• US futures are supported, but off highs with ES +1.2% as the DXY dips (-0.4%) and USTs curve bear-steepens
• FiveThirtyEight projects Biden has an 89% chance of winning the election vs. 10% chance for President Trump & a CNBC poll has Biden ahead of Trump in 6 battleground states
• The RBA cut rates by 15bps as expected and announced an AUD 100bln boost to its QE programme; Governor Lowe pushed back on neg. rates
• PayPal beat on EPS & revenue but are subdued in the pre-market as no preliminary FY21 guidance was provided
• Looking ahead highlights include US ISM New York, Factory Orders and Durable Goods (R), Weekly Private Inventory data, New Zealand Unemployment Rate, ECB's Lagarde and Panetta, Eurogroup meeting & US Election

CORONAVIRUS UPDATE

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)

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 (+1.9%) 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 (+1.9%) and Shanghai Comp. (+1.4%) 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. Separately, China's Commerce Ministry to impose temporary anti-dumping measures on 3-Methyphenol imports from the US, EU & Japan as of November 6th (SCMP/Newswires)

Initial comments from China’s 5-year plan via State Media: step up the exploration of oil & gas and speed up the construction of oil & gas storage facilities; step up counter-cyclical adjustments to the macro economy & push forward with research and development of a digital currency. (Newswires)

US

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)

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)

GEOPOLITICAL

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

Iran Supreme Leader Khamenei says they need to further develop missile capabilities to defend against enemies, will not surrender to US pressure or demands. (Newswires)

EQUITIES

European cash equities trade with strong gains across the board (Euro Stoxx 50 +1.9%) after the region picked up the bullish APAC baton and as traders gear up for the US Presidential Election (full cheat sheet available in the Research Suite), with the latest betting odds from Betfair Exchange suggesting a rise in Trump’s re-election chances to 39% from 35%, whilst FiveThirtyEight overnight projected a Biden win at 89% vs. 10% for President Trump. Back to Europe, major bourses mostly experience broad-based gains with modest outperformance seen in the France’s CAC 40 (+2.1%) and Italy’s FTSE MIB (+2.2%) amid a firm performance in the banking sector - after BNP Paribas (+5.5%) posted a +30% YY increase in FICC revenues on the back of a “sharp rise in credit,” alongside a “rebound in forex and emerging markets and a good performance of rates.” As such, this has lifted the regional banking sector which resides as one of the top performers alongside the Basic Resources and Oil & Gas sectors, with the latter on account of rising oil prices. The other end of the spectrum sees some of the more defensive sectors including Health Care lagging on account of the overall risk-appetite, albeit Travel and Leisure continues to bear the brunt of the impact from nationwide lockdowns in Europe. In terms of individual movers, earnings see Pandora (+4%) and Hugo Boss (+4.8%) higher, with the latter also flagging “exceptionally strong” Chinese business in October. Looking at some M&A updates, Suez (+0.6%) failed to materially benefit from Veolia (+2.0%) confirming its intention to make a public takeover bid for Suez at EUR 18/shr. This came after Veolia announced around a month ago a 29.9% stake acquisition from Engie at the same price. Meanwhile, G4S (+4%) rejected the takeover proposal from Allied Universal.

NVIDIA (NVDA) – Co. deal to purchase Arm Holdings from SoftBank (9984 JT) is reported to face fresh complications in China from Allen Wu who is the dissatisfied chief of Arm's local JV and holds 17% of the unit, according to FT. (FT)

PayPal Holdings Inc (PYPL) - Q3 20: Adj. EPS USD 1.07 vs. Exp. USD 0.94, Revenue USD 5.46bln vs. Exp. USD 5.43bln. Did not provide FY21 preliminary guidance. (Newswires) -5.7% in pre-market trade

Skyworks Solutions Inc (SWKS) - Q4 20: Adj. EPS USD 1.85 vs. Exp. USD 1.52, Revenue USD 0.96bln vs. Exp. USD 0.84bln. Sees Q1 Adj. EPS USD 2.06 vs. Exp. USD 1.81, sees Q1 rev. USD 1.04bln-1.07bln vs. Exp. USD 0.94bln. (Newswires) -0.4% in after-market trade

FX

USD – Another bullish session in prospect for stocks, oil and other risk assets has enticed Buck bears back out of the woods, while the looming Presidential vote outcome is also keeping the Greenback on tenterhooks. Indeed, the DXY has faded just above 94.000 and ahead of Monday’s 94.285 peak to post a deeper low at 93.622 vs yesterday’s 93.871 base in the run up to relatively secondary US releases that fill the void before the primary issue is known or the vote proves too close to declare and is contested.

AUD – The Aussie has reclaimed all and more of its knee-jerk post-RBA losses even though dovish expectations were exceeded by the Central Bank cutting the benchmark rate, 3 year yield target and TFF by 15 bp to 0.1%, while lowering the rate for Exchange Settlements to zero and unveiling a new Aud 100 bn QE remit for an initial 6 months and aimed at 5-10 year bonds. However, Aud/Usd has spiked from the low 0.7000 zone all the up to and just beyond 0.7100, while the Aud/Nzd cross has staged a firmer rebound from closer to 1.0600 towards 1.0675 as the Kiwi lags ahead of 0.6700 vs its US counterpart in advance of NZ labour data.

CAD/GBP/EUR/CHF – Also forging gains largely at the expense of their US rival, but the Loonie also deriving more momentum from the ongoing recovery in oil as it probes through 1.3150 before Canadian trade on Wednesday. Meanwhile, Sterling is within striking distance of 1.3000 again and retesting 0.9000 offers/resistance against the Euro amidst unconfirmed reports that EU officials may have made a key concession to the UK on zonal attachment methodology in respect of fishing rights. Nevertheless, the single currency is equally close to 1.1700 vs the Dollar having breached the 100 DMA at 1.1661 and the Franc has pared declines from sub-0.9200 to 0.9160+ following in line Swiss CPI readings.

JPY – The G10 underperformer, albeit without local sponsorship as Japanese markets celebrate Culture Day, as the Yen fails to sustain gains above 104.50 due to the aforementioned pick-up in risk appetite on the second day of November.

SCANDI/EM – Somewhat belatedly, the Nok seems to be warming to crude reawakening and eyeing 11.0000 vs the Eur from under 11.1700 at one stage yesterday, but the Try’s tribulations show no sign of ending at all following Turkish inflation prints effectively matching consensus and despite the CBRT jacking up swap rates to 13.25% from 11.75%. In fact, the Lira looks almost destined to extend record lows to 8.5000. Conversely, the Brl may get some respite on return from All Saint’s Day via BCB minutes and/or Brazil’s manufacturing PMI given the generally weak Usd and upbeat sentiment.

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)

Riksbank's Governor Ingves says proposed new law would limit the Central Bank's ability to react flexibly in periods of crisis and would not be in line with EU regulations; to combat the pandemic, the Riksbank needs tools that are not present in the proposals for new law. Under new proposals the Riksbank would be unable to lend to companies via banks as it has done throughout the crisis. Additionally, will most likely have to revise down Q4 forecasts given a second COVID-19 wave in Europe. (Newswires)

Notable FX Expiry, NY Cut:

-       USD/JPY: 104.50-55 (550M), 104.70 (220M), 105.00 (425M), 105.50 (1.1BLN)

Turkish CPI YY (Oct) 11.89% vs. Exp. 11.9% (Prev. 11.75%); MM (Oct) 2.13% vs. Exp. 2.1% (Prev. 0.97%)

Polish rate decision has been pushed back to Friday from Wednesday, according to PAP news agency. (Newswires)

FIXED INCOME

The ongoing stock revival and repositioning post-month end may be weighing on debt, but UK bonds will also be conscious that 2041 DMO issuance may not be as well received as the shorter-dated tap given the mounting cost of COVID-19 relief. Hence, the 10 year benchmark remains depressed near new 135.72 Liffe lows alongside Bunds and US Treasuries, close to 175.95 and 138-02+ ahead of the 2nd auction and US data in advance of the Presidential Election run in. For the record, a relatively small German linker sale has drawn decent enough demand.

COMMODITIES

WTI and Brent front month futures continue their upward trajectory in early EU hours following an overnight session of consolidation, with prices underpinned by sentiment and feeling a second wind from Russia’s comments yesterday which suggested the largest non-OPEC producer is actively discussing rolling over current output curbs through Q1 2021 as opposed to a wind-down from January. In terms of upcoming meetings, the JTC and JMMC are set to meet on Nov 16/17th – with source reports/leaks likely heading into and during the events, followed by the decision-making OPEC/OPEC+ meetings on Nov 30th/Dec 1st. Over in the Gulf of Mexico, operations are resuming following the passing of Hurricane Zeta, with BSEE’s latest estimate suggesting 28% (Prev. 46%) of oil and 16% (Prev. 20%) of natgas production still shut in. Price action in the crude complex will likely be dictated by overall market sentiment heading into election, barring any OPEC-specific headlines and the weekly Private Inventory report. WTI Dec and Brent Jan hover off session highs around 38/bbl (vs. low USD 36.57/bbl) and USD 40/bbl (vs. low 38.65/bbl) respectively. Elsewhere spot gold and spot silver benefit from the Dollar’s decline despite the earlier positive correlation, with the yellow metal retesting USD 1900/oz to the upside at the time of writing, whilst spot silver regained a footing above USD 24/oz. Finally, LME copper trades firmer as the red metal coattails on risk appetite and benefits from the softer Dollar.

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