• US President Trump said he doesn't think China is stepping up to the level he wants in trade talks and that China wants a trade deal more than he does.
• China last week invited US trade negotiators for further talks, reports WSJ citing sources
• US House has voted to pass the Hong Kong bill and sent it to US President Trump who is expected to sign the bill
• European equities are modestly lower but off worst levels amid the US-Sino confusion, DXY remains softer whilst G10 FX benefit from the Dollar’s pullback, Fixed Income remains modestly subdued
• Looking ahead, highlights include US Philadelphia Fed Business Index, Existing Home Sales, Japanese Core CPI Nationwide, ECB Minutes, SARB Rate Decision, Fed’s Mester, Kashkari, BoC’s Poloz

TRADE

US President Trump said he doesn't think China is stepping up to the level he wants in trade talks and that China wants a trade deal more than he does. (Newswires)

Chinese Vice Premier Liu said he is cautiously optimistic about agreeing a phase one deal with US and that he remains confident but confused about US demands. In related news, a China state think tank economist also said it is still likely for a phase one deal with US to be reached this year if there is no disturbance, while the economist added a global financial crisis is not far off if US and China keep fighting. (Newswires)

Subsequently, Chinese Commerce Ministry says they will strive to reach a phase-one trade deal with the US; regarding possible disagreements in discussions states that outside rumors are not accurate, teams will maintain communication. (Newswires)

China last week invited US trade negotiators for further talks, reports WSJ citing sources, Chinese officials hope the in-person negotiations can happen before next Thursday (which is the Thanksgiving holiday in the US), but the US has reportedly not committed to a date yet. US negotiators said they would be willing to meet in person, but would be reluctant travel all the way to China, unless they make it clear that it would make commitments on IP protection, forced technology transfers and ag purchases. (WSJ)

US House has voted to pass the Hong Kong bill as expected and sent it to US President Trump for signature or veto, while source reports later noted President Trump is expected to sign the bill. (Newswires) Hong Kong Government said it strongly oppose US house passing Hong Kong bill which won’t help ease social unrest and sends the wrong signal to the violent protesters. (Newswires)

US has approved the resumption of some tech sales to Huawei, President Trump is considering exempting Apple (AAPL) from the tariffs; what about other US firms? President Trump’s policy is causing serious business discrimination., Chinese Global Times. (Twitter)

ASIA-PAC

Asian equity markets declined across the board with risk sentiment rattled by increased trade pessimism after source reports noted the US-China phase one deal may not be completed this year and US President Trump suggested China is not stepping up to the level he wants. In addition, the House passage of the Hong Kong rights bill which President Trump is expected to sign, added another front to the trade uncertainty. ASX 200 (-0.7%) and Nikkei 225 (-0.5%) traded negatively with Australia dragged by underperformance in trade sensitive sectors such as tech, materials, and industrials, while Tokyo exporters suffered the ill-effects from safe-haven flows into the domestic currency. Hang Seng (-1.6%) and Shanghai Comp. (-0.3%) were also downbeat on the trade-related doubts and with China media outlets continuing to voice their backlash to the US ‘interference’, while the losses in Hong Kong initially snowballed as all components in its benchmark index briefly resided in the red, although there was mild relief following comments from Chinese Vice Premier Liu He who was cautiously optimistic about reaching an agreement and remained confident despite being confused regarding US demands. Finally, 10yr JGBs were underpinned by the early safe-haven demand although gains were later capped as advances in T-notes stalled around the 130.00 level 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 7.0217 vs. Exp. 7.0209 (Prev. 7.0118)

People's Daily commentary stated the Hong Kong Human Rights and Democracy Act is a piece of wastepaper that interferes in China's internal affairs, while China Global Times tweeted that the US Senate's move on Hong Kong bill will hurt US investments in Hong Kong and may lead to retaliation citing an expert. Elsewhere, CNBC's Yoon tweeted that China will double down on attacks of US Congress after the House passed legislation supporting Hong Kong protesters, while she suggested both China and the US will not want to link the Hong Kong bill to current trade talks and also tweeted the Chinese feel the US is the one that needs to make the next move with tariff rollbacks to show sincerity, make deal “balanced” and give Beijing face. (People’s Daily/Twitter)

Chinese Premier Li said China's economy maintained stable performance this year and that China will keep macro policies stable, while it needs to use all possible means to lower real interest rates. Premier Li added China will stick to its reform agenda and that both foreign and domestic companies will be treated as equals regardless of ownership structure. (Newswires)

US

OECD keeps 2019 growth forecast at 2.9% and downgrades 2020 to 2.9% (Prev. 3.0%); US: 2019 2.3% (Prev. 2.4%), 2020 2.0% (Prev. 2.0%); China: 2019 6.2% (Prev. 6.1%), 2020 5.7% (Prev. 5.7%). (Newswires)

UK/EU

UK election Savanta/ComRes poll showed Conservatives 42% (+1), Labour 31% (-2), Lib Dems 15% (+1), Brexit Party 7% (Unch.) with the survey conducted November 18th-19th. (Telegraph) Europe Elects UK election seat projection: Conservatives at 354 seats (+56), Labour at 194 seats (-48), Lib Dems at 37 seats (+17). (Twitter)

FT Chief Political Correspondent Pickard tweeted that Labour leader Corbyn will vow to spend GBP 75bln on the biggest social housebuilding programme since the 1960s with a target of delivering 150K new government-supported homes a year by end of the next parliament. (Twitter)

German exports to the US rise by 7.6% Y/Y in Q3, despite trade tensions, says Stats Office Data; exports to France up 3.1% Y/Y, exports to China almost stagnate. (Newswire)

ECB's Mersch says it is about time for a single European banking market and some argue the ECB should look much closer to home for unwarranted obstacles to consolidation, would not exclude to revisit our assessment criteria. (Newswires) 

EQUITIES

Major European bourses (Euro Stoxx 50 -0.7%) are lower across the board but off worst levels, as hopes for a prompt US/China phase 1 trade accord fade on a series of negative developments. However, global equities were lifted off overnight lows on more upbeat comments from Chinese Vice Premier Liu, who said he is cautiously optimistic about agreeing a Phase One deal with US and remains confident but confused about US demands, whilst the WSJ report on China inviting US negotiators for a meeting also aided sentiment. Sectors are mostly in the red, barring Telecoms (-0.1%), with the more defensive Utilities (+0.2%) and Consumer Staples (-0.2%) holding up slightly better. In terms of notable movers; Tobacco names Imperial Brands (+0.8%) and British American Tobacco (+3.0%) received a boost from the news that US regulators have dropped a plan to sharply reduce nicotine content in cigarettes, with the former affected by ex-divs. Topping the Stoxx 600 chart is Centrica (+8.2%), who maintained its FY outlook, which some desks noted is a positive turn around after a series of downgrades to its outlook. Conversely, the notable Stoxx 600 loser is Royal Mail (-16.2%), who warned that revenue and cost headwinds could possibly result in a break-even or loss-making position for UK business in 2020-21 whilst warnings that its transformation plan to expand its parcels business internationally was behind schedule. Another laggard is ThyssenKrupp (-10.3%), sinking post-earnings on the news that the Co. will not achieve its medium-term targets set for 2020/21, with a weak economy weighing on margins, thus its peers Salzgitter (-1.4%) and ArcelorMittal (-2.2%) are lower in sympathy. Elsewhere, Fiat Chrysler (-1.8%) is under pressure after General Motors yesterday filed a racketeering lawsuit against Fiat Chrysler and three former executives, asserting that it bribed UAW officials to get more favourable contract terms. A Fiat Chrysler spokesperson said that the Co. believes GM is trying to disrupt its merger with PSA (-0.6%), who opened lower in sympathy but have since come off worst levels. Separately, LVMH (-1.1%) upped its offer for Tiffany & Co. to USD 130/shr the previous USD 120/shr offer, prompting Tiffany to open its books and thus upping the chances of a deal, according to sources. Finally, Sanofi (+1.6%) sharply reversed early losses on the news that the Co. is mulling options for its USD 30bln consumer health unit.

GEOPOLITICS

US Defence Secretary Esper said US does not regret taking high road on halting joint drills, while he added that North Korea's response was not positive and that he hasn't heard of reports to withdraw troops from South Korea. (Newswires)

FX

DXY, Yuan - The broad Dollar and Index have drifted off overnight highs in early EU trade in wake of upbeat comments from China’s MOFCOM, who reaffirmed determination to reach a Phase One deal whilst dismissing rumours of disagreements in discussions. This follow comments from Chinese Vice Premier overnight who expressed cautious optimism regarding a deal. However, markets are gathering focus around the Hong Kong Human Rights bill, which was almost unanimously passed by the House overnight, with sources stating that US President Trump plans to sign the bill, which could be on his desk as soon as today. The bill could potentially imperil the trade deal between the two nations and is facing fierce backlash from Chinese officials. DXY remains below 98.00 (having shown little reaction to the FOMC Minutes) and has dipped under its 21 DMA and WMAs both coinciding around 97.86-87 to a session low of 97.80. The CNH meanwhile remains little changed on the day, albeit choppy as it balances trade optimism with potential ramifications from the HK bill. USD/CNH trades near the bottom of its current 7.0350-0530 range having earlier dipped below its 100 DMA (7.0428). CNH then saw a mild bout of strength amid sources reports noting that China last week invited US negotiators for further talks.

AUD, NZD, JPY - All modestly firmer and moving in tandem to the weakening USD as conflicting trade sentiment provide little to move on, although late source reports on China inviting US negotiators underpinned the antipodeans and influence mild outflow in the JPY. AUD climbed off overnight lows (0.6785) to reclaim 0.6800+ status ahead of its 50 DMA at 0.6812 (with AUD 1bln expiring at strikes 0.6800-10) whilst its Kiwi counterpart remains above 0.6400 (0.6424 current intraday high) having earlier tested the figure to the downside. Similarly, safe-havens remain firmer; USD/JPY trades just above 108.50 (current intraday range 108.30-66) looking ahead to a barrage of option expiries at 108.25-35 (1.7bln), 108.40-50 (2.7bln) abd 108.65-75 (1.3bln), whilst technicians will be eyeing resistance and support 108.74 (21 DMA) and 108.27 (50 DMA) respectively.

EUR, GBP - Once again, Sterling and the Single currency move in lockstep to the Dollar with little on the domestic front to spark individual movements ahead of the Labour manifesto release later today. Cable took out touted offers at 1.2945 ahead of more at 1.2950 with around 1bln in options expiring at 1.2955-65 and a further 1.8bln around 1.2990-1.300. Meanwhile, EUR/USD eclipsed its 100 DMA at 1.1087-88 in early trade with the next level to the upside its 21 WMA at 1.1094. Large options expiries for the pair reside at 1.1090 (1.4bln) and 1.1100-10 (1bln) for today’s NY cut, with little fireworks expected from the ECB Minutes.

Singificant FX Option Expiries, NY Cut

- EUR/USD: 1.1020-25 (1BLN), 1.1035-40 (880M), 1.1050 (885M), 1.1065-75 (400M), 1.1090 (1.4BLN), 1.1100-10 (1BLN), 1.1125 (500M)

- USD/CHF: 0.9865 (760M), 0.9950 (780M)

- GBP/USD: 1.2935 (200M), 1.2945-50 (385M), 1.2955-65 (1BLN) 1.2990-1.3000 (1.8BLN)

- NZD/USD: 0.6360 (430M), 0.6400 (825M), 0.6480 (301M) - AUD/USD: 0.6800-10 (1BLN), 0.6850 (1.9BLN), 0.6865 (860M), 0.6870-75 (550M) - USD/JPY: 108.00 (850M), 108.15-20 (722M), 108.25-35 (1.7BLN), 108.40-50(2.7BLN), 108.65-75 (1.3BLN), 109.25 (400M).

FIXED INCOME

The debt complex has taken a slight downturn following a relatively unchanged start to the session, on the latest updates to the US-China trade saga; in which, reports indicate that last week China invited US trade negotiators to further discussions. Spurring some downside across both core and peripheral bonds, including BTPs which have been the marked outperformer thus far; returning to the core, Bunds have now given up the 171.0 mark to the downside with a low of 170.75 printed. Technically, there is no support until 170.50 and 26. Other core bonds are similarly subdued, with UK asset watchers awaiting today’s Labour party manifesto and stateside the curve is little changed at present, ahead of Fed speak via two 2020 voters. Finally, returning to the aforementioned BTPs which remain in positive territory with some flagging supply from Spain and France, with Spain’s 5-year seeing the highest demand and record, providing support to Italian debt.

COMMODITIES                                      

The crude complex is modestly lower on Thursday morning, reflective of the markets cautious tone following a litany of mixed US/China trade updates, although in the context of yesterday’s post bullish EIA Inventory data upside the moves are relatively small. Front month WTI and Brent contracts are subdued under 57/bbl and modestly above USD 62/bbl, some way off yesterday’s USD 57.40 and USD 62.80/bbl highs. In terms of crude specific news flow; the Norwegian Q4 oil investment survey revealed that 2019’s figure was revised slightly higher NOK 183bln, while the 2020 figure came in at NOK 182.7bln. Although lower than their expectations, Nordea notes that “the survey did not yet cover some big field developments such as Balder X which we assumed would be included”. In terms of metals, gold was consolidating between the USD 1470-1475/oz levels but saw some mild downside in recent trade on the WSJ source article. Market caution is, however, exerting downward pressure on Copper, which is heading towards weekly lows around USD 2.614/lbs after hitting weekly highs yesterday at USD 2.666/lbs.

OPEC+ is likely to extend its existing production cut agreement until June 2020; so far there are no plans for deeper cuts in December, according to sources. (Newswires)