• European bourses are firmer this morning in tentative trade ahead of the last full US day for the week
• Top trade ministers from US, Mexico and Canada will sit down in Washington today for talks on USMCA
• Little movement in either the FX or Fixed complexes at present; DXY is slightly firmer
• Looking ahead, highlights include US Durables, GDP 2nd Estimate, Jobless Claims, Personal Income, Consumption, Core PCE Price Index, DoEs, Japanese Retail Sales, Fed’s Beige Book, YouGov MRP Model, Day 1 of OPEC's Economic Commission Board Meeting, supply from the US

ASIA-PAC

Asian equity markets traded broadly firmer after Wall Street extended on record levels once again, but with gains capped given the lack of material breakthrough from the recent slew of optimistic US-China trade rhetoric and following a further slump in Chinese Industrial Profits. ASX 200 (+0.9%) and Nikkei 225 (+0.3%) were positive with notable strength in Australia’s telecoms sector as Telstra was boosted in anticipation of a stronger performance in H2 and with gold miners underpinned after the precious metal found relief from support at USD 1450/oz, while Tokyo sentiment rode on the recent upward trajectory in USD/JPY and with Toshiba lifted by prospects of a sooner return to the main market following reports the Tokyo Stock Exchange will ease requirements to fast-track promotion to the main board as soon as next year. Hang Seng (+0.2%) and Shanghai Comp. (-0.1%) were somewhat indecisive with Hong Kong kept afloat by hopes protests were waning and that the university siege may have drawn to an end, although the mainland was choppy due to continued PBoC liquidity inaction and after Industrial Profits further deteriorated with its largest decline since 2011. Finally, 10yr JGBs ignored the mostly positive tone in stocks and extended on the prior day’s post-40yr auction rebound to briefly test resistance at the 153.50 level, with prices also supported by the BoJ’s presence in the market today with the central bank’s Rinban operations heavily concentrated on 5yr-10yr maturities.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set CNY mid-point at 7.0349 vs. Exp. 7.0344 (Prev. 7.0344)

Chinese Industrial Profits (Oct) Y/Y -9.9% (Prev. -5.3%); largest decline since 2011. (Newswires)

US President Trump says he is holding up a deal with China and that it has got to be good. (Newswires)

US

Top trade ministers from US, Mexico and Canada will sit down in Washington today for talks on USMCA. In related news, Mexican trade official said he was told by US House Speaker Pelosi that she should have a completed USMCA deal from the USTR by month-end, while Mexican President AMLO sent a letter to Pelosi yesterday reassuring her about the USMCA deal. (Politico/Fox)

UK/EU

UK Opposition Labour Party Leader Corbyn says they have obtained 451 pages of Government documents which, in his view, prove the NHS is 'up for sale' in UK-US trade talks., Mail's Maidment. (Twitter)

German Import Prices MM* (Oct) -0.1% vs. Exp. -0.2% (Prev. 0.6%); YY* (Oct) -3.5% vs. Exp. -3.6% (Prev. -2.5%)

EQUITIES

Major European bourses (Euro Stoxx 50 +0.2%) are higher in quiet but choppy trade, as global equities continue to build on recent momentum amid elevated trade hopes since the latest US President Trump comments that trade talks are in the “final throes”. Meanwhile, month-end factors continue to distort price-action. Sectors are in the green across the board, with outperformance seen in Materials (+0.3%) and Consumer Discretionary (+0.3%). In terms of individual movers; British American Tobacco (+2.1%) nursed losses seen at the open after the Co. noted that it is on track for a strong year despite a slowdown in the US vaping market. Elsewhere today’s notable gainers include Aroundtown Properties (+2.5%) whose shares advanced after the Co. posted strong gains in both revenue and EBITDA. In terms of the laggards, Knorr Bremse (-3.5%) is under pressure after the Co. posted earnings that missed on top line expectations. Meanwhile, Rolls Royce (-1.5%) and Compass Group (-2.5%) are both lower following downgrades at Morgan Stanley and SocGen respectively. Taking a broader view, Barclays continue to see moderate upside for European equity markets in 2020, forecasting a further 9% of upside for the Euro Stoxx 50 by next year’s end. Although “the tactical risk-reward has become less appealing following the latest rally, as macro recovery and reducing policy uncertainty appear to be widely expected… light positioning, the relative expensiveness of ‘safe assets’, the positive delta in activity & earnings and the easier financial conditions argue for an extension of the equity bull market into 2020” the bank concludes.

Deere & Co (DE) Q3 19 (USD): EPS 2.14 (exp. 2.14), Revenue 8.7bln (exp. 8.55bln). Co’s performance reflects continuing agricultural sector uncertainty Lower by circa 1.5% in pre-market trade

GEOPOLITICS

Hong Kong police are reportedly prepared to use a court order to enter a besieged university if bosses do not help them get into the campus, according to SCMP citing sources. (SCMP)

South Korea is poised to regain control of airway from Japan via UN deal, according to sources, an agreement in principle has been reached. (Newswires)

FX

USD - The Dollar remains on a firm footing ahead of a packed US agenda with data front loaded and compressed due to Thursday’s Thanksgiving holiday. The Greenback is up vs most G10 rivals, albeit rangebound as the DXY meanders between 98.407-259 parameters, and just shy of resistance at 98.450. Back to today’s raft of releases, Q3 GDP and October core PCE are likely to headline, but durable goods may steal the limelight given the erratic nature of that series.

CAD/NZD/SEK/NOK - The major outliers and ‘outperformers’, as the Loonie maintains a degree of bullish technical momentum after Usd/Cad closed below the 200 DMA on Tuesday (1.3278) and the Kiwi benefits from favourable cross-winds with Aud/Nzd pivoting 1.0550 and Nzd/Usd holding relatively firmly above 0.6400 having largely shrugged off or taken in stride comments from RBNZ Governor Orr, the latest FSR and NZ trade data. Similarly, the Scandi Crowns have not really sustained serious or lasting damage from a dip in Swedish household lending, flip from trade surplus to a deficit twice the size or rise in the unofficial Norwegian survey-based jobless rate, as Eur/Sek tests support at 10.5500 and Eur/Nok straddles 10.1000.

GBP/AUD/JPY/CHF/EUR - The Pound has recovered pretty well if not impressively from early weakness and a breach of yesterday’s low (circa 1.2835) that seemed partly Eur/Gbp related amidst reports of RHS demand for the end of November. Indeed, Cable has bounced ahead of last Friday’s base (around 1.2822) towards 1.2885 and eclipsing the 21 DMA (1.2881) and the cross is back near 0.8650 having climbed to within a few pips of its 21 DMA (0.8587), as Eur/Usd hovers just above 1.1000. Note, hefty options expire close by (2 bn from 1.0995-1.1000 and 1.1 bn between 1.1035-40), while a key Fib (1.0994) is also keeping the single currency in narrow confines. Elsewhere, broadly risk-on sentiment amidst latest positive US-China trade chat (phase 1 deal in final throes per President Trump) is capping the Yen and Franc just under 109.00 and over parity respectively, with expiry interest also in proximity for Usd/Jpy (3.3 bn from 108.95-109.00 and 1 bn at 109.15). Back down under, a couple of dovish RBA calls vs 1 less dovish has weighed on Aud/Usd and protected a serious approach on 0.6800, but the pair is holding above 1bn expiries between 0.6760-75.

Large FX Expiries, NY Cut:

- EUR/USD: 1.0995-1.1000 (2BLN), 1.1010 (320M), 1.1035-40 (1.1BLN), 1.1050 (684M), 1.1100 (500M)

- GBP/USD: 1.2700 (1.1BLN), 1.2800 (335M), 1.2845-60 (1.1BLN), 1.2900 (315M)

- AUD/USD: 0.6760-75 (1BLN), 0.6830-40 (750M), 0.6850-60 (1BLN)

- USD/JPY: 108.45-55 (1.9BLN), 108.65-75 (1.7BLN), 108.95-109.00 (3.3BLN), 109.15 (1BLN), 109.50 (800M)

Citi no longer expects RBA to deploy QE next year and noted recent comments from RBA Governor Lowe which suggests 0.25% is the effective lower bound for rates. Conversely, Westpac forecasts RBA to lower rates to 0.25% by June 2020 and start QE in H2 2020, while RBC sees the RBA cutting rates to 0.25% in 2021 and to begin QE that year also. (Newswires)

RBNZ Financial Stability Report noted that New Zealand’s financial system is resilient to a range of economic risks although global financial stability risks and domestic debt vulnerabilities remain, while it added that prolonged low long-term interest rates could generate excess leverage and overheated asset prices. Furthermore, the RBNZ stated negative OCR is not currently a central scenario in its published forecasts and it is considering potential impacts of unconventional monetary policy tools on bank profitability. (Newswires)

RBNZ Governor Orr said low rates are needed to achieve targets but added that persistently lower global rates bring about challenges, while he also stated they were not particularly close to loosening LVR rules and need to get more confident around bank lending behaviour before considering loosening LVRs. (Newswires)

New Zealand Trade Balance (Oct) -1013.0M vs. Exp. -1621.0M (Prev. -1242.0M) New Zealand Exports (Oct) 5.03B vs. Exp. 5.00B (Prev. 4.47B) New Zealand Imports (Oct) 6.05B vs. Exp. 6.00B (Prev. 5.71B)

FIXED INCOME

Not much further price action of range extension in core bonds, but Gilts have recently slipped to a fresh Liffe intraday trough (132.41) after yesterday’s upturn on heightened hung parliament risks/hedging in contrast to soft, though steadier Bunds and US Treasuries following a solid German 5 year auction and an extra busy pm session across the Atlantic (including multiple data points and the Fed’s latest Beige Book) given tomorrow’s US holiday and a final session of the week/month that is also likely to be low key due to those still celebrating or suffering the effects of Thanksgiving excesses. Note also, the last of this week’s T-note auctions awaits in the form of Usd32 bn 7 year paper and normally receives decent sponsorship from foreign buyers.

COMMODITIES                                      

The crude complex is slightly firmer, with Brent Feb’ 20 futures making fresh weekly highs above yesterday’s high (around USD 64.30/bbl) , as the market rebounds from overnight post bearish API inventory data lows as it opts to instead take its cue from better risk appetite spurred by trade hopes. Looking ahead, attention will be on EIA inventory data, where weekly crude stocks are seen drawing by 347k barrels, although if EIA crude stocks follow API’s lead and print a surprise build, this would mark a fifth straight week of builds. It is also the first day of the OPEC Economic Commission Board Meeting, which ends tomorrow, after which the board may provide policy recommendations to OPEC - although the recommendations are non-binding. Elsewhere, eyes turn to Libya following reports of military action around the El-Feel oilfield (circa. 100k BPD capacity), although no damage or production halts have been reported, the organisation stated that an escalation in violence could prompt evacuations and production shut-down. Looking at metals, gold prices continue to be subdued from lack of haven demand, with prices having briefly slipped below the USD 1460/oz mark. Meanwhile, copper prices continue to gain traction, as positive trade feels spur macro risk appetite, although prices did take a fleeting hit during overnight trade in the wake of abysmal IP data out of China.

US API Weekly Crude Stocks (26 Nov) +3.6mln vs. Exp. -0.4mln (Prev. +6.0mln). (Newswires)

Russian Energy Minister says adjusting oil output cut quotas is to be discussed at the next OPEC+ meeting on December 6th, according to TASS. (Newswires)

Libya's NOC notes that any escalation in violence may lead to staff being evacuated and production being shut down, following reports of military activity around El-Feel oil field. (Newswires)