• Major APAC indices traded lower across the board after Wall Street suffered another down day
• US Chief of Staff Meadows spoke with Treasury Secretary Mnuchin on COVID-19 relief, said there has been progress but no one is "popping the champagne corks yet"
• EU's Chief Brexit Negotiator Barnier has reportedly given no indication that the bloc is prepared to cede to UK PM Johnson's demands regarding concessions to get a deal, particularly on fishing
• OPEC+ panel made no recommendation on Monday to change prior policy for 2021, Russia seemingly did not submit a compensation plan for its undercompliance
• In FX, DXY held onto yesterday’s losses, USD/JPY drifter higher and Antipodeans lagged
• Looking ahead, highlights include US Building Permits/Housing Starts, Fed’s Williams, Quarles & Evans and supply from Germany
• Earnings include UBS, Bellway, Phillip Morris, P&G, Lockheed Martin, Netflix

CORONAVIRUS UPDATE

US reported 47,035 (prev. +53,157) new COVID-19 cases and 475 (prev. +593) additional deaths. New York reported 9,98 (prev. +1,390), positivity rate 1.21% (prev. 1.08%), hospitalizations 934 (prev. 913), and deaths +14 (prev. +7) (Newswires)

US CDC has issued a new "strong recommendation" for all US airplane and train passengers/employees to wear masks to prevent the spread of COVID-19. (Newswires)

Under UK plans to open international travel, passengers will undergo a one-hour COVID-19 test when leaving Britain, according to the Times. Rapid tests will be introduced from today at Heathrow airport to permit travelers to enter countries where negatives tests are required. (Times)

France reported 13,243 (prev. +29,837) new COVID-19 cases. (Newswires) Italy reported 9,338 (prev. +11,075) new COVID-19 cases and 73 (prev. +69) additional deaths. Germany reported 6,868 (Prev. 4,325) new COVID-19 cases and 47 (Prev. 12) additional deaths. Italian economy minister said government will extend ban on firing workers through the end of the year. Italy government agreed on the Lombardy region request to impose further restrictions. (Newswires) 

Moderna (MRNA) CEO said its COVID-19 vaccine could get authorisation for emergency use in December, contingent on positive interim results in November from the large clinical trials. (WSJ) Note, in an FT article in late September, Moderna CEO said the Co. would not be ready to seek emergency use authorisation from the FDA before November 25 at the earliest, and added that he did not expect to have full approval to distribute the drug to all sections of the population until next spring. (FT)

Pfizer (PFE) said its Phase 2/3 trial of its COVID-19 vaccine has enrolled 39,863 participants and 34,601 have received a second vaccination. (Newswires)

ASIA

Major Asia-Pac indices traded with losses across the board after Wall Street suffered a broad decline following reports which suggested a State-side stimulus deal is not sounding imminent based on comments from the House Speaker and Committee Chairs. US equity futures opened electronic trade in modest positive territory, but have since came off highs and traded sideways throughout the night, with ES, NQ and YM still holding onto some gains heading into the European open. Back to APAC, ASX 200 (-0.6%) was pressured by its mining sector, albeit the index saw some fleeting upside in light of further the dovish RBA rhetoric, this time from Assistant Governor Kent. Nikkei 225 (-0.5%) failed to benefit from the JPY dynamics as the index felt the weight of losses across its industrial sector. KOSPI (-0.3%) conformed to the losses in the region, with Hyundai and its affiliate Kia posting losses between 3-4% after the former warned that Q3 profits will be hit by charges related to engine problems. Meanwhile, SK Hynix traded in the red after the chipmaker confirmed that it is to purchase Intel’s NAND memory business. Elsewhere, the humdrum tone reverberated into China, with Hang Seng (-0.3%) and Shanghai Comp. (-0.1%) modestly softer despite another PBoC liquidity injection and a non-event LPR setting as anticipated.

US Secretary of State Pompeo confirmed sanctions on Chinese entities: "we are sanctioning mainland-China and Hong Kong entities and individuals for conduct related to the sanctioned proliferator the Islamic Republic of Iran Shipping Lines". (Newswires)

PBoC set USD/CNY midpoint at 6.6930 (Prev. 6.7010) (Newswires)

PBoC injected a net CNY 70bln via 7-day reverse repos at a maintained rate of 2.20%.

S&P affirmed Australia at "AAA"; outlook Negative. (Newswires)

Softbank (9984 JT) is said to plan to renew it commitment towards its asset management division with a stock trading strategy that will focus on earnings in Q3. Co. is said to have accumulated USD 20bln in its public stock unit. (Newswires)

CENTRAL BANKS

RBA Assistant Governor Kent said the Board is considering the case for further easing, there is some room to cut the Cash Rate further, one option is to purchase longer-dated bonds - bond purchases would be regular and aimed to bring down yield. Kent also said expansion of balance sheet is adding monetary stimulus, need policy support to be provided for some time given. Kent remarked that the Bank Bill Swap Rate (BBSW) could move into negative territory in the case of further RBA easing. He also reiterated that the central bank will not increase Cash Rate until actual inflation is sustainably in the target range. RBA has not done a formal policy framework review. (RBA/Newswires)

RBA Minutes noted the Board discussed the case for additional monetary easing to support jobs and the overall economy. As in previous meetings, members discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative, and buying government bonds further along the yield curve. While members noted that the Australian dollar exchange rate was broadly consistent with its fundamental determinants, a lower exchange rate would provide more stimulus to the Australian economy in the recovery phase. (RBA)

RBNZ Governor Orr said there is plenty of room left in its QE programme, will update on tools in November. (Newswires)

PBoC Loan Prime Rate 1Y (Oct) 3.85% vs. Exp. 3.85% (Prev. 3.85%). (Newswires) 

PBoC Loan Prime Rate 5Y (Oct) 4.65% vs. Exp. 4.65% (Prev. 4.65%)

China's Securities Journal suggests the PBoC could increase reverse repos. (Newswires)

BoJ sources stated the Bank is to cut the FY economic and price forecasts in the quarterly projections due next week; such a downgrade is unlikely to trigger an immediate shift in policy. Inflation forecast downgrade is largely due to discounts on domestic travel, sources said. (Newswires) Note, the next monetary policy decision will be published on Oct 29th

ECB's Weidmann reiterated large scale borrowing at the EU level is worrying and it should remain as a one-off crisis measure. (Newswires)

Fed's Clarida (voter) said the Fed is looking at the health of the banking industry in an ongoing basis but he has no particular concerns, and added that banks passed the ultimate stress test in March and April and passed with flying colours. Clarida reiterated that additional monetary and fiscal policy support will be needed, and that Fed is committed to using its full range of tools to support the economy (Newswires)

Fed's Bostic (2021 voter) said he is comfortable with current monetary policy, adding it will be some time before the Fed tightens rates or pulls back actions supporting financial functioning. (Newswires)

UK/EU

EU's Chief Brexit Negotiator Barnier has reportedly given no indication that the bloc is prepared to cede to UK PM Johnson's demands regarding concessions to get a deal, particularly on fishing, according to the Times. (Times) UK PM Johnson's office said it noted the EU proposal to genuinely intensify talks and called for movement on the EU side. UK continues to believe there is no basis to continue talks. UK said the talks between Chief Brexit Negotiators Frost and Barnier were constructive. European Commission VP Sefcovic said he had a constructive meeting with UK minister Gove, says advancing well on citizens’ rights (Newswires)

UK Conservatives are reportedly putting together a strategy aimed at countering increasing support for Scottish independence, according to sources. (Newswires)

FX

In FX, DXY held onto a bulk of the prior day’s losses but traded within a narrow overnight band after the index was lifted off Wall Street lows following source reports which poured cold water on hopes of an imminent US stimulus deal. This prompted the index to climb off yesterday’s 92.207 session low and back above its 50 DMA (93.288) but short of the 93.500 mark. As such EUR/USD also saw a tepid APAC session after yesterday’s USD weakness took the pair to a high of 1.1793 which coincides with its 50 DMA. GBP/USD moved in tandem to the Buck on either side of 1.2950 as Sterling remains fixated on Brexit headlines for impetus. USD/JPY moved higher despite a lack of fresh news flow and a mostly softer Dollar, with traction in the pair derived after an upside breach of 105.50 – a level the pair tested but failed to breach several times last week, although some attributed the upside to Gatobi demand. Antipodeans were softer amid central bank speakers, with RBA Assistant Governor Kent’s remarks surrounding the next potential move prompting AUD/USD to dip below 0.7050 – with some pining some pressure on comments that the Bank Bill Swap Rates (BBSW) could move into negative territory in the case of further easing. AUD/USD saw little immediate reaction to the stale RBA minutes as Governor Lowe and Assistant Governor Kent provided timelier updates. Meanwhile the Kiwi was weighed on by RBNZ Governor Orr who suggested there is plenty of room left in the QE programme and the central bank will update participants on tools next month. NZD/USD surrendered further ground below 0.6600 and losses were exacerbated by a breach of its 100 DMA (0.6586). Note, NZD/USD tested its 100 DMA on multiple occasions since September but has yet to close below the line. Finally, CNH saw volatility in light of another firmer Yuan fix by the PBoC which took the USD/CNH rate down to 6.6672, a level unseen since Q1/Q2 2019, meanwhile the currency saw little follow through from the PBoC’s expected hold on 1yr and 5yr Loan Prime Rates.

US and Brazil have signed a new protocol regarding transparency and trade rules. (Newswires)

COMMODITIES

WTI and Brent futures drifted lower overnight amid the fallout from the OPEC JMMC meeting, which made no recommendations to change the output policy for 2021 according to sources, whilst the committee also flagged lockdowns this winter as a downside risk. Interestingly, although the JMMC stressed the importance of compliance, there were reportedly no signs of Russia submitting compensations plans for their excess productions. The press release from the meeting also highlighted the “necessity to be vigilant and proactive”. Nonetheless, WTI and Brent Dec trickled lower with the former below USD 41/bbl and the latter losing further ground below 42.50/bbl. Note: WTI Nov futures expire today. Further on the supply side, Libya’s largest oil field reportedly increased production further and is now running at half-capacity. On the demand side, premiums on Russia ESPO crude for Dec-loading reportedly hit a three-month high amid demand from China. Elsewhere, spot gold and silver were uneventful around USD 1900/oz and USD 24.50/oz respectively, whilst copper futures trimmed some of yesterday’s gains as the red metal tracked the broader losses across stock markets.

OPEC+ panel made no recommendation on Monday to change prior policy for 2021, according to three sources, as expected. OPEC+ panel said full or partial lockdowns this winter could put oil demand at further risk, underperformance stood at 199k BPD in September. The next meeting to be held on November 17th (Newswires) There was reportedly no sign of Russia submitting a compensation plan for their excess overproduction of 430,000 barrels, according to Energy Intel. (Twitter) The press release noted "The Committee reminded all participating countries of the necessity to be vigilant and proactive". (OPEC)

Russian Energy Minister Novak said OPEC+ will continue discussions in December and current oil prices are adequate and we agreed to continue implementing the deal in full. (Newswires)

Libya's El Sharara production (capacity 300k BPD) is running at 150k BPD (vs 100k last week), sources said. (Newswires)

Spot premium for Russian ESPO crude Dec loadings have reportedly risen to a 3mth high at USD 1.55-1.65/bbl to Dubai, with sources citing China demand. (Newswires)

BHP (BHP LN/ BHP AT) said copper operations in South America continue to be impacted by COVID-19 measures. (Newswires)

GEOPOLITICAL

UK said Russian Military intelligence is attempting to disrupt Tokyo Olympic and Paralympic games with malicious cyberattacks; US DoJ indicts six Russian hackers for four year-long hacking spree. (Newswires)

Support is growing within the Indian government for India to formally start trade talks with Taiwan. (Newswires)

US

Treasuries modestly bear-steepened as a busy supply slate kept duration from strengthening despite the downside in stocks. By settlement, 2s +0.2bps at 14.7bps, 10s +1.5bps at 75.9bps, and 30s +1.7bps at 154.6bps; T-Note futures volumes were lacklustre compared to recent averages. The steepener had been initiated overnight before the stock sell-off, with many quick to cite renewed Pelosi stimulus optimism for the perceived risk appetite. However, that o/n risk appetite soon reversed as US equity trade got underway, with the masses now quick to cite the unlikelihood of a stimulus deal being attained, which the Dems reportedly said themselves in late-trade. Regardless, yields came off their lows into the T-Note settlement; 10s and 30s touched earlier highs of 78.1bps and 157.4bps, respectively. Given the approaching 20-year bond auction on Wednesday, as well as the rising corporate issuance pipeline - including a USD 4.75bln, duration-heavy T-Mobile deal – it is somewhat unsurprising that USTs could not go bid, despite the tumble lower in stocks. Elsewhere, monthly TIC flow data from Friday evening grabbed attention after it showed China and Japan continuing to cut their Treasury holdings in September by USD 18bln collectively, although the Fed’s USD 120bln monthly purchases more than absorbs that, ceteris paribus. T-note (Z0) futures settled 4+ ticks lower at 138-29+

A stimulus deal with Treasury Secretary Mnuchin is not sounding imminent based on comments from Pelosi and committee chairs, according to sources on the House Democratic caucus call, according to WaPo’s Werner (Twitter) Democrats, on a caucus call, said there has been some progress in stimulus discussions but not enough; House Speaker Pelosi reiterated the Tuesday deadline for a deal - Politico's Sherman. (Twitter) House Committee Chairs told rank and file members that “language” continues to be a problem in getting a universal coronavirus agreement, and testing and contact tracing continues to be an issue, as per sources cited by Fox's Pergram. (Twitter)

US Chief of Staff Meadows spoke with Treasury Secretary Mnuchin on COVID-19 relief, said there has been progress but no one is "popping the champagne corks yet", via Fox's Pergram. (Twitter) US Senate Majority Leader McConnel says Senate will vote on GOP virus relief this week. (Newswires) White House spokesperson said they are cautiously optimistic that House Speaker Pelosi is moving toward a deal on COVID-19 stimulus. (Fox News)

US Debate Commission adopted new rules to mute microphones to allow President Trump and Democratic Candidate Biden two minutes of uninterrupted time per segment. (AP) US President Trump is committed to a debate with Democratic Candidate Biden despite the last-minute rule change, according to the Trump Campaign. (Twitter) US President Trump confirmed that he will partake in the next presidential debate but thinks it is unfair. (Newswires)

POLL: Reuters/Ipsos poll of likely voters in Wisconsin, 51% back Biden vs 43% for Trump. (Newswires) RCP average has Biden ahead by 6 points in Wisconsin

POLL: Reuters/Ipsos poll of likely voters in Pennsylvania sees 49% back Biden vs 45% for Trump. (Newswires) RCP average: Biden leads by 4.4 points in Pennsylvania

US Supreme Court has rejected the Republican request to limit mail-in voting in Pennsylvania, (Newswires)

US President Trump said the FBI should investigate Candidate Biden. (Newswires) Note, reports last week noted that the FBI is investigating whether the exposure of Hunter Biden's emails was linked to a foreign intelligence effort to undermine the US election.

Goldman Sachs (GS) is set to pay over USD 2bln in the DOJ's 1MDB probe, according to sources. (Newswires) GS holds a 4.8% weighing in the DJIA