• The mood across European stocks has improved from the subdued cash open (Euro Stoxx 50 +0.5%; Stoxx 600 +0.3%)
• US equity futures have also nursed earlier losses and trade in modest positive territory across the board, with the NQ narrowly outperforming
• Apple is reportedly set to slash iPhone production due to the chip crunch
• Chinese trade data saw exports top estimates but imports disappointed
• Looking ahead, highlights include US CPI, FOMC Minutes, EIA STEO, OPEC MOMR, Fed's Bowman, George, Brainard, BoE's Cunliffe, supply from the US

CORONAVIRUS UPDATE

US will allow fully vaccinated travellers from Canada and Mexico to enter the US through land borders and ferry crossings beginning early next month, while it plans to announce the precise date for restrictions to be lifted on vaccinated air and land travellers to the US very soon. (Newswires)

ASIA

Asia-Pac stocks were mixed following the choppy performance stateside with global risk appetite cautious amid the rate hike bets in US and heading into key events including US CPI and FOMC Minutes, while there were also mild headwinds for US equity futures after the closing bell on reports that Apple is set to reduce output of iPhones by 10mln from what was initially planned amid the chip shortage. ASX 200 (unch.) was little changed as gains in gold miners, energy and tech were offset by losses in financials and the broader mining sector, with softer Westpac Consumer Confidence also limiting upside in the index. Nikkei 225 (-0.3%) was pressured at the open as participants digested mixed Machinery Orders data which showed the largest M/M contraction since February 2018 and prompted the government to cut its assessment on machinery orders, although the benchmark index gradually retraced most its losses after finding support around the 28k level and amid the recent favourable currency moves. Shanghai Comp. (+0.4%) also declined as participants digested mixed Chinese trade data in which exports topped estimates but imports disappointed and with Hong Kong markets kept shut due to a typhoon warning. Finally, 10yr JGBs were steady with price action contained after the curve flattening stateside and tentative mood heading to upcoming risk events, although prices were kept afloat amid the BoJ’s purchases in the market for around JPY 1tln of JGBs predominantly focused on 1-3yr and 5-10yr maturities.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a CNY 90bln net daily drain. (Newswires)PBoC set USD/CNY mid-point at 6.4612 vs exp. 6.4613 (prev. 6.4447)

US State Department senior official said Secretary of State Blinken will be candid in the meeting with Israel's Foreign Minister today regarding risks to shared national security interests from close cooperation with China. (Newswires)

China Taiwan Affairs Office said PLA exercises and training are aimed at Taiwan independence and interference by external forces, while it added that Taiwan's hyping of military threat is a bogus accusation. It was later reported that Taiwan warned of a tougher response if Chinese military jet flights approach too close. (Newswires)

China Customs said trade still faces many uncertain and unstable factors but China's measures to stabilise foreign trade are showing results, while it added that foreign trade will soften in Q4 due to a high base although relatively fast growth is still expected for whole year trade. (Newswires)

• Chinese Trade Balance (USD)(Sep) 66.76B vs. Exp. 46.8B (Prev. 58.34B)
• Chinese Exports YY (USD) (Sep) 28.1% vs. Exp. 21.0% (Prev. 25.6%)
• Chinese Imports YY (USD)(Sep) 17.6% vs. Exp. 20.0% (Prev. 33.1%)
• Chinese Trade Balance (CNY)(Sep) 433.2B vs. Exp. 386B (Prev. 376.3B)
• Chinese Exports YY (CNY)(Sep) 19.9% vs. Exp. 17.1% (Prev. 15.7%)
• Chinese Imports YY (CNY)(Sep) 10.1% vs. Exp. 22.3% (Prev. 23.1%)
• Japanese Machinery Orders MM (Aug) -2.4% vs. Exp. 1.7% (Prev. 0.9%)
• Japanese Machinery Orders YY (Aug) 17.0% vs. Exp. 14.7% (Prev. 11.1%)

Fitch affirms Australia at AAA; outlook stable (previously negative). (Newswires)

US

Fed announced Vice Chair for Supervisions Quarles will no longer chair the supervision and regulation committee as vice chair term expires this Wednesday, while committee will meet on an un-chaired basis and will advance regulatory matters when there is broad consensus. (Newswires)

US Treasury Secretary Yellen reiterated the transitory inflation view and sees isolated shortages of goods in the approaching months, while she also noted it is absolutely necessary to lift the debt limit. (Newswires)

US House voted 219-206 for the final passage with vote of the debt limit increase bill which extends the debt limit to early December which just requires President Biden to sign into law. (Newswires)

Apple (AAPL) is reportedly set to slash iPhone production due to the chip crunch and expects to produce 10mln fewer iPhones than initially planned, with suppliers Broadcom (AVGO) and Texas Instruments (TXN) said to be struggling to deliver enough chips, according to sources. It was also reported that Apple added China's BOE Technology (000725 CH) to its supplier list for premium displays for its iPhone 13. (Newswires/Nikkei)

UK/EU

EU officials are set to announce that they can significantly reduce the number of checks on British goods exported to Northern Ireland if they are given access to UK trade databases. However, the bloc is to reject calls to remove the role of the ECJ in the Brexit deal. (Telegraph)

• UK GDP Estimate MM (Aug) 0.4% vs. Exp. 0.5% (Prev. 0.1%)
• UK GDP Estimate 3M/3M (Aug) 2.9% vs. Exp. 3.0% (Prev. 3.6%)

EQUITIES

The mood across European stocks has improved from the subdued cash open (Euro Stoxx 50 +0.5%; Stoxx 600 +0.3%) despite a distinct lack of newsflow and heading into the official start of US earnings season, US CPI and FOMC minutes. US equity futures have also nursed earlier losses and trade in modest positive territory across the board, with the NQ (+0.5%) narrowly outperforming owing to the intraday fall in yields, alongside the sectorial outperformance seen in European tech amid tech giant SAP (+4.7%) upgrading its full FY outlook, reflecting the strong business performance which is expected to continue to accelerate cloud revenue growth. As such, the DAX 40 (+0.7%) outperformed since the cash open, whilst the FTSE 100 (-0.2%) is weighed on by underperformance in its heavyweight Banking and Basic Resources sectors amid a decline in yields and hefty losses in iron ore prices. Elsewhere, the CAC 40 (+0.3%) is buoyed by LMVH (+2.0%) after the luxury name topped revenue forecasts and subsequently lifted the Retail sector in tandem. Overall, sectors are mixed with no clear bias. In terms of individual movers, Volkswagen (+3.5%) was bolstered amid Handelsblatt reports in which the Co was said to be cutting some 30k jobs as costs are too high vs competitors, whilst separate sources suggested the automaker is said to be mulling spinning off its Battery Cell and charging unit. Chipmakers meanwhile see mixed fortunes in the aftermath of sources which suggested Apple (-0.7% pre-market) is said to be slashing output amid the chip crunch.

FX

DXY - The Dollar looks somewhat deflated or jaded after yesterday’s exertions when it carved out several fresh 2021 highs against rival currencies and a new record peak vs the increasingly beleaguered Turkish Lira. In index terms, a bout of profit taking, consolidation and position paring seems to have prompted a pull-back from 94.563 into a marginally lower 94.533-246 range awaiting potentially pivotal US inflation data, more Fed rhetoric and FOMC minutes from the last policy meeting that may provide more clues or clarity about prospects for near term tapering.

NZD/GBP - Both taking advantage of the Greenback’s aforementioned loss of momentum, but also deriving impetus from favourable crosswinds closer to home as the Kiwi briefly revisited 0.6950+ terrain and Aud/Nzd retreats quite sharply from 1.0600+, while Cable has rebounded through 1.3600 again as Eur/Gbp retests support south of 0.8480 yet again, or 1.1800 as a reciprocal. From a fundamental perspective, Nzd/Usd may also be gleaning leverage from the more forward-looking Activity Outlook component of ANZ’s preliminary business survey for October rather than a decline in sentiment, and Sterling could be content with reported concessions from the EU on NI customs in an effort to resolve the Protocol impasse.

EUR/CAD/AUD/CHF - Also reclaiming some lost ground against the Buck, with the Euro rebounding from around 1.1525 to circa 1.1560, though not technically stable until closer to 1.1600 having faded ahead of the round number on several occasions in the last week. Meanwhile, the Loonie is straddling 1.2450 in keeping with WTI crude on the Usd 80/brl handle, the Aussie is pivoting 0.7350, but capped in wake of a dip in Westpac consumer confidence, and the Franc is rotating either side of 0.9300.

JPY - The Yen seems rather reluctant to get too carried away by the Dollar’s demise or join the broad retracement given so many false dawns of late before further depreciation and a continuation of its losing streak. Indeed, the latest recovery has stalled around 113.35 and Usd/Jpy appears firmly underpinned following significantly weaker than expected Japanese m/m machinery orders overnight.

SCANDI/EM - Not much upside in the Sek via firmer Swedish money market inflation expectations and perhaps due to the fact that actual CPI data preceded the latest survey and topped consensus, but the Cnh and Cny are firmer on the back of China’s much wider than forecast trade surplus that was bloated by exports exceeding estimates by some distance in contrast to imports. Elsewhere, further hawkish guidance for the Czk as CNB’s Benda contends that high inflation warrants relatively rapid tightening, but the Try has not derived a lot of support from reports that Turkey is in talks to secure extra gas supplies to meet demand this winter, according to a Minister, and perhaps due to more sabre-rattling from the Foreign Ministry over Syria with accusations aimed at the US and Russia.

Australian Treasurer Frydenberg said he expects GDP to contract by at least 3% in Q3 but is confident the economy will rebounded strongly, while he stated that companies and households have built up AUD 250mln on balance sheets. (Newswires)

FIXED INCOME

Debt futures still have some way to go before redemption or reaching the point at which shorts are likely cut/trim positions and bears refrain from selling into upticks, with the exception of Gilts perhaps as the10 year UK benchmark has rebounded to a new w-t-d peak and eclipsed last Friday’s high in the process. Nevertheless, the revival has been stealthy and measured, with Bunds overcoming a series of technical humps on the way to reaching 168.89 (+48 ticks vs -10 ticks at the early Eurex low), while its Liffe peer recently topped out at 124.68 (+61 ticks vs +1 tick at worst) and US Treasuries are hugging overnight session pinnacles amidst further curve flattening pre-CPI, Fed commentary, Usd 24 bn 30 year issuance and FOMC minutes.

COMMODITIES

WTI and Brent front-month futures see another choppy session within recent and elevated levels – with the former around USD 80.50/bbl (80.79-79.87/bbl) and the latter around 83.35/bbl (83.50-82.65/bbl range). The complex saw some downside in conjunction with jawboning from the Iraqi Energy Minster, who state oil price is unlikely to increase further, whilst at the same time, the Gazprom CEO suggested that the oil market is overheated. Nonetheless, prices saw a rebound from those lows heading into the US inflation figure, whilst the OPEC MOMR is scheduled for 12:00BST/07:00EDT. Although the release will not likely sway prices amidst the myriad of risk events on the docket, it will offer a peek into OPEC's current thinking on the market. As a reminder, the weekly Private Inventory report will be released tonight, with the DoE's slated for tomorrow on account of Monday's Columbus Day holiday. Gas prices, meanwhile, are relatively stable. Russia's Kremlin noted gas supplies have increased to their maximum possible levels, whilst Gazprom is sticking to its contractual obligations, and there can be no gas supplies beyond those obligations. Over to metals, spot gold and silver move in tandem with the receding Buck, with spot gold inching closer towards its 50 DMA at 1,776/oz (vs low 1,759.50/oz). In terms of base metals, LME copper has regained a footing above USD 9,500/t as stocks grind higher. Conversely, iron ore and rebar futures overnight fell some 6%, with overnight headlines suggesting that China has required steel mills to cut winter output. Further from the supply side, Nyrstar is to limit European smelter output by up to 50% due to energy costs. Nyrstar has a market-leading position in zinc and lead. LME zinc hit the highest levels since March 2018 following the headlines

IEA warned of higher oil prices if demand doesn't subside and a looming possibility of additional instability for global energy markets, while it added that global energy consumption in 2021 is expected to reclaim all ground lost the year before and predicts natgas consumption to increase 15% from 2020 levels by 2030 but won't peak until 2050. (Newswires)

Nyrstar is to limit European smelter output by up to 50% due to energy costs. (Newswires)

Gazprom Neft CEO says oil market is overheated. (Newswires)

Iraqi Oil Minister says oil price is unlikely to increase further. (Newswires)

Russia's Kremlin say gas supplies have increased to their maximum possible levels, Gazprom is sticking to its contractual obligations and there can be no gas supplies beyond those obligations. (Newswires)

Chinese State Planner says local governments will be strictly banned from shutting down coal mines without authorisation; coal supply is secured for the winter and spring. (Newswires)

GEOPOLITICAL

Turkish Foreign Minister says Russia and the US have responsibility in the recent Kurdish YPG attacks on Turkey from Syria; Turkey will do "what is necessary" in Syria. (Newswires)

Saudi coalition has destroyed two explosive-laden boats used by Yemeni Houthis, according to State TV. (Newswires)

CRYPTO

Crypto Exchange Binance announce the delisting of CNY pairings. (Binance)