• European bourses/US futures are contained awaiting the US entrance and notable Central Bank speakers, ES +0.1%, NQ -0.1%
• Tesla (TSLA) CEO Musk, via a Twitter poll, asked if he should sell a 10% stake (~USD 21bln) in Tesla, 57.9% voted "Yes"; -6.0% in pre-market
• DXY has been choppy though G10 peers, ex-NZD & CHF, are contained while core debt dips after Friday's upside
• 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
• Looking ahead, highlights include Fed’s Powell, Evans, Harker, Montgomery, ECB’s Lane, BoE's Bailey and supply from the US
• Earnings: PayPal

CORONAVIRUS UPDATE

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 (-0.4%) 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 (-0.4%) and Shanghai Comp. (+0.2%) 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)

Chances of a PBoC rate cut looks slim, but the PBoC may opt for RRR cuts, according to sources involved in internal policy discussions; “There is room for cutting interest rates and RRR, but the room could be limited by rising produce prices,”, source. (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)

US

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)

UK/EU

EU Sentix Index (Nov) 18.3 vs. Exp. 15.5 (Prev. 16.9)

GEOPOLITICAL

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)

EQUITIES

Equities in Europe kicked the week off in an uninspiring fashion and with a mild downside bias (Euro Stoxx 50 -0.2%; Stoxx 600 -0.1%) after a similar sentiment seeped from overnight APAC trade. US equity futures were originally mostly lower, but have since drifted into positive territory with the exception of the NQ – with Tesla (-6% pre-market) weighing on the tech-laden future after CEO Musk’s Twitter poll showed support towards a 10% stake sale by the CEO, whilst October China-made vehicle sales were also lower M/M. Tesla holds a 2.5% weighting in the SPX and 6.4% weighting in the NDX. Back to Europe, there isn’t much to report in terms of individual index action. Sectors are also mixed with no overarching theme. Oil & Gas stands as the current winner following overnight gains in the oil complex, whilst Autos sit at the bottom of the bunch with Volkswagen (-1.3%) also pressured amid a broker downgrade. Further for auto names - Chinese battery names are reportedly writing to EV producers, regarding battery supply, looking to renegotiate contracts and move away from fixed-price structures; amid strained lithium supplies set to increase the costs of such cells. In terms of M&A newsflow, Abrdn (+2.5%) confirmed it is in discussions around a potential acquisition of Interactive Investor. BHP (+0.1%) divested its interest in Mitsui Coal for up to USD 1.35bln. Engie (+0.9%) confirmed that they have entered exclusive negotiations to sell Equans to Bouygues (-4.2%), for EUR 7.1bln. Finally Third Point has reportedly acquired a stake in Richemont (+3.4%). Looking at analyst commentary, JPM upgraded the UK to overweight on the premise that the FTSE 100 had been lagging global peers for a while and as “UK equity trading with respect to certain macro variables appears to be evolving.”

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. * -6.0% in US premarket

FX

NZD/AUD/GBP/CHF/SEK/DXY - Most majors are largely going through the motions on a relatively low-key Monday in terms of scheduled data and events, while the Greenback is meandering within its pre and post-US payrolls extremes of 94.184-634 from 92.194 to 92.380. However, the Kiwi is taking advantage of the Buck retreat and another reversal in the Aud/Nzd cross through 1.0400 amidst positive news on the NZ covid front as restrictions in Auckland are set to be relaxed from midweek. Hence, Nzd/Usd is hovering nearer the top of a 0.7154-04 band ahead of electronic card retail sales data tonight, while the Aussie is straddling 0.7400 vs its US counterpart in advance of NAB business sentiment and conditions tomorrow. Elsewhere, Sterling is still succumbing to a degree of BoE repositioning and Article 16 risk, as Cable looks for half round number support circa 1.3450, but is capped into 1.3500 and Eur/Gbp pivots 0.8575 where hefty option expiry interest resides (1.1 bn). However, the Franc is lagging alongside the Swedish Crown in G10 circles even though Switzerland’s nsa jobless rate dipped in October and latest weekly sight deposit data revealed a decline in domestic bank balances, with Usd/Chf eyeing 0.9150 and Eur/Chf closer to 1.0580 than 1.0550.

EUR/CAD/JPY/NOK - The Euro is contained within a 1.1551-76 range awaiting more ECB speakers following an unexpected improvement in the Eurozone Sentix Index that was largely taken in stride, the Loonie is rotating around 1.2450 with some traction from a rebound in WTI crude prices rather than commentary from BoC Governor Macklem who believes inflation is transitory, but not short-lived, and the Yen is also anchored, either side of 113.50 with little independent impetus from the latest BoJ SOMP in advance of Japanese bank lending, trade and current account data. Meanwhile, the Norwegian Krona is tethered to 9.8800 vs the Euro and not really reacting to outgoing PM Solberg’s revised 2022 Budget proposal that is tighter than anticipated as pandemic support measures are unwound.

EM/PM - Somewhat mixed Chinese trade data as the surplus hit a new record on blowout exports, but Usd-denominated imports missed consensus, while Evergrande and another property developer failed to make more bond interest payments, yet the Cnh and Cny are both holding above 6.4000 vs the Usd as PBoC sources contend that the prospects of easing are diminishing - see 9.58GMT post on the Headline Feed for more. Meanwhile, hawkish vibes from the BCB may give the Brl a boost as the Bank says it may lift the SELIC rate by a bigger margin if warranted next month, while the Czk could get a fillip from a dip in the Czech unemployment rate and Pln from updated NBP inflation and growth forecasts. Conversely, Gold has lost some lustre as bond yields back up and curves steepen, though retains a firm grip of the Usd 1800/oz handle.

Major FX Expiry, NY Cut:

• EUR/GBP: 0.8575 (1.1BLN)

FIXED

No big catalyst, bar a better than expected Eurozone Sentix Index, but debt futures have retreated over the course of the European am season after a rather half-hearted upside foray or a few attempts to rebound. In fact, Gilts and US Treasuries are ‘underperforming’ on the way back down and it could simply be a case of bouncing too far from pre-BoE lows for the former and post-NFP troughs for the latter as they hover above deeper intraday bases at 170.71 and 131-15 respectively compared to Bunds trading midway between 171.12-170.71. Ahead, several ECB and Fed speakers vs BoE Governor Bailey as the lone MPC member, US employment trends and Usd 56 bln 3 year note issuance.

COMMODITIES

WTI and Brent front month futures gained at the open of futures before consolidating heading into the European open. Prices thereafter resumed the upward march with WTI Dec back around USD 82.50/bbl (vs 81.05 low) and Brent Jan around USD 84/bbl (vs low 82.50/bbl). News flow of the complex has thus far been light in European hours, although the weekend saw Saudi Aramco upping the December OSPs for all regions – sometimes seen as a proxy for demand. On the Iranian nuclear front, the Iranian Foreign Minister reiterated Iran's stance on the JCPOA and again called on the US to lift all sanctions at once – ahead of the resumption of nuclear talks on Nov 29th. The UAE energy minister also hit the wires this morning but provided little in the way of fresh commentary. Elsewhere, spot gold and silver are flat with the former within the overnight range around USD 1,815/oz whilst spot silver meanders north of USD 24/oz. Base metals are also uninteresting – LME copper trades on either side of USD 9,500/t awaiting more catalysts.

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)

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.