• Equity bourses are pressured following a soft APAC handover and NQ (-1.0%) underperformance post-AAPL & AMZN
• Apple (-3.9%) and Amazon (-4.8%) both initially fell over 5% post-earnings; both firms cited supply chain issues
• RBA again refrained from defending the Apr 2024 bond yield; bond yield rose to above 0.80% vs RBA's 0.10% target; global yields are elevated
• US House Speaker Pelosi confirmed that the House vote on the Infrastructure Bill will be postponed; noted that most who originally opposed the bill now support it
• The US is committed to helping Taiwan with its ability to defend itself, according to a top US diplomat in Taiwan
• Looking ahead, highlights include US PCE Price Index, Chicago PMI, Canadian GDP
• Earnings: Exxon, Phillips 66, AbbVie, Colgate-Palmolive

CORONAVIRUS UPDATE

South Korea is to ease social distancing measures next month, according to Yonhap. (Yonhap)

ASIA

Asia-Pac equities initially traded lower but later painted a mixed picture as the tailwinds from Wall Street dissipated. The S&P 500 and Nasdaq closed at record highs, whilst the DJIA and R2K posted solid gains. Aftermarket earnings saw reports from Apple (-3.5% AM) and Amazon (-4.7% AM), who both fell over 5% at one point, in turn hitting the NQ, with both firms citing supply chain issues. US equity futures overnight resumed trade modestly firmer but then drifted lower as APAC sentiment seeped into the Western futures. The ASX 200 (-1.5%) was dragged lower by its Telecoms and Financials sectors, whilst the KOSPI (-1.3%) conformed to the risk tone. The Nikkei 225 (+0.3%) was initially hampered with some of the export-heavy sectors towards the bottom of the bunch, although later recovered as the JPY eased, and with Japan also looking ahead to the lower house election on Sunday. The Shanghai Comp (+0.8%) saw its opening losses cushioned after another daily net CNY 100bln injection by the PBoC, for a net weekly injection of CNY 680bln – the largest in 21 months. Hang Seng (-0.7%) failed to recover amid post-earnings losses from BYD, Ping An Insurance, and Petrochina, whilst Alibaba and Tencent are also in the red. Finally, the RBA once again refrained from defending the April 2024 yield, with the bond extending its rise to 0.77% vs the RBA's 0.10% target range.

• PBoC injected a CNY 200bln for a net CNY 100bln via 7-day reverse repos at a rate of 2.20%
• PBoC injected a weekly net CNY 680bln via OMO, the largest in 21 months
• PBoC set USD/CNY mid-point at 6.3907 vs exp. 6.3882 (prev. 6.3957)

China Evergrande (3333 HK) has made another debt payment ahead of Friday, according to NYT. (NYT) China Evergrande founder has pledged to repay USD 260mln in bonds, according to reports. (Newswires)

Japan's ruling coalition is on track to maintain a majority, according to Nikkei. (Nikkei) Lower house elections are set to take place on Sunday.

Japanese Government said Japanese car production fell 28.2% M/M in September; Factory output posted the biggest M/M drop in the month since May. Japanese government official said October output may not expand as much as expected as worries over the chips and parts shortages remain (Newswires)

• Australian Retail Sales MM Final (Sep) 1.3% vs. Exp. 0.2% (Prev. -1.7%)
• Australian PPI YY (Q3) 2.9% (Prev. 2.2%)
• Australian PPI QQ (Q3) 1.1% (Prev. 0.7%)

CENTRAL BANKS

The RBA again made no offer to purchase Apr 2024 yield-target bond. (Newswires) Australian Apr 2024 bond yield topped 0.80% vs the RBA's 0.10% target. ANZ expects the RBA to eliminate its Apr 2024 YCC target at the upcoming meeting. (Newswires)

US

US House Speaker Pelosi confirmed that the House vote on the Infrastructure Bill will be postponed; noted that most who originally opposed the bill now support it. The White House said it is confident Congress will soon pass the Infrastructure and Social Spending and Climate bills. (Newswires)

US Progressive Democratic Representative Jayapal said she is still unchanged and would vote against The Infrastructure Bill if it came to the floor yesterday, via CNN's Fox. (Twitter) US Democratic Senator Manchin said USD 1.75tln Biden Agenda price tag is not too high for him, called it "negotiated". (Newswires)

US House approved (358-59) the stopgap extension of the highways programme. (Twitter)

UK/EU

EU HICP Flash YY (Oct) 4.1% vs. Exp. 3.7% (Prev. 3.4%); X Food & Energy Flash YY (Oct) 2.1% vs. Exp. 1.9% (Prev. 1.9%)

• Super Core YY (Oct): 2.1 Y/Y (exp. 1.9%, prev. 2.1%)

UK Foreign Secretary has summoned the French Ambassador for discussions today over the seizing of a UK vessel. (BBC News)

EU’s Breton understands the position of France regarding fishing licenses with the UK; believes UK will come to a 'reasonable decision'; subsequently, UK Environment Minister says UK always open to increase enforcement of French vessels, to board more of them. (Newswires)

GEOPOLITICAL

The US is committed to helping Taiwan with its ability to defend itself, according to a top US diplomat in Taiwan. US support for Taiwan and defense relations are rock solid and remain unchanged (Newswires) Yesterday, 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.

Chinese Foreign Ministry confirmed that Chinese President Xi will dial into the G20 summit via video link. (Newswires)

US DoJ said a Russian national has been extradited to the US to face charges for an alleged role in cybercriminal organization. (Newswires)

EQUITIES

European bourses commenced the session on the back foot, Euro Stoxx 50 -0.9%, though performance throughout the morning has been choppy with indices having been unchanged and lower by as much as 1.0% on the session thus far. The morning’s busy docket hasn’t changed the dial too much, with the action perhaps more a factor of participant’s digesting the US/APAC leads and earnings updates. APAC was subdued with pressure Stateside most pronounced in the NQ (-0.8%) after earnings from Apple (AMZN) and Amazon (AAPL), which both fell around 5.0% in after hours trading, with attention being placed on supply chain issues impacting performance. In Europe, all sectors started in the red, though banking names have picked up given the ongoing drive higher in yields offsetting poorly received updates from the likes of NatWest (-4.5%); attention is on the company’s money laundering provisions of some GBP 300mln. Elsewhere, real estate names are hampered amid reports that UK banks/building societies are to begin increasing mortgage rate given inflation. Auto’s are towards the top of the pile driven by updates from Daimler (+1.7%) and the CFO remarking that market demand is high, could expect an increase in 2022 passenger car sales. Finally, the energy sector is in-focus amid OPEC+ JTC sourced reports (see commodities) and as we have a number of key names due to report stateside, including Exxon (XOM) following Chevron beating on top and bottom lines, +2.1% pre-market.

Amazon (AMZN) Q3 2021 (USD): EPS 6.12 (exp. 8.92), Revenue 110.8bln (exp. 111.6bln). AWS sales 16.11bln (exp. 15.40bln); Online Stores Sales 49.94bln (exp. 51.53bln). Q4 Revenue view 130-140bln (exp. 142bln), Q4 op. income view 0-3.0bln (prev. 6.0bln Y/Y) "In Q4, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs". (Amazon IR) Amazon sees USD 4bln in labour, inflation and operational disruption costs in Q4, according to the CFO. CFO said the Co. sees itself as a "shock absorber" so customers and merchants on the platform are not affected by higher costs. (Newswires) Shares fell 4.1% after market.

Apple Inc (AAPL) Q4 2021 (USD): EPS 1.24 (exp. 1.24/1.23 GAAP), Revenue 83.4bln (exp. 84.85bln). iPad: 8.25bln (exp. 7.227bln). iPhone: 38.87bln (exp. 41.511bln). Mac: 9.18bln (exp. 9.227bln). Other Products: 8.79bln (exp. 9.326bln). Services: 18.28bln (exp. 17.637bln). Supply chain constraints had larger than expected impact of 6bln on Q4 sales. Chip shortages and COVID related supply chain disruptions in S.E Asia impacted sales. Supply constraints affecting all of Apple's product lines. (Businesswire) CFO expects to achieve "very solid" revenue growth in December quarter and expects to set a record. Shares fell 3.6% after market.

FX

DXY - The Dollar has regained some poise following yesterday’s sell-off, largely on the back of a post-ECB rebound in the Euro that knocked the index down to a new w-t-d base and gave other Greenback rivals a lift indirectly. However, the index remains toppy towards the bottom of 94.024-93.277 extremes within a narrow 93.592-320 range, wary about residual or final rebalancing flows that a German bank model suggests is more prominent vs the Pound and Yen. From a tech perspective, the 50 DMA could be pivotal and comes in at 93.415 today after the DXY tested, but respected the 100 DMA circa 94.000 on several occasions, while fundamental drivers may come via a raft of data and survey releases, including PCE price metrics and the Chicago PMI. Aside from all this, yields remain elevated and curves are re-steepening irrespective of a downturn in broad risk sentiment, or perhaps in response to the ongoing bond rout, with safe-haven benefits for the Buck.

NZD/AUD - Yet another change in fortunes for the Kiwi and Aussie, as the Antipodean cross rebounds amidst several positive factors for the latter, like much stronger than forecast final retail sales and a pick-up in ppi, while ramp higher in 3 year cash continues unchecked. Hence, Aud/Nzd is eyeing 1.0500 again and Aud/Usd is consolidating near 0.7550, but Nzd/Usd has slipped back below 0.7200.

EUR - Some consolidation and a partial loss of the aforementioned ECB-inspired recovery momentum has pushed the Euro back down, with Eur/Usd now testing support and underlying bids around 1.1650 even though flash Eurozone inflation came in well above expectations and most preliminary Q3 GDP prints beat consensus (Germany the exception). Nevertheless, the headline pair looks less inclined to be drawn to the latest option expiries close to 1.1600 (1.5 bn in a band ending at 1.1590) and adjacent to similar size between the half round number and 1.1660 (1.4 bn to be precise).

CHF/CAD/GBP/JPY - The Franc is marginally outpacing the Buck and extending its outperformance against the Euro to the brink of 0.9100 and not much further away from 1.0600 respectively in wake of an upbeat Swiss KOF leading indicator, but the SNB could be on edge amidst a sharp ratchet up in implied interest rates via the 3 month strip. Elsewhere, the Loonie is idling either side of 1.2350 vs its US peer in line with crude prices ahead of Canadian monthly GDP and ppi that might provide tangible justification for the BoC’s hawkish shift on QE and rate guidance, Sterling continues encounter resistance circa 1.3800 and 0.8450 against the Euro awaiting developments on the UK-French fishing row front rather than reacting to stronger than forecast BoE mortgage lending and approvals. Similarly, the Yen has taken a raft of Japanese data in stride as it straddles 113.50 in lock-step with its US counterpart and UST/JGB yield differentials.

SCANDI/EM - Not much sign of upset for the Nok given a sharp drop in the pace of Norges Bank daily purchases for November and a downtick in Norway’s registered jobless rate hot on the heels of the LFS version on Thursday may be helping, while the Cnh and Cny could be gleaning support amidst general weakness vs the Usd from the latest PBoC liquidity injections and China’s Evergrande making more overdue payments in time to meet grace period deadlines. Conversely, the Zar is underperforming following weaker than anticipated SA private credit and the Try is unwinding more of its recent recovery gains.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1550 (305M), 1.1590-1.1600 (1.5BN), 1.1625-30 (700M), 1.1650-60 (1.4BN), 1.1680 (295M), 1.1700 (549M)
• USD/CAD: 1.2275 (543M), 1.2300 (1.1BN), 1.2345 (785M), 1.2375 (515M), 1.2400-10 (705M), 1.2450-55 (684M)
• USD/JPY: 112.50 (680M), 113.00 (674M), 113.50 (387M), 113.75 (526M), 113.85-114.00 (1.3BN), 114.60 (500M), 114.75 (1BN). 115.00 (730M)

FIXED

Selling into upticks remains prudent alongside spread positioning in the Eurozone that is providing some underlying traction for Bunds to the detriment of the periphery and even the semi-French core. However, the German bond has been down to 168.13 (93 ticks below par), Gilts hit a deeper Liffe low at 124.68 (-81 ticks on the day) before regaining a degree of composure and the 10 year T-note slipped to 130-13 vs 130-27+ at one stage awaiting a fairly busy agenda to wrap up the week and last day of the month. In terms of the pm highlights, PCE inflation vies with Chicago PMI as the Fed’s preferred price measure and a proxy for ISM.

COMMODITIES

WTI and Brent are essentially unchanged on the session, and reside towards the mid-point of the week’s range thus far. Newsflow has been limited and we look to energy giant earnings later for further impetus; though, the benchmarks did come under modest pressure on JTC source reports ahead of next week’s OPEC+ gathering. Namely, sources said that the JTC had trimmed its 2021 oil demand forecast to 5.7mln BPD (prev. 5.8mln BPD), though explained that the downward revision was ‘nothing to worry about’ and was due to updated data and rounding effects. Elsewhere, spot gold and silver have been contained within narrow ranges in the European morning with spot gold not experiencing a meaningful move away from the USD 1800/oz handle. Base metals are a touch softer from the contained performance seen in APAC hours where attention was more on thermal coal, following China’s State Planner said there is room for continued adjustments of coal prices; initial investigation results show coal production costs are significantly below current coal spot prices. In wake of this, thermal coal futures once again hit 10% limit down.

China's State Planner said there is room for continued adjustments of coal prices; initial investigation results show coal production costs are significantly below current coal spot prices; studying plans to establish a long-term coal pricing mechanism; studying bringing coal into the products list that forbids excessive profits. (Newswires)

OPEC+ output increase should not exceed 0.4mln BPD in December, Algeria's energy minister told state news. (Newswires) OPEC+ now sees more room for its oil in the market, according to an initial draft report cited by EnergyIntel. (EnergyIntel)

OPEC+ JTC reportedly trims 2021 oil demand forecast to 5.7mln BPD according to two sources; leaves 2022 demand forecast steady at 4.2mln BPD; 'nothing to worry about', due to rouding and new data. (Newswires)

CME raises NYMEX natural gas futures maintenance margins by 9% to USD 7,000 per contract from USD 6,400 in December 2021. (Newswires)

CME lowers COMEX 5000 silver futures initial margin by 8% to USD 11.5k/contract from USD 12.5k/contract. (Newswires)

CRYPTO

Ethereum (ETH) hits an all-time-high on Binance and BitStamp. (Newswires)

Australian Securities and Investments Commission (ASIC) released guidance on crypto investment products: ASIC has introduced a new ‘crypto-asset’ category in the licensing application for responsible entities. Responsible entities that intend to hold underlying assets that comprise crypto-assets will need to hold an authorisation in relation to crypto-assets. Key matters covered by ASIC’s good-practice guide include admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management. (ASIC)

Monetary Authority of Singapore (MAS) vows to regulate digital assets to combat financial crimes performed through cryptocurrencies, says stablecoins could have a "useful role". (Finance Magnates)