• APAC stocks traded with little in the way of conviction and within tight ranges following a downbeat Wall Street handover
• Eli Lilly's (LLY) trial of its coronavirus antibody treatment has been paused over safety concerns
• Senate Majority Leader McConnell said he will table a stimulus proposal for USD 500bln next week; House Speaker Pelosi reportedly said she has no intention to meet McConnell in the middle
• BoK and MAS left policy settings unchanged as expected
• Looking ahead, highlights include ECB's Lagarde, Lane & Mersch, Fed's Clarida & Kaplan, BoE's Haldane, IEA Oil Market Report, Amazon Prime Day, supply from UK and Germany
• Earnings: Wells Fargo, Goldman Sachs, Bank of America, United Airlines, ASML

CORONAVIRUS UPDATE

Eli Lilly's (LLY) trial of its coronavirus antibody treatment has been paused over safety concerns. (Twitter)

US COVID-19 (D/D): Cases +46,614 (prev. +46,069); death toll +338 (prev. +494). (Newswires)

UK PM Johnson will consider a “circuit-breaker” lockdown if the recently announced tiering system fails. One senior source said the chances of a circuit breaker were “at least 80 per cent”. Government sources said the PM could order a two-week closure of pubs, restaurants and some other businesses if recent measures do not reverse the spread of the virus. (Telegraph) Opposition leader Starmer has called on PM Johnson to impose a half-term “circuit breaker”. (Times) London Mayor Khan said it is "inevitable" that London will pass a "trigger point" to enter tougher coronavirus restrictions in the "next few days”. (Sky News)

France reported 12,993 (prev. +8,505) new COVID-19 cases. Germany reported 5,132 (Prev. 4,122) new COVID-19 cases and 40 (Prev. 13) additional deaths. Dutch PM Rutte announced new COVID-19 restrictions - Netherlands will go into "partial lockdown" for an initial four weeks, and added if measures are ineffective, total lockdown may follow. (Newswires)

ASIA

Asia-Pac equities traded with no clear conviction following a downbeat handover from Wall Street whereby the major indices snapped a four-day winning streak as hopes for a near-term stimulus bill fade with Democrats and Republicans still at loggerheads, whilst Eli Lilly announced that it will pause its COVID-19 antibody treatment over safety concerns, less than a day after Johnson & Johnson announced the halt of its vaccine study. ASX 200 (-0.3%) was contained within a tight parameter amid the heightening tensions with China and ahead of Aussie jobs data and a speech by RBA Governor Lowe tomorrow. Nikkei 225 (unch) and KOSPI (-0.8%) both opened narrowly lower but thereafter diverged, with the latter extending losses after the BoK stood pat on rates, whilst Apple suppliers saw mixed trade following the unveiling of the iPhone 12, with Taiyo Yuden and Murata Manufacturing posting losses, whilst South Korea’s LG Display jumped over 2.5% as Apple extended the range of iPhones to include a new “mini” model – Taiwanese chip makers were also mixed. Elsewhere, Shanghai Comp (-0.8%) held onto losses amid another net daily drain by the PBoC as Chinese markets awaited President Xi’s speech which provided little by way of fresh news or surprises, whilst Hang Seng (-0.2%) opened with modest gains as it played catchup from yesterday’s storm-cancelled trade but immediately erased upside as China’s Evergrande shares slumped over 15% after announcing a share placement as a discount to its last closing price, and HSBC fell around 3% after the Co. was left off the list of banks arranging China’s sovereign debt sale. 10yr JGBs saw modest gains amid the cautious risk tone in the APAC region.

Reports suggested Chinese platforms abruptly cut the coverage of the Apple (AAPL) event. (Twitter)

Chinese President Xi says China will protect property rights and intellectual property rights of entrepreneurs. (Newswires)

PBoC sets USD/CNY midpoint at 6.7473 vs. Exp. 6.7439 (Prev. 6.7296) (Newswires)

PBoC skipped open market operations for a net daily drain of CNY 50bln.

BoK left its Base Rate unchanged at 0.50% as expected in a unanimous decision and reiterated its accommodative policy stance. BoK said South Korean inflation is likely to remain low this year, whilst economic outlook is in line with prior projections. Governor Lee stated that the BoK may ramp up treasury bond purchases if needed but they have no plans to expand T-bond purchases for now. Governor Lee also stated that the BoK will act to stabilise FX markets ewswires)

Monetary Authority of Singapore (MAS) left its policy settings unchanged as expected with zero currency appreciation maintained; Singapore economy is forecast to contract 5-7% in 2020. (Newswires)

UK/EU

UK government is reportedly looking to stop hostile state takeovers of its key assets. (Newswires)

EU leaders are to say no breakthrough has been found in Brexit talks and are poised to vow to step up preparations for a no-deal Brexit, according to a draft document. (Newswires)

FX

In FX, DXY was choppy within a tight band amidst a lack of catalysts but with State-side stimulus talks still at a deadlock and the chances of a bill before elections diminishing by the day. DXY saw some modest softening in conjunction with the Japanese and South Korea cash opens, wherein the index dipped below the 93.500 psychological mark and tested its 200 HMA (93.487) ahead of the 50 DMA (93.272), thereafter, the index pared some losses in a move which coincided with losses in stock markets at the time, with upside levels including the 21 DMA at 93.655. EUR/USD and GBP/USD traded in tandem with the Buck as the former encountered a barrier at 1.1750 where EUR 1.2bln in OpEx resides, whilst Cable traded on either side of its 200 WMA (1.2939) heading into today’s call between UK PM Johnson, EU Commission President von der Leyen and Council President Michel in the run up to the EU summit tomorrow. Elsewhere USD/JPY was somewhat pressured for a large part of the session due to the overall cautious tone in the market, albeit still within recent ranges, with the next downside level the 105.00 psychological mark. Should this break, Friday’s 104.92 low could prove to be support – while option expiries see ~USD 800mln at strike 105.20 followed by ~USD 1bln between 105.00-15. AUD/NZD and NZD/USD also saw choppy trade, with AUD/USD finding overnight support at 0.7150 ahead of tomorrow’s jobs and Lowe double-risk event, whilst the Kiwi found no impetus from remarks by RBNZ Assistant Governor who stating that a lower exchange rate could provide further stimulus.

RBNZ Assistant Governor Hawkesby said some economic data points are surprising to the upside, but the economy will require continued policy support. Lower exchange rate could provide further stimulus, lower bound on interest rate likely to change over time and will also depend on other policy tools being used. (Newswires)

COMMODITIES

WTI and Brent front month futures drifted lower in APAC trade amid the overall sentiment around the market, after the complex pared some of this week’s losses in the prior session. Pertinent overnight news-flow had been light for the crude complex, but traders will be eyeing the IEA oil report for their take on the global oil demand outlook after OPEC and EIA downgraded their respective forecasts this month. Elsewhere, spot gold was choppy within a tight range due to Dollar influence, but the yellow metal remained below USD 1900/oz. Spot silver traded in a similar fashion and briefly dipped below USD 24/oz. Copper prices were also indecisive as the red metal tracked the choppiness in stocks and the USD.

BSEE said 44% of offshore Gulf of Mexico crude oil production has been shut in (prev. 69%); natural gas 30% (prev. 47%) (Newswires) 

US total shale regions oil production for November is seen down about 123k BPD at 7.692mln BPD (vs 88k BPD fall in October), according to EIA. (Newswires)

Russian President Putin and Saudi Crown Prince Mohammed Bin Salman have urged OPEC+ producers to stick to the production cut agreement. (Newswires)

GEOPOLITICAL 

White House reportedly asked Congress to approve sale of MQ9 drones and a defensive missile system to Taiwan. (Newswires)

Norway has blamed Russia for a cyber-attack on the email system in the Norwegian parliament in August. (BBC)

US

The Treasury curve bull-flattened on Tuesday as stocks pared their Monday gains and bonds reopened after the long weekend in the US. By settlement, 2s -1.2bps at 14.1bps, 10s -4.6bps at 72.9bps, and 30s -5.7bps at 151.7bps; futures volumes were average. After the standalone, tech-led outperformance of stocks on Monday, and the cyclical underperformance extending into Tuesday, the bid came naturally for rates as cash bonds reopened. Additionally, there has likely been some additional pent-up order flow as China returned from its Golden Week holiday. Meanwhile, the US CPI data (+0.2% M/M, Core +0.2% M/M; both in line with consensus) today was by no means ecstatic, although the left-tail risk was also cut off, perhaps causing investors to hold their horses on the reflationary Biden trade that has characterized markets for the past few weeks, in addition to the more likely natural near-term limits that trade faces, given the perceived stretched positioning in curve steepeners. Meanwhile, Fed’s Clarida is due to speak on Wednesday, which could be interesting if he chimes in on the pronounced curve steepening seen in the last week, especially after some of the more fringe Fed members have alluded to changes in the bank’s asset purchases. Otherwise, outside of earnings, Wednesday is set to be a quiet day on the calendar front, ahead of Thursday’s retail sales and the Treasury’s 20-year bond refunding announcement. T-note Futures (Z0) settled 9+ ticks higher at 139-06+

Senate Majority Leader McConnell said they will try one more time pre-election to try and strike a stimulus deal; will table a deal for USD 500bln next week. House Speaker Pelosi reportedly reiterated she will not accept latest GOP stimulus offer and has no intention to meet McConnell in the middle. (Newswires) 

Fed Daly (non-voter) says US economy and Fed policy is in a good position and well positioned to weather the COVID-19 storm, it remains to be seen if more Fed action will be needed, will watch the data. (Newswires)

Fed Discount Rate Minutes noted all 12 regional Fed banks supported maintaining the discount rate. (Newswires)