• European bourses are firmer after a directionless open, amid a grinding bid throughout the session with US futures following suit; ES +0.3
• US House is to meet at 12:00GMT/08:00EDT to debate the procedural “rule” to put the social spending bill on the floor; hoping to debate & vote today
• The DXY remains bid and is in proximity to the current YTD peak of 94.563 with peers subdued and GBP still reeling post-BoE
• Core debt diverges with EGBs firmer and driven by Gilts as rate pricing unwinds while USTs are flat pre-NFP
• Looking ahead, highlights include US and Canadian Labour Market Reports, ECB's de Guindos, Panetta, BoE's Pill, Ramsden & Tenreyro
• Earnings: 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)

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 (-0.6%) 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 (-1.4%) and Shanghai Comp. (-1.0%) 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)

US

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)

US 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. (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. Subsequently, reported that the US House is to meet at 12:00GMT/08:00EDT to debate the procedural “rule” to put the social spending bill on the floor, "Dems hope to debate & vote on that bill plus vote on infrastructure bill today", according to Fox's Pergram. (Twitter)

UK/EU

BoE's Bailey says that no member of the MPC guided towards a November hike, rates will have to increase at some point but we will not be reverting back to 4-5% rates. (BBC Radio 4)

RTE's Connelly reports that there is a "growing expectation that the UK will trigger" Article 16, there is a much more intense discussion in the European Commission about how the EU should respond. Subsequently, UK Brexit Negotiator Frost says they will not be triggering Article 16 at today's meeting, but it remains on the table, Daily Mail's Franey. (Twitter)

France has made demands for skippers, not boats to be handed fishing licenses as its price for ending the ongoing dispute with the UK. (Telegraph)

ECB's de Guindos says factors behind the recent surge in inflation are of transitory nature, such as disruption in supply chains; EZ inflation will decline next year, though maybe not as much as expected given second round effects. Any increase in wages has to take into account that the inflation surge is transitory, factors behind the surge in inflation are also impacting economic activity. (Newswires)

ECB's Makhlouf says he would be in favour of 'earlier rather than later' action if inflation pressures continue to build and there is evidence the short-term squeeze is taking a 'deeper root'; "Right now. I'm comfortable with our policy stance,”. (Independent)

ECB's Stournaras categorises inflation pressures as temporary and estimated that relief will begin from 2022. (Naftemporiki)

GEOPOLITICAL

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)

Iran says its stockpile of 60% enriched uranium has reached 25kg, via state media. (Newswires)

China says it will stop those who are pro-Taiwan independence from entering the Mainland, Hong Kong and Macau; will pursue criminal liability on those who are pro-Taiwan independence. (Newswires)

EQUITIES

European equities broadly trade on a marginally firmer footing (Euro Stoxx 50 +0.4%; Stoxx 600 +0.2%) with the Stoxx 600 set to close the week out with gains of around 1.6%. Macro commentary for the session has been relatively light thus far in the wake of yesterday’s BoE surprise. The handover from the APAC session was predominantly a negative one with Hang Seng (-1.4%) and Shanghai Comp. (-1%) both subdued as stocks in Hong Kong were 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. Stateside, futures have been inching higher ahead of the latest US jobs report with consensus looking for a 450k addition in nonfarm payrolls. Events in Washington are also worth keeping an eye on after CNN’s Raju reported yesterday that House Dems see Friday as the day they can finish the rule, USD 1.75tln Build Back Better bill and infrastructure bill. The Infrastructure bill would then go to Biden’s desk and the USD 1.75tln bill would go to the Senate for further negotiation with Manchin and other Senate Dems. Back to Europe, sectors are relatively mixed with Telecom names outperforming amid gains in BT (+1.8%) who sit at the top of the FTSE 100 as speculation continues to rumble on that billionaire investor Patrick Drahi could make a move for the Co. Deutsche Telekom is also providing support for the sector after confirming that IFM is to buy 50% in Co's Glasfaserplys GmbH for EUR 900mln. To the downside, Travel & Leisure names lag as opening gains for IAG (-2.1%) proved to be fleeting with the Co. warning of a potential EUR 3bln FY loss alongside Q3 earnings. Elsewhere, Oil & Gas names are trading lower alongside losses in the crude complex, with Basic Resources also near the foot of the leaderboard.

FX

DXY - The Dollar index has gained some traction and has broken out of the 94.273-417 APAC range in the run-up to the US labour market report – with the headline NFP print forecast at 450k (full preview available in the Newsquawk Research Suite), although anything short of an extreme jobs reports this month will likely not sway the Fed's dials following the taper announcement earlier this week - which will commence later this month. On the fiscal front, the US House is to meet at 12:00GMT/08:00EDT to debate the procedural rule to put the social spending bill on the floor. Democrats hope to debate and vote on the social spending and infrastructure bills today, according to Fox. From a technical perspective, DXY eyes yesterday 94.475 high ahead of the YTD peak at 94.563.

GBP, EUR - Sterling is the marked laggard thus far in what is seemingly a hangover on the day after the BoE coupled with Brexit risk, as the UK and EU's Brexit negotiators are set to meet in a bid to temper down cross-channel frictions. Governor Bailey made an appearance on UK radio this morning but failed to provide much in the way of additional colour regarding yesterday's policy decision – with markets currently assigning a 2/3 chance of a 15bps hike in December. On that note, BoE's new Chief Economist Pill, alongside MPC members Tenreyro and Ramsden, are all slated to speak throughout the session. Over to Brexit developments, RTE's Connelly recently reported that there is a "growing expectation" that the UK will trigger Article 16 - suggesting that "the view is that the EU's response could be much swifter and more 'radical' than expected.", although a special meeting of the bloc's leaders will likely be needed before any move. From a technical standpoint, EUR/GBP breached overnight resistance at 0.8565 before briefly topping the 200 DMA at 0.8584. In turn, GBP/USD declined from its 1.3508 high to a base sub-1.3450, with some traders suggesting the pair ran into sellers just ahead of a Fib level at 1.3511. EUR is supported by the EUR/GBP cross, with EUR/USD relatively flat on the day and still above yesterday's 1.1527 low. EUR/USD also looks ahead to some OpEx – with EUR 1.4bln between 1.5555-60 alongside some EUR 725mln at strike 1.1575.

AUD, NZD, CAD - The high-beta non-US dollars all post modest intraday losses. The Aussie sits at the bottom of this bunch after the RBA's SoMP overnight reiterated a patient approach, with headwinds also felt by a decline in iron ore prices overnight whilst copper trades lacklustre. NZD is softer in sympathy whilst the Loonie bears the brunt of lower post-OPEC crude prices. AUD/USD has declined from a 0.7408 peak and dips under its 200 DMA (0.7379) ahead of the 50 DMA (0.7364). NZD/USD meanwhile loses ground under the 0.7100 mark – which also coincides with its 21 and 200 DMAs. USD/CAD eyes its 200 DMA at 1.2479 from a 1.2450 base in the run-up to the Canadian jobs report – with the pair also cognizant of USD 1.3bln in OpEx between 1.2500-05.

JPY - USD/JPY trades on either side of its 21 DMA (113.77) amid the indecisive mood, with the pair also eyeing a chunky USD 2bln in option expiries between 113.70-75 for today's NY cut.

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)

Notable FX Option Expiries, NY Cut:

• EUR/USD: 1.1500 (576M), 1.1540 (524M), 1.1555-60 (1.37BLN), 1.1575 (725M), 1.1600 (677M), 1.1640-50 (722M)
• EUR/GBP: 0.8440 (1BLN), 0.8525 (710M), 0.8550-60 (1.43BLN)
• USD/CAD: 1.2375 (565M), 1.2395-1.2400 (547M), 1.2500-05 (1.32BLN), 1.2520-25 (410M)
• USD/JPY: 113.70-75 (2.0BLN), 114.25 (860M), 114.50 (965M), 115.00 (916M)

South Africa's Eskom notes that Stage 2 loadshedding will be implemented at 11:00 local time; loadshedding stage will escalate into the weekend. (Newswires)

FIXED

EGBs are firmer with action being driven by continued strength in Gilts which have already surpassed yesterday's 126.30 peak to a current session high of 126.63 and the accompanying yield below 90bp. This dovish action has come alongside further downside in Sterling (see FX), that was evident prior to commentary from BoE's Governor Bailey who for the most part reiterated language from yesterday's meeting/press conference. Although Bailey did add that while rates will have to increase at some point, we will not be reverting back to 4-5% levels – a remark which spurred modest price reaction. In terms of market pricing for December, that has continued to dissipate with less than 10bp of upside currently priced in vs just over 11bp in the wake of yesterday’s announcement; for reference, pricing for February 2022 has remained relatively steady around the 35bp mark. Expected commentary from Pill, Ramsden and Tenreyro today will of course be heavily scrutinised for additional guidance. Back to the mainland, where Bunds have been lifted on this action and are currently holding above the 170.50 mark with resistance present at the 17th of September low of 170.81 before 171.00 itself and fib levels thereafter. Finally, USTs are trading with more of a whimper than the relative bang seen in Bunds/Gilts on bonfire night, with little on the docket Stateside aside from the NFP report (newsquawk preview available) before the substantial number of Fed speakers due next week. Currently, the yield curve is modestly flatter with all of the action in the 2-5yr components, 10yr yield is unchanged. Technically, if USTs defy the lead from EGBs at any point, there is very little support until the 130.00 mark itself while an upside move would run into resistance at the 30.2% fib of the August 4th move at 131.26.

COMMODITIES

WTI and Brent front-month futures consolidate following yesterday's post-OPEC+ declines and heading into today's main event – the US labour market report. To recap the OPEC+ confab, ministers opted to continue the current plan to hike monthly output by 400k BPD (despite calls from the US to up output by 600-800k BPD), whilst reports also suggested that there will be no compensation for the underproduction seen from some nations. Traders are now on the lookout for a US response, with Washington yesterday reiterating the use of tools against oil prices. As a reminder, US Energy Secretary Granholm in an FT interview in October raised the prospect of an SPR release, whilst also refusing to rule out a ban on oil crude oil exports, suggesting “it is also a tool”. From the demand side, China’s economic slowdown has prompted JPM to downgrade the nation’s GDP growth forecast by 1ppt to 4.0%, citing the lingering impact of the power crunch and resurgence in COVID. It’s also worth noting that next week will see the Chinese inflation metrics, with oil prices expected to contribute to another Y/Y rise in PPI. WTI Dec trades just under USD 80/bbl (vs 78.96/bbl low) whilst Brent Jan trades on either side of USD 81/bbl (vs low 80.26/bbl). Turning to metals, spot gold and silver are uninteresting heading into the US jobs report whilst LME copper remains under USD 9,500/t. Overnight, Dalian iron ore futures fell once again to log a fourth consecutive week of losses amid China’s crackdown on the raw material.