• APAC equities traded mostly lower; US equity futures held onto an upside bias
• In FX, the DXY was caged, AUD and CAD underperformed and USD/JPY drifted lower
• Australian bond yields spiked higher after the RBA refrained from purchasing the April 2024 yield-target bond
• BCB hiked its Selic Rate by 150bps (vs exp. 100bps hike); BoJ maintained policy settings and trimmed FY21 forecasts
• Taiwan's President said the threat from China is increasing 'every day,' and confirmed the presence of US troops on the island
• Looking ahead, highlights include German Unemployment, EZ Consumer Confidence (Final), US GDP Advance, PCE Prices Advance, IJC, ECB Policy Announcement and Press Conference, supply from Italy and the US
• Earnings: Airbus, AB InBev, Carlsberg, Evolution Gaming, Nokia, Saint Gobain; Shell; Amazon, Apple, Comcast, Merck, Caterpillar, Mastercard, Yum!, Shopify

CORONAVIRUS UPDATE

UK red list and hotel quarantine rules are set to be scrapped. (Telegraph)

Australia announced the "do not travel" global advisory has been removed. (Newswires)

New Zealand Health Minister Hipkins says can't rule out a snap Christchurch lockdown. (Newswires)

ASIA

APAC equities traded mostly lower following the downbeat lead from Wall Street, which saw the S&P 500, DJIA and R2K finish the session in the red, whilst the Nasdaq closed flat as Microsoft (+4.2%) and Alphabet (+4.8%) provided tailwinds alongside the broader strong bid for duration. Overnight, US equity futures drifted marginally higher as trade resumed and held onto mild gains, whilst European equity futures traded flat. The ASX 200 (-0.3%) and the Nikkei 225 (-0.9%) were both pressured by hefty losses in their energy sectors, closely followed by materials and mining. The KOSPI (+0.2%) was somewhat supported by heavyweight Samsung Electronics trimming earlier losses, with the tech giant also expecting overall consumer electronic demand to weaken in 2022, whilst suggesting that component supply issues could improve from H2 2022. The Shanghai Comp (-0.9%) was softer despite another chunky net CNY 100bln liquidity injection by the PBoC, whilst the Hang Seng (-0.3) initially moved between modest gains and losses before conforming to the overall mood, whilst property firm Kaisa group shares sunk 15% after S&P downgraded its rating due diminishing liquidity and elevated refinancing risk. Finally, Aussie bonds once again took the limelight after the RBA refrained from April 2024 yield target bond purchases, with the yield on the April 2024 bond extending its rise to 0.50% vs the RBA's 0.10% target range.

• PBoC set USD/CNY mid-point at 6.3957 vs exp. 6.3926 (prev. 6.3856)
• PBoC injected a CNY 200bln for a net CNY 100bln via 7-day reverse repos at a rate of 2.20%

Evergrande and bondholders' advisers reportedly took a step towards debt talks with Evergrande and creditor advisers signing NDA's before potential talks. (Newswires)

Samsung Electronics (005930 KS) reported Q3 net KRW 12.3tln vs exp. KRW 11.5tln, revenue KRW 73.98tln vs Co. exp. KRW 73tln, operating profit KRW 15.82tln vs Co. exp. KRW 15.8tln. Samsung expects overall consumer electronic demand to weaken in 2022. Co. expects client demand to be affected by supply shortage in Q4. Co. said the component supply issues may improve from H2 2022. (Newswires) Shares opened lower by around 1% before nursing all losses

CENTRAL BANKS

SNB's Maechler reiterated that the CHF is highly valued. (Newswires)

RBA did not offer to buy April 2024 yield-target bond; offered to buy AUD 1.60bln in government bonds in its purchase programme (matching expected amount). (Newswires)

RBA Deputy Governor Debelle said monetary policy is looking to generate higher inflation, a little more inflation welcome, a lot more inflation is not welcome. Debelle said there are signs that the economy has strong momentum domestically, what the RBA sees in the domestic economy is positive, and low rates contributed to rising house prices, but it's not the only factor. (Newswires)

The BoJ maintained policy settings as expected with rates kept at -0.10% and 10yr JGB yield target kept at around 0%. Board Member Kataoka dissented on YCC. In the Outlook Report, the BoJ lowered Core CPI and Real GDP forecasts for the current fiscal year, as telegraphed by earlier sources. The Outlook Report suggested Japan's consumer inflation is likely to gradually accelerate, whilst exports and output are weak due to supply constraints but increasing as a trend.

The BCB hiked its Selic Rate by a larger-than-expected 150bps (vs exp. 100bps) to 7.75% from 6.25%. The decision was unanimous and the central bank said it envisages a hike of the same magnitude at the next meeting. The BCB noted additional pricing pressures on items associated with core inflation. (Newswires/BCB)

UK/EU

France released a list of possible sanctions against the UK in the Brexit fishing row; could prevent British fishing boats from accessing certain ports from November 2nd. Would strengthen border and sanitary checks on British goods imports; including checks on trucks both from and going to the UK. Not ruling out a review of its power supply to the UK under the second round of measures. (Newswires)

FX

In FX, DXY remained caged to a tight parameter under its 21 DMA (93.988) after printing a 94.011 high in yesterday’s session. EUR/USD and GBP/USD were uneventful and moved in tandem with the Dollar - the former hovered around 1.1600 ahead of the ECB (full Newsquawk preview available here), whilst the latter remained above its 50 DMA (1.3711). The Aussie was the laggard overnight following two days of APAC outperformance. The AUD/USD pair briefly dipped under 0.7500 in lockstep with hefty losses in the commodities complex - especially in coal. Losses for the AUD were however cushioned by a spike in Aussie yields – particularly in the shorter end - after the RBA refrained from buying the April 2024 yield target bond. The NZD was supported by a softer AUD/NZD cross which failed to mount 1.0500. CAD was feeling pressure from the losses across the crude complex. USD/JPY was flat for the first half of the session, but the risk aversion later prompted mild haven flows into the JPY, whilst the BoJ release was a non-event.

COMMODITIES

Industrial commodities suffered overnight. WTI and Brent Dec futures continued to slide overnight with no apparent catalyst apart from the APAC risk aversion, alongside the double-dose of inventory builds seen Stateside this week. The oil complex could've also seen headwinds from another slump in Chinese coal prices, with lower coal prices offering less incentive to switch. WTI Dec briefly dipped under USD 81/bbl (vs a high of USD 82.37/bbl), while its Brent counterpart fell to around USD 2/bbl at worst. Over to metals, spot gold and silver saw a mild divergence overnight whereby the former tested USD 1,800/oz to the upside as the latter dipped below USD 24/oz. Copper prices were subdued by the risk tone. Finally, Zhengzhou thermal coal traded -13% in early trade amid continued crackdown on prices from China.

Chinese State Planner met with coal producers and associations yesterday to study and judge criteria for profiteering. (Newswires)

Russian President Putin told Gazprom to start raising the level of gas storage in Austria and Germany once Russian storage is filled. (Newswires)

Citi forecasts Q421 WTI at USD 83/bbl and Q122 at USD 76/bbl. (Newswires)

GEOPOLITICAL

Taiwan's President said the threat from China is increasing 'every day,' and confirmed the presence of US troops on the island, according to CNN. (CNN) She said she has 'faith' US will defend the island, according to AFP. (Twitter)

Saudi Arabia seeks US help boosting its defence systems as it faces pressure from the US to lift the blockade on Yemen ports, according to sources. (Newswires)

CRYPTO

US SEC has asked at least one asset manager not to go ahead with plans for leveraged Bitcoin (BTC) ETF, according to WSJ sources. "Regulator has signaled it will allow only unleveraged funds tied to the cryptocurrency, at least for now." (WSJ)

US

Govvies saw initial selling in APAC Wednesday trade on the back of Aussie yields hitting levels not seen since February after a solid CPI report – T-Notes saw session lows of 130-14. However, bidders returned into the European session with some positioning into Thursday's ECB meeting likely a factor; there wasn't much reaction to another disappointing German Bund auction. Instead, the recent long-end strength tied to curve flatteners extended into the session, supporting T-Notes as a result, with additional tailwinds from the smaller-than-expected Gilt issuance plans from the UK Treasury. Flatteners were also supported by the approaching 5yr auction. The front-end saw a hammering lower after the BoC gave a nod to future rate hikes. However, the belly found some support after the solid 5yr auction, which stopped thru 2.5bps with a YTD B/C record of 2.55x and Dealers taking well below average. The strong demand saw T-Notes rise to session highs and comfortably above the 131-00 resistance level into the settlement for the first time since Oct 15th – to extend further would see the return to the 131-16 area which has served as both support and resistance before. On the curve, the 10+ bp move lower in the long-end has taken the 30yr back beneath 2.00% for the first time since the end of September; further momentum could test the September low of 1.81%. Looking to Thursday, traders have a catalyst-rich session to navigate with both the BoJ and ECB meetings coming against Advanced Q3 US GDP data, Jobless Claims, and the 7yr note auction. T-note (Z1) futures settled 18 ticks higher at 131-05+.

US House Democrats have scheduled an in-person meeting at 9:00EDT/14:00BST Thursday, according to Fox's Pergram. (Twitter) Sources confirmed US President Biden will go to the House Democratic Caucus tomorrow morning to discuss the reconciliation bill and fate of bipartisan infrastructure bill, via Politico's Everett. (Twitter)

US Democrats are expected to drop paid leave from President Biden's sweeping spending plan amid Senator Manchin's opposition, sources told The Hill. (The Hill)

US House Speaker Pelosi said Democrats are close to an agreement on the top line for Biden's bill. (Newswires) At least 40 US progressive lawmakers prepared to vote against the infrastructure bill until a house vote on reconciliation, reports CNN. (CNN)

US Senator Manchin and White House meeting "yielded no significant breakthrough on Biden’s economic package, leaving it unclear whether any deal can be reached imminently" - CNN's Raju citing sources. (Twitter) Moderate Democratic Senator Sinema said they are making progress after meeting with White House. (Newswires)

Chipmaker GlobalFoundries (GFS) prices 55mln common shares at USD 47/shr (vs USD 47/shr guidance). (Newswires)