• European bourses see a choppy session but have tilted towards the green after experiencing a mixed cash open.
• US equity futures see gains across the board following the steep losses on Friday - with the NQ and RTY narrowly outperforming.
• Gilts gap-up and lead the way ahead of a potential "mini-Budget" U-turn from new Chancellor Hunt, peers buoyed in turn.
• Pound perkier in turn with the DXY modestly pressured to the benefit of peers across the board.
• WTI and Brent futures trimmed earlier gains in downside that was exacerbated after reports China is to delay its Q3 GDP release.
• Looking ahead, UK Chancellor Hunt, ECB’s Lane, BoC’s Rogers

As of 10:40BST/05:40ET

LOOKING AHEAD

• UK Chancellor Hunt, ECB’s Lane, BoC’s Rogers
• Click here for the Week Ahead preview.

EUROPEAN TRADE

EQUITIES

• European bourses see a choppy session but have tilted towards the green after experiencing a mixed cash open.
• Sectors are mostly firmer with no overaching theme - Insurance, Autos, and Utilties lead the gains whilst Chemicals, Retail and Consumer Products lag.
• US equity futures see gains across the board following the steep losses on Friday - with the NQ and RTY narrowly outperforming.
• Click here for more detail.

FX

• Pound perkier on premise that new UK Chancellor will be more frugal with public finances, Cable comfortable on 1.1200 handle and EUR/GBP probing 50 DMA just shy of 0.8650.
• Aussie and Kiwi recover amidst less risk-off environment ahead of RBA minutes and NZ Q3 CPI; AUD/USD hovering around 0.6250 and NZD/USD just under 0.5600.
• Loonie, Franc and Euro all firmer vs Greenback as DXY slips from Friday's peak to pivot 113.000, USD/CAD eyeing 1.3800, USD/CHF close to parity and EUR/USD above 0.9750.
• Yen propped ahead of 149.00 vs Dollar as Japanese officials turn up volume of verbal intervention.
• PBoC set USD/CNY mid-point at 7.1095 vs exp. 7.1331 (prev. 7.1088)
• Major Chinese state-owned banks were seen swapping yuan for dollars in the forwards market and selling dollars in the spot market to stabilise the local currency, according to sources cited by Reuters.
• Click here for more detail.

FIXED INCOME

• Gilts gap-up and lead the way ahead of a potential "mini-Budget" U-turn from new Chancellor Hunt, peers buoyed in turn.
• Specifically, Gilt Dec'22 posts upside of over 300 ticks around the 97.00 mark with the associated 10yr yield down to near 4.0%.
• Amidst this, SONIA is taking a dovish-turn despite the weekend's remarks from Bailey, with pricing dipping to 'just' a ~75% chance of a 100bp increase in November.
• Stateside, USTs are firmer by around 15ticks with the US-specific docket comparably sparse after last week's key inputs.
• BoE Gilt statement: As previously announced, the Bank terminated these operations and ceased all bond purchases on Friday 14 October. As intended, these operations have enabled a significant increase in the resilience of the sector.
• Click here for more detail.

COMMODITIES

• WTI and Brent futures trimmed earlier gains in downside that was exacerbated after reports China is to delay is Q3 GDP release.
• French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters.
• Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz.
• LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes.
• Click here for more detail.

OPEC HEADLINES

• OPEC Secretary-General al-Ghais said slow economic growth reflects on oil demand and that OPEC+ took the pre-emptive decision, while he added OPEC doesn’t target a specific price but targets a balance between supply and demand. Al Ghais also stated that they do not control oil prices and that their decisions are purely technical, as well as noted that there is always space for flexibility in OPEC when asked about reviewing this month’s oil output cut. Furthermore, he commented that oil markets are going through a stage of great fluctuations, according to Reuters.
• Iraq said OPEC+ decisions are based on economic indicators and there is consensus in OPEC+ to be pre-emptive to deal with the current uncertainty in oil markets, while it added that the OPEC+ latest decision is based on market inputs and it is essential to achieve market stability, according to a SOMO statement cited by Reuters.
• UAE Energy Minister said the OPEC decision was purely technical and unanimous not political as some described, according to Reuters.
• Kuwait said it welcomes the recent decision by OPEC+ to cut output and said it is keen to maintain balance in the oil markets for the benefit of consumers and producers, while it added that expected slow global economic growth led to more disturbance in the balance of supply and demand in oil markets, according to Reuters. Furthermore, Kuwait appointed Badr Al Mulla as its new Oil Minister and appointed Wahab Al Rasheed as Finance Minister, according to a tweet.
• Oman’s Energy Ministry said OPEC+ decisions are based on purely economic considerations, as well as realities of supply and demand in the market, while the decision was important and necessary to reassure the market and support its stability, according to a Tweet.
• Bahrain’s Oil Minister said the OPEC+ decision was reached by consensus among all member states and that OPEC+ will study any economic developments in the future to ensure the stability of markets and global supply, according to the state news agency cited by Reuters.

NOTABLE EUROPEAN HEADLINES

UK

• BoE Governor Bailey said they will not hesitate to raise interest rates to meet the inflation target and that the Bank had to intervene to deal with the threat to the stability of the financial system, while they think inflation should peak at around 11% and his best guess is that inflationary pressures will require a stronger response than perhaps thought in August, according to Reuters.
• BoE Governor Bailey said he does not comment on fiscal policy but has to emphasise sustainability, while he spoke with UK Chancellor Hunt and said that there is a meeting of minds on sustainability. Furthermore, Bailey said they are going to have to stay very focused on the risks of second-round effects on inflation, according to Reuters.
• UK Chancellor Hunt said taking difficult decisions now is the best way to stop interest rates from rising and that the PM hasn’t changed the destination, she has changed the way we are going to get there. Hunt also commented that the PM is in charge and the last thing they need is another Conservative leadership campaign, according to Reuters.
• UK Chancellor Hunt said ‘yes’ when asked if he can change the mini-Budget plans and noted that the priority will be to help struggling businesses and families, while he is leaving all possibilities open when asked about government spending and stated that tax will not be cut as quickly and some taxes will go up, according to Reuters.
• UK Chancellor Hunt is to make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability, via Treasury. Hunt will deliver the full medium-term fiscal plan, to be published with OBR forecasts, on 31st October. Chancellor Hunt met with BoE Governor Bailey and the DMO head on Sunday night, to brief them on these plans.
• UK Chancellor Hunt is to delay plans to reduce the basic rate of income tax by a year and it was also reported that the draft forecast by the OBR fiscal watchdog sees the UK will have a black hole in public finances of up to GBP 72bln by 2027/28, according to The Sunday Times.
• Senior Tories will hold talks this week on a “rescue mission” that could see the swift removal of Liz Truss as leader, after the new Chancellor Hunt tore up her economic package and signalled a new era of austerity, according to The Observer. Furthermore, The Times reported that Tories held secret talks on installing a new leader and Daily Mail also reported that UK lawmakers will attempt to oust UK PM Truss this week despite warnings from Downing Street that it could trigger a general election.
• Reportedly almost all of Kwarteng's GBP 45bln of unfunded tax reductions is set to be scrapped by Chancellor Hunt, via FT's Parker; "including income tax cut and stuff on dividends, stamp duty, foreign shoppers and IR35."
• US President Biden said he wasn’t the only one who thought that UK PM Truss’s original economic plan was a mistake, according to Reuters. It was also separately reported that Goldman Sachs downgraded its UK growth outlook after the government tax U-turn.
• Head of UK's Unison union warned the largest nationwide strike of NHS workers since the early 1980s could occur this winter if ministers ignore calls to match pay with inflation, according to FT.
• BoE is publishing a market notice which sets out how energy firms and commercial lenders can apply to participate in the energy markets financing scheme; open to applications today; alongside this the UK Gov't has published a release, outlining the financing scheme and specifying that the gov't will only be liable if a firm defaults on their repayment; scheme is designed to help firms facing temporary shot-term financing problems.

ECB

• ECB’s Knot said he is increasingly convinced that rates need to rise above neutral and once rates hit a neutral level, it makes sense to consider running off APP stock, according to Reuters.
• ECB's Rehn said the threat of stagflation has intensified. The stability risks of international financial markets are clearly increasing. Although the global financial crisis has been avoided for now, it is not time to breathe a sigh of relief.
• ECB's Lane expected to propose a 75bps hike at the upcoming ECB meeting, according to an ECB insider cited by Econostream.
• ECB's de Guindos expects FX rate to stabilise in the coming months, via Reuters.
• Some ECB officials are seeing legal basis to toughen bank TLTRO terms, according to Bloomberg sources.

NOTABLE EUROPEAN DATA

• UK Rightmove House Prices MM (Oct) 0.9% (Prev. 0.7%); YY (Oct) 7.8% (Prev. 8.7%)

NOTABLE US HEADLINES

• White House Economic Adviser Rouse said Fed actions are beginning to cool the red-hot US economy, especially the housing and labour markets, but added that inflation was still too high, according to Reuters.
• Goldman Sachs (GS) plans a major overhaul to combine its units, according to Reuters sources; an announcement is due on Tuesday, October 18th.

CRYPTO

• Bitcoin is rangebound and holding just above the USD 19k mark at present.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Bakhmut and Soledar in eastern Donbas are hotspots at the front with heavy fighting, while it was separately reported that that Kyiv's Mayor Klitschko said blasts hit Kyiv's city centre, according to Reuters.
• Russian Defence Ministry said Russia destroyed three US-made M777 Howitzers in Ukraine’s Kharkiv region and that Russian troops repelled Ukrainian attempts to advance in the regions of Donetsk, Kherson and Mykolaiv, according to Reuters.
• Russian Defence Ministry said 11 people were killed and 15 were wounded after two Tajikistan citizens committed an act of terrorism at a training ground in Russia’s Belgorod.

OTHER

• Lebanon said Israeli gunboats violated Lebanese territorial waters opposite Ras Al Naqoura, while the Israeli military denied any crossing of the Lebanese maritime borer by its forces, according to Reuters.
• Iranian President Raisi blamed US President Biden for inciting chaos and terror in Iran through his comments, according to IRNA.
• White House National Security Adviser Sullivan said US President Biden will act methodically in re-evaluating the US relationship with Saudi Arabia and said President Biden has no plans to meet with the Saudi Crown Prince at the G20 next month, while he added that countries including China need to send the message to Russia that Moscow should not contemplate the use of nuclear weapons in the Ukraine conflict, according to CNN.
• Saudi Defence Minister said they are astonished by the accusations that the kingdom is standing with Russia in its war with Ukraine, while it added that although the OPEC+ decision was taken unanimously and was due to purely economic reasons, some accused the kingdom of standing with Russia, according to Reuters.
• EU ministers advised to take a tougher stance on China and work more closely with the US, strengthen its cyber and hybrid threat defences and diversify supply chains away from China, according to FT.
  • Taiwan Presidential Office said Taiwan's mainstream public opinion opposes the ‘one country, two systems’ and Taiwan will not back down on its sovereignty, while it will not compromise on freedom and democracy. Furthermore, it stated that meeting on the battlefield is not an option and that maintaining peace and stability in the Taiwan Strait and the region is the common responsibility of both sides, according to Reuters.
  • EU's Borrell said do no expect any move on the nuclear deal with Iran.

APAC TRADE

EQUITIES

• APAC stocks were negative as the region took its cue from last Friday's declines on Wall St where risk assets were pressured by inflationary concerns, while the region also digested hawkish global central bank rhetoric and China sticking to its strict zero-COVID policy.
• ASX 200 was led lower by the commodity-related sectors and with Australian Treasurer Chalmers flagging an increase in the cost of living due to floods in the primary food growing areas.
• Nikkei 225 weakened with Japan said to consider a rise in corporation tax as an option to fund the nation’s defence budget which could double in the next few years.
• Hang Seng and Shanghai Comp. were lower following Chinese President Xi’s speech to kick-start the Communist Party Congress in which he defended the zero-Covid policy and reaffirmed intentions for the reunification of Taiwan, while attention was also on the PBoC which rolled over CNY 500bln of MLF loans and kept the rate at 2.75% which suggests a likely pause in its benchmark rates later this week.

CCP NATIONAL CONGRESS

• Chinese President Xi declared the new core mission of the party is to lead China united in the challenge to be a powerful, modern socialist nation by 2049. Chinese President Xi said they will promote a high level of opening to the outside world and will maintain pluralistic and stable economic relations with other countries. Furthermore, Xi said they will strengthen the ability to prevent and control the epidemic, while he also commented that the next five years will be crucial for building a modern socialist power and will aim for high-quality growth, as well as support the private economy unwaveringly, according to Reuters.
• China Communist Party spokesman Sun said China is capable of greater miracles going forward but noted China has entered a new normal of slower growth and is more focused on fixing long-term issues than growth. Sun also stated that they all hope the pandemic will end soon but what they see now is that the pandemic is still on and that their Covid prevention policy is the best and most economically efficient, according to Reuters.
• Chinese government officials are backpedalling on efforts to organise a meeting between US President Biden and Chinese President Xi on the sidelines of the G20 summit next month, according to Politico.
• Chinese President Xi said they will firmly promote reunification efforts with Taiwan and it is up to the Chinese people to resolve the Taiwan issue, while he added they will never renounce the right to use force and said reunification of the motherland must and will certainly be achieved.
• Chinese Communist Party spokesman Sun said achieving reunification with Taiwan by peaceful means best meets the interest of all and the use of force is the last resort under compelling circumstances, while he added that Taiwan will plunge into a disaster if pro-independence Taiwan and external forces are left unchecked, according to Reuters.

NOTABLE APAC HEADLINES

• Chinese will delay the release of Q3 economic indicators including GDP, according to the Stats Bureau; no new date mentioned.
• PBoC injected CNY 500bln via 1-year MLF with the rate kept at 2.75%, as expected.
• China locked down nearly 1mln people near an Apple (AAPL) iPhone factory in which Zhengzhou city ordered residents in one district to stay home, according to Bloomberg.
• BoJ Governor Kuroda said the BoJ is continuing with monetary easing since Japan’s headline inflation is likely to fall below 2% next fiscal year, while he added it is appropriate to continue monetary easing to ensure a shift in the deflationary norm and achieve the inflation target in a sustainable and stable manner, according to Reuters.
• BoJ Deputy Governor Wakatabe said it is up to the Finance Ministry to decide on whether or not to intervene in the FX market and that current FX fluctuations are clearly too rapid and too one-sided.
• Japanese top currency diplomat Kanda said they are ready to take decisive action if excess FX moves continue and are backed by speculative trading, while Kanda reiterated that recent JPY moves were somewhat rapid, according to Reuters.
• BoK Governor Rhee said he does not see interest among US officials in pursuing a plaza accord to stem the dollar strength, while Rhee also stated that the BoK needs a little bit more experience and technical capacity for forward guidance, according to Reuters.
• South Korean Finance Minister Choo said the government will scrap taxes on foreigners’ income from Korean treasury bonds and monetary stabilisation bonds from Monday, according to Reuters.

DATA RECAP

• Singapore Non-Oil Exports MM (Sep) -4.0% vs. Exp. -2.1% (Prev. -3.9%)
• Singapore Non-Oil Exports YY (Sep) 3.1% vs. Exp. 7.1% (Prev. 11.4%)