• Asian equity markets traded cautiously following a somewhat mixed handover from the US
• The S&P 500 and Nasdaq extended on fresh record highs with outperformance in rate-sensitive stocks
• The DXY has held on to gains above 94.00, EUR/USD remains on a 1.15 handle and GBP/USD trades sub-1.35
• Looking ahead, highlights include German Industrial Production, Eurozone Retail Sales, US and Canadian Labour Market Reports, ECB's de Guindos, Panetta
• Earnings: Uniper, Siemens Gamesa, IAG, Johnson Controls, DISH, Goodyear

CORONAVIRUS UPDATE

US FDA declined EUA for NRx Pharmaceuticals' (NRXP) Zyesami for patients with critical COVID-19 respiratory failure due to insufficient data of known and potential benefits and risks. (Newswires)

Novavax (NVAX) anticipates regulatory package for pediatric use of COVID-19 vaccine to be available in Q1, while it added that manufacturing partner Serum Institute of India has produced many tens of millions of doses which are already shippable. (Newswires)

Increasing COVID-19 infections in Europe are reportedly alarming health officials and have led to fears that a new wave of the pandemic could sweep over the region this winter. (FT)

South Korea purchases additional 30mln doses of the Pfizer (PFE) COVID-19 vaccine for use in 2022. (KDCA)

ASIA

Asian equity markets traded cautiously following a somewhat mixed handover from the US where the S&P 500 and Nasdaq extended on fresh record highs with outperformance in rate-sensitive stocks alongside the rally in global bonds. However, the DJIA lagged but with only marginal losses as attention shifted to the upcoming NFP jobs data, while Chinese developer default concerns provided headwinds in Asia after reports Kaisa Group missed a payment on its wealth management product. ASX 200 (+0.4%) was underpinned by strength in the mining-related sectors as gold producers benefitted from the recent advances in the precious metal which approached just shy of the USD 1800/oz level and with sentiment also helped by the continued dovish tone by the RBA in its quarterly Statement on Monetary Policy, although advances were capped amid losses in tech and with energy names suffering due to lower oil prices. Nikkei 225 (-0.7%) weakness was a function of recent adverse currency flows but with downside stemmed as participants digest a slew of earnings releases and reports the government is considering cash handouts of JPY 100k to under-18s. Hang Seng (-1.2%) and Shanghai Comp. (-0.6%) were both subdued with Hong Kong pressured by losses in the blue chip financial, tech and energy stocks and with property names also constrained by the missed Kaisa Group payment which the Shenzhen-based developer plans to repay in instalments. It was also reported that China told certain smaller banks to limit wealth products, although the losses in the mainland were cushioned after the PBoC upped its liquidity effort despite still resulting in a net daily drain. Finally, 10yr JGBs were higher following on from the gains in global counterparts which were spurred by the surprise BoE hold on rates and with the weakness in Japanese stocks also helping keep bond prices afloat, with price action also unfazed by the lack of purchases from the BoJ which were instead seeking to buy corporate bonds with 1yr-3yr maturities for Nov. 10th.

PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.20% for a CNY 100bln net daily drain. (Newswires) PBoC set USD/CNY mid-point at 6.3980 vs exp. 6.3983 (prev. 6.3943)

PBoC Vice Governor Chen urged China to prevent systemic financial risks and for the creation of financial firewalls, while it was also reported that the PBoC is expected to keep market liquidity ample, according to PBoC-backed press. (Newswires/Financial News)

Kaisa Group (1638 HK) and its units Kaisa Health Group (876 HK) and Kaisa Capital Investment (936 HK) were halted after it missed wealth management product payments and plans to repay the wealth products in instalments. (Newswires)

Japan is reportedly mulling to provide cash handouts of JPY 100k to under-18s. There were later comments from Japanese Finance Minister Suzuki that PM Kishida told them to look for tax breaks to pay for hikes, while he added that Japan needs to maintain fiscal discipline and affirmed that they will mull JPY 100k payments to 18-year-olds and under. In relevant news, Economic Minister Yamagiwa said they will take into account the impact of energy prices on the economy in compiling the stimulus package, although declined to comment on the size or content. (Newswires)

UK/EU

UK could revive domestic output of magnets needed for EVs and wind turbines with government support to cut reliance on China, according to sources. (Newswires)

French minister Beaune said France will give the UK a few days to see if dialogue over fishing rights is real. (Newswires) Other reports note that France has made demands for skippers, not boats to be handed fishing licenses as its price for ending the ongoing dispute. (Telegraph)

ECB's Schnabel said she has good reasons to believe that inflation will visibly decline next year and that the ECB is very unlikely to raise interest rates next year as price pressures are likely to abate, while she takes citizens’ concerns over high inflation very seriously. (Newswires)

FX

In FX markets, the DXY held on to the prior day’s gains above the 94.00 level after having fully recouped the post-FOMC losses and then some, with the greenback finding a backbone from the losses in its major counterparts while focus now shifts to the upcoming NFP report. The USD largely benefitted from the weakness in its transatlantic peers including GBP/USD which suffered after the BoE’s decision to keep rates unchanged caught markets off guard. EUR/USD retreated firmly beneath the 1.1600 handle, while there were also comments from ECB’s Schnabel that she has good reasons to believe inflation will visibly decline next year and that the ECB is very unlikely to raise interest rates next year as price pressures are likely to abate. JPY remained firm after outshining the recent USD strength owing to an interest rate differentials play and amid the risk-averse mood in Japan, while antipodeans were subdued with AUD/USD restricted by the continued dovish RBA rhetoric in the Statement on Monetary Policy whereby it noted a commitment to keeping highly supportive monetary conditions and will act if worsening health outcomes impact the economic outlook. Furthermore, the central bank reiterated it is prepared to be patient and suggested that depending on the trajectory of the economy at that time, the Board judged the outcome of its forecasts could be consistent with a first rate increase in 2024.

RBA Statement on Monetary Policy said they are committed to keeping highly supportive monetary conditions and will act if worsening health outcomes impact the economic outlook, while it noted the labour market would need to be tighter and wage growth materially higher for inflation to be between 2%-3% on a sustainable basis. Furthermore, the RBA board will not raise the Cash rate until these criteria are met and it is prepared to be patient. RBA provided its latest forecasts with GDP seen at 3% in end-2021, 5.5% in end-2022 and 2.5% in end-2023, as well as noted that if the economy evolves in line with the central scenario, wages growth is expected to have edged up to around 3% and underlying inflation would have only just reached the middle of the 2-3% target band by the end of 2023, for the first time in seven years. It added that depending on the trajectory of the economy at that time, the Board judges that this outcome could be consistent with the first increase in the cash rate being in 2024. (Newswires)

COMMODITIES

Commodities were rangebound in which WTI crude nursed some of the recent losses but remained below the USD 80/bbl level following yesterday's whipsawing amid the OPEC+ meeting where producers stuck to their plans to raise output by 400k bpd. Nonetheless, prices spent most of the US session on the backfoot due to a resurgence in the greenback and amid reports that Saudi production is set to exceed 10mln bpd for the first time since the pandemic, while there were also comments from Iran's President that Tehran will not leave the negotiating table in nuclear talks in Vienna and is working towards a lifting of US sanctions. Gold remained firm with the USD 1800/oz level in sight after finding a lift from softer yields, while copper traded sideways amid the cautious risk tone ahead of the looming NFP data.

White House stated that now is the time for oil producing countries to produce and not hamstring the global economy. (Newswires)

Algeria's Energy Minister said their oil production quota is to become 962k BPD in December, which is up 10k BPD from November, according to the State News Agency. (Newswires)

Libya's NOC said work was completed at the NC-4 oil field with production capacity of 15k BPD and that production is to start soon. (Newswires)

GEOPOLITICAL

US State Department sent the missile deal to congress for review and approved up to USD 650mln missile sale to Saudi Arabia which involves up to 280 air-to-air missiles. (Newswires)

Britain tracked Chinese submarines from its flagship aircraft carrier in the South China Sea which allowed it to steer clear and was ready to intercept Chinese jets if needed, according to Sky News citing officers. (Sky News)

US

Treasuries bull-steepened after the BoE decision saw the front-end of global sovereign curves lifted. Futures volumes were below recent averages across the whole curve. 2s -6.5bps at 0.413%, 3s -8.1bps at 0.676%, 5s -8.6bps at 1.099%, 7s -7.2bps at 1.374%, 10s -5.8bps at 1.521%, 20s -3.1bps at 1.963%, 30s -2.6bps at 1.960%. 5yr TIPS -10.1bps at -1.796%, 10yr TIPS -7.8bps at -1.045%, 30yr TIPS -6.2bps at -0.375%. Bidders emerged into the European open, with some attributing the lack of participation from EGBs and Gilts as being enough to prevent further selling. The BoE then lifted the Treasury curve out to the belly, as well as other sovereign curves, after it refrained from raising rates against market pricing; headlines noted UK front-end Gilt yields were pushing for their biggest decline since the June 2016 Brexit referendum. On the US curve, note the bull-steepener as the front-end led the rally, while the long-end struggled. T-Notes sustained strength into the NY afternoon to see session highs of 131-14 in late trade. Friday's jobs report is next up, with an extreme reading in either direction needed to raise questions around taper adjustments (low odds), as participants otherwise begin positioning into the weekend as well as the cut-size refunding auctions next week for 3s, 10s, and 30s. T-note (Z1) futures settle 17+ ticks higher at 131-10.

Fed Chair Powell was seen visiting the White House on Thursday, while there were earlier reports that the White House asked Democrat senators to meet with Fed Chair Powell before Thanksgiving which was said to have led to some believing that he may be renominated this month, according to Axios citing people familiar with the matter. (WSJ/Axios)

White House said US President Biden is enthusiastic about paid leave being in the house bill and will work to get it approved by the Senate. (Newswires)

US House Speaker Pelosi said the Joint Tax Committee analysis of revenue from President Biden’s domestic spending bill omits "pay-fors" that would raise USD 650bln, while the bill would raise more than USD 2tln in revenue. It was later reported that House Speaker Pelosi said she expects the House Rules to meet shortly and will process fixes to the bill from the Senate to comply with Senate rules, according to reporter Wasson. (Newswires/Twitter)

House Democrat leaders see Friday as the day they can finish the rule, USD 1.75tln Build Back Better bill and infrastructure bill, while the infrastructure bill would then go to President Biden’s desk and USD 1.75tln would go to the Senate for further negotiation with Manchin and other Senate Democrats, according to a tweet by CNN's Raju. (Twitter)