• European bourses are subdued this morning, Stoxx 50 -0.2%, but off lows with fundamental updates sparse and US futures posting similar declines; ES -0.2%
• Differences continue to narrow but more work needs to be done on US stimulus and Pelosi & Mnuchin will speak again today
• US FBI Director said US has identified Russia and Iran to have taken action to interfere with the election; Russia have since denied this
• Tesla printed a new sales record and posted its 5th consecutive quarter of profit, +5.0% in pre-market
• FX has seen a USD resurgence but DXY still below 93.00 with major peers modesty softer but magnitudes relatively slim
• Looking ahead US Weekly Jobs & Existing Home Sales, EZ Consumer Confidence (Flash), CBRT Rate Decision, Fed's Kaplan & Barkin, ECB's Panetta & Hakkarainen
• Earnings: Intel, American Airlines, Coca-Cola, Southwest

CORONAVIRUS UPDATE

Germany reported 11,287 (Prev. 7,595) new COVID-19 cases and 30 (Prev. 39) additional deaths, according to RKI. 

AstraZeneca (AZN)/ University of Oxford COVID vaccine volunteer in Brazil who died reportedly did not receive the vaccine, according to a source. Separately, an independent review indicates the vaccine follows its programmed genetic instructions. (Newswires)

Fujifilm (4901 JT) partnered with China’s CareLink to deploy Avigan tablets in China. (Newswires) Note: Avigan has shown positive results in COVID-19 Phase III trial

ASIA

Asia-Pac equities traded with losses across the board as the region took its cue from the downbeat Wall Street handover, which saw the Dow reverse its earlier gains and the S&P and Nasdaq close the day with modest losses as participants tracked stimulus developments. In terms of the electronic reopen, US equity futures opened flat but lost ground after the FBI Director announced that US has identified Russia and Iran to have taken action in order to interfere with the 2020 election, with under a fortnight to go until voters head to the polls. This sentiment reverberated into APAC indices – losses in the ASX 200 (-0.3%) were led by the oil and mining sectors, whilst Nikkei 225 (-0.7%) saw lacklustre performances across its industrial, auto and pharma names, while airliner ANA holdings fell to the foot of the index after sources suggested the Co. is to post a record annual loss and shed half of its fleet. KOSPI (-0.7%) also held onto losses in-line with the regional performance, whilst a South Korean business lobby group called on Japan to ease its restrictions on exports of key industrial products to South Korea in a bid to help improve strained ties between the two countries. In China, Hang Seng (+0.1%) and Shanghai Comp. (-0.4%) conformed to the glum tone, and with geopolitical tensions heating up as the Pentagon confirmed last week’s source reports that it notified US Congress of three possible military sales to Taiwan, a move repeatedly contested by Beijing. Finally, JGB futures track action in the fixed income futures complex amid a lack of pertinent data, auctions or news flow.

PBoC sets USD/CNY midpoint at 6.6556 vs. Exp. 6.6521 (Prev. 6.6781); the firmest CNY fix since July 11 2018  (Newswires) PBoC injected CNY 50bln via 7-day reverse repos at a maintained rate of 2.20% for a net neutral daily position.

A South Korean business lobby group on Thursday called on Japan to ease its restrictions on exports of key industrial products to Korea to help improve strained ties between the two countries. (Yonhap)

CENTRAL BANKS

Fed's Bullard (non-voter) said Fed is not battling with markets; markets believe Fed will keep rates low for a while, Fed is buying bonds at a healthy clip and will need to think about how to play QE going forward and negative rates are not a good option. (Newswires)

South Korea and China have agreed to extend FX swap agreement by 5yrs and expand the agreement to CNY 400bln (Prev. CNY 360bln). (Newswires)

US

US House Speaker Pelosi and Treasury Secretary Mnuchin's conversation brought the sides closer to "being able to put pen to paper to write legislation". Differences continue to narrow but more work needs to be done. Pelosi and Mnuchin will speak again today, according to her aide. (Twitter)

US President Trump tweeted that he does not see any way US House Speaker Pelosi and Senate Minority Leader Schumer doing the right thing for workers, regarding COVID-19 relief. (Twitter)

There is almost no operational way the House and the Senate could move such a stimulus bill before the election, according to Fox's Pergram, with Congressional sources believing that the effort from both sides is to give the appearance they are trying to get a deal just before the election. (Twitter)

POLL: Fox News Poll shows Biden tops Trump in Michigan, Pennsylvania, Wisconsin; but Trump leads in Ohio; conducted Oct 17-20 state-wide among likely voters +/- 3ppts error margin: Michigan: Biden 52% Trump 40%, Pennsylvania Biden: Biden 50% Trump 45%, Wisconsin: Biden 49% Trump 44%, Ohio: Biden 45% Trump 48%. (Fox) 

Tesla Inc. (TSLA) - Q3 2020 (USD): EPS 0.76 (exp. 0.57); Revenue 8.77bln (exp. 8.36bln). Maintains FY guidance of 500k deliveries, but says it has become more difficult. Co. said achieving 500k deliveries is dependent on Q/Q increases in Model Y and Shanghai production, as well as improvements in logistics and delivery efficiency at higher volumes. Co. noted Shanghai Model 3 production capacity has increased to 250k units per year. CEO Musk said hopefully there will be a wide release of the full self-driving feather by year-end (Newswires) ­Shares rose 3% after market

Dow Inc (DOW) Q3 20 (USD): EPS 0.50 (exp. 0.33), Revenue 9.7bln (exp. 9.53bln)

Danaher (DHR) Q3 2020 (USD): Adj EPS 1.72 (exp. 1.36/1.00 reported); Revenue 5.9bln (exp. 5.5bln)

West Pharmaceutical Services Inc (WST) Q3 20 (USD): EPS 1.15 (exp. 0.99), Revenue 0.548bln (exp. 0.51bln)

US Federal judge is reportedly considering blocking President Trump's order that would effectively force a sale of the Co. to US investors, according to WSJ. (WSJ)

UK/EU

UK Chancellor Sunak is to unveil fourth COVID-19 support package for ailing firms, according to The Guardian. (Guardian) UK Chancellor is understood to be working on a compensation package for thousands of businesses whose trade is restricted by COVID-19 restrictions; Sunak is poised to announce extra help for pubs and restaurants. (Telegraph) Note, Sunak will be addressing the House of Commons today at 11:30BST on the matter

BoE's Haldane says that UK household spending has been "remarkably resilient". (Newswires)

ECB's Makhlouf says the Irish central bank changed its base case to assume no deal between EU and UK. (FT)

GEOPOLITICAL         

US FBI Director said US has identified Russia and Iran to have taken action to interfere with the election. Iran sent spoof emails to intimidate voters, Russia obtained some voter information Intelligence Community caught threat and reacted swiftly (Newswires) US government has concluded that Iran is behind a series of threatening emails arriving this week in the inboxes of Democratic voters, according to two U.S. officials cited by Washington Post. (Washington Post)

US State Department said Pentagon has notified congress of three possible military sales to Taiwan; deal could have a value of up to USD 1.8bln. (Newswires) This is in-fitting with sources last week which suggested the White House is moving forward with three sales of advanced weaponry to Taiwan. Missile drills in the South China Sea and aeronautical limitations were the reasons a Taiwanese aircraft was denied entry into Hong Kong airspace en route to the Pratas Islands last week, according to a military insider. (SCMP)

Syrian army were reportedly bombarding Turkish groups in northern Syria, according to Kurdistan224 journalist. (Newswires)

A top Trump admin official secretly met with a representative of Venezuelan leader Maduro’s regime last month to try to negotiate the leader’s peaceful exit from power, sources cited by Bloomberg's Jacobs. (Twitter)

EQUITIES

European equities (Eurostoxx 50 -0.2%) are so far enduring another session of losses with downside in futures accelerating once again alongside the opening of cash products; however, as we enter US hours we have seen a modest pick-up in performance with price action moving closer to the U/C mark on the day – for reference, ES -0.2%. As was the case yesterday, there was a lack of incremental macro catalysts (beyond some of the slightly more downbeat updates on the US stimulus front yesterday) for the move in what has been a relatively busy morning of corporate updates for the region thus far. Sectors trade relatively mixed on the session with slight underperformance observed in health care and oil & gas names with the latter unable to benefit from a modest pick-up in crude prices.  Notably, and in spite of downbeat COVID updates from Spain and Germany, travel & leisure names are eking mild gains. Of note and of concern for the sector, prelim Q3 results for IAG (U/C; initially -5.0%) saw the Co. miss on revenue expectations, lower capacity and downgrade its outlook in what is set to be a tough earnings season for airliners. Food & beverage names have been granted some reprieve by earnings from Pernod Ricard (+2.7%) who exceeded expectations for Q1 revenue and anticipate a return to growth by H2. Also, of note for the CAC 40 is gains in Schneider Electric (+2.5%) post-earnings with the Co. beating expectations of revenues and raising FY guidance. Other notable corporate updates include Unilever (+0.4%) who posted a beat on revenues and underlying sales growth whilst maintaining its dividend. To the downside, there were a slew of disappointing Scandi earnings from the likes of Telia (-2.2%), Alfa Laval (-3.0%) and SEB (-1.6%) who are notable laggards within the Stoxx 600. 

FX

DXY – Some respite for the Greenback after Wednesday’s steeper decline and all round selling pushed the index down through 92.500, but the recovery looks fragile amidst the ongoing impasse on US fiscal stimulus and inferences that a deal may well not be settled until after the election, even though the 2 sides are said to have narrowed differences and further talks are scheduled. The DXY and Buck more broadly may also be drawing underlying support on sentimental or psychological grounds, if not truly technical impulses, given the fact that a pseudo double bottom was not breached to expose 92.000, albeit many pundits point out that the bearish trend and tide will unlikely turn unless the index rebounds through 93.000 and holds above the round number. Ahead, IJC, housing data and a trio of Fed speaker and the DXY is currently near the top of a 92.903-603 range.

NZD/NOK – The Kiwi and Norwegian Crown are both former against the grain, with the former benefiting from Aud/Nzd tailwinds rather than NZ specifics ahead of Q3 CPI data, but the latter perhaps gleaning traction from a marked improvement in Q3 industrial sentiment rather than labour force survey-based unemployment that was higher than expected in August. Nzd/Usd is holding comfortably above 0.6650 as the cross hovers around 1.0660, while Eur/Nok is still eyeing support ahead of 10.9000 after repelling several upside approaches towards or just beyond 11.0000.

CAD/JPY/EUR/GBP/AUD/CHF – All narrowly mixed vs their US counterpart, with the Loonie paring post-Canadian retail sales losses between 1.3177-36 parameters and the Yen pivoting 104.60 following yesterday’s big figure+ ascent through decent option expiries and prior October highs. However, today’s expiry interests may offer more resistance, as 2.9 bn lie at 104.55-50 and 2.1 bn from 104.10 to 104.00 that coincides with last month’s Usd/Jpy low. Elsewhere, the Euro is straddling 1.1850, the Pound is consolidating circa 1.3100 awaiting BoE rhetoric, Chancellor Sunak and probably any Brexit developments as trade talks resume above all else. Meanwhile, the Aussie is just keeping sights on 0.7100 in advance of October PMIs and the Franc continues to straddle 0.9050 in wake of a somewhat mixed Swiss KOF Autumn update outlining 2 scenarios (baseline -3.6% 2020 GDP and -4.9% worst case if the pandemic spread persists).

SEK/EM – The Swedish Krona is still lagging and not deriving much momentum from what could be construed as positive news via the Riksbank’s latest business survey showing a gradual recovery in the economic situation and less need on balance to provide financial support to some sectors. Conversely, the Turkish Lira is maintaining a bid unlike other EMs in anticipation of another boost from the CBRT at midday, with the consensus looking for a 175 bp hike.

Notable Expiries, NY Cut:

-        EUR/USD: 1.1800 (1.25BLN), 1.1845-50 (710M), 1.1875-80 (550M) 1.1900 (660M)

-        USD/JPY: 104.00-10 (2.1BLN), 104.50-55 (2.9BLN), 104.65-75 (500M), 104.90-105.00 (1.6BLN), 105.23-25 (1.2BLN), 105.30-40 (850M), 105.50 (690M)

South Korean Finance Minister said they will take action to stabilise FX markets if needed. BoK was suspected of purchasing USD to curb KRW gains, according to FX dealers. (Newswires)

FIXED INCOME

The 10 year UK debt future has fallen to fresh Liffe lows after a fleeting bounce of the dead cat variety stalled and a respectable 15 year DMO offering failed to provide much in the way of traction ahead of the 30 year sale and Chancellor’s HoC statement that will have issuance implications if reports of ‘significant’ support measures materialise. Gilts are hovering just above 135.50 (October 13 base), with Bunds back down near their Eurex trough in sympathy and BTPs under 149.00 as Italy’s syndicated bond progresses towards sizing and pricing. Elsewhere, US Treasuries are midway between overnight session ranges with the curve a tad less steep following a reasonable 20 year auction and now eyeing weekly claims, housing data and 3 Fed speakers for further direction.

COMMODITIES

Thus far the crude complex has fared somewhat better than European equity bourses & US futures with WTI and Brent currently around the unchanged mark; albeit, most recently the benchmarks have experienced a pull-back from earlier highs. Fundamental updates explicitly for the complex have once again been sparse throughout the European morning aside from bank updates which include ABN Amro forecasting WTI averaging USD 34/bbl in 2020 and USD 43/bbl in 2021, alongside Goldman Sachs expecting a bull market to emerge for commodities in 2021. Given the lack of specific fundamental updates price action will likely once again be at the whim of broader sentiment with focus on stimulus updates ahead of the weekend’s latest deadline from Speaker Pelosi. Elsewhere, amidst the mornings European earnings Anglo American tightened their FY20 copper production guidance to 630-660k/T compared to analysts’ expectations for ~631k/T for the period and the prior 638k/T for FY19. Separately, spot gold is modestly softer this morning as while the DXY remains below the 93.00 mark and was subdued at the start of the European session it has been gradually picking up and remains in proximity to highs; as such, the yellow metal is ~USD 6/oz softer but still a similar magnitude from overnight lows.

Norway's Industri Enegi trade union has agreed a new wage deal with oil service companies. (Newswires)

ABN AMRO sees WTI averaging USD 34/bbl in 2020 and USD 43/bbl in 2021. Goldman Sachs sees a bull market emerging for commodities in 2021. (Newswires)