• Asian equity markets traded mostly lower following the bloodbath on Wall St where all major indices declined by more than 3%
• BoJ maintained policy settings as expected and continued to signal a lack of urgency for immediate support
• Regeneron (REGN) COVID-19 outpatient trial prospectively demonstrates that its antibody cocktail REGN-COV2 significantly lowered virus levels
• In FX markets, the DXY held on to most of yesterday’s gains above 93.00, EUR/USD hovers around 1.1750 and GBP/USD maintains 1.30 status
• OPEC+ are reportedly mulling extending oil output cuts at current levels through to end-March, according to Energy Intel's Bakr
• Looking ahead, highlights include EZ Consumer Confidence (Final), Economic Sentiment, US GDP (Advanced), Initial/Continued Jobless Claims, German CPI (Prelim). Japanese Unemployment, ECB & BoJ Rate Decision, ECB’s Lagarde
• Earnings: AB InBev, Airbus, Equinor, Nokia, Orange, Volkswagen, Standard Chartered, Amazon, Apple, Comcast, Facebook, Twitter, Moderna

CORONAVIRUS UPDATE

US COVID cases +72,183 (prev. +63,589) and deaths +901 (prev. +483), while a major newswire tally stated that US cases rose by at least 80,923 to a total of 8.89mln and deaths rose by at least 1,026 to a total of 227.8k. (Newswires)

France COVID cases +36,437 (prev. +33,417) and deaths +244 (prev. +523), while Germany cases rose by 16,774 to 481,013 and deaths rose by 89 to 10,272, according to RKI. (Newswires)

French President Macron confirmed new lockdown measures starting from Friday until December 1st in which bars & restaurants are to be shut, while there will be no moving between regions and external borders out of the Schengen area will remain closed although schools will stay open. Furthermore, work from home will be generalised and Macron added that they will see in 15 days if the situation has improved and if we can re-open shops, while the lockdown is to ease once daily new infections fall back to about 5k per day from currently about 40k and he also noted the second wave is likely to be worse than the first. (Newswires)

German Chancellor Merkel said we are in a very serious situation and that the health care system can deal with current figures but will hit capacity in the coming weeks if this rate continues. Furthermore, she confirmed that federal and state governments have agreed new lockdown measures from November 2nd which includes closing bars and restaurants, although shops will remain open with fewer than 1 person per 10 square meters, while the measures will be reviewed in two weeks and economic support will be provided to affected businesses. (Newswires)

Regeneron (REGN) COVID-19 outpatient trial prospectively demonstrates that its antibody cocktail REGN-COV2 significantly lowered virus levels and need for further medical attention, while it added that REGN-COV2 met primary and key secondary endpoints. Treatment with REGN-COV2 reduced COVID-19 related visits by 57% through day 29 and treatment lowered COVID-19 related medical visits by 72% in patients with one or more risk factors, while REGN-COV2 was well tolerated and serious adverse effects were numerically more frequent with placebo than REGN-COV2 treatment. (Newswires)

Eli Lilly (LLY) BAMLANIVIMAB trial data in COVID-19 outpatients showed it may be effective by reducing viral load, symptoms and risk of hospitalization in outpatients. (Newswires)

Senior UK government sources expect the verdict on whether Pfizer's COVID-19 vaccine works will be available prior to Oxford University's vaccine, while it was separately reported that 10% of England's population could be tested for COVID-19 every week. (Times/Guardian)

NIH's Dr. Fauci said the vaccine won't be available until January at the earliest. (Newswires)

ASIA

Asian equity markets traded mostly lower amid jitters following the bloodbath on Wall St where all major indices declined more than 3% and the DJIA fell over 900 points as risk appetite was decimated by concerns regarding lockdowns in France and Germany, whilst heavy losses were also observed in the tech sector. In addition, pre-election caution and comments from NIH's Fauci that a vaccine won't be available until January at the earliest added to the downbeat tone, although US stock index futures nursed some losses overnight after encouraging updates from both Regeneron and Eli Lilly regarding their COVID-19 treatment trials and with the US said to provide Huawei a lifeline by allowing more companies to supply the Chinese tech giant with components as long as it is unrelated to 5G. Nonetheless, Asian bourses weakened with tech and commodity-related sectors the underperformers in the ASX 200 (-1.6%) and financials were also pressured after ANZ Bank reported a 42% decline in full-year profit and Westpac reached an agreement to settle a BBSW class action in US. Nikkei 225 (-0.4%) was subdued following weak retail sales data and as participants awaited the BoJ policy announcement, which proved to be a damp squib as the central bank maintained policy settings as expected and continued to signal a lack of urgency for immediate support, although some of the losses have been pared amid mild currency outflows and as earnings supported the likes of Sony and Hitachi, while the KOSPI (-0.9%) suffered after Samsung Electronics failed to benefit from its final Q3 results which despite printing an increase from the prior year, it also flagged a decline in chip and mobile profitability for Q4. Hang Seng (-0.8%) and Shanghai Comp. (+0.2%) were cautious ahead of several blue-chip earnings including the first of the big 4 banks and with participants looking out for details of the 5-year plan when the 4-day plenum concludes today. Finally, 10yr JGBs failed to benefit from the broad risk-aversion and instead tracked the recent declines in T-notes with demand constrained amid the BoJ policy announcement in which the central bank provided a somewhat balanced tone that suggested it was likely to remain on the fence on future measures.

PBoC injected CNY 140bln via 7-day reverse repos at a rate of 2.20% for a net injection of CNY 90bln. (Newswires) PBoC set USD/CNY mid-point at 6.7260 vs. Exp. 6.7219 (Prev. 6.7195)

US is reportedly permitting an increasing number of companies to supply components to Huawei, as long as it is not related to the 5G business. (FT)

BoJ kept monetary policy settings as expected with bank rate kept at -0.10% and QQE with YCC maintained to flexibly target 10yr JGB yields at around 0% with the decision on YCC made by 8-1 vote as Kataoka remained the lone dissenter. BoJ stated that Japan's economy is likely to improve as a trend but notes extremely high uncertainty over economic and price outlook, while it added that consumer prices to decline for the time being but turn positive as the economy improves and will gradually accelerate pace of increase, while it stated that Japan's economy remains in a severe state but has begun to pick up and that exports and output are increasing. Furthermore, the BoJ downgraded its forecast for Real GDP and Core CPI in the Outlook Report for the current fiscal year but upgraded forecasts for next fiscal year. (Newswires)

Japanese Retail Sales (Sep) M/M -0.1% vs. Exp. 1.0% (Prev. 4.6%). (Newswires) Japanese Retail Sales (Sep) Y/Y -8.7% vs. Exp. -7.7% (Prev. -1.9%)

UK/EU

UK Trade Minister Truss is said to reject a 'Britain First' trade policy and will layout the principles of the country’s future trade policy, as well as slam the ‘pernicious’ trading practices of US and EU. (Newswires)

More than 500k companies in the UK were in significant distress during 3 months to September, according to reports citing data on court orders to pay off debts. (FT)

FX

In FX markets, the DXY traded sideways but held on to most of yesterday’s gains above the 93.00 level as the risk-averse tone provided a platform for the haven currency which kept the greenback’s major counterparts lacklustre. EUR/USD was off its lows although price action was stuck around 1.1750 where there is a notable option expiry rolling off at today’s  New York cut, with the single currency languishing after confirmation from France and Germany to impose nationwide lockdowns, while participants also look ahead to the ECB meeting where there are expectations for the ECB to pave the way for additional stimulus in December. GBP/USD was rangebound but eventually reclaimed the 1.3000 status with some encouragement provided by recent reports that EU and UK negotiators made progress this week on resolving some of the biggest disagreements in Brexit discussions. Elsewhere, USD/JPY marginally pared losses but with upside contained amid the lack of fireworks at the BoJ policy announcement and antipodeans were also restricted by the subdued risk appetite and after another weaker PBoC reference rate setting.

New Zealand NBNZ Business Confidence (Oct) -15.7% (Prev. -28.5%) New Zealand NBNZ Activity Outlook (Oct) 4.7% (Prev. -5.4%)

COMMODITIES

WTI crude futures slumped by around 5.5% and briefly tested USD 37.00/bbl to the downside amid the stock sell-off on Wall St and lockdowns in Europe, while the latest EIA inventory report conformed to the bearish private inventory data. Nonetheless, oil prices are off their lows amid mixed headlines for the complex the latest as although BSEE estimated oil production shut-ins increased to 67% from 49%, the NHC anticipates further weakening of Zeta to a non-tropical gale-force low on Thursday morning, while there were also reports that OPEC+ was said to be mulling a 3-month extension to the output pact. Gold prices also took a breather following the recent slump beneath the psychologically key USD 1900/oz level which was largely attributed to the USD-strength and copper outperformed in a continuation of yesterday’s intraday rebound with resilience in mainland China also providing a tailwind for prices.

OPEC+ are reportedly mulling extending oil output cuts at current levels through to end-March, according to Energy Intel's Bakr. (Twitter)

BSEE estimated Gulf of Mexico Production shut in due to Zeta was at 67% of oil (prev. 49% yesterday), 45% of NatGas (prev. 55%). (Newswires)

NHC said Zeta weakened as it moved over south-eastern Mississippi but still noted life-threatening surge and strong winds, while it later added that Zeta should decay into a tropical storm overnight and into a non-tropical gale-force low on Thursday morning. (Newswires)

Shell announced it is shutting-in production at its Appomattox asset due to downstream impacts from Zeta. (Newswires)

India Q3 gold demand fell 30% to 86.6 tons due to COVID-19 lockdown, although gold consumption could improve in Q4 on festival shopping and pent up demand, according to the World Gold Council. (Newswires) 

US

Treasuries were ultimately flat with rates participants caught between a rock and a hard place as debt-raising/recovery expectations offset the near-term haven-flows from tied to European lockdowns and election uncertainty. By settlement, 2s -0.3bps at 14.9bps, 10s -0.2bps at 77.6bps, and 30s -0.3bps at 156.8bps; T-Note futures volumes were below recent averages still. Rates had rising in European trade while stocks sold off as the continent prepared for nationwide lockdowns in powerhouses Germany and France. Month-end index extension (0.1yr for USTs) was also cited as a tailwind. However, despite the eye-gorging losses in global stocks and broader risk assets, yields began to rise off their lows. One desk noted that real money had been seen as sellers, and then as the 10-year cash yield failed to break below the 75bps resistance level convincingly, algo sell programmes were said to have been triggered. That selling pressure was also catching traction out of Germany too, where reports suggested the German government would have to issue more debt than expected in 2021 as part of its fiscal aid, providing spill-over effects to USTs. The US Treasury’s USD 55bln 5-year note auction was mixed, stopping through the 0.335% WI by 0.5bps, although the cover ratio and non-dealer participation was less than average, although this can partly be linked to the increased size of the offering; Thursday sees the 7-year note come to auction. T-note (Z0) futures settled 1+ tick lower at 138-25+.

US House Speaker Pelosi said hopefully President Trump will come to the table as he sees the stock market fall, while she reiterated that they haven't stopped working on stimulus, while House Speaker Pelosi later noted that details of the coronavirus package could change after the election. (MSNBC/WSJ)