• Asian equity markets were higher across the board after following suit from the gains on Wall St
• The RBA cut rates by 15bps as expected and announced an AUD 100bln boost to its QE programme
• Governor Lowe noted that the RBA has not run out of firepower but also pushed back against the prospect of negative rates
• In FX markets, the DXY slipped back below 94.00, providing some reprieve to major counterparts
• Looking ahead, highlights include Turkish CPI, US ISM New York, Factory Orders and Durable Goods (R), Weekly Private Inventory data, New Zealand Unemployment Rate, Riksbank's Ingves, Breman, ECB's Lagarde and Panetta, supply from the UK, Eurogroup meeting, US Election 

CORONAVIRUS UPDATE

US COVID-19 cases +77,398 (prev. 80,932) and deaths +451 (prev. +823). New York COVID-19 cases +1,633 (prev. +2,255), positivity rate 1.70% (prev. 1.51%) and deaths +14 (prev. +17). (Newswires) Massachusetts Governor Baker announced a stay-at-home advisory, mask order and restaurant curfew beginning on Friday in response to the recent rise in COVID-19 cases and hospitalizations in the state. (NBC10 Boston)

UK COVID-19 cases +18,950 (prev. 23,254) and deaths +136 (prev. +162), while France cases rose by a record 52,518 (prev. +46,290) and deaths +416 (prev. +231). (Newswires)

Quarantines in the UK could be reduced to as little as seven days for people who are told to self-isolate after a positive COVID-19 test; a decision could be announced soon. Separate research suggests that quarantine for travellers could be safely cut to five days from 14 in an attempt to kickstart travel. (Telegraph) 

ASIA

Asian equity markets were higher across the board after following suit from the gains on Wall St where all major indices were lifted heading into the US election as polls continued to point to a Biden win and with stronger than expected global PMI data also adding to the constructive risk tone. ASX 200 (+1.9%) rallied throughout the session amid the RBA policy meeting where the central bank delivered a package of loosening measures including cutting key rates by 15bps as expected and a AUD 100bln boost to QE, with the broad upside led by the energy sector after oil prices rebounded on reports that Russia is considering postponing the tapering in OPEC+ cuts until the end of Q1. KOSPI (+1.8%) was also buoyed as participants shrugged off a negative inflation print and mixed vehicle sales data from South Korea’s top 2 automakers, while LG Display was among the notable gainers amid reports it is to supply mini-LEDs for Apple’s iPad. Hang Seng (+2.2%) and Shanghai Comp. (+1.2%) conformed to the upbeat risk tone after a mild liquidity injection by the PBoC and as all regional bourses joined the global rising tide, aside from Japanese markets which remained closed in observance of Culture Day.

PBoC injected CNY 120bln via 7-day reverse repos at rate of 2.2% for a net daily injection of CNY 20bln. (Newswires) PBoC set USD/CNY mid-point at 6.6957 vs. Exp. 6.6948 (Prev. 6.7050)

8 Chinese military aircrafts reportedly entered Taiwan's air defense identification zone on Monday. (Newswires)

China is expected to ban imports of wheat from Australia which are valued at AUD 560mln. (SCMP)

UK/EU

UK FCA is proposing to extend availability of deferrals to the end of January 2021 to support mortgage borrowers who are experiencing payment difficulties due to COVID-19. (Newswires)

FX

The DXY was slightly pressured overnight and declined below the 94.00 level as the positive risk tone spurred haven outflows and amid some pre-positioning heading into today’s US election. The greenback’s major counterparts marginally benefited with EUR/USD trading around 1.1650 where there is a medium-sized option expiry rolling off at today’s NY cut and with the single currency’s 100DMA also nearby at 1.1664, while GBP/USD recouped some of the recent lockdown-related losses with participants awaiting any developments from the Brexit negotiations in Brussels. USD/JPY was rangebound near the 122.00 level amid the absence of Japanese participants and CAD held on to yesterday’s spoils after the resurgence in oil, while antipodeans were initially kept afloat by the risk appetite. Furthermore, AUD/USD was later pressured after the RBA policy decision in which the central bank delivered multi-faceted policy easing including a 15bps rate cut and expansion to its QE program as expected, although some of the weakness was later pared following the speech by Governor Lowe who noted that they have not run out of firepower but also pushed back against the prospect of negative rates.

RBA lowered the Cash Rate Target, 3-year Yield Target and rate on Term Funding Facility by 15bps each to 0.10% as expected, while it announced AUD 100bln in bond purchases of 5yr-10yr maturities for 6 months in which purchases will be bonds issued by the government, state and territories. RBA also stated that it does not expect to raise the Cash Rate for at least 3 years and that the Board is prepared to do more if necessary and remains prepared to buy bonds in any quantity required to reach 3yr yield target. Furthermore, it stated positive GDP growth is now expected in September quarter and sees GDP around 6% over the year to June 2021, while the unemployment rate is expected to remain high but peak at slightly below 8% and sees end-2022 unemployment at around 6%. (Newswires)

RBA Governor Lowe said the RBA is not out of firepower after the latest decision and that if needed, they can and will do more on bond purchases, while other tools include further liquidity provision, asset purchases and transactions in the FX market. Furthermore, Lowe added that there is little to be gained from reducing rates into negative territory and that negative policy rate in Australia is extraordinarily unlikely, while he also stated rates are now at effective lower bound they have done all they can on rates with focus now on QE. (Newswires)

COMMODITIES

WTI crude futures held steady near USD 37/bbl after the prior day’s resurgence in oil due to reports that Russia was said to be mulling delaying OPEC+ cuts taper until the end of Q1, while the improved global risk tone and better than expected slew of PMI releases were also conducive to the recent bullish mood in prices. Elsewhere, gold traded flat beneath the USD 1900/oz level as tailwinds from a weaker greenback were offset by the lack of haven demand and with the precious metal also kept tentative heading into the US election, while copper marginally extended on gains alongside the upbeat risk tone.

BSEE estimated 28% of offshore Gulf of Mexico crude oil production is currently shut-in (prev. 46% on Sunday), while 16% of NatGas is shut-in (prev. 20%). (Newswires)

CNPC said Russia-China gas supply will increase to 28mln cubic metres per day beginning in January from 14mln at end-2020. (Newswires)

GEOPOLITICAL

China has annexed over 150 hectares of Nepal, months after deadly border clashes between Chinese and Indian troops. (Telegraph) 

US

Treasury yields were slightly lower on Monday after a spell of steepening at the end of last week. By settlement 2s +0.6bps at 15.8bps, 10s -1.1bps at 84.9bps, 30s -1bps at 162.3bps; futures volumes were average. Monday price action was always going to be taken with a pinch of salt in the context of the week ahead, although analysts had attributed real money type accounts lifting the long-end in cash bonds. Those accounts had been attributed to month-turn related flows as passive indexers look to match their portfolios to indexes. One also has to consider the pre-election positioning factors at play, with a mixture of players likely hedging and speculating as they look to prepare for the possible election scenarios. Thursday’s FOMC and Treasury quarterly refunding announcement will also serve as highlights, although both are seen as inconsequential this time around, especially when compared to the wide permutations of fiscal policy paths that can emerge this week as the election result looms. Still, a contested/pro-longed election could keep that uncertainty up in the air. T-note (Z0) futures settled 2+ ticks higher 138-09+.

US Democrat political advisers say Elizabeth Warren has extremely low odds of being named Treasury Secretary, according to FBN's Gasparino. (Fox Business News)

CNBC poll showed Democrat Presidential candidate Biden ahead of US President Trump in 6 battleground states of Arizona at 50% vs. 47%, Florida at 51% vs. 48%, Michigan at 51% vs. 44%, North Carolina at 49% vs. 47% Pennsylvania at 50% vs. 46% and Wisconsin at 53% vs. 45%. (Newswires)

Monmouth poll showed Biden's lead in Pennsylvania narrowed to +7ppts from +11ppts; the poll of 502 registered voters in Pennsylvania was conducted between Oct. 28 and Nov. 1 and has a 4.4ppts margin of error. (Newswires)

Quinnipiac University National Poll has Biden ahead at 50% vs 39% for Trump, while it showed Biden ahead in Florida at 47% vs 43% and ahead in Ohio at 47% vs 43%. (Newswires)

FiveThirtyEight projects Biden has an 89% chance of winning the election vs. 10% chance for President Trump, while it sees Biden winning 348 electoral votes vs. 190 for President Trump. (Newswires)