and Nikkei 225 (+0.8%) were mixed with Australia dragged by underperformance in the mining related sectors and with financials subdued after tepid results from the nation’s largest lender CBA, while the Japanese benchmark just about remained afloat with a varied currency the main catalyst for price action. Hang Seng (+0.5%) and Shanghai Comp. (+0.2%) traded choppy after weaker than expected Chinese financing data and with the efforts to recoup the prior day’s hefty losses in Hong Kong, stalling due to resistance around the 27000 level and continued unrest in the city. Finally, 10yr JGBs slipped below the 153.00 level after a lacklustre tone seen in US Treasury futures which was hampered by the US bond market closure for Veteran’s Day, while demand was also restricted by a weak 30yr auction and with the BoJ only in the market today for Treasury Discount Bills.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set CNY mid-point at 6.9988 vs. Exp. 6.9975 (Prev. 6.9933)

Hong Kong riot police reportedly fired tear gas at a city university campus in Kowloon Tong today, while several universities have cancelled classes and bus operators suspended routes. In related news, US State Department spokeswoman said the US is watching the situation in Hong Kong with grave concern and condemns the violence on all sides, while she added the US urges China to honour commitments that Hong Kong will enjoy a high degree of autonomy. (Newswires)

In concern over a 'trickle of capital outflows becoming a exodus', the Hong Kong authorities are reportedly offering private banks and offices incentives which may include tax cuts., Nikkei. (Nikkei)

US

US President Trump is reportedly to have a 'constructive statement on China' in his remarks at the Economic Club of New York., Politico's Playbook citing a source familiar with the remarks. (Politico)

Fed Vice Chair Clarida (Voter, Neutral) says Fed is reviewing its policy framework in a low-rate global environment; Makes reference to a discussion about “makeup” inflation strategies that could aid anchor inflation expectations and support the economy should rates fall to zero. (Newswires)

UK/EU

UK Claimant Count Unemployment Change (Oct) 33.0k vs. Exp. 21.3k (Prev. 21.1k, Rev. 13.5k)

- Average Week Earnings 3M YY (Sep) 3.6% vs. Exp. 3.8% (Prev. 3.8%, Rev. 3.7%)

- Average Earnings (Ex-Bonus) (Sep) 3.6% vs. Exp. 3.8% (Prev. 3.8%)

- ILO Unemployment Rate (Sep) 3.8% vs. Exp. 3.9% (Prev. 3.9%)

- Employment Change (Sep) -58k vs. Exp. -94k (Prev. -56k)

German ZEW Economic Sentiment (Nov) -2.1 vs. Exp. -13.0 (Prev. -22.8)

- ZEW Current Conditions (Nov) -24.7 vs. Exp. -22.0 (Prev. -25.3)

- EU ZEW Survey Expectations (Nov) -1.0 (Prev. -23.5)

- ZEW says that growing hope the international economic policy environment will improve in the near future explains the sharp rise in the ZEW indicator in November

GEOPOLITICS

Israel announced it struck the house of the leader of Palestinian Islamic Jihad armed wing in Gaza, while a residential building was also said to be hit during Israeli airstrikes in Damascus. In related news, the Palestinian Islamic Jihad vowed a powerful response to Israel's strike which killed the group's leader, while reports later noted rocket sirens sounding, multiple explosions and Iron Dome interceptions from a rocket barrage in Israel. (ELINT News)

EQUITIES

European equities eke modest gains in early trade [Eurostoxx 50 +0.4%] following on from a relatively indecisive APAC session. Major bourses are buoyed amid expectations that US President Trump will delay the decision to impose tariffs on EU autos by six months, according to Politico citing sources, although upside is hampered amid US-China trade uncertainty and continuing social unrest in Hong Kong with its financial district paralysed with protests. Further upside was also generated after the better than expected German ZEW metrics. Sectors are mostly in the green with underperformance seen in Consumer Staples; Tesco (-1.3%) shares weighed on after Kantar showed a decline in the supermarket’s sales for the 12 weeks to November 3rd, whilst sector heavyweight Nestle (-0.2%) is also subdued after Unilever (+0.3%) was chosen by Burger King to supply plant-based burgers, passing over Nestle, Impossible Foods and Beyond Meat. Elsewhere, most European auto names are cushioned on the back of the aforementioned Politico article; Daimler (+1.0%), Fiat Chrysler (+1.5%) and Peugeot (+1.5%) are all in the green, albeit Renault (Unch) fails to benefit after its alliance partner Nissan reported a 70% Q2 profit slump and slashed its FY sales and operating profit due to weaker demand. Tyre names are broadly lower as dismal earnings from Continental (-1.4%) overshadowed the Politico autos story, with Michelin (+0.3%) initially lower in sympathy, whilst Pirelli (+1.0%) awaits its earnings release scheduled for later today. Meanwhile, Airbus (+1.0%) shares seem to be lifted via a Boeing tailwind, whose shares closed higher in excess of 4% after a spokesperson said 737Max deliveries could resume in December; however, FAA approval is not expected until January 2020. Looking at other movers, Illiad (+17.5%) soared to the top of the pan-European index at the open after the Co. announced a EUR 1.4bln share buyback programme at EUR 120/shr, vs. a sub EUR 100/shr Monday close. Finally, Infineon (+7.5%), Dialog Semiconductor (+6.5%) and Deutsche Post (+4.5%) shares remain firm at the top of the Stoxx 600 index post-earnings.

US President Trump is reportedly expected to delay the EU auto tariff decision for another 6 months. (Politico)

FX

NZD/AUD - Not quite all change, but a marked turnaround in fortunes and sentiment for the Kiwi following a dip in NZ inflation expectations on the eve of the RBNZ policy meeting that has lifted 25 bp rate cut expectations to just over 80% from around 60% ahead of the survey and prompted Westpac to reinstate its call for an ease this month after the bank switched to unchanged. Nzd/Usd has slipped further below 0.6350 in response and Aud/Nzd is back up near 1.0800 even though the Aussie has fallen in sympathy to fresh 2 week lows vs its US counterpart around 0.6835 amidst expectations that the RBA will implement QE by the end of 2020, per JPM.

NOK - The Norwegian Krona is marginally underperforming relative to its Scandinavian peer and in Euro cross terms in wake of GDP data showing softer than forecast Q3 growth and consecutive m/m contractions, with Eur/Nok nudging towards 10.1000 vs Eur/Sek holding steady circa 10.7000.

EUR/JPY/CAD/GBP/CHF - All softer against the Greenback, albeit to varying degrees as the DXY derives some support from steadier UST yields and a broadly unchanged curve in contrast to Monday’s bullish retracement and re-flattening. The index is straddling 98.250, with Eur/Usd, Usd/Jpy, Usd/Cad, Cable and Usd/Chf meandering between 1.1020-38, 109.30-00, 1.3255-25, 1.2866-16 and 0.9953-30 respectively. The single currency appears supported ahead of 1.2 bn option expiries at the 1.1000 strike, but capped well in advance of 1.6 bn that roll off between 1.1075-85, and somewhat strangely unimpressed with significantly better than anticipated ZEW economic sentiment and expectations for Germany and the Eurozone as a whole. Conversely, Sterling did derive a bit of traction from elements of the UK labour report, like a dip in the jobless rate and ‘only’ 58k drop in employment vs -94k or more consensus that compensated for claimant count and wage misses.

EM - The Rand has rebounded from yesterday’s 14.9600+ lows even though SA’s Eskom is still experiencing problems, but the Lira has not really gleaned much comfort from Turkey’s record current account surplus given ongoing jitters about the outcome of Wednesday’s meeting between US President Trump and Erdogan. Elsewhere, the offshore Yuan is hovering around 7.0000 awaiting Trump’s address on Trade and Economic Policy that may contain something constructive on the status of talks with China (perhaps more on Phase 1?).

New Zealand RBNZ 2yr Inflation Expectations (Q4) 1.80% (Prev. 1.86%). (Newswires)

New Zealand RBNZ 1yr Inflation Expectations at 1.66% (Prev. 1.71%)

Australian NAB Business Confidence (Oct) 2.0 (Prev. 0.0). (Newswires) Australian NAB Business Conditions (Oct) 3.0 (Prev. 2.0)

Notable FX Option Expiries, NY Cut:

- EUR/USD: 1.1000 (1.2BLN), 1.1025-35 (700M), 1.075-85 (1.6BLN)

FIXED INCOME

Gilts have emerged from their bouts of weakness and underperformance relative to Bunds in wake of the mixed UK jobs/wage data and a pre-Liffe open upgrade to the DMO’s remit for the current fiscal year with enough gusto to close the gap and post a net gain on the day of 11 ticks vs a 36 tick deficit at one stage. However, the 10 year benchmark has now faded just ahead of 131.00 as its German/Eurozone peer sits 20 ticks above the 169.26 Eurex low, but still sub-par in keeping with US Treasuries ahead of the return of cash traders from their long holiday weekend and what could be a key/pivotal address from President Trump at the NY Economic Club, although Fed’s Barkin and Harker may vie for attention.

COMMODITIES

Crude markets are higher on Tuesday morning, as the complex continues to consolidate within recent ranges amid a lack of fresh fundamental drivers. For now, WTI Dec’ 19 and Brent Jan’ 19 futures are rangebound around the USD 57.00/bbl and USD 62.50/bbl marks respectively. Comments yesterday from Oman’s Oil Minister, who said deeper OPEC+ cuts at next month’s meeting are unlikely, served as further evidence that there is a lack of willingness among OPEC+ to take stronger action to support crude prices. Recent reports alleged that the Saudis will push for production cuts, but only via seeking better compliance rather than deeper output cuts. Analysts at Morgan Stanley argue that without firmer intervention, a new supply glut could send the market lower early next year by around 30%, which would see Brent trading at roughly USD 45/bbl. In terms of fresh drivers, the market will be eyeing a US President Trump speech at the Economic Club of New York this afternoon and a slate of Fed/ECB speak throughout the day. Participants will have to wait one day longer than usual for the weekly API Inventory data release and the EIA Short-Term Energy Outlook, which have both been delayed on account of yesterday’s US Veteran’s Day holiday. Similarly, Wednesday’s usual EIA Inventory data release will be pushed back to 16:00 GMT Thursday. In terms of metals; Gold prices are marginally softer and tentative ahead of President Trump’s speech. Elsewhere, Dalian Iron Ore prices were sent higher during overnight trade on the news of an outlook cut from Vale, which implies a decline in sales of at least 14.7% in 2019. Copper, meanwhile, fell as EU players arrived at their desks, breaking through resistance at the USD 2.6500/lbs level to a low of around 2.6425/lb