• Asian equity markets traded mixed as positive headlines out of China provided reprieve from losses in the US
• Evergrande was reported to have paid the overdue interest on three bonds to avoid a default
• In FX, the DXY tested 95.0 to the upside, EUR/USD trades sub-1.15 and AUD lags post-jobs data
• US Senator Manchin could reportedly "punt" Biden's Build Back Better agenda to next year amid inflation concerns
• Looking ahead, highlights include UK GDP and Output data, Banxico rate decision, OPEC MOMR, ECB's Lane, Schnabel, supply from Italy. Veteran's Day (US cash Bonds closed)

ASIA

Asian equity markets traded mixed as positive Chinese developer headlines including news of Evergrande payments, helped the region partially shrug off the losses seen stateside where duration sensitive stocks underperformed as yields surged following a hot CPI print and a soft 30yr auction. ASX 200 (-0.6%) declined with the index led lower by tech and energy which followed suit to the heavy losses in their US counterparts and with disappointing jobs data adding to the headwinds. Nikkei 225 (+0.6%) coat-tailed on the advances in USD/JPY which briefly climbed above the 114.00 level and with a slew of earnings releases providing a catalyst for individual stock prices. Hang Seng (Unch.) and Shanghai Comp. (+0.9%) were varied with notable strength in property names after Evergrande was reported to have paid the overdue interest on three bonds to avoid a default and with China said to be considering moderating property curbs to help troubled developers unload assets. In addition, the PBoC continued with its mild liquidity efforts and it was also reported that the Biden-Xi virtual meeting is tentatively scheduled for next Monday, although weakness in tech capped upside in the Hong Kong benchmark with shares in index heavyweight Tencent pressured post-earnings as the Beijing crackdown decelerated revenue growth to the slowest pace since the Co. listed in 2004. Finally, 10yr JGBs suffered spillover selling from global peers including T-notes which declined by a point to below 131.00 and with prices also hampered after a weak 30yr auction, while focus in Japan shifted to the enhanced liquidity auction for longer dated government bonds which printed a lower b/c although the highest accepted spread returned positive.

PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.20% for a CNY 50bln net injection. (Newswires) PBoC set USD/CNY mid-point at 6.4145 vs exp. 6.4110 (prev. 6.3948)

US President Biden and Chinese President Xi virtual meeting is tentatively scheduled for Monday evening. In other news, US and China surprised COP26 with a joint pledge to slow climate change in which they stated that they are firmly committed to working together and with other parties to strengthen the implementation of the Paris Agreement. (Newswires/Politico)

Chinese President Xi said achieving steady economic recovery at an early date is the most pressing task in the APAC region and that China will ensure stable and smooth supply chains in APAC region, while other reports noted that President Xi is expected to secure a resolution at the sixth plenum that will allow a third term and could also secure a mandate to allow him to rule for life. (Newswires)

USTR Tai said she is optimistic that engagement with China on the Phase 1 trade agreement will lead to better outcomes but cannot predict the result and noted that the Biden administration is getting traction with Chinese counterparts on trade talks. Tai added talks aim to hold Beijing accountable to the Phase 1 trade deal, while familiarity between Biden and Xi will help manage the complex relationship during a challenging period. Furthermore, she stated that it is not in her interests for talks on the Phase 1 deal to take a very, very long time and said that easing tariffs on Chinese goods could help tame inflation, while the USTR is focused on the bigger picture and US competitiveness. (Newswires)

Evergrande (3333 HK) was said to have paid the overdue interest on three bonds, according to Clearstream. There were also separate reports that China is considering moderating property curbs to help troubled developers unload assets, according to WSJ. The report noted that Chinese regulators, wary of financial risks spreading as a result of their crackdown on property lending, are considering easing the rules to let struggling developers sell off assets to avoid defaults and hits to the broader economy. PBoC is considering opening a pathway for financially strained property firms to unload projects by allowing the buyers, likely state-owned firms, to take over the assets without having the projects’ associated debt affect their own debt ratios. (WSJ)

UK/EU

ECB's Holzmann said the economic situation has deteriorated since the summer and it might take two years to reach the 2019 growth plan, while he added that there is no reason to continue the TLTRO programme and the ECB could stop buying bonds as soon as next September. (Newswires)

US warned against intellectual property and trade secret risk in draft EU tech rules, while it stated that forcing tech giants to change business practices may have implications for security and consumer protection issues. Furthermore, US urged a rethink of hefty fines and penalties in EU rules, as well as urged for a narrow definition of illegal content to be taken down by tech giants. (Newswires)

• UK RICS Housing Survey* (Oct) 70 vs. Exp. 65 (Prev. 68, Rev. 69)

FX

In FX markets, the USD remained elevated after having rallied on the back of the firmer than expected US CPI data which underpinned the DXY to eventually test the 95.00 level and saw Fed Fund Rate futures point to an earlier hike next year of July from September, while a further rise in yields after a weak 30yr auction was also conducive to the dollar rally. As a reminder, the hot inflation reading spurred comments from President Biden who said reversing the increase in inflation is a top priority. The major currencies gave way to the surge in the greenback in which EUR/USD retreated beneath 1.1500 and with comments from ECB’s Holzmann providing no favours for the single currency in which he stated that the economic situation has deteriorated since the summer and may take two years to reach the 2019 growth plan. Holzmann did also suggest that ECB bond purchases could come to an end next September. GBP/USD fell to a fresh YTD low beneath 1.3400 despite the modest improvement in tone on the Brexit front in which UK’s chief negotiator Frost said he welcomes the deferral of the French measures but hopes they will be taken off the table permanently. USD/JPY was driven by the strength in the base currency, while antipodeans were pressured amid recent declines in oil prices and disappointing Australian jobs data which showed a surprise contraction in headline Employment Change and a jump in the Unemployment Rate to 5.2% from 4.6%.

• Australian Employment Change (Oct) -46.3k vs. Exp. 50.0k (Prev. -138.0k)
• Australian Full Time Employment (Oct) -40.4k (Prev. 26.7k)
• Australian Unemployment Rate (Oct) 5.2% vs. Exp. 4.8% (Prev. 4.6%)
• Australian Participation Rate (Oct) 64.7% vs. Exp. 64.9% (Prev. 64.5%)

COMMODITIES

Commodities were rangebound overnight in which WTI crude futures remained despondent following the prior day's tumble to briefly beneath the USD 81.00/bbl level with the sell-off due to a stronger greenback and risk averse mood. The firm CPI data spurred President Biden to instruct parts of the administration to pursue a means for reducing energy cost and tackle price manipulation, while a slightly lower than expected build to headline EIA crude stockpiles failed to support prices as this was still at a contrast to the surprise draw for crude in the latest private inventory data. Gold prices are little changed near USD 1850/oz after having rallied yesterday due to its appeal as an inflation hedge and with Citi raising its up to 3-month price target for the precious metal by 11% to USD 1900/oz, while copper nursed some losses overnight but with the recovery limited by the mixed risk appetite.

Kuwait set December KEC crude OSP for Asia at Oman/Dubai + USD 2.15/bbl and Iran set December light crude to Asia at Oman/Dubai +USD 2.50/bbl. (Newswires)

GEOPOLITICAL

US Secretary of State Blinken said the US is concerned by reports of 'unusual Russian military activity' near Ukraine and said any escalatory or aggressive action would be of concern to the US, while the US is discussing ways to ensure security of energy supply to Ukraine. Furthermore, Blinken said Russia could and should take actions to reduce energy crunch, while the US is committed to taking appropriate action should Russia use energy as a weapon. (Newswires)

US

Treasuries were sold hard Wednesday as the CPI-induced front-end hammering was accentuated by an eye-gouging 5.2bp tail at the 30yr auction. TYZ1 volumes were above average.2s +9.2bps at 0.501%, 3s +11.3bps at 0.829%, 5s +14.0bps at 1.208%, 7s +12.5bps at 1.439%, 10s +10.2bps at 1.551%, 20s +10.5bps at 1.954%, 30s +8.9bps at 1.910%. 5yr TIPS -4.9bps at -1.874%, 10yr TIPS +3.3bps at -1.163%, 30yr TIPS +4.2bps at -0.531%. 5yr BEI +10.0bps at 3.147%, 10yr BEI +5.6bps at 2.669%, 30yr BEI +3.8bps at 2.453%. T-notes initially held onto support around 131-26 up into the US CPI print, where the (above expectations) +0.9% M/M and Core +0.6% M/M prints saw the curve hammered lower, with the front and belly leading the losses as speculation around hawkish alterations of the Fed's policy/tapering path grew – the +6.2% Y/Y CPI print, the highest since 1982, helped inflation breakevens rally to new cycle peaks. T-Notes then trundled lower through into the 30yr bond auction, sitting at 130-28 just before, although note the CPI-accentuated curve flattener lost some momentum into the NY afternoon amid comments from Fed's Daly who called for more patience from the Fed before altering policy. The record 5.2bp tail for the 30yr new issue saw T-Notes knee-jerk to session lows of 130-19+, although miraculously returned to pre-auction levels within the 30 minutes post-auction, a window that saw close to 300k contracts traded. The 30yr cash itself knee jerked from 1.88% to highs of 1.99% immediately after, before paring significantly to 1.92% not long after. However, note that the 20s couldn't catch a break, where the 20s30s curve extended its inversion after the auction, perhaps amid concerns for next Wednesday's USD 20bln new issue (announced earlier Wednesday), where if the 10s and 30s offerings this week are anything to go by, doesn't look to be a successful one. T-note (Z1) futures settled 1 point & 3+ ticks lower at 130-23+.

US President Biden is reportedly to sign the infrastructure bill on Monday. In relevant news, it was separately reported in Axios that Senator Manchin could punt President Biden's Build Back Better agenda to next year amid inflation concerns. (ABC/Axios)

US SEC Chair Gensler said private fund fees might need more transparency and questioned why private equity and hedge fund fees remain so high, while he added that fund performance metrics may need more transparency and asked SEC staff about new rules for side letters. (Newswires)

US FCC said it is ready to authorize over USD 700mln for broadband in 26 US states. (Newswires)