• APAC bourses adopted a downside bias, Hong Kong underperformed; US equity futures were flat/lower
• In FX, the DXY has been choppy with peers modestly pressured ex-JPY/CHF; core debt was diverging but has moved higher most recently
• Microsoft and Twitter rose post-earnings whilst Alphabet and AMD dipped
• US Senate Finance Committee Chairman has unveiled a tax proposal focused on unrealised gains of assets held by billionaires
• US President Biden reportedly agreed to push for a deal as soon as possible in a meeting with lawmakers
• France intends to retaliate against Britain's refusal to offer additional permits for French fisherman working in British onshore-waters
• Looking ahead, highlights include US Durable Goods, BoC & BCB Policy Announcement, the UK Budget, supply from the US
• Earnings: GlaxoSmithKline; Ford, GM, Boeing, Coca-Cola, Kraft Heinz, McDonalds, Garmin

CORONAVIRUS UPDATE

US FDA advisory panel backs of use Pfizer (PFE)/BioNTech (BNTX) COVID-19 vaccine in children aged 5-11; benefits outweigh risks. (Newswires)

ASIA

APAC bourses adopted a downside bias as sentiment waned following the mild gains on Wall Street, in which the S&P 500 and DJIA eked out record closes after easing off best levels. The US close also saw earnings from behemoths Microsoft, Alphabet and AMD - the former rose 2% after blockbuster metrics, whilst the latter two dipped after-market. Meanwhile, Twitter shares rose almost 4% after hours as the Co. highlighted the lower-than-expected Q3 impact from Apple’s privacy-related iOS changes. On the flipside, Robinhood slumped over 8% after reporting a steep decline in crypto activity. It’s also worth noting that Berkshire Hathaway Class A shares - the world’s most expensive shares - are quoted +51% after-market (+USD 223,614.00/shr); reasoning currently unclear. Overnight, US equity futures resumed trade flat before a mild divergence became evident between the NQ and RTY, whilst European equity futures' losses were slightly more pronounced. Back to APAC, the ASX 200 (+0.1%) was buoyed by its tech sector amid the post-Microsoft tailwinds from the US, but the sector configuration then turned defensive, whilst Woolworths slumped some 4% after earnings and dragged the Consumer Staples sector with it. The Nikkei 225 (-0.1%) saw losses across most sectors, with Retail, Insurance and Banks towards the bottom. The KOSPI (-0.8%) conformed to the downbeat mood, whilst Hyundai shares were also pressured amid its chip-related commentary. The Hang Seng (-1.6%) and Shanghai Comp (-1.0%) declined despite another substantial CNY 200bln PBoC liquidity injection for a net CNY 100bln. The Hang Seng accelerated losses in the first half-hour of trade with Alibaba, Tencent and Xiaomi among the laggards. Meanwhile. PAX Technology slumped 45% after the FBI raided the Co's Florida officers amid suspicion PAX’s systems may have been involved in cyberattacks on US and EU organizations. Finally, 10yr JGBs were lower amid spillover selling from T-notes and Bund futures, whilst the Aussie 3yr yield topped 1.00% for the first time since 2019 as the trimmed and weighted Australian CPI metrics moved into the RBA's target zone.

• PBoC set USD/CNY mid-point at 6.3856 vs exp. 6.3862 (prev. 6.3890)
• PBoC injected a CNY 200bln for a net CNY 100bln via 7-day reverse repos at a rate of 2.20%

Chinese authorities summoned 8 property companies to learn about their foreign debt on Tue. The companies reported difficulties faced by the market and hoped that the authorities would release policies to solve the issues, Global Times tweets. (Twitter)

PAX Technology (327 HK) Florida Offices were raided today; sources said the raid is tied to reports that PAX’s systems may have been involved in cyberattacks on US and EU organizations. (Krebonsecurity) PAX is a Chinese provider of point-of-sale devices used by millions of businesses and retailers globally.

Some Chinese property developers at yesterday's regulatory meeting expressed their intention to extend offshore bond maturities and proposed debt restructuring, according to sources; regulators asked Co.'s with large offshore debt to look at payment risks and report any difficulties. (Newswires)

• Australian CPI QQ (Q3) 0.8% vs. Exp. 0.8% (Prev. 0.8%)
• Australian CPI YY (Q3) 3% vs. Exp. 3.1% (Prev. 3.8%)
• Australian RBA Weighted Median CPI QQ (Q3) 0.7% vs. Exp. 0.5% (Prev. 0.5%)
• Australian RBA Weighted Median CPI YY (Q3) 2.1% vs. Exp. 1.9% (Prev. - 1.7%)
• Australian RBA Trimmed Mean CPI QQ (Q3) 0.7% vs. Exp. 0.5% (Prev. 0.5%)
• Australian RBA Trimmed Mean CPI YY (Q3) 2.1% vs. Exp. 1.8% (Prev. 1.6%)
• New Zealand Trade Balance (Sep) -2.171B (Prev. -2.144B, Rev. -2.139B)
• New Zealand Imports (Sep) 6.57B (Prev. 6.49B, Rev. 6.50B)
• New Zealand Exports (Sep) 4.40B (Prev. 4.35B, Rev. 4.36B)

US

US President Biden reportedly agreed to push for a deal as soon as possible in a meeting with lawmakers, according to reports. (Newswires) US Democrats are within striking distance of securing agreement on two critical components of President Joe Biden's domestic agenda, according to a source familiar with the negotiations cited by CNN. (CNN)

US Senate Finance Committee Chairman has unveiled a tax proposal focused on unrealised gains of assets held by billionaires, the tax would impose 23.8% capital gains rate to tradable assets such as stocks; taking aim at around 700 taxpayers with assets over USD 1bln on USD 100mln in annual income for three consecutive years. (Newswires)

Senate Democrats unveil new corporate minimum tax: 15% rate on companies with USD 1bln in profits; Would hit about 200 companies; Can still use tax credits, carry forward losses; Projected to raise hundreds of billions of dollars over decade. (Newswires)

The White House is privately telling lawmakers the climate portion of Biden's roughly USD 2tln social spending plan is "mostly settled" and will likely cost more than USD 500bln, two sources familiar with the talks tell Axios. (Axios)

UK/EU

France intends to retaliate against Britain's refusal to offer additional permits for French fisherman working in British onshore-waters, according to the Times citing plans prepared by officials including the PM; such measures could include increase the price of electricity to Jersey or restrictions British boat access. (Times)

• UK BRC Shop Price Index (Oct) Y/Y -0.4% (Prev. -0.5%)

German GfK Consumer Sentiment (Nov) 0.9 vs. Exp. -0.5 (Prev. 0.3, Rev. 0.4)

GEOPOLITICAL

Saudi-led coalition says it destroyed a drone which attempted to attack Abha International Airport, via State Media. (Newswires)

Iran is ready for direct discussions with European parties on the 2015 nuclear agreement, via Press TV. (Newswires)

EQUITIES

European equities (Stoxx 600 -0.3%) are trading moderately lower in a session which has been heavy on earnings and light on macro developments. The APAC session saw more pronounced losses in Chinese bourses (Shanghai Comp -1%, Hang Seng -1.8%) compared to peers despite ongoing liquidity efforts by the PBoC with Hong Kong stocks hampered by losses in Alibaba, Tencent and Xiaomi. Stateside, performance across US index futures were initially firmer before following European peers lower with more recent downside coinciding with the US Senate Finance Committee Chairman unveiling a tax proposal focused on unrealised gains of assets held by billionaires and impose a 23.8% capital gains rate on tradable assets such as stocks; ES -0.1%. The US close saw earnings from behemoths Microsoft, Alphabet and AMD - the former rose 2% after blockbuster metrics, whilst the latter two dipped after-market. Meanwhile, Twitter shares rose almost 4% after hours as the Co. highlighted the lower-than-expected Q3 impact from Apple’s privacy-related iOS changes. On the flipside, Robinhood slumped over 8% after reporting a steep decline in crypto activity. In the pre-market, upcoming earnings highlights include McDonalds, Boeing, GM, Bristol Myers and FTSE 100-listed GSK. Back to Europe, sectors are mostly lower with Basic Resources and Oil & Gas names at the foot of the leaderboard amid performance in underlying commodity prices. Banking names are also trading on a softer footing following earnings from Deutsche Bank (-5.4%) which saw the Co. report a decline in trading revenues whilst managing to make a profit for the 5th consecutive quarter. Spanish heavyweight Santander (-2.5%) is also acting as a drag on the sector despite reporting a net profit above expectations for Q3 with some desks highlighting softer performance for its US operations. Elsewhere, Sodexo (+5.6%) is the best performer in the Stoxx 600 after strong FY results, whilst Puma (+3.2%) trades on a firmer footing after reporting a beat on Q3 earnings and raising guidance. To the downside, BASF (-1.0%) shares are seen lower despite exceeding expectations for earnings with the Co. cautioning that the impact from higher Nat Gas prices in the first nine months of the year amounted to EUR 600mln costs and a significant increase in costs is expected following the October price hike.

Advanced Micro Devices Inc (AMD) Q3 2021 (USD): EPS 0.73 (exp. 0.67/0.60 GAAP), Revenue 4.31bln (exp. 4.12bln). Computating And Graphics: 2.398bln (exp. 2.33bln). Enterprise, Embedded And Semi: 1.915bln (exp. 1.71bln). (Globe Newswires) Shares fell 0.6% after market

Alphabet Inc (GOOGL) Q3 2021 (USD): EPS 27.99 (exp. 23.48), Revenue 65.1bln (exp. 63.34bln). Advertising Revenue: 53.13bln (exp. 51.08bln). Google Cloud: 4.99bln (exp. 5.23bln). Other Bets: 182mln (exp. 201.22mln). (Alphabet) Shares fell 0.9% after market.

Microsoft Corp (MSFT) Q1 2022 (USD): Diluted EPS 2.71 (exp. 2.07/2.07 GAAP), Revenue 45.3bln (exp. 43.97bln). Q2 2022 Revenue View (USD): 50.15bln-51.05bln (exp. 48.92bln). Intelligent Cloud: 17bln (exp. 16.58bln). More Personal Computing: 13.3bln (exp. 12.68bln). Productivity And Business Processes: 15bln (exp. 14.70bln). Windows OEM revenue increased 10%. Windows Commercial products and cloud services revenue increased 12% (up 10% in constant currency). Xbox content and services revenue increased 2% (relatively unchanged in constant currency) Search and news advertising revenue excluding traffic acquisition costs increased 40% (up 39% in constant currency). Surface revenue decreased 17% (down 19% in constant currency). (Microsoft) CFO says the Co. is able to ship more Xbox consoles than expected, with demand exceeding supply in the quarter. (Newswires) Shares rose 2.0% after market.

Twitter Inc (TWTR) Q3 2021 (USD): Diluted EPS -0.67 (exp. +0.17), Revenue 1.29bln (exp. 1.28bln). It is still too early for Twitter to assess the long-term impact of Apple’s privacy-related iOS changes, but the Q3 revenue impact was lower than expected, and we have incorporated an ongoing modest impact into our Q4 guidance. (Twitter) Shares rose 3.9% after market

Tesla (TSLA) has raised prices for some Model S & X vehicle variants in China. (Newswires)

German Economy Minister says that hundred of thousands or cars cannot be made at the moment as a result of the chip shortage. (Newswires)

FX

DXY/JPY - Nearly, but not quite for the index in terms of turning full circle on Tuesday and matching the prior week high as it fell just shy at 94.024 vs 94.174 on October 18, while also narrowly missing 94.000 on a ‘closing’ basis with a last price of 93.956. Moreover, month end rebalancing factors are moderately bearish for the Greenback against G10 rivals, and especially vs the Yen that has a relatively large 1.6 standard deviation and appears to be playing out in the headline pair and Jpy crosses on spot October 29. Indeed, Usd/Jpy has recoiled further from yesterday’s peak circa 114.31 to sub-113.60 before taking cues from the BoJ tomorrow and Japanese retail sales in the run up, but decent option expiry interest between 113.55-50 (1.8 bn) may underpin and support the DXY by default within a narrow 94.008-819 band. More immediately for the Buck in particular and peers indirectly, US durable goods, advance trade, wholesale and retail inventories.

CHF/AUD - Also firmer vs their US counterpart, as the Franc clambers back above 0.9200 irrespective of a deterioration in Swiss investor sentiment and the growing chance that the SNB could be prompted to respond to a retreat in Eur/Chf from 1.0700+ to 1.0637 or so. Elsewhere, the Aussie has pared some of its post-core inflation inspired gains, but is holding close to 0.7500 and still outpacing its Antipodean neighbour as Aud/Nzd hovers around 1.0500.

NZD/CAD/GBP - A downturn in overall risk sentiment and the aforementioned cross headwinds are weighing on the Kiwi that has slipped under 0.7150 vs its US namesake, and it’s a similar tale for Sterling that failed to retain 1.3800+ status or breach 0.8400 against the Euro before the latest reports about France preparing retaliatory measures against the UK over the fishing rights dispute. On top of that, Eur/Gbp tides are turning into month end and the usual RHS flows seen into and around fixings, while the Pound may also be acknowledging a pull-back in Brent prices in advance of the Budget, like the Loonie in respect of WTI ahead of the BoC, with Usd/Cad back above 1.2400 compared to 1.2350 at one stage on Tuesday and a tad lower in the prior session. Note, the break-even via implied volatility indicates a 58 pip move on the policy meeting that comes with a new MPR and press conference from Governor Macklem.

EUR - Notwithstanding several gyrations and deviations of late, the Euro seems largely anchored to the 1.1600 mark vs the Dollar and yet more option expiries at the strike (1.5 bn today) may well be a contributing factor as the clock continues to tick down Thursday’s ECB convene that is seen as a dead rubber event in passing ahead of the big one in December - check out the Research Suite for a preview and other global Central Bank confabs scheduled this week.

SCANDI/EM - Hardly a surprise to see the Nok recoil alongside crude prices, but the Sek is holding up relatively well in wake of an uptick in Swedish household lending and a big swing in trade balance from deficit to surplus. Conversely, the Try’s stoic revival mission has been derailed to an extent by dip in Turkish economic confidence offsetting a narrower trade shortfall, the Rub and Mxn are also feeling the adverse effects of oil’s retracement, the Zar is tracking Gold’s reversal through 200 and 100 DMAs, and the Cny/Cnh have been ruffled by the latest US-China angst, this time on the telecoms front. Last, but not least, the Brl anticipates a minimum 100 bp SELIC rate hike from the BCB, if not 125 bp as some hawkish forecasts suggest.

Brazilian Senate Investigative Committee have approved the final report calling for the indictment of President Bolsonaro for COVID-related crimes. (Newswires)

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1600 (1.5BLN), 1.1605-10 (300M), 1.1615 (557M), 1.1630 (347M), 1.1650 (351M), 1.1675 (397M), 1.1685-1.1700 (1.35BLN)
• USD/JPY: 113.35 (440M), 113.50-55 (1.8BLN), 113.85 (355M), 114.50 (758M)

FIXED

There may be an element of asset reallocation rather than duration demand for the end of October behind the latest leg up in bonds, but certainly little sign of supply indigestion even though retention was relatively high at the 15 year German auction and cover could have arguably been stronger given that the average yield turned slightly positive. Whatever the rationale, Bunds and Gilts have extended rebounds to 169.28 and 124.95 respectively (+59 and +51 ticks on the day respectively vs -18 and +11 ticks at the Eurex and Liffe low), with corresponding yields back down through psychological if not technically significant levels sub-15 bp and 1.10% in the process. Meanwhile, US Treasuries have climbed almost in sympathy with the curve flatter pre-durable goods, advance trade, wholesale and retail inventories and supply comprising Usd 28 bn 2 year FRNs and Usd 61 bn 5 year notes.

COMMODITIES

A softer start to the session for WTI and Brent seemingly stemming from the cautiously downbeat tone portrayed by broader risk and continuing to take impetus from last night’s Private Inventory report. For reference, the benchmarks are currently lower in excess of USD 1/bbl and WTI Dec’21 has been within touching distance of the USD 83.00/bbl figure, though is yet to test the level. Returning to yesterday’s crude report which printed an above consensus build of 2.318M for the headline print while the gasoline and distillate components were unexpectedly bearish, posting modest builds against expected sizeable draws. Looking ahead, the EIA release is expected to post a headline build. Aside from this, crude specific newsflow has been limited ahead of next week’s OPEC+ gathering though Iran remains on the radar given the latest release of constructive commentary on nuclear discussions. Albeit, we are still awaiting details on a return to full Vienna discussions. Moving to metals, spot gold and silver are softer on the session in a continuation of action seen around this time during yesterday’s session; metals pressured in wake of a choppy, but ultimately firmer, dollar. Elsewhere, China has reportedly agreed to set a price cap for thermal coal sales and comes as part of the ongoing crackdown by China on the commodity which spurred Zhengzhou thermal coal futures to hit limit-down overnight.

US Energy Inventory (bbls): Crude +2.318mln (exp. +1.9mln), Cushing -3.734mln, Gasoline 0.530mln (exp. -1.9mln), Distillate 0.986mln (exp. -2.3mln)