• European bourses are little changed in what has been tentative trade thus far on mixed US-China remarks, ahead of Powell part 2
• China customs have lifted restrictions on US poultry meat imports, according to reports
• German Q3 GDP Flash QQ 0.1%, avoiding a technical recession
• Antipodeans underperform on poor AUD labour data, with the USD slightly firmer at present
• Looking ahead, highlights include US Initial Jobless Claims, Weekly EIA Inventories, OPEC Monthly Report (12:10 GMT), Banxico Rate Decision, Fed’s Clarida, Evans, Powell, Daly, Williams, Bullard, Kaplan, ECB’s de Galhau, SNB’s Maechler, RBNZ Governor Orr
• Earnings: Walmart

ASIA-PAC

Asian equity markets traded somewhat mixed after a tentative lead from Wall St peers due to ongoing trade uncertainty and as the region digested several substandard tier-1 data releases. ASX 200 (+0.6%) was positive as tech and consumer staples led the early broad gains across Australia’s sectors and with abysmal jobs data supporting prospects the RBA may need to ease further. Nikkei 225 (-0.8%) succumbed to softer than expected Q3 GDP which disappointed hopes of front-loading ahead of the sales tax hike and raised questions regarding the Q4 outlook, although there were some success stories with Yahoo Japan the biggest gainer on news of a potential merger with Line Corp which also provided a tailwind for their respective parents SoftBank and Naver. Hang Seng (-0.9%) was the laggard and Shanghai Comp. (+0.2%) was indecisive amid the ongoing precarious US-China trade climate as President Trump commented that a deal is moving along very rapidly, although other reports suggested trade talks may have hit a snag over agricultural purchases. Furthermore, sentiment was also dragged by weaker than expected Chinese Industrial Production and Retail Sales data, as well as a decline in profits by index heavyweight Tencent and continued unrest in Hong Kong where protesters persisted with their new strategy of weekday disruptions. Finally, 10yr JGBs were higher and broke through resistance at 153.00, with prices underpinned by the cautious sentiment, weaker than expected Q3 economic growth and firmer demand at the 5yr auction.

PBoC skipped open market operations for a net neutral daily position. (Newswires)

PBoC set CNY mid-point at 7.0083 vs. Exp. 7.0078 (Prev. 7.0026)

China stats bureau said the economy faces many external uncertainties and downward pressure continues, but also noted China will resist economic downward pressure and needs efforts to achieve full-year employment target. (Newswires)

Chinese Industrial Production (Oct) Y/Y 4.7% vs. Exp. 5.4% (Prev. 5.8%). Chinese Industrial Production YTD (Oct) Y/Y 5.6% vs. Exp. 5.6% (Prev. 5.6%) Chinese Retail Sales (Oct) Y/Y 7.2% vs. Exp. 7.9% (Prev. 7.8%) Chinese Retail Sales YTD (Oct) Y/Y 8.1% vs. Exp. 8.1% (Prev. 8.2%)

Japanese Economic Minister Nishimura said GDP data shows economy in gradual recovery and that they will closely watch private consumption. Nishimura added they must be vigilant of the impact from the sales tax hike and will prepare against downside risks from overseas economy, while he noted the effects from worsening ties with South Korea had a big impact on exports. (Newswires)

Japanese GDP (Q3) Q/Q 0.1% vs. Exp. 0.2% (Prev. 0.3%, Rev. 0.4%).

Japanese GDP (Q3) Y/Y 0.2% vs. Exp. 0.8% (Prev. 1.3%, Rev. 1.8%)

Hong Kong government is expected to announce a curfew for the weekend, according to sources cited by Global Times; However, SCMP citing a Government source state this is fake news. (Global Times/SCMP)

US

China's MOFCOM says cancelling tariffs is an important condition for achieving a trade deal between US and China; degree of tariff cancellation should entirely reflect importance of a Phase One agreement, sides remain in discussion an a Phase One agreement. (Newswires)

China customs have lifted restrictions on US poultry meat imports, according to reports. Subsequently, China's Global Times acknowledges earlier reports that China has lifted a ban of US poultry imports, which it says comes "amid the continuation of tradetalks, paving the way for hundreds of millions of dollars worth US meat export to China"; the US exported USD 390mln worth of poultry to China in 2014 before the ban. (Newswires/Twitter)

UK/EU

UK Tory party was said to offer a deal to the Brexit Party in which the latter would only contest 40 seats, although this was rejected by party leader Farage. According to reports, PM Johnson was prepared to put up “paper candidates” in opposition Labour-held constituencies to give an advantage to Brexit Party rivals, although Brexit Party Farage turned down the offer as they would prefer the Tories withdrawing their candidates altogether from the seats as they could still attract votes. (Telegraph) Note, Political Parties have until 16:00GMT today to confirm candidates for the upcoming general election.

ComRes UK election poll showed Conservatives at 40% (+3), Labour at 30% (+1), Lib Dems 16% (-1), Brexit 7% (-2) in survey conducted November 11th-12th. (Twitter)

UK Retail Sales MM (Oct) -0.1% vs. Exp. 0.2%; Ex-Fuel MM (Oct) -0.3% vs. Exp. 0.2% (Prev. 0.2%)

- Retail Sales YY (Oct) 3.1% vs. Exp. 3.7% (Prev. 3.1%); Ex-Fuel YY (Oct) 2.7% vs. Exp. 3.4% (Prev. 3.0%, Rev. 2.9%)

German GDP Flash QQ SA (Q3) 0.1% vs. Exp. -0.1% (Prev. -0.1%; Revised. -0.2%)

EU GDP Flash Estimate QQ (Q3) 0.2% vs. Exp. 0.2% (Prev. 0.2%); YY (Q3) 1.2% vs. Exp. 1.1% (Prev. 1.1%)

- EU Employment Flash YY (Q3) 1.00% vs. Exp. 1.00% (Prev. 1.20%); QQ (Q3) 0.1% vs. Exp. 0.20% (Prev. 0.20%)

GEOPOLITICS

In related news, Turkey President Erdogan said Turkey expects the US to halt support for Kurdish YPG immediately, while he added that a US resolution on Armenian genocide is a shameful step. (Newswires)

A Gaza ceasefire has been agreed according to reports citing Egyptian and Islamic Jihad sources. (AFP/Twitter)

EQUITIES

Negative news regarding US/China trade talks, which have reportedly “hit a snag” over agricultural purchases and Chinese resistance to US demands for strong enforcement mechanisms, coupled with a disappointing data in the form of weak Chinese Industrial Production and Japanese GDP, saw major European bourses (Euro Stoxx 50 unch.) trade cautiously on Thursday morning. An upside surprise for German Q3 GDP numbers, which saw the country narrowly avoid a technical recession, was unable materially lift the DAX, which is weighed on by underperformance in a number of its heavyweights; Daimler (-3.0%) is lower on the news a shift into electric vehicles will negatively impact 2020 and 2021 earnings. Additionally, Merck (-1.6%) shares are under pressure despite upgrades to EBITDA and revenue guidance as the Co.’s Performance Materials unit saw adjusted EBITDA drop by 12.7% YY, while the Co. also warned that the economic environment could result in a moderate decline in semiconductors. Similarly, RWE (-3.3%) shares are also lower despite upgrades to EBITDA and revenue guidance after the Co. posted substantial losses for its generation’s unit. Later in the morning, European bourses received a short-lived lift on the news that Chinese customs have lifted restrictions on US poultry meat imports, albeit the move was fleeting. In terms of the sectors; defensives are amongst the outperformers, with Health Care (unch.), Utilities (-0.2%) and Consumer Staples (unch.). Tech (-0.5%) is also outperforming the market; Wirecard (+0.9%) is on the front foot following the news that the payments Co. has secured YeePay as a partner for global online bookings, with potential transaction volume from this is in excess of EUR 17bln per annum. In terms of other notable movers; Altice (+1.0%) and Henkel (-2.0%) are higher after earnings; the former reported strong EBITDA and revenue results while the latter confirmed its FY19 outlook. K+S (-2.1%) earnings were weaker as the Co. cut its 2019 potash production target by 200k tons and, subsequently, cut its FY19 EBITDA target. Ryanair (-1.0%) shares were pressured after the airline was downgraded to underweight at Exane BP. Finally, Bouygues (+1.4%) was bid after positive comments from its CEO, who said competition remains intense in the French telecom market, but less so than last year.

FX

AUD/NZD - The Aussie has tumbled to the bottom of the G10 table after a raft of sub-forecast data overnight, kicking off with Japanese Q3 GDP and extending through Australia’s October jobs report to Chinese IP and Retail Sales. Naturally, the big disappointment and shock was a decline in payrolls that was mostly down to a fall in permanent positions and contributed to an uptick in the unemployment rate, albeit in line with expectations. Aud/Usd recoiled from just over 0.6840 to sub-0.6800, while Aud/Nzd retreated further from pre-RBNZ peaks through 1.0650 and towards 1.0625 as the Kiwi holds up better vs a still rangebound Greenback (DXY meandering between 98.427-282) and within sight of the 0.6400 handle awaiting NZ manufacturing PMI and more from Governor Orr on the surprise decision to keep rates on hold this month. Note, Bascand underlined switch to wait-and-see mode last night, though left the door open to another OCR cut next February, if warranted.

JPY/CHF/GBP/EUR/CAD - All narrowly mixed vs the US Dollar, with the Yen and Franc maintaining an underlying bid and safe-haven premium even though China may have alleviated some trade jitters amidst reports of an ag snag by lifting its ban on US poultry. Usd/Jpy remains below a key Fib and pivoting chart support ahead of 108.50, while Aud/Jpy has retreated to around 73.80 amidst the all round Aussie underperformance noted above, but could pare some losses and revisit 74.00 given a hefty 1.6 bn option expiries in the cross at that strike. Meanwhile, Usd/Chf is back under 0.9900 and Eur/Chf near the base of a 1.0903-1.0864 band ahead of a speech by SNB’s Maechler that may well be used as another opportunity to espouse the mantra of sub-zero rates and proactive currency intervention to ensure that the Franc does not appreciate to excessive levels. Elsewhere, Sterling only saw a shallow and brief set-back when UK retail sales fell well short of consensus, with Cable back above 1.2850 and flirting with the 10 DMA, while Eur/Gbp is retesting 0.8555 stops, as Eur/Usd relinquishes 1.1000+ status recovered in wake of German Q3 GDP data beating forecasts that would have consigned the economy to a technical recession if confirmed. Note, however, the single currency is still finding support close to a 1.0993 Fib, while the Loonie is straddling 1.3250 again and eyeing Canadian new house prices to provide independent direction and a distraction to US claims and PPI.

SEK/NOK - Although Statistics Sweden has issued another warning about the reliability and sample size of the figures used to formulate monthly employment reports, the Swedish Krona appears to be taking the data at face value, as Eur/Sek probes below 10.6900 vs almost 10.7300 at one stage and compared to Eur/Nok that is elevated above 10.1000 and has been as high as 10.1300+.

EM - Some positive platitudes and constructive discussions, but no resolutions from the talks between Turkish and US Presidents has left the Lira under pressure and only a little off worst levels vs the Buck near 5.7800 in contrast to the Rand that has recouped losses on the back of significantly better that anticipated SA mining production and irrespective of persistent output disruption at Eskom. Indeed, Usd/Zar has pulled back sharply from 15.0000+ peaks to sub-14.8300 before bouncing.

Australian Employment Change (Oct) -19.0k vs. Exp. 15.0k (Prev. 14.7k). (Newswires) Australian Unemployment Rate (Oct) 5.3% vs. Exp. 5.3% (Prev. 5.2%)

Notable FX Expiries, NY Cut:

- EUR/USD: 1.0965-75 (450M), 1.1000 (772M), 1.1020-30 (700M), 1.1040-50 (1.6BLN), 1.1055-65 (900M)

- AUD/JPY: 74.00 (1.6BLN)

FIXED INCOME

The latest Chinese concessions may only be paltry in the big scheme, but will appease some of the reported angst about sticking points that are apparently holding up Phase 1 of the trade agreement, and thus must be deemed as positive. Meanwhile, another surprisingly weak core debt sale, this time in the UK and perhaps even more perplexing given institutional demand for long-dated paper, has undermined Gilts that are well off best levels within 131.70-36 extremes. Similarly, Bunds have pared back from 170.87 and 10 year T-notes have drifted towards 129-00 vs 129-05+ as attention shifts to the US open a busy pm docket comprising data, more Fed speak including Chair Powell’s JEC part 2.

COMMODITIES – Note, OPEC Monthly Report to be released at 1210GMT

Crude markets are in the green despite the markets tentative feel, with a surprise draw in API inventory data last night helping underpin the benchmarks. Front month WTI and Brent futures advanced as high as USD 57.80/bbl and USD 63.20/bbl respectively, fresh highs for the week, although weak Japanese and Chinese data has since capped further upside. Looking ahead, official EIA inventory data will be published at 16:00 GMT. Fresh crude specific news flow has been light, although the OPEC Monthly Oil Report is due to be released at 12:10 GMT, which will be the final report before the Cartel convenes next month. In terms of metals; Copper has been on the front foot, pushing above its recent USD 2.6330/lbs to USD 2.6480/lbs intraday range, as the red metal largely shrugs off weak Chinese data. Tuesday reports of strikes in Chile appear to not have had a meaningful impact on the supply. Meanwhile, Gold is trading firmer; amid wider feelings of risk aversion, the precious metal has now reclaimed the USD 1470/oz handle.

US API Weekly Crude Stocks -0.54mln vs. Exp. +1.60mln (Prev. +4.26mln). (Newswires)