• APAC stocks were mixed following the choppy performance stateside where major indices wobbled on news that Apple cut iPhone 14 Plus production.
• US futures were supported after Netflix beat on top and bottom lines and more than doubled expected quarterly net subscriber additions.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.8% after the cash market closed with gains of 0.6% yesterday.
• DXY edged higher and reclaimed 112, EUR/USD and GBP/USD are steady on 0.98 and 1.12 handles respectively.
• Looking ahead, highlights include UK CPI, EZ CPI (Final), Canadian CPI, Speeches from Fed's Bullard, Evans & Kashkari, Supply from UK & US, Earnings from Tesla, P&G, Abbott, Nestle, ASML, Deutsche Boerse, Hargreaves Lansdown.

US TRADE

• US stocks finished higher on what was a choppy session as participants digested mixed data and earnings releases. There was a bias towards industrials after strong US production data although a bout of pressure was seen in the major indices later in the session after reports that Apple (AAPL) had cut iPhone 14 Plus production less than two weeks after its debut. Nonetheless, stocks then edged higher heading into the close with futures also supported after hours following results from Netflix which beat on its top and bottom lines, as well as more than doubled the expected quarterly net subscriber additions.
• SPX +1.14% at 3,720, NDX +0.77% at 11,148, DJIA +1.12% at 30,524, RUT +1.16% at 1,756.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Discount Rate Minutes stated 9 of 12 Fed bank boards sought a 75bps discount rate hike in September and Minneapolis sought a 100bps hike.
• Fed's Kashkari (2023 voter) said the Fed won't need to do as much with interest rates if they can get help from the supply side but without help from the supply side, the Fed would need to do more. Kashkari added that core inflation has not shown evidence of a peak and he is not ready to declare a pause in rate hikes until he sees some compelling evidence that core inflation has at least peaked although would be comfortable pausing once he has confidence inflation has peaked. Furthermore, Kashkari said he could easily see rates getting to mid-4% next year and if he doesn't see progress on inflation, he doesn't see why rates should not go higher.
• Fed's Bostic (2024 voter) said the Fed cannot solve all the problems causing current inflation, while he noted there is a lot of "shuffle and churn" currently in the economy and they must work through that to get to a new equilibrium.
• Apple (AAPL) reportedly cut iPhone 14 Plus production less than two weeks after its debut, according to The Information.

APAC TRADE

EQUITIES

• APAC stocks were mixed following the choppy performance stateside where the major indices wobbled on news that Apple cut iPhone 14 Plus production less than two weeks after its debut, but then recovered heading into the close and with futures underpinned after-hours after strong earnings and subscriber additions from Netflix.
• ASX 200 gained with outperformance in defensive sectors although the upside was contained by a lacklustre mood in miners after BHP’s quarterly output update which included higher iron output but also a severe drop in coal production.
• Nikkei 225 was led higher by notable strength in blue-chip names including SoftBank and Fast Retailing and with firm gains also in utilities and power stocks, while the latest commentary from BoJ board member Adachi echoed the central bank’s dovish message as he warned against a shift towards tightening and pushed back on responding to short-term FX moves with monetary policy.
• Hang Seng and Shanghai Comp. remained pressured amid COVID concerns and data uncertainty, while Hong Kong Chief Executive John Lee’s first annual Policy Address failed to inspire a turnaround despite the announcement of measures to support property, tech start-ups and attract foreign talent.
• US equity futures (e-mini S&P +0.7%) were encouraged by the strong results from Netflix which also inspired its streaming peers.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.8% after the cash market closed with gains of 0.6% yesterday.

FX

• DXY edged higher as US yields sat above 4% and with Fed's Kashkari sticking to the hawkish script.
• EUR/USD slightly eased after recent fluctuations, despite recent hawkish-leaning ECB comments and a Reuters poll which showed that the majority of economists were calling for a 75bps rate hike next week.
• GBP/USD was steady after the BoE refuted the report of a delay in QT and confirmed gilt sales will take place on Nov. 1st, while Chancellor Hunt is reportedly lining up taxes on energy firms and banks to fill a GBP 40bln fiscal hole.
• USD/JPY traded sideways after climbing above the 149.00 level as officials continued to speak out against rapid one-sided moves although BoJ's Adachi warned against responding to short-term FX moves with monetary policy.
• Antipodeans were rangebound amid the lack of key data releases and mixed risk tone although hold on to a large majority of this week’s gains.

FIXED INCOME

• 10yr UST futures slightly softened overnight amid mild gains across yields in which yields across the curve all sat above 4% and with US equity futures propped up by encouraging earnings releases.
• Bund futures were contained following recent price swings.
• 10yr JGB futures are rangebound as the 10yr yield tests the BoJ’s tolerance around the 25bps cap and with the central bank only in the market today under its fixed buying operations.

COMMODITIES

• Crude mildly rebounded overnight following bullish inventory data but with gains capped amid the mixed picture across risk assets and with President Biden set to announce a 15mln SPR release.
• US Private Energy Inventory (bbls): Crude -1.3mln (exp. +1.4mln), Gasoline -2.2mln (exp. -1.1mln), Distillates -1.1mln (exp. -2.2mln), Cushing +0.9mln.
• US President Biden will lay out plans on Wednesday to continue using the SPR to gain more stability in gas prices and will reiterate that gasoline company profits are too high and should be returned to consumers, according to a senior administration official. Furthermore, the Biden administration agreed to make future oil purchases to refill reserves at prices at or below USD 67.00-72.00/bbl, while President Biden will announce 15mln additional barrels for delivery from SPR in December, extending the initial timeline and completing the 180mln commitment.
• Spot gold was contained by a rangebound dollar with the precious metal stuck near USD 1650/oz.
• Copper remained lacklustre amid the mixed risk appetite and weakness in its largest buyer China.
• World primary nickel production in 2021 was 2.612mln tons and is forecast to reach 3.036mln tons in 2022 and 3.387mln tons in 2023, while usage was 2.775mln tons in 2021 and forecast to increase to 2.892mln tons in 2022 and 3.216mln tons in 2023, according to INSG.

CRYPTO

• Bitcoin eked slight gains with prices kept afloat after support held at the 19,500 level.
• Coinbase (COIN) and Primer forge global integration to make cryptocurrency a standard payment method, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• A news blackout was reportedly underway in southern Ukraine which means "something big is going on" and suggests an imminent push from Kyiv, according to Sky News.
• Russia says it is preparing to evacuate civilians from Kherson which comes as Ukrainian troops push closer to the city as part of a successful counter-offensive, according to AFP News Agency
• Russian Commander in Ukraine said the situation in the area of the special operation is "tense" and that Russian forces are not aiming for rapid progress in Ukraine and are seeking to minimise civilian casualties. The Russian Commander also said further actions regarding Kherson are to depend on the current military and tactical situation, while he added it is complicated and difficult decisions cannot be ruled out, according to TASS.
• Europe is planning to sanction a number of Iranian individuals and entities regarding arms sales to Russia, according to Politico citing diplomats/officials; adding, a list of sanctions has been prepared, aim is to be in agreement before Thursday/Friday
• US Pentagon said it had no information to corroborate reports about Iran offering surface-to-surface missiles to Russia, while the US State Department said a deepening alliance between Russia and Iran is something the world should view as a profound threat and it has a number of tools to continue to hold both Iran and Russia accountable.
• US, Britain and France plan to raise Iran's arms transfers to Russia during closed-door UN security council meeting Wednesday, according to Reuters citing diplomats.
• UK Defence Secretary Wallace made an emergency trip to the US to discuss the security situation in Ukraine including the threat of a nuclear attack, according to London Evening Standard.

OTHER

• North Korea said it fired artillery shells on Tuesday to send a warning against South Korea's military drills and it called on its 'enemies' to immediately stop causing military tensions, according to KCNA.

ASIA

NOTABLE APAC HEADLINES

• China’s ideology tsar Wang Huning is tipped to head the National People’s Congress, while Wang is a core member of the Politburo Standing Committee and one of the architects of President Xi’s ‘Chinese dream’ concept, according to SCMP sources.
• Hong Kong Chief Executive John Lee said in his first annual Policy Address that national sovereignty and security are top priorities, while he also noted Hong Kong faces a “new chapter” of development and warned Hong Kong faces risks from global turmoil and Covid. Lee added that they will allow overseas talent to refund extra stamp duty on home purchases and will introduce a bill this year to exempt the stamp duty payable for transactions conducted by dual-counter market makers. Lee also stated the HKEX will revise main board listing rules next year to facilitate fundraising of advanced tech enterprises that have yet to meet the profit and trading record requirements, according to Reuters.
• BoJ's Adachi said monetary policy does not directly control FX and there are times FX moves rapidly short-term, while he added that responding to short-term FX moves with monetary policy would heighten uncertainty over BoJ's guidance which is not good for the economy. Adachi also stated that inflation is starting to increase but he is not convinced yet that the BoJ's target will be achieved in a stable and sustained manner. Furthermore, he said they must be cautious about shifting toward monetary tightening as downside risks to the economy are increasing and a shift to monetary tightening would weaken demand and heighten the risk Japan will revert to deflation, while the best approach now is to maintain easy monetary policy.

EU/UK

NOTABLE EU/UK HEADLINES

• BoE confirmed APF gilt sales operation will take place on November 1st and it currently expects to conduct APF gilt sales operations in Q4 2022 at a similar size and frequency as had been previously announced, while any shortfall as a result of the postponement relative to its previous sales plan will be incorporated into sales in subsequent quarters. For Q4 2022, these APF gilt sales operations will be distributed evenly across the short and medium maturity sectors only.
• UK Tory rebels were reported to have asked opposition Labour Party MPs to help them oust UK PM Truss as Tory backbenchers grow increasingly frustrated with the PMs leadership, according to The Telegraph.
• Pensions could increase in line with earnings instead of inflation next year after UK PM Truss went back on her commitment to the pension triple lock, according to The Telegraph.
• UK Chancellor Hunt met with Chairman of the 1922 Committee Brady on Tuesday afternoon which prompted further questions about the future of UK PM Truss, according to Sky News.
• UK Chancellor is lining up taxes on energy companies and banks to fill a GBP 40bln UK fiscal hole, according to FT.
• UK rail union RMT announced plans to take three days of coordinated strike action next month.
• ECB is set to warn of the risks of the Spanish tax proposal as part of its non-binding opinion, while it will highlight the adverse impact on the solvency of the Spanish banking sector and reportedly sees risks of a higher cost of credit, according to Reuters citing sources.