• European bourses are mixed/firmer after a tepid open with European sectors illustrating changing dynamics throughout the morning in-spite of quiet newsflow; ES +0.7%, NQ +0.8%, RTY +0.8%
• FX features a depressed DXY with major peers largely firmer while fixed is firmer but off highs ahead of more central bank speak
• Gilead's (GILD) antiviral remdesivir should not be used as a routine treatment for COVID-19 patients in critical care wards
• Looking ahead highlights include US University of Michigan, Fed's Williams & Bullard; BoE's Bailey & Tenreyro

US ELECTION UPDATE

US President Trump tweeted criticism of inaccurate and unsecure Dominion Voting System which he stated is used in States where tens of thousands of votes were stolen and given to Biden. However, there was a separate tweet from AFP that election officials said there is no evidence of lost or changed votes. (Newswires)

Pennsylvania Secretary of State asked the Federal Judge to dismiss President Trump campaign's lawsuit regarding election results. (Newswires/Twitter)

CORONAVIRUS UPDATE

Gilead's (GILD) antiviral remdesivir should not be used as a routine treatment for COVID-19 patients in critical care wards, according to doctors of world's top body for intensive care; this comes after a WHO-led solidarity results. (Newswires)

German government spokesperson says Germany cannot talk about a turnaround in COVID infections just yet, no easing of restrictions is possible. (Newswires)

ASIA

Asian equity markets weakened on spill-over selling from Wall Street, where all major indices declined as participants continued to fade the reflation trade and with increases in virus cases denting the recent vaccine optimism, which saw the DJIA lead the downturn and briefly give up the 29k level. ASX 200 (-0.2%) was dragged lower by notable losses in the energy sector following similar underperformance stateside as rising infections and restrictions weighed on the demand outlook, while Nikkei 225 (-0.5%) was pressured as exporters felt the brunt of currency inflows and with earnings in focus as Rakuten shares slumped after its 9-month net loss widened five-fold. Conversely, Nissan shares were in top gear despite posting a H1 net loss of JPY 330bln as the Co. reduced its annual operating loss forecast by 28% and Sony was also among the notable gainers after it began PlayStation 5 sales in several major markets. KOSPI (+0.7%) rebounded from early losses with the index helped by resilience in tech stocks and with Asiana Airlines soaring on potential M&A reports after Korean Air Lines was said to be in discussions to acquire the airliner. Hang Seng (U/C) and Shanghai Comp. (-0.9%) conformed to the broad downbeat tone despite a firm liquidity effort by the PBoC, as sentiment remained subdued after China’s further clampdown on Hong Kong freedoms which triggered an uproar globally, with the UK said to be considering sanctions, while tensions remained a headwind after the White House confirmed an executive order prohibiting US investments in Chinese firms owned or controlled by the Chinese military. Finally, 10yr JGBs marginally extended above the 152.00 level following the bull flattening in USTs and with upside helped by the glum picture across risk assets, although the upside was capped amid the absence of the BoJ from the market today and ahead of key data beginning with Q3 GDP early next week.

PboC injected CNY 160bln via 7-day reverse repos at rate of 2.20% for a net injection of CNY 160bln. (Newswires) PboC set USD/CNY mid-point at 6.6285 vs. Exp. 6.6283 (Prev. 6.6236)

China’s Foreign Ministry urges the US to stop their behaviour of arbitrary suppression, will firmly uphold rights and interests of Chinese firms. (Newswires)

CENTRAL BANKS

RBNZ Governor Orr said the assumption that the economy will continue to grow is a ‘big if’. Furthermore, Orr stated he is currently very comfortable with the funding for lending and QE programmes, while he added foreign asset purchases are not a preferred option. (Newswires)

ECB’s de Cos says COVID-19 vaccines news are positive, but it will take some time before seeing positive economic impacts; vaccine at least puts worst-case scenario off the table – bold economic policies are still needed to fight the pandemic. Most likely see a revision-down to inflation outlook for Spain & EZ in December. (Newswires)

UK/EU

UK Tory MPs reportedly warned that PM Johnson is on his last chance to overhaul a dysfunctional Downing Street, while the report also noted increasing rumours the PM’s Chief Adviser Cummings will leave by Christmas. (Guardian)

EU GDP Flash Estimate QQ (Q3) 12.6% vs. Exp. 12.7% (Prev. 12.7%); YY (Q3) -4.4% vs. Exp. -4.3% (Prev. -4.3%)

-        Employment Flash QQ (Q3) 0.9% (Prev. -2.9%); YY (Q3) -2.0% (Prev. -3.1%)

GEOPOLITICAL

7-8 Pakistan Army soldiers killed in retaliatory firing by Indian Army in response to ceasefire violations from across Line of Control, according to an Indian Army sources cited by ANI. (Twitter)

EQUITIES

Major European bourses have largely nursed the mild losses seen at the cash open (Euro Stoxx 50 +0.4%) following on from a mostly downbeat APAC handover. The European day kicked off with a continuation of the growth to value rotational pause, reflected by sectors at the open alongside US equity futures performances at the time. However, despite a distinct lack of fresh fundamental news-flow, sentiment picked up pace whilst the rotational dynamics somewhat decoupling. European sectors at the open saw Oil & Gas, Autos and Banking names at the foot of the index whilst Tech and Healthcare fared better, whilst US equity futures at the time saw NQ outpacing the ES and RTY. However, as things stand, Tech retains top spot whilst Banks and Autos also reside towards to top of the pile. Oil & Gas has trimmed losses towards the unchanged mark whilst Healthcare tumbled, and Travel & Leisure ebbed lower towards the bottom of the pack. This decoupling is also reflected in US equity futures’ performance as NQ, ES and RTY are all posting gains in proximity to 0.8%. Back to Europe, UK’s FTSE 100 (-0.3%) underperforms regional peers as a firmer Sterling weighs on exporters, whilst gains in the SMI (Unch) are capped by a lacklustre performance in pharma-giants.

Japan Display (6704 JT) – 6-month: net JPY -36.29bln vs. Prev. JPY -104.16bln, operating JPY -9.88bln vs. Prev. JPY -35.17bln. (Newswires)

FX

GBP/TRY - Little sign of Sterling succumbing to any Friday 13 phobias, thus far, and some observers are suggesting that the latest rebound in Cable from the low 1.3100 area may be due to impending departure of UK PM Johnson’s SPAD Cummings. However, Eur/Gbp has also retreated from a double top just above 0.9000 and the Pound’s bounce could be more technical and consolidative given no positive developments on the Brexit front. Conversely, the Lira’s impressive revival can be put squarely if not solely down to Turkish President Erdogan’s economic epiphany in terms of pursuing more orthodox monetary and fiscal policies after sacking another CBRT President, with Usd/Try extending its sharp reversal from record peaks to test support below 7.6200 ahead of next week’s rate meeting.

NZD/AUD - The Kiwi has fallen further from post-RBNZ highs above 0.6900 towards 0.6800 vs its US counterpart and 1.0700+ against the Aussie to sub-1.0600 at one stage in wake of rather downbeat remarks from RBNZ Governor Orr overnight, caveating forecasts for the economic recovery to continue with a big ‘IF’, and backed up somewhat by a slowdown in October’s NZ manufacturing PMI. Meanwhile, Aud/Usd is hovering around 0.7260 as the Foreign Ministry’s Deputy Secretary states a readiness to engage with China on trade relations that have been strained of late.

DXY/EUR/CAD/JPY/CHF - Aside from all the deviations noted above, G10 currencies remain relatively rangebound and pretty much epitomised by the Dollar index holding within a narrow 93.007-92.767 band within wtd extremes (93.210-92.129), albeit easing amidst an upturn in broad risk sentiment. Indeed, the Euro and Loonie are gradually firming up as the Greenback slips to retest offers/resistance into 1.1850 and 1.3100 respectively. No obvious reaction to Eurozone data, but another decent option expiry interest may keep Eur/Usd contained between 1.1840-50 and 1.1795-1.1800 given 1.4 bn on either side and the BoC’s Senior Loan Officer Survey may offer the Cad some independent impetus in advance of Canadian CPI and retail sales next week. Elsewhere, the Yen and Franc are both meandering from 105.15 to 104.87 and 0.9158 to 0.9137, with the latter largely ignoring slightly less deflationary Swiss import and producer prices.

SCANDI/EM - Not quite all change, but the Swedish Krona has slipped after holding up better than its Norwegian peer on Thursday and it looks like 10.2000 is proving sticky for the Eur/Sek cross, but the Mexican Peso is deriving some protection from softer crude prices on the back of Banxico’s unexpected decision to stand pat on rates with only one dissenter chiming with consensus for a 25 bp ease, as Usd/Mxn probes 20.5000.

Notable FX Expiries, NY Cut:

-       EUR/USD:  1.1770 (462M), 1.1795-1.1800 (1.4BLN), 1.1840-50 (1.4BLN)

FIXED INCOME

It could just be a case of Friday fatigue setting in or perhaps a lack of conviction to reclaim more lost ground without additional impetus, but debt futures have topped out amidst some signs of consolidation in equities and after testing psychological if not recognised technical levels. Bunds are now nearer their new 174.78 Eurex low vs 175.05 at best, Gilts closer to 134.58 than 134.96 and the 10-year T-note back below parity between 138-10+/138-02+ parameters. Ahead, US PPI may not prompt much price action given that CPI has already been released and was softer than anticipated, but preliminary Michigan sentiment is forward-looking and this week’s bumper Central Bank speakers’ schedule rounds off with a duo of Fed and BoE representatives.

German finance/budgetary experts expect the Gov't to take on EUR 125bln in additional debt in 2021, Der Spiegel.

COMMODITIES

WTI and Brent front-month futures trade remain pressured but have been drifting off worst levels during early European hours in lockstep with price action across equity markets. News flow for the complex has been light on Friday morning and thus the cue is taken from overall market sentiment. In terms of the fundamental environment, rising COVID-19 cases across the globe continues to weigh on the demand side of the equation, with an effective vaccine unlikely to see a mass rollout in the near-term, whilst supply side is still uncertain as OPEC+ producers gear up to for its non-policy confab next week. On that note, profit-taking in the crude complex cannot be ruled out ahead of the weekend given the respectable gains in the benchmarks this week. WTI Dec trades just under USD 41/bbl (vs. low 40.16/bbl) whilst Brent Jan edges higher above USD 43/bbl (vs. low 42.67/bbl). Elsewhere, spot gold and silver eke mild gains as the precious metals coat-tail on the recent USD softness, albeit remain contained within recent ranges. Finally, LME copper gleans support for the softer Buck and recovery in stocks.

Libyan oil production exceeds 1.2mln BPD, according to a source. (Newswires)