Asia-Pacific stocks traded mixed as the region followed a similar picture painted on Wall St

FX markets were choppy as the greenback eased to print fresh intraday lows with EUR/USD and GBP/USD testing 1.1500 and 1.3100 to the upside

FT reports, US Officials warned China that Trump will not engage in trade talks with Chinese President Xi at the G20 summit if China does not produce a detailed list of concessions

Looking ahead, highlights include German trade, ECB’s Mersch, Fed’s Kaplan, ECB’s Villeroy, Fed’s Evans, BoE’s Broadbent, Fed’s Harker, BoE’s Carney

ASIA-PAC

Asia-Pacific stocks traded mixed as the region followed a similar picture painted on Wall St, where the Dow rose for the first time in three days, the S&P closed little changed and the Nasdaq pulled back for a third straight session. ASX 200 (-0.8%) was pressured by the healthcare and lT sectors, while Nikkei 225 (-1.4%) was playing catch-up to yesterday’s slump while also subdued by a firmer currency, after re-entering the market from a long weekend. Elsewhere, Hang Seng (+0.5%) and Shanghai Comp. (+0.5%) traded choppy and with no firm direction for most of the session, before finding a firmer footing in the green following yesterday’s mass sell-off. Finally, US Treasury yields continued to rise with the 30yr hitting 4-year highs and the 10yr revisiting levels last seen in 2011. 

PBoC set CNY mid-point at 6.9019 (Prev. 6.8957) (Newswires)
PBoC skipped open market operations for a net daily drain of CNY 60bln

US Officials warned China that US President Trump will not engage in trade talks with Chinese President Xi at the G20 summit if China does not produce a detailed list of concessions; according to two people briefed on negotiations. Chinese officials said they have such a list but will not present it without some guarantee of it being received in a stable political climate in Washington. US officials have been frustrated in what they see as unwillingness from China. (FT)

US Treasury Secretary Mnuchin may hold non-trade bilateral discussions with officials from Chinese Finance Ministry and the PBoC, while top trade negotiators from China and US are unlikely to meet this week during the IMF and World Bank annual meetings; according to a senior US Treasury Official. (Newswires)

IMF World Economic Outlook Report cut 2018 and 2019 global growth forecast to 3.7% (Prev. 3.9%) citing trade war frictions and EM turmoil. China’s 2019 growth forecast was revised lower to 6.2% (Prev. 6.4%) and 2018 unchanged at 6.6%. (Newswires)

UK

Former Conservative Whip Harper has warned that PM May will be unsuccessful in getting her Chequers deal through Parliament and needs to switch to a Canada-style deal. (Telegraph)

Former UK Brexit Minister states that Senior government figures are attempting to engineer the softest form of Brexit in order to allow Britain to join the EU. (Sky)

UK BRC Total Retail Sales (Sep) Y/Y 0.7% (Prev. 1.3%) (Newswires)
UK BRC Retail Sales Monitor (Sep) Y/Y -0.2% (Prev. 0.2%)
UK Barclaycard Consumer Spending (Sep) Y/Y 3.9% (Prev. 4.5%)

EU

Italy's European Affairs Minister Savona said he is confident that if necessary ECB's Draghi will prevent another grave crisis in Europe and added no one in the Italian government wants to leave the EU. (Newswires)

IMF cut EZ 2018 growth forecast to 2.0% (Prev. 2.2%) while leaving 2019 unchanged at 1.9%. (Newswires)

FX

FX markets were choppy as the greenback eased to print fresh intraday lows with EUR/USD and GBP/USD testing 1.1500 and 1.3100 to the upside. Meanwhile, positive trade for antipodeans though AUD marginally outperformed NZD as the cross came in close proximity to the 1.10 level. Elsewhere, JPY was indecisive as the currency hovered just above the 113.00 level vs. the greenback before testing the level to the downside with safe-haven flows into the currency and as the USD pulled back. Finally, CNH pared back yesterday’s losses to trade closer to 6.9000 vs. the USD.

Brazil Presidential Candidate Bolsorano denied potential plans to raise income tax while Presidential Candidate Haddad said, if elected, he plans to reform the banking system in order to lower interest rates. (Newswires)

COMMODITIES

Commodities traded mostly higher with WTI and Brent back above USD 74.50/bbl and USD 84.00/bbl respectively as hurricane-related supply concerns regained focus following the complete closures and evacuations of some refineries in the Gulf of Mexico ahead of Hurricane Michael’s landfall. Elsewhere, metals recovered from the recent selloff with gold and copper higher in a move to retrace some losses, while Dalian iron ore rose over 3%.

NHC said Hurricane Michael is expected to become a major hurricane by Tuesday night. 324K bpd of US Gulf of Mexico crude oil production has been shut due hurricane Michael, according to BSEE. US estimates Gulf of Mexico producers have shut 19% of crude oil production and 11% of natural gas production ahead of Hurricane Michael, while Anadarko removed all personnel and shut production of oil and gas at its Horn Mountain and Marlin platforms in the Gulf of Mexico. (Newswires)

US President Trump is to ask EPA to seek rule change allowing summers sales of higher ethanol gasoline and impose new rules that limit speculation in biofuel credit in an attempt to prevent parties from driving up price ahead of the November mid-term elections; according to White House official. (Newswires)

Nigeria crude output rose 1.81mln BPD in September (Prev. 1.8mln BPD). (Newswires)

CENTRAL BANKS

Fed's Bullard (Non-Voter, Dove) reiterated we are at a good level of rates today and he does not think rates will have to rise much more to contain inflation. (Newswires)

ECB's Villeroy (Dovish) said you could judge Italian debt as too risky, Italian mix of high debt and weak growth is unbalanced. (Newswires)

ECB's Vasiliauskas (Hawkish) sees elevated risks to global growth. (Newswires)

US

Treasury futures mirrored action seen in Bunds on Monday amid thin volume; the complex drifted higher as European traders got to their desks given concern expressed by the EU Commission on Italy’s budget plan whilst actions remained limited in US trade. Note due to public holiday the cash treasury market was closed for Columbus Day. US T-note futures (Z8) unchanged at 117-23+.

IMF cut US 2019 growth forecast to 2.5% (Prev. 2.7%) while affirming 2018 at 2.9%. (Newswires)