• European bourses are firmer continuing the post-FOMC APAC tailwinds with US futures marginally positive but rangebound, ES +0.1%
• DXY is firmed and comfortably above 94.00 with EUR lagging and below 1.1550 & Cable pressured pre-BoE
• OPEC+ is likely to stick to plans to raise output by 400k BPD despite calls from the US for extra supply, according to sources
• House majority leader Hoyer said votes on bipartisan infrastructure framework and build back better are possible for Thursday, Punchbowl
• Iran said nuclear talks will resume on November 29th in Vienna
• Looking ahead, highlights include BoE Rate Decision and Press Conference, US IJC, ECB's Lagarde, Elderson
• Earnings: ViacomCBS, Kellogg, Occidental, Parker-Hannifin, Uber

CORONAVIRUS UPDATE

A large study by Imperial College London found COVID-19 infections in England during October were at the highest level since the study began in May last year with the infection rate in study participants at 1.72% or one in 58 people which was more than double compared to the prior month. (Newswires)

Australia's Victoria state reported 1,247 new COVID-19 cases (prev. 941) and New South Wales reported 308 new cases (prev. 190). (Newswires)

Hong Kong-China quarantine free travel reportedly is to start as early as next month but will be limited to Guangdong province with Shenzhen as the only entry point. (Newswires)

ASIA

Asia-Pac stocks traded higher amid tailwinds from the fresh record highs stateside in the aftermath of the FOMC where the Fed announced it is to begin tapering asset purchases but suggested it was in no rush to hike rates. ASX 200 (+0.5%) was kept afloat by advances in tech and financials but with gains in the index capped after weak Retail Sales data and rising COVID-19 cases for Australia’s most populous states, while the energy sector underperformed after oil prices tumbled 4.5% yesterday due to bearish inventory data and the announcement that Iran nuclear talks will resume on November 29th in Vienna. Nikkei 225 (+0.9%) was buoyed on return from holiday as it coat-tailed on the recent advances in USD/JPY and with Japan mulling easing border controls as soon as next Monday, with Toyota also holding on to gains after a jump in H1 profits and JPY 150bln buyback announcement, although the Nikkei finished well off intraday highs after stalling on approach to the 30k level. Hang Seng (+0.8%) and Shanghai Comp. (+0.8%) conformed to the broad upbeat mood but was slow to start after another substantial liquidity drain by the PBoC despite the suggestion by Chinese press that recent reverse repo action showed stabilisation efforts. In addition, COVID-19 concerns continued to linger with Beijing having suspended inbound trains from 23 regions to curb the spread of the virus, while there was also attention on the geopolitical front after the US Department of Defense warned that China’s nuclear stockpile is outpacing forecasts and with China conducting week-long live-fire drills in the East China Sea. Finally, 10yr JGBs were steady with only a slight pullback seen from yesterday’s advances and with prices largely ignoring the subdued picture in T-notes which were pressured heading into the Fed taper announcement, while JGBs were also kept afloat after the 10yr inflation-indexed auction from Japan which showed an increase in both the b/c and lowest accepted prices.

PBoC injected CNY 50bln via 7-day reverse repos with the rate at 2.20% for a CNY 150bln net daily drain. (Newswires) PBoC set USD/CNY mid-point at 6.3943 vs exp. 6.3911 (prev. 6.4079)

Chinese President Xi said China will expand international shipping cooperation and will ensure smooth global industry and supply chains. (CCTV)

US

US Democratic Representative Larsen said the vote on infrastructure would come after the vote on Biden's social policy agenda, while it was later reported that House majority leader Hoyer said votes on bipartisan infrastructure framework and build back better are possible for Thursday, according to Punchbowl News' Jake Sherman. (Newswires/Twitter)

US House Democrats are tweaking the EV tax credit proposal and are revising vehicle price caps in which the new proposal makes vans, SUVs and trucks with MSRP up to USD 80k eligible and lowers the income cutoff to USD 500k for joint tax returns for full EV tax credit. (Newswires)

UK/EU

EU Markit Services Final PMI (Oct) 54.6 vs. Exp. 54.7 (Prev. 54.7)

• German Markit Composite Final PMI (Oct) 52.0 vs. Exp. 52.0 (Prev. 52.0); Services PMI (Oct) 52.4 vs. Exp. 52.4 (Prev. 52.4)

UK Markit/CIPS Construction PMI (Oct) 54.6 vs. Exp. 52.0 (Prev. 52.6)

GEOPOLITICAL

Iran said nuclear talks will resume on November 29th in Vienna and the US State Department stated that if Iran nuclear talks are to succeed, they should restart precisely where the sixth round of talks in Vienna left off. (Newswires)

US Department of Defense said China could have 700 nuclear warheads by 2027 and possibly 1,000 by 2030, while it warned that the nuclear stockpile is outpacing forecasts. (Newswires)

Russian Navy is reportedly keeping track of USS Mount Whitney as it enters the Black Sea, according to Sputnik. (Twitter)

EQUITIES

Stocks in Europe hold onto the positive bias (Euro Stoxx 50 +0.4%; Stoxx 600 +0.5%) - which originally emanated from the post-FOMC Wall Street session and later reverberated across APAC. US equity futures have been consolidating following yesterdays post-Powell ramp, with the NQ (+0.4%) outperforming the RTY (+0.2%), ES (+0.1%) and YM (Unch). Back to Europe, bourses are posting broad-based gains in what was a morning doused in European corporate updates, whilst the UK’s FTSE 100 (+0.4%) is on standby for the BoE policy decision (full preview available in the Newsquawk Research Suite). Sectors in Europe are mostly firmer with no real overarching bias. Oil & Gas lead the gains following yesterday’s underperformance and in the run-up to the JMMC/OPEC+ meetings later today. Healthcare meanwhile is boosted by pharma-behemoths Roche (+2.5%) and Novartis (+1.6%) after the firms agreed on a bilateral transaction for the sale of 53.3mln (approximately 33%) Roche bearer shares held by Novartis for a total consideration of USD 20.7bln. This in turn has pushed the SMI (+0.8%) to modestly outperform the region. The Telecoms sector is also buoyed by BT (+5.7%) amid constructive earnings, but gains for the sector are capped Telefonica (-1.6%), who hold a larger sector weighting, following their metrics. The morning has been busy in terms of bank earnings, although the sector is constrained by yield dynamics. Nonetheless, SocGen (+3.3%), ING (+1.1%), Commerzbank (+5.2%) and Credit Suisse (+0.7%) all reported today – with the latter also announcing the exit of its prime brokerage activities and will be shifting its focus on to its wealth management business in a bid to better manage risks. Over to the consumer sector, Sainsbury’s (-4.3%) trundles lower after flagging complications from supply chain issues. Finally, in terms of M&A, Alstria Office (+17.5%) soars after Brookfield offered to buy the Co. for EUR 19.50/shr in cash, a premium to yesterday’s EUR 16.62/shr closing price.

Tesla (TSLA) is rumoured to be working on a new factory in China, but Tesla denies rumoured specific location. (Electrek)

FX

DXY - The Dollar has erased all and more of its initial or knee-jerk declines in wake of the FOMC policy meeting that confirmed the start of QE tapering in a few days' time at the pre-announced pace, but kept clear distance between the unwinding of asset purchase and rate lift-off. However, there was a subtle tweak to the language regarding inflation to indicate less of a transitory assessment and Fed chair Powell refrained from using the ‘t’ word in his press conference before responding to a question by saying that it is also used to convey the view that prices rises caused by bottlenecks and supply-demand imbalances will not leave a legacy of persistently higher inflation. In index terms, a marginally higher peak at 94.280 vs 94.217 at best on Wednesday follows a fractionally higher low of 93.818 vs 93.809 and brings Monday’s w-t-d apex (94.313) back into contention ahead of Challenger Lay-offs, jobless claims, trade data and Q3 labour costs that were highlighted by Powell as a key gauge of tightness in the labour market, which he expected to reach max employment levels by mid-2022.

EUR - Mixed Eurozone services and composite PMIs have not afforded the Euro any protection from the aforementioned Greenback revival, while the yield backdrop is also weighing as EGB/UST spreads widen, but Eur/Usd might glean some support from option expiries as 1.1 bn resides at 1.1550 and 1.1525. Moreover, the headline pair has found underlying bids around the half round number and a recent trough comes in at 1.1535 (October 29) ahead of the double 2021 low of 1.1525.

GBP - Sterling is also succumbing to the broad Buck bounce, but also treading cautiously into the BoE amidst a marked unwind of rate hike pricing via Short Sterling contracts alongside a recovery in UK debt. Cable is hovering around 1.3620 having pulled up just shy of 1.3700 and options are anticipating an 80 pip break-even for the live MPC event that is far from certain even though ‘markets’ are anticipating a 15 bp hike. Note also, implied volatility on the Eur/Gbp straddle suggests a 43 pip move either way, though the cross may also be prone to movement from the current 0.8491-65 range pending developments in France where Brexit Minister Frost is aiming to untangle crossed lines over fishing licences.

NZD/AUD/CAD - The Kiwi, Aussie and Loonie are all weaker vs their US counterpart, with Nzd/Usd and Aud/Usd hovering in the low 0.7100s and 0.7400s respectively, and the latter not far off post-RBA reversal lows after downbeat Q3 retail sales and exports within the overall trade balance overnight. Meanwhile, only a tame rebound in crude prices appears to be capping Usd/Cad around a 1.2400 axis in advance of Canadian trade and the jobs face-off with the US on Friday.

CHF/JPY - Relative outperformers, or at least holding up better than other majors in the face of the Dollar rebound, as the Franc meanders between 0.9144-11 irrespective of a deterioration in Swiss consumer sentiment and the Yen contains losses below 114.00 on the return of Japanese markets from Culture Day to a benign bond backdrop overall. Note, hefty option expiry interest may keep Usd/Jpy restrained as 2.1 bn sits at the round number and a further 1.8 bn at 114.30.

SCANDI/EM - In stark contrast to the knife-edge BoE, November’s Norges Bank policy meeting merely spruced up guidance for a pre-Xmas hike to leave the Nok rangebound against the Eur either side of 9.8600, but for the record bullets from the accompanying statement, our snap analysis and a full link to the official release is available via the Headline Feed at 9.00GMT. Elsewhere, the Zar will be looking for independent direction from SA MTBS and updated forecasts due at 12.00GMT and to be presented by the Finance Minister, as Usd/Zar trades within 15.3465-15.2365 extremes and Gold hovers around Usd 1775/oz.

• Australian Retail Trade (Q3) -4.4% vs. Exp. -4.6% (Prev. 0.8%)
• Australian Trade Balance G&S (AUD)(Sep) 12.2B vs. Exp. 12.2B (Prev. 15.1B)
• Australian Exports (Sep) -6% (Prev. 4%)
• Australian Imports (Sep) -2% (Prev. -1%)

Major FX Expiries, NY Cut:

• EUR/USD: 1.1525 (1.1BLN), 1.1550 (1.1BLN), 1.1575 (421M), 1.1600 (517M), 1.1625 (473M), 1.1650 (469M)
• USD/JPY: 113.70 (390M), 114.00 (2.1BLN), 114.30 (1.8BLN), 114.50 (733M), 115.00 (1BLN)

Norges Bank maintains its Key Policy Rate at 0.25% as expected; reiterates rate will most likely be raised in December. (Norges Bank)

FIXED

Bunds and Gilts have been dovetailing in the aftermath of last night’s FOMC that was largely as expected, albeit not a non-event given tinkering on the subject of inflation in recognition of factors that have already proved to be lingering rather than transitionary. However, curves remain steeper and the core EU debt futures have faded from highs of 169.68 (+34 ticks and just 2 ticks under Wednesday's high) and 125.23 respectively (+43 ticks on the day) as attention switches to the BoE through an as scripted Norges Bank, with MPC calls still extremely divided between a 15 bp hike or no move yet. Meanwhile, US Treasuries are hugging overnight peaks ahead of a busy pm agenda in terms of US data.

COMMODITIES

WTI and Brent front-month futures have firmer on the day as the benchmarks clamber off yesterday’s worst levels despite the rampant Dollar and in the run-up to the JMMC and OPEC+ meetings slated for 13:00GMT and 14:00GMT respectively (full preview available in the Newsquawk Research Suite). Markets expect a continuation of the current plan to ease output curbs by 400k BPD/m. Outside calls have been getting louder for the producers to open the taps more than planned amid inflationary feed-through to consumers and company margins, although ministers, including de-facto heads Saudi and Russia, have been putting weight behind current plans, with no pushback seen from members within OPEC+ thus far. Furthermore, the COVID situation in China is deteriorating, hence ministers will likely express a cautious approach. However, the US is asking OPEC+ to increase supply by 600-800k BPD, according to delegates. Note some journalists noted that there are three options the US has offered OPEC+, 1) a 600k BPD hike, 2) an 800k BPD hike and 3) 100% compliance on a 400k BPD hike. Nonetheless, sources suggested OPEC+ is likely to stick to plans to raise output by 400k BPD despite calls from the US for extra supply; adding that the US has plenty of capacity to raise output itself. The US-OPEC+ dynamics will be worth keeping on the radar following this meeting. As a reminder, the US threatened the release of its SPR whilst also refusing to rule out oil export bans – suggesting that all tools are being looked at in a bid to lower prices. It’s also worth being cognizant of the knock-on effect the OPEC+ decision will have on Iranian nuclear talks – scheduled to resume on November 29th – with higher oil prices and a lack of OPEC+ coordination, possibly providing more incentives for the US to offer more concessions. WTI Dec takes aim at USD 82/bbl (vs 79.74/bbl low) at the time of writing whilst Brent Jan extends above USD 83/bbl (vs 81.07/bbl low). Metals markets are less interesting this morning, spot gold and silver are consolidating and trade relatively flat, with the former around USD 1,775/oz and the latter just north of USD 23.50/oz. Meanwhile, LME copper is modestly firmer but trades on either side of USD 9,500/t.

Russia's Gazprom export chief stated that their long-term business strategy is based on prospective demand in Russia and the company is not interested in record low or record high gas prices. Furthermore, they need to see a balanced market, while they treat the European market with great responsibility and will continue to meet demand. (Newswires)

US is asking OPEC+ to increase supply by 600-800k BPD, according to delegates. (Newswires)

OPEC+ is likely to stick to plans to raise output by 400k BPD despite calls from the US for extra supply, according to sources; adding that the US has plenty of capacity to raise output itself. (Newswires)