• Asia-Pac markets were quiet, owing to the closures in key bourses across the region, while trade in Japan was mired by system issues for the Tokyo Stock Exchange
• However, the mood was still positive as US equity futures extended on recent gains
• House Democrats were forced to postpone the vote on their USD 2.2tln bill to Thursday to allow more time for talks with the White House
• US Treasury Secretary Mnuchin's COVID proposal to House Speaker Pelosi on Wednesday was valued at USD 1.62tln
• Moderna stated its vaccine will not be ready before the US election and will not be ready to seek EUA from the FDA before November 25th at the earliest
• In FX, the DXY remained subdued below 94.00, EUR/USD met resistance at 1.1750 and GBP/USD extended gains above 1.29
• Looking ahead highlights include, Swiss CPI, EZ, UK & US Mfg PMI (Final), US PCE Price Index, Weekly Jobs & ISM Mfg PMI. Special European Council Meeting, Riksbank Mins, Fed's Williams & Bowman, ECB's Lane & de Guindos, BoE's Haldane, supply from Spain, France & UK

CORONAVIRUS UPDATE

US COVID cases +38,764 (prev. +33,891) and deaths +774 (prev. +270), while a major newswire stated that cases increased by at least 40,561 to a total of 7.26mln on Wednesday and deaths rose by at least 1000 to a total of 207.1k. (Newswires)

UK PM Johnson said UK is on target to conduct 500k tests per day by the end of October and that if evidence requires, they will not hesitate to take further measures. PM Johnson added that we are not going back to the situation in March at the moment and he doesn't want to return to a national lockdown. (Newswires)

England Chief Medical Officer Whitty said the pattern we are seeing is different to the first wave and that at this moment there is a heavy concentration in particular areas, although there is a general increase across the whole of the UK, while there were also comments from the UK Chief Scientific Adviser Vallance that we do not have this under control at the moment. (Newswires)

US FDA reportedly widened inquiry into AstraZeneca (AZN LN) vaccine candidate and wants raw data from clinical trials of similar vaccines produced by the same scientists, according to sources. Furthermore, it was also reported that AstraZeneca and Oxford University COVID vaccine is said to get real time EU regulatory review, while reports added that EU rolling review could speed up the eventual decision on the vaccine. (Newswires)

Moderna (MRNA) CEO stated its vaccine will not be ready before the US election and that they will not be ready to seek EUA from the FDA before November 25th at the earliest. Furthermore, they do not expect to have full approval to distribute vaccine to all sections of population until next spring. (FT)

ASIA

Asia-Pac markets were quiet, owing to the closures in key bourses across the region with China, Hong Kong, Taiwan and South Korea all observing holidays, while trade in Japan was also mired by system issues for the Tokyo Stock Exchange which forced JPX to announce a halt of trade for the entire day. The lack of participants resulted in an uneventful overnight session; however, the mood was still positive as US equity futures extended on gains which had been attributed to month-end flows, strong data and increased stimulus hopes. This was after attempts by US Treasury Secretary Mnuchin and House Speaker Pelosi to reach an agreement on COVID relief and although progress was said to have been made, an actual deal remained elusive and House Democrats were forced to postpone the vote on their USD 2.2tln bill to Thursday to allow more time for talks with the White House. ASX 200 (+1.5%) traded with firm gains and surged above the 5,900 level with the index underpinned as miners led the broad strength in all its sectors, while Nikkei 225 remained suspended alongside Tokyo trade but Osaka futures were higher by 0.2% with a mild lift provided by the tailwinds from US and amid reports Japan is to consider further stimulus to address the pandemic. There was also mixed Tankan data which despite mostly missing expectations including on the headline Large Manufacturers Index, it still showed an improvement of the index for the first time in 11 quarters and Large All Industry Capex also topped estimates. Finally, 10yr JGBs futures were steady just above the 152.00 psychological level with price action contained as firmer results in the 10yr JGB auction was nullified by the system issues in Tokyo.

US Treasury is reportedly to issue new guidelines for possible approval of the TikTok/Oracle (ORCL) deal that could determine the fate of the app, according to FBN citing sources. (Fox Business News)

JPX halted all trade through the entire day for the Tokyo Stock Exchange due to system issued as they could not take orders and were unsure when the system would be restored, while a Tokyo Stock Exchange spokesman later stated that the outage happened due to a hardware breakdown. (Newswires)

Japan is reportedly considering additional stimulus to address the coronavirus impact which could be partially funded with a 3rd extra budget. (Nikkei)

Japanese Tankan Large Manufacturing Index (Q3) -27 vs. Exp. -23 (Prev. -34) Japanese Tankan Large Manufacturing Outlook (Q3) -17 vs. Exp. -17 (Prev. -27) Japanese Tankan Large Non-Manufacturing Index (Q3) -12 vs. Exp. -9 (Prev. -17) Japanese Tankan Large Non-Manufacturing Outlook (Q3) -11 vs. Exp. -9.0 (Prev. -14.0) Japanese Tankan Large All Industry Capex Est (Q3) 1.4% vs. Exp. 1.3% (Prev. 3.2%)

UK/EU

UK reportedly banned Chinese post-graduates from security-linked studies. (The Times)

FX

In FX markets, the DXY is subdued after falling back below the 94.00 level with the currency pressured during US hours amid the positive risk tone which had been spurred by strong Chicago PMI data and better than expected ADP Employment which comes ahead of Friday’s NFP. The softness in the greenback benefits it major counterparts with EUR/USD gradually making its way towards the prior day’s resistance of 1.1750 and with GBP/USD extending on gains above 1.2900. Elsewhere, USD/JPY is lacklustre due to the weakness in USD although JPY crosses are underpinned by haven outflows, while antipodeans marginally benefit from their high beta statuses and alongside CNH strength in which USD/CNH broke below support at 6.7800 with price action exacerbated by thinner liquidity owing to the closures in Mainland China and Hong Kong.

US President Trump’s administration plans to open investigation of Vietnam's currency practices. (Newswires)

COMMODITIES                                                          

The crude complex held on to the prior day’s gains which had underpinned WTI to above the USD 40/bbl level, while a surprise draw in EIA crude inventories and escalation of strike action for Norway oil workers were also conducive to the upside in oil prices. Elsewhere, gold also traded higher amid a softer USD to approach back towards the psychological USD 1900/oz level and copper remained near this week’s highs but with further advances limited by the mass market closures in Asia.

Marathon Petroleum (MPC) will cut at least 6% of jobs in its core refining business this week, according to sources. (Newswires)

GEOPOLITICAL

Russian President Putin and French President Macron held a joint-call in which they urged an immediate ceasefire in Nagorno-Karabakh and discussed future steps Minsk Group could take to help de-escalate the conflict, according to the Kremlin. (Newswires)

US

The TPLEX bear-steepened as reflation-style trades were at play amid renewed hopes of COVID stimulus, positive econ data, and competing month/quarter-end flows. By settlement, 2s unch. at 12.5bps, 10s +3.2bps at 67.7bps, and 30s +4.2bps at 144.8bps; futures volumes picked up in comparison to some recent dead session. The selling made headway after stocks reversed overnight losses through into the US session. Adding fuel to the flame was the combo of a better than expected ADP employment print, boding well for Friday’s NFP, as well as a multi-year high in the Chicago PMI. Furthermore, the risk tone emboldened further, seeing yields rise too, as the market raised its hopes of Congress coming together on stimulus bill as Mnuchin and Pelosi met. However, this was dampened after no deal came to fruition, and the house are to vote on their bill tonight, suggesting the deal is dead, but talks are ongoing. One desk noted the broad range of sellers with CTAs selling in the TYZ and USZ, hedge funds selling from the FVZ out to the USZ, in addition to broader real money being big sellers. It also appears that that quarter-end flows, which are seen rotating out of duration fixed income and into stocks overpowered the month-end duration extension, in addition to the positive risk tone bringing in marginal sellers. T-note (Z0) futures settled 8 ticks lower at 139-17.

Fed's Bowman (voter) said recent data suggests US economy is recovering at a rapid pace but unemployment remains quite high and that continued monetary and targeted fiscal support will likely be needed, while she added that the path to recovery will be bumpy and uneven. (Newswires)

Fed's Kaplan (voter, dissenter) said we're going to need to keep rates at zero for probably next 2.5-3 years, while he reiterated call for further fiscal stimulus and noted the US faces downside risks without it. (Newswires)

Fed's Kashkari (voter, dissenter) said the longer the virus goes on, the greater the risk to banks, and that reaching full employment could take several years. (Newswires)

Fed's Bullard (non-voter) said he is more bullish on the economy and states that the current quarter will be a blowout for growth, while he later added that we cannot wait until 2021 to decide on further stimulus. (Newswires)

Fed's Daly (non-voter) said the US economy is not out the woods and needs more fiscal support, while she added the unemployment rate is an overused measure and US is in a very big ditch. (CNBC)

Fed is to extend restrictions on large bank capital distributions through Q4 amid continued economic uncertainty, which prolongs ban on share buybacks and dividend caps for banks with over USD 100bln in assets. (Newswires)

US Senate passed the stopgap bill by 84-10 votes to fund government through to December 11th and avert a shutdown, which was sent to President Trump for signing. (Newswires)

US House delayed a planned vote on the USD 2.2tln coronavirus relief bill to Thursday to provide more time for talks with the White House. (Newswires)

US Treasury Secretary Mnuchin's COVID proposal to House Speaker Pelosi on Wednesday was valued at USD 1.62tln which included more state and local funds, as well as USD 400/week in unemployment benefits. There were also comments from White House Chief of Staff Meadows who confirmed the administration’s proposed package was valued at over USD 1.5tln and suggested that it would be difficult if price tag reached USD 2tln. (Newswires)

US Treasury Secretary Mnuchin said we made a lot of progress but there is still no agreement on stimulus and still more work to do. Mnuchin later stated he will not accept USD 2.2tln coronavirus bill proposed by Democrats and that may speak again with Pelosi but doesn't think progress will be made until possibly Thursday, while he noted that they reached agreement on direct payments. (Newswires)

US Senate Majority Leader McConnell said House Speaker Pelosi's latest COVID aid bill still has poison pills, while he later noted that Republicans and Democrats are far apart on coronavirus relief and the GOP would not come up to USD 2.2trln. (Newswires)

US President Trump signed executive order to expand rare earths mining in US amid threat from China. (Newswires)