• Asian equity markets weakened heading into month-end and after US stock index futures faded the recovery seen on Wall Street
• Disappointment was observed in the wake of big tech earnings despite Apple, Alphabet, Amazon, Facebook and Twitter all beating on top and bottom lines
• ECB sources stated that policymakers debated tools for the next stimulus package on Thursday in which some favoured more bond purchases under PEPP, some preferred TLTRO adjustments and others a mix of both
• In FX, they DXY retreated back below 94.00, providing some reprieve for its major counterparts
• Looking ahead, highlights include German GDP (Flash), EZ CPI (Flash), GDP (Flash/Prelim) & Unemployment, US PCE, Personal Income & Chicago PMI, ECB’s de Guindos
• Earnings: Amundi, BBVA, Caixabank, Total, Swiss Re, Exxon, Chevron, Phillips, AbbVie, Colgate-Palmolive

CORONAVIRUS UPDATE

US COVID cases +81,599 (prev. +72,183) and deaths +1,060 (prev. +901). AFP noted that US cases reached a record in 24 hours, while a major newswire tally stated US cases rose by at least 91,254 to a total of 8.98mln and deaths rose by at least 1,185 to a total of 229.0k. (Newswires) New York COVID cases +2,499 (prev. +2,031) and deaths +19 (prev. +15). (Newswires)

France COVID stats: Cases +47,636 (prev. +36,437); deaths +235 (prev. +244). There were also comments from the French Finance Minister that total cost of support will be EUR 15bln per month of lockdown. (Newswires)

European Commission President Von der Leyen said the virus spread will overwhelm the healthcare system if we do not act quickly and commission has made EUR 220mln available to fund cross-border transfer of patients. (Newswires)

UK PM Johnson is reportedly under increasing pressure to impose a lockdown before and after Christmas but allow easing of restrictions during the Christmas holidays, as sources close to the government warned that the current 3-tier system may not be sufficient to contain number of infections. (Telegraph)

ASIA

Asian equity markets weakened heading into month-end and after US stock index futures faded the recovery seen on Wall Street amid disappointment from the big tech earnings despite Apple, Alphabet, Amazon, Facebook and Twitter all beating on top and bottom lines. Apple shares declined over 4% in extended trade with investors discouraged by the miss on iPhone sales and lack of guidance, as well as a 29% Y/Y drop in its Chinese revenue which pressured its supply Chain in Asia and Twitter slumped nearly 18% after hours on slower user growth. ASX 200 (-0.6%) and Nikkei 225 (-1.5%) were weaker with industrials and tech frontrunning the declines in Australia although losses in the index were briefly pared by financials as AMP shares surged over 20% following a takeover approach by Ares Management, while the mood in Tokyo was clouded by currency effects and soft inflation data but with Panasonic shares a notable gainer on reports it is working with Tesla to build a new battery cell production line at the Gigafactory. Elsewhere, the Hang Seng (-1.3%) and Shanghai Comp. (-0.7%) remained cautious amid a plethora of large-cap earnings and with participants mulling over the initial details of the 5-year plan which seeks to build the nation into a technological powerhouse and emphasized quality growth over speed but refrained from specifying a targeted pace of growth. Finally, 10yr JGBs were lower and fell below support near 152.00 on spillover selling from T-notes as Wall Street initially nursed losses and following an uninspiring 7yr auction stateside, although the downside for JGBs was cushioned with the BoJ in the market for nearly JPY 1.3tln of JGBs with up to 10yr maturities.

PBoC injected CNY 100bln via 7-day reverse repos at rate of 2.20% for a CNY 190bln net weekly injection. (Newswires) PBoC set USD/CNY mid-point at 6.7232 vs. Exp. 6.7207 (Prev. 6.7260)

Chinese Science Minister Wang said tech innovation is important for dual circulation strategy and that China tech self-sufficiency does not mean it is closing its doors. There were also comments from China Communist Party senior official Han that dual circulation is a proactive measure and long-term strategy, while he added China will expand market access for foreign investors and expects China's foreign trade and foreign investments to increase. (Newswires)

Japanese Industrial Production (Sep P) M/M 4.0% vs. Exp. 3.2% (Prev. 1.0%). (Newswires) Japanese Industrial Production (Sep P) Y/Y -9.0% vs. Exp. -9.8% (Prev. -13.8%)

Tokyo CPI (Oct) Y/Y -0.3% vs. Exp. -0.1% (Prev. 0.2%). (Newswires) Tokyo CPI Ex. Fresh Food (Oct) Y/Y -0.5% vs. Exp. -0.5% (Prev. -0.2%) Tokyo CPI Ex. Fresh Food & Energy (Oct) Y/Y -0.2% vs. Exp. -0.2% (Prev. 0.0%)

UK/EU

ECB sources stated that policymakers debated tools of the next stimulus package on Thursday in which some favoured more bond purchases under PEPP, some preferred TLTRO adjustments and others a mix of both. Furthermore, a source said the discussion was de-facto prepositioning for the December meeting and one of the open questions related to the composition of PEPP and how to make it targeted to the current juncture. (Newswires)

EU budget deal negotiations reached a deadlock as countries and parliaments fail to strike a deal, which could lead to the first tranche of the recovery fund being delayed. (FT)

UK Lloyds Business Barometer (Oct) -18 (Prev. -11). (Newswires)

FX

The DXY pared some its recent gains and extended its retreat below the 94.00 level to provide some brief reprieve for its major counterparts especially EUR/USD which slumped below 1.1700 in the wake of the ECB meeting which signalled looming action in December. GBP/USD was indecisive and reapproached 1.2900 amid tentativeness following recent reports that suggested although progress was made in Brexit discussions, there are still significant differences on the issue of non-regression clauses. USD/JPY and JPY-crosses lacked direction for most of the session after mixed output and inflation data but were eventually pressured in tandem with the risk aversion, while antipodeans initially benefitted from the strengthening of China’s currency in which USD/CNY broke beneath the 6.7000 handle, with mild outperformance evident in AUD as there were also reports ANZ CEO Elliott pushed back against an RBA rate cut and warned that it would further drown the financial system in liquidity, impact bank profits by squeezing margins and do little to spur the economy and jobs. However, the gains in activity currencies were later wiped out as the risk tone deteriorated further.

COMMODITIES

WTI crude futures consolidated after another bout of selling yesterday which briefly dragged prices to test USD 35.00/bbl where it found support, with the weakness due to demand concerns which were stoked by the fresh lockdowns in Europe and rampant infections as the US posted a record daily number of cases and the number of global cases had also increased by over 500k for the first time on Wednesday. Elsewhere, gold eked mild gains as the precious metal found some reprieve from a pullback in USD, while copper was rangebound with price action hampered by the risk aversion.

BSEE estimated Gulf of Mexico Production shut in due to Storm Zeta at 85% of oil (prev. 67% yesterday) and 58% of NatGas (prev. 45%). (Newswires)

GEOPOLITICAL

US imposed Iran-related sanctions on individuals and entities, according to the US Treasury website. (Newswires)

US

Treasuries steepened on Thursday as the bearish rates momentum continued amid the stock market consolidating from Wednesday’s volatility spike. By settlement, 2s +0.2bps at 15.3bps, 7s +4.8bps at 60.3bps, 10s +5.5bps at 83.6bps, 30s +5.2bps at 162.3bps; volumes in the futures were decent today. The selling pressure in USTs caught traction as stock futures made gains into the US cash equity open. It was to be somewhat expected that yields would rise again in the context of Wednesday, where despite the big sell-off in stocks amid reimposed lockdown out of Europe and the impending election uncertainty, yields managed to close little changed, with haven inflows outweighed by Treasury selling pressures. As a result, the consolidation of stocks today, and easing of haven flows, allowed the curve to resume it’s steepening. There was an additional leg lower in Treasuries after the sloppy 7-year auction, which tailed the 0.588% WI by 1.2bps, covered less than average, and dealers taking down a larger share than usual. Desks noted some block sales in duration contracts on the back of the auction, coinciding with the 10-year yield testing its 200dma support level at 84bps. Similarly, part of the pressure is likely a result of the corporate pipeline, with Boeing (BA) bringing USD 4.9bln to market, competing for duration bidders. Technicians now look to 87bps for technical support, ahead of the post-March high of 96bps (from early June). T-note (Z0) futures settled 12+ ticks lower at 138-13.

US Treasury Secretary Mnuchin said he spoke with House Speaker Pelosi nearly every day for the last month and a half, while he added that the letter he received from Pelosi was a political stunt. (Fox News)

POLL: Quinnipiac University finds, Florida has Biden at 45%, Trump 42%; Iowa has Trump 47%, Biden 46%; Pennsylvania has Biden 51%, Trump 44% and Ohio has Biden 48%, Trump 43%

Elizabeth Warren is reportedly set to request to become Joe Biden’s Treasury Secretary in the event that the former VP wins the upcoming election. Should this request not be granted, Warren would look to push for a seat on the Senate Finance Committee, according to sources. (Politico)

Apple (AAPL) Q4 (USD): EPS 0.73 (exp. 0.70); Revenue 64.70bln (exp. 63.7bln). iPhone: 26.44bln (exp. 27.93bln), iPad: 6.80bln (exp. 6.12bln), Mac: 9.03bln (exp. 7.93bln), Other: 7.88bln (exp. 7.40bln), Services: 14.55bln (exp. 14.08), Greater China 7.95bln vs. Prev. 11.13bln Y/Y. Co. confirmed during the conference call that it will not issue revenue guidance for Q1 but sees services revenue to grow by double digits and expects iPhone revenue to grow in December quarter despite late shipping, while CEO Cook said they are very optimistic about the iPhone 12 and that this year has a few more exciting things in store. (Newswires)

Alphabet Inc (GOOG) Q3 (USD): EPS 16.40 (exp. 11.29), Revenue 46.2bln (exp. 42.9bln)

Amazon (AMZN) Q3 (USD): EPS 12.37 (exp. 7.41); Revenue 96.1bln (exp. 56.43bln)

Facebook (FB) Q3 (USD): Adj. EPS 2.71 (exp. 1.91); Revenue 21.5bln (exp. 19.82bln)

Twitter (TWTR) Q3 (USD): Adj. EPS 0.19 (exp. 0.06); Revenue 936mln (exp. 777mln); DAUs: 187mln (exp. 195.2mln)