• Asian equity markets began the week subdued; US equity futures were mostly lower with underperformance in the NQ
• Tesla (TSLA) CEO Musk, via a Twitter poll, asked if he should sell a 10% stake (~USD 21bln) in Tesla; 57.9% voted "Yes" with over 3.5mln total votes
• US House voted to pass the USD 1.2tln bipartisan infrastructure bill late on Friday and sent it to President Biden for signing
• Chinese trade data showed a larger-than-expected trade surplus and strong exports, but USD-denominated imports missed estimates
• Some China Evergrande (3333 HK) unit's offshore bondholders have not received interest payments due Saturday, according to sources
• The UK is reportedly prepared to trigger Article 16 and ditch customs checks before Christmas, according to sources
• Looking ahead, highlights include EZ Sentix Index, Fed’s Powell, Evans, Harker, Montgomery; ECB’s Lane, supply from the US
• Earnings: Covestro, PayPal

CORONAVIRUS UPDATE

White House said it is preparing to secure both Merck (MRK) and Pfizer (PFE) COVID-19 pills. In related news, US Federal Appeals Court temporarily blocked the Biden administration’s effort to require US companies with a minimum of 100 employees to be vaccinated or tested weekly for COVID-19. (Newswires/CNBC)

UK Health Secretary Javid urged the elderly and vulnerable people to get their COVID-19 booster jabs as soon as they can to help avert restrictions being imposed during Christmas. (Sky News)

The three German parties that are aiming for a coalition agreement next month will present proposals on Monday to address the spread of COVID-19. Elsewhere, Austria is tightening COVID-19 restrictions as of today, according to a government statement. (Newswires)

China stated that it will continue with its COVID-19 curbs amid outbreaks abroad, while it was also reported that Beijing’s Municipal Commission of Transport suggested residents do not travel outdoors unless necessary and avoid public transportation as much as possible, while some expressways around the city will be closed. (Twitter)

New Zealand PM Ardern announced that Auckland will be permitted to move to 'state 2' of COVID-19 alert level 3 with retail stores to open on Wednesday, while they expect to ease restrictions further on November 29th. (Newswires)

Japan reported no deaths from COVID-19 for the first time in 15 months, while it is to reopen borders from today for business travellers and foreign students. (Newswires)

ASIA

Asian equity markets began the week subdued and failed to take impetus from last Friday’s fresh record highs on Wall St and the forecast-topping NFP jobs data, as participants in the region digested somewhat mixed Chinese trade figures and US equity futures were also constrained with underperformance in NQ futures on a potential share sale by Tesla’s CEO Musk who took to a Twitter poll to decide whether to sell 10% of his stake in the EV manufacturer, equating to around USD 21bln. In that poll, 57.9% voted "Yes" and 42.1% voted "No", with over 3.5mln votes. The ASX 200 (-0.1%) was subdued with underperformance in tech, telecoms and the consumer-related sectors, but with downside in the index limited by M&A-related headlines including Sydney Airport entering a buyout deal valued at AUD 23.6bln. The Nikkei 225 (-0.2%) was initially positive after Japan reported no deaths from COVID-19 for the first time in 15 months and with its borders to reopen to business travellers and foreign students from today, although the index shortly gave up its opening gains amid residual effects from recent JPY inflows. The Hang Seng (-0.3%) and Shanghai Comp. (+0.4%) were mixed with price action tentative following the latest Chinese trade data over the weekend which showed a larger-than-expected trade surplus and strong exports, but USD-denominated imports missed estimates. Default concerns also lingered after a Hangzhou property developer missed a payment on a loan guaranteed by Fantasia Group and with an Evergrande unit missing offshore bond payments that were due on Saturday, while the recent Chinese sanctions on Taiwanese officials were also seen as a headwind for markets but was offset by the PBoC’s net liquidity injection. Finally, 10yr JGBs faded some of Friday’s advances as T-notes pulled back from the recent bull flattening with resistance just shy of the 132.00 level, while demand for JGBs was further hampered by the lack of BoJ purchases in the market although downside was also stemmed by the cautious tone in stocks.

• PBoC injected CNY 100bln via 7-day reverse repos with rate at 2.2% for a CNY 90bln net daily injection. (Newswires)
• PBoC set USD/CNY mid-point at 6.3959 vs exp. 6.3906 (prev. 6.3980)

China said it is prepared to lower tariffs when the RCEP takes effect next year. (Newswires)

Some China Evergrande (3333 HK) unit's offshore bondholders have not received interest payments due Saturday by Monday morning in Asia, according to sources, while it was also reported that a Hangzhou property developer missed payment on a loan guaranteed by Fantasia Group (1777 HK). (Newswires)

• Chinese Trade Balance (USD)(Oct) 84.5B vs Exp. 65.6B (Prev. 66.8B)
• Chinese Exports YY (USD)(Oct) 27.1% vs Exp. 24.5% (Prev. 28.1%)
• Chinese Imports YY (USD)(Oct) 20.6% vs Exp. 25.0% (Prev. 17.6%)
• Chinese Trade Balance (CNY)(Oct) 546.0B vs Exp. 385.9B (Prev. 433.2B)
• Chinese Exports YY (CNY)(Oct) 20.3% vs Exp. 17.1% (Prev. 19.9%)
• Chinese Imports YY (CNY)(Oct) 14.5% vs Exp. 10.1% (Prev. 10.1%)
• Chinese FX Reserves (USD)(Oct) 3218B (Prev. 3201B)
• Chinese Gold Reserves (USD)(Oct) 110.83B (Prev. 109.18B)

CENTRAL BANKS

ECB's Lane said current level of inflation is very unusual and not chronic, while he suggests to not overreact to a transitory spike in inflation and they expect the inflation rate to decline next year. (El Pais)

BoC Governor Macklem said inflation is transitory but not short-lived and he wants to assure Canadians they will keep inflation under control, while they have the tools which they will adjust to bring inflation back to the target. (Newswires)

BoJ Summary of Opinions from the October 27th-28th meeting stated Japan's economy has picked up as a trend but remained in a severe situation due to the impact of COVID-19, while the economy is likely to improve gradually as pent up demand materialises and the baseline scenario that Japan's economy will recover, is expected to be maintained. It was also stated that the BoJ should continue to support financing and maintain stability in financial markets through the three measures conducted in response to COVID-19. Furthermore, they must maintain easy monetary policy to help improve the output gap and must communicate clearly that the BoJ has absolutely no reason to tweak current easy policy as inflation remains below target. (Newswires)

UK/EU

The UK is reportedly prepared to trigger Article 16 and ditch customs checks before Christmas, according to sources. A decision from the UK on Article 16 will be taken at the end of November. (Telegraph) Irish Foreign Minister Coveney warned that the EU could abandon the Brexit deal in its entirety if the UK proceeds with its threat to suspend parts of the agreement. (FT)

UK airlines are reportedly to boost the number of flights to Greece in anticipation of an increase in foreign travel as restrictions are relaxed. (FT)

The UK Office for National Statistics (ONS) is to start incorporating data taken from scanners in grocery stores across the UK to get a more accurate and detailed measure of inflation. (Times)

Fitch affirmed France at AA; Outlook Negative. (Newswires)

FX

In FX, the DXY was slightly firmer and retained the 94.00 status as it composed itself following last week’s post-NFP whipsaw, with focus on the data front now shifting towards the latest US CPI figures due mid-week. It was also reported that the House voted to pass the USD 1.2tln bipartisan infrastructure bill late on Friday to send to President Biden who is planning to conduct a signing ceremony soon. EUR/USD was rangebound at the 1.1500 handle and GBP/USD was also uninspired after pulling back from resistance at 1.3500 as the option to trigger Article 16 remains on the table. USD/JPY and JPY-crosses attempted to nurse some of their recent losses, although the recovery was limited by the cautious risk tone and uneventful BoJ Summary of Opinions, while antipodeans were also rangebound amid the tentative mood, quiet overnight calendar and somewhat mixed Chinese trade data, but with mild support in NZD/USD after New Zealand PM Ardern announced to ease restrictions in Auckland where retail stores will reopen this Wednesday.

COMMODITIES

WTI crude futures rose above the USD 82.00/bbl level in an extension of Friday's gains with reports also noting that Saudi Aramco raised its OSPs in December to all regions. There were also recent comments from the US Energy Secretary who suggested to expect higher heating costs this winter and although she reiterated that the SPR is one of the tools President Biden is looking at, this did little to derail the moment for oil prices. Gold prices were rangebound overnight but remain at around two-month highs after having reclaimed the USD 1800/oz status last Friday and copper prices were kept afloat after the recent strong US jobs data and record highs on Wall Street but with upside capped after the mixed trade data from China.

US Energy Secretary Granholm commented that Americans should expect higher heating costs this winter, while she also noted that the administration will be looking at the upcoming EIA forecast and reiterated that the SPR is one of the tools President Biden is looking at. (Newswires/CNN)

Saudi Aramco raised December OSPs to all regions with the premium for Arab light crude to Asia increased by USD 1.40/bbl to USD 2.70/bbl. (Newswires)

UAE Energy Minister Mazrouei said demand for energy supplies are increasing year after year, while OPEC+ is aiming to balance the market and incentivise investment and stated that oil prices would be higher right now if OPEC+ did not exist

Baker Hughes US rig count (w/e Nov 5th): Oil +6 at 450, Nat Gas unch. at 100, and Total +6 at 550. (Newswires)

Occidental Petroleum (OXY) CEO sees oil prices remaining well above USD 50-60/bbl for the next three to five years and said that current oil prices are about as 'high as anyone wants it to go'. (Newswires)

GEOPOLITICAL

US Pentagon's Kirby said they are watching "unusual" Russian movements near Ukraine, citing the size of the units near the border. (Newswires)

There was a failed assassination attempt on Iraqi PM Mustafa Al-Kadhimi in which an explosives-laden drone targeted his house in Baghdad. The Iraqi military later confirmed the PM was in good health and unhurt by the attack, while the PM said following a security meeting that those responsible for the attack were well-known and will be exposed. (Newswires)

A large explosion was reported amid a suspected ballistic missile launch into Marib, Yemen. (Twitter)

US

Treasuries and global govvies bull-flattened hard Friday (2s30s -6bp) as short-covering and positioning were cited as NFP and central banks entered the rear-view mirror. TYZ1 volumes were average. 2s -2.4bps at 0.393%, 3s -3.3bps at 0.647%, 5s -6.1bps at 1.043%, 7s -7.7bps at 1.302%, 10s -8.5bps at 1.439%, 20s -8.6bps at 1.882%, 30s -8.8bps at 1.875%. 5yr TIPS -5.3bps at -1.841%, 10yr TIPS -6.9bps at -1.108%, 30yr TIPS -7.2bps at -0.444%. 5yr BEI -1.8bps at 2.939%, 10yr BEI -2.2bps at 2.522%, 30yr BEI -2.0bps at 2.331%. The stronger than expected NFP headline print saw an initial kneejerk lower in the contracts to session lows of 131-01+, with a session 10yr cash yield high of 1.55%, although the benchmark soon returned to its pre-announcement level with the decent report doing nothing to alter Fed policy expectations (i.e. alter taper pace). Instead, once the dust had settled, bidders emerged and bull-flatteners let rip. There was little fundamental reason to explain the unrelenting bid for govvies, although positioning makes the most sense, with central banks and NFP now in the rear-view mirror, there is likely less reason to hold onto shorts, while those who have been looking to allocate to duration might now have the green light after the risk events; CPI next week serves as the US data highlight. Note the rally was just as pronounced if not greater in Europe in both Gilts, EGBs and periphery. The rally Friday was all the more breathtaking when taking into consideration the approaching quarterly refunding auctions next week for 3s, 10s, and 30s. T-Notes hit resistance at 131-26 as Europe began departing for the weekend, with cash 10yr yields hovering at 1.46% in pre-settlement trade, the lowest since early October. T-note (Z1) futures settled 16+ ticks higher at 131-26+.

US House voted 228-206 to pass the USD 1.2tln bipartisan infrastructure bill late on Friday and sent it to President Biden for signing, while House Speaker Pelosi said they will look to pass the Build Back Better Act before Thanksgiving when CBO estimates are available. (Newswires)

US President Biden called the infrastructure bill a once in a generation that will create millions of jobs and that infrastructure spending will ease inflation, while he added that the bill will facilitate the construction of 500k electric charging stations and that he will have a formal signing ceremony for the bill soon. Furthermore, President Biden called the bill a blueprint to rebuild America and is confident that the House will pass the Build Back Better Act during the week of November 15th. (Newswires)

Tesla (TSLA) CEO Musk tweeted that much has been made lately regarding unrealised gains being used to avoid taxes and proposed selling 10% of his Tesla stock (~USD 21bln) if his Twitter followers supported the sale. Musk noted that he was prepared to accept either outcome. 57.9% voted "Yes" and 42.1% voted "No", with over 3.5mln votes. (Twitter) Tesla holds a 2.5% weighting in the SPX and 6.4% weighting in the NDX