• Asian stocks are mostly higher and US equity futures recover Apple-inspired losses after reports that Trump has asked the cabinet to draft a potential China trade deal
• FT reports that the EU is floating a compromise with London on the Irish border backstop that would give the UK stronger guarantees of no need for a customs border
• Looking ahead, highlights include EZ Mfg PMIs, UK construction PMI, US and Canadian jobs reports, Baker Hughes rig count

ASIA

Asian equity markets tracked their Wall St counterparts higher after US stocks posted a 3rd consecutive gain with sentiment underpinned by optimism regarding US-China trade after what US President Trump described as a ‘very good’ conversation between him and Chinese President Xi Jinping. Furthermore, reports that Trump asked the cabinet to draft a potential China trade deal added fuel to the rally and helped US equity futures recover from the after-market pressure triggered by declines in Apple shares after the tech giant missed on iPhone and iPad sales, provided soft Q1 revenue guidance and announced to halt product unit sales data. ASX 200 (+0.1%) and Nikkei 225 (+2.5%) were mixed throughout most the session with Australia dampened by energy names after WTI crude futures slipped 2.7% to below USD 64.00/bbl on higher OPEC production in October, while the Japanese benchmark surged on a weaker currency and the encouraging trade related news. Elsewhere, Hang Seng (+3.5%) and Shanghai Comp. (+2.1%) also rose aggressively on the positive developments between US and China, with gains led by strength in tech names as well as casino stocks post-Macau gaming revenue numbers. Finally, 10yr JGBs were eventually flat as the initial upside was wiped out as US-China trade hopes were kindled by overnight reports, while the BoJ were also in the market today and increased its purchase amounts in the 1-5yr JGBs which was unsurprising given the reduction in the number of occasions it had planned for those purchases this month.

US President Trump has asked his cabinet to draft a possible China trade deal in an attempt to signal a ceasefire in tensions, according to sources. (Newswires)

PBoC skipped open market operations for a net weekly drain of CNY 490bln vs. last week's CNY 460bln net injection. (Newswires)
PBoC set CNY mid-point at 6.9371 (Prev. 6.9670)

UK/EU

EU is floating a compromise with London on the Irish border backstop that would give the UK stronger guarantees of no need for a customs border. (FT)

Former UK PM Cameron reportedly told friends he hopes to return to politics as next Foreign Secretary. (The Sun)

FX

In FX markets, most major currencies initially took a breather from the broad rally against the greenback heading into today’s Non-Farm Payrolls report, which helped the USD nurse some of the prior day’s losses in early trade. This saw EUR/USD and GBP/USD slightly ease from Thursday’s highs to briefly below the 1.1400 and 1.3000 handles respectively, while antipodeans were steady with AUD/USD indecisive around 0.7200 to remain near its best levels in a month after mixed data in which Retail Sales disappointed but PPI printed at a multi-year high. However, high-beta currencies were then spurred in late trade after reports US President Trump asked the cabinet to draft a potential China trade agreement, which helped USD/JPY reclaim the 113.00 handle and underpinned JPY-crosses.

Australian Retail Sales MM Sep 0.2% vs. Exp. 0.3% (Prev. 0.3%). (Newswires)
Australian Retail Sales Ex. Inflation (Q3) Q/Q 0.2% vs. Exp. 0.4% (Prev. 1.2%)
Australian PPI (Q3) Y/Y 2.1% (Prev. 1.5%)

COMMODITIES

Commodities were mostly higher overnight on the encouraging US-China trade related news which helped oil pare some of its losses, although the rebound in WTI crude futures was miniscule in comparison to the prior day’s 2.7% slump to below USD 64.00/bbl due to last month’s increased OPEC production/, Elsewhere, gold was steady with the precious metal biding its time ahead of today’s NFP jobs data, while copper was initially pressured amid early heavy selling across Chinese commodities although prices then rebounded as risk appetite surged on the positive US-China developments.

US is to give 8 countries waivers on new Iran oil sanctions, according to sources; updates to follow on the breakdown but India and South Korea have been touted as two of the nations. (Newswires)

US is attempting to broker a deal between Saudi Arabia and Kuwait concerning restart of 'neutral zone' oil production and US is also attempting to persuade Iraq to permit oil exports through Kurdistan, according to sources. Furthermore, reports added that ‘neutral zone’ issues are far from resolved and may take 9 months to bring its crude output to full capacity of around 500k bpd, while US told Iraq it may get Iran sanctions waiver if it permits resumption of Kirkuk oil exports to Turkey. (WSJ)

US National Security Advisor Bolton said US President Trump signed an order to enable Venezuela gold sanctions, while reports noted the US will target dishonest deals in Venezuela's gold sector. (Newswires)

GEOPOLITICS

US Secretary of State Pompeo said will be a handful more weeks until US has sufficient evidence to impose sanctions related to killing of journalist Khashoggi. (Newswires)

US

Treasuries were marginally higher on Thursday after disappointing ISM Manufacturing data and as investors prepare for tomorrow’s October labour market report where 183k jobs are expected to be added to the economy. Informa notes “anything remotely close to that number could spell trouble for the bond market, as it will almost certainly trigger a mass migration to the equity markets as investor confidence builds”. Yields across the curve were lower by c.2bps at settlement; 2s10s and 2s30s widened by c.1bps and 10s30 narrowed by less than 1bps. The US treasury announced it will sell USD 45bln of 3-month and USD 39bln of 6-month bills on November 5th to settle on November 8th, USD 26bln of 52-week bills on November 6th to settle on November 8th. US T-note futures (Z8) settled 4+ ticks higher at 118-18+.

US President Trump said he will be issuing an executive order next week regarding immigration. (Newswires)

Apple Inc (AAPL) Q4 EPS USD 2.91 vs. Exp. 2.78, revenue USD 62.90bln vs. Exp. 61.57bln, Q4 iPhone unit sales 46.9mln vs. Exp. 47.5mln, Q4 iPad unit sales 9.7mln (Exp. 10.53mln). Co. announced to halt unit sales data for iPhones, iPads and Macs, while it sees Q1 revenue USD 89bln-93bln vs. Exp. USD 93bln and said Q1 outlook reflects anticipated USD 2bln impact from expected FX headwinds, EM macroeconomic weakness and some supply/demand uncertainties. (Newswires)