• The electoral vote tally remains unchanged from yesterday with Biden at 264 votes, including Arizona (11 EC votes), and President Trump at 214 votes
• Georgia (16 EC votes) counts now have Biden leading by over 1k votes; with Arizona, Biden would have 280 EC votes without AZ he would hold 269
• However, desks note it may not be possible to call Georgia Presidential race for weeks given how close the race is
• Sentiment has slipped since the European cash open, ES -0.7%, though we are off lows with the downside more pronounced in crude
• FX features a downbeat USD at fresh session lows of 92.298 to the benefit of major peers; USTs are relatively unchanged as is the yield curve
• Looking ahead highlights include US and Canadian Labour Market Reports, Baker Hughes Rig Count

US ELECTION UPDATE

The electoral vote tally remains unchanged from yesterday with Biden at 264 votes, including Arizona (11 EC votes), and President Trump at 214 votes, with key states still to be called including Nevada (6 EC votes), Georgia (16 EC votes), North Carolina (15 EC votes) and Pennsylvania (20 EC votes). Senate race remains on 48 for both Democrats & Republicans with 4-seats remaining. 

There have been a number of updates for Georgia (16 EC votes) throughout the morning with the latest tally via Decision Desk showing Biden leading by 1,296; Trump 49.37% (2,448,484) vs. Biden 49.39% (2,449,580) with >99% estimated votes tallied. Given these developments Betfair Exchange has moved to implied probabilities of >90% for a Biden Presidency. However, NBC News Decision Desk stated it may not be possible to call Georgia Presidential race for weeks given how close the race is.

Given these developments: assuming this Decision Desk tally corresponds with the final outcome for Georgia (16 EC votes) and if, as some desks are, you award Arizona (11 EC votes) to Biden this would place the Democratic candidate on 280 votes and thus surpassing the 270 required for Presidency. However, if you do not count Arizona, then Biden would be on 269 electoral college votes and therefore one short of the 270 required at this stage. In terms of a recount: in Georgia, there is no automatic recount within a certain threshold. Either candidate can request a recount in the event the margin of victory is less than or equal to 0.5%.

Edison Research reported President Trump is ahead in Pennsylvania (20 EC votes) at 49.5% vs. Biden at 49.2% with 95% of votes tallied. Pennsylvania Secretary of State said several hundred thousands of ballots remain to be counted with an overwhelming majority to be counted by Friday and it will take time to announce a winner as the race is close, while President Trump's campaign sued the Philadelphia county election board seeking to bar ballot counting unless Republican observers are present. (Newswires)

US President Trump said he would easily win if the legal votes were counted and noted that a lot of votes arrived late, while he claimed he is being cheated out of victory and that there had been a number of disturbing irregularities in the election across the nation. President added the goal is to defend the integrity of the election, that he will not allow his voters to be silenced and reiterated litigation over the election may end up at the Supreme Court. (Newswires)

Democrat Presidential candidate Biden reiterated that every vote must be counted and has no doubt that he will win. (Newswires)

US Office of Special Counsel has opened a probe into the Trump campaign use of the White House for campaign-related activities to determine if any federal law was broken. (Newswires)

ASIA

Asian equity markets traded mixed with the region only partially sustaining the momentum from Wall Street where the post-election rally persisted despite no declared winner yet, although Biden does remain on the cusp with 6 electoral votes shy of victory at 264 votes vs. President Trump at 214 votes. The key states still to be declared include Nevada (6 votes), Georgia (16 votes), North Carolina (15 votes) and Pennsylvania (20 votes) with Biden leading in Nevada, while the former VP dramatically caught up with President Trump in Georgia and narrowed the gap in Pennsylvania. ASX 200 (+0.8%) was lifted by strength in mining names and as financials were kept afloat, with the largest-weighted sector and shares in Macquarie unfazed by the slump in the latter’s H1 earnings, while Nikkei 225 (+1.0%) extended on gains to breach October 2018 highs and briefly print its best levels in nearly 3 decades with slight encouragement from better than expected household spending. Conversely, Hang Seng (-+0.1%) and Shanghai Comp. (-0.2%) lagged after the PBoC refrained from open market operations which resulted to a net daily drain of CNY 100bln and weekly drain of CNY 590bln, while the central bank also set the strongest currency fix in more than 2 years. Finally, 10yr JGBs were flat as prices took a breather from the mid-week surge to above the 152.00 level and with further upside capped by the gains in stocks and mixed results at the 10yr inflation-indexed JGB auction.

PBoC skipped reverse repo operations for a CNY 100bln net daily drain and CNY 590bln weekly net drain. (Newswires) PBoC set USD/CNY mid-point at 6.6290 vs. Exp. 6.6310 (Prev. 6.6895); strongest since July 2018.

PBoC Vice Governor stated that adjustments will be based on assessments of the economy and cannot make hasty moves. PBoC Vice Governor added policy adjustments need to be considered as the economy recovers and they will guide financial innovation to support real economy and safeguard bottom lines on systemic risks, while the PBoC also noted monetary policy will be more flexible and appropriate. (Newswires)

Japanese All Household Spending (Sep) M/M 3.8% vs. Exp. 2.2% (Prev. 1.7%). (Newswires) Japanese All Household Spending (Sep) Y/Y -10.2% vs. Exp. -10.7% (Prev. -6.9%)

Gov't Officials at an Australian business meeting reportedly advised participants that bilateral relations with China were unlikely to recover in the short-term and they should begin exploring alternative options, FT. (FT)

UK/EU

EU Chief Brexit Negotiator Barnier believes that the UK is trying to move towards a leader level intervention as per the Withdrawal Agreement, according to Sun's Gutteridge; open to a few select topics being passed upward at the very end, but the UK wants to leave as many as 30 issues open.

-        In a generally gloomy assessment the EU's chief negotiator said the talks are currently 'not on a trajectory' to get a deal and there won't be one unless the UK changes its approach, especially on LPF and fishing where he said the EU has shown willingness to compromise.

GEOPOLITICAL

India will not be accepting changes to the Line of Actual Control and the status quo has to be restored, Chief of Defence General Rawat. (Newswires)

EQUITIES

Equities across Europe trade lower across the board (Euro Stoxx 50 -0.6%), albeit off worst levels following a mixed APAC session as sentiment deteriorates throughout the European morning – with the US Presidential race winner still undeclared but tilting further towards Biden. The latest update from some poll-watchers suggested a blue flip in the state of Georgia with over 99% of votes tallied. Assuming this tally corresponds with the final outcome for Georgia (16 EC votes) and if Arizona (11 EC votes) is awarded to Biden (as some desks have), this would place the Democratic candidate on 280 votes and thus surpassing the 270 required for Presidency. However, if you omit Arizona, then Biden would be on 269 electoral college votes. As a reminder, officials in the state have remarked that it could be several weeks before we get a final result given how close the race is regarding Georgia. Meanwhile, the latest implied probabilities from Betfair Exchange point to a +90% chance of a Biden victory. Elsewhere, the Senate rate remains neck and neck as each side clutch 48 seats, with 4 still hanging in the balance. US equity futures (ES -0.8%, NQ -1.2%, YM -0.6%, RTY -0.5%) have been drifting lower since European players entered the fray, with traders also weighing a contested outcome as Trump continues to condemn the legitimacy of the voting system. Back to Europe, the region conforms to the risk aversion as bourses extended on the downside seen at the cash open, whilst losses remain relatively broad-based across. Sectors are now all in the red after a mixed open, with Travel & Leisure at the bottom of the pile as it continues to bear the brunt of COVID-related lockdown measures, with IAG’s (-1.8%) British Airways also cancelling all flights from Gatwick airport for the month amid England’s restrictions. Meanwhile, losses in the Telecoms sectors are cushioned on the back of stellar earnings from T-Mobile (+6.4% pre-mkt) which in turn bolstered its majority shareholder Deutsche Telekom (+2.4%), who owns some 43.5% of TMUS. The insurance sector is also faring better than some of its peers as Allianz (+0.1%) rose post-earnings, but the stock has waned off highs. Other earnings-related movers include Richemont (+8.3%) who saw a positive trend in Q2 following the sharp decline in the prior month, in turn supporting its peer Swatch (+1.0%).

DISH Network Corp (DISH) Q3 20 (USD): EPS 0.76 (exp. 0.70), Revenue 4.53bln (exp. 3.56bln). Net Pay-TV subscribers increased around 116k (prev. 148k)

Twitter (TWTR) - US President Trump tweets "Twitter is out of control, made possible through the government gift of Section 230!". (Twitter)

UBER (UBER) Q3 EPS -0.62 (exp. -0.61), revenue 2.81bln (exp. 2.82bln); gross bookings USD 14.75bln (exp. 14.49bln), Monthly active platform consumers 78mln (exp. 80.2mln)

FX

NZD/AUD – The Kiwi is consolidating recent gains in the high 0.6700 zone vs its US counterpart and has peered just above 0.6800 in wake of an uptick in NZ Q4 inflation expectations overnight, but the Nzd is also benefiting from tailwinds via the Aussie cross amidst more angst between China and its Antipodean neighbour on the trade front. Indeed, Aud/Nzd has retreated to test 1.0700 from around 1.0760 at one stage and Aud/Usd is losing momentum have topped out a few pips over 0.7280 despite another firm PBoC Cny fix. For the record, the RBA’s SOMP merely underscored dovish guidance that came alongside Tuesday’s multi-pronged policy stimulus, so hardly impacted.

USD – Little respite for the Dollar or reprieve from the FOMC, as the wait to see final results of the US Presidential Election continues. In fact, the DXY has slipped into another lower range even though several major peers are losing momentum independently or in line with a downturn in broad risk sentiment. The index has bounced off worst levels within a 92.823-435 range, and perhaps looking idle sideways into NFP unless any of the last remaining states declare and push front-runner Biden technically through the tape.

CAD/GBP – The Loonie has lost traction from oil, but retaining grip of the 1.3000 handle vs its US rival in the run up to Canadian jobs data, but the Pound appears a bit more precarious above 1.3100 given latest Brexit updates from EU chief negotiator Barnier effectively laying the blame for no progress on fishing or the LPF at the UK’s door.

EUR/CHF/JPY – All firmer against the Buck, with the Euro still within striking distance of a cluster of late October peaks that stand in the way of last month’s apex circa 1.1880, while the Franc is hovering just shy of 0.9000 and Yen has accelerated beyond 103.50 following firmer than forecast Japanese household spending data and somewhat dismissive rhetoric from PM Suga on exchange rates aside from expressing the importance of stability.

SCANDI/EM – Collapsing crude prices and contagion in stocks, or vice-versa are obvious factors behind a rebound in Eur/Nok through 10.9000, but a fall in Norwegian manufacturing output hot on the heels of yesterday’s downbeat Norges Bank economic outlook is also weighing on the Crown. Elsewhere, the Rub is also weaker alongside Brent that has slipped under Usd 40/brl, but the Try is not gleaning any comfort from cheaper oil at all.

RBA Statement on Monetary Policy noted the board is prepared to expand bond buying if required and that it is not contemplating further lowering rates with little to be gained from moving to negative rates. Furthermore, it committed to not increase rates until inflation is sustainably in 2%-3% target band, Furthermore, it sees GDP Y/Y growth at -4% in Q4 2020, +5% in Q4 2021 and +4% in Q4 2022, while it sees Trimmed Mean CPI Y/Y at 1% in Q4 2020, 1% in Q4 2021 and 1.5% in Q4 2022. (Newswires)

New Zealand Inflation Expectations (Q4) 1.6% (Prev. 1.4%)

FIXED INCOME

It remains uncertain whether the monthly BLS report will cause much of a stir or market movement, but US jobs data holds more potential than other macro releases at least. For now though, as the Presidential Ballot vigil rumbles on, risk-off sentiment and positioning has helped debt futures pare more downside, with Bunds up to 176.49, Gilts 136.24 and the 10 year T-note crossing 139-00 again vs lows of 176.27, 135.92 and 138-26+. Conversely, equities are back-pedalling after a strong bull run and weakness in oil prices could be the catalyst or at least compounding the retracement, while the COVID situation continues to deteriorate and Brexit is still far from resolved in terms of a deal between the UK and EU.

COMMODITIES

WTI and Brent front-month futures post losses in tandem with the overall sentiment across the market and with complex-specific news flow on the lighter side. Again, price action throughout the day is likely to be dictated by macro-themes in the absence of OPEC/OPEC+ updates as producers continue to balance supply and demand risks heading into a crucial month for the members. Consensus thus far points to an extension of current cuts through Q1 21, with some murmurs of deeper cuts, albeit this has not been agreed on nor confirmed by ministers. WTI Dec loses ground below USD 38/bbl (vs. high 38.61/bbl) while Brent Jan yielded the USD 40/bbl handle (vs. high 40.70/bbl). Elsewhere, spot gold and silver drift off worst levels on the back of a softer Buck, with the former now north of 1950/oz to the upside after climbing from a low of ~1935/oz, whilst spot silver gains ground above USD 25.50/oz. The softer Dollar has also benefitted LME copper, which remains around session highs heading into the US open.