• APAC stocks were pressured following the weak handover from Wall Street (S&P 500 -0.7%). Tesla was lower by 6.3% post-earnings after-hours. 
• China is reportedly mulling cutting inbound quarantine to 7 days from 10 days, according to Bloomberg.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -0.3% after the cash market closed with gains of 0.2% yesterday.
• DXY has pulled back below 113, EUR/USD and Cable sit on 0.97 and 1.12 handles respectively, antipodeans lag.
• Looking ahead, highlights include US Philly Fed, Speeches from Fed's Bowman, Cook, Harker & Jefferson, Supply from Spain & France, Earnings from AT&T, American Airlines, Phillip Morris, L'Oréal, Hermes, Pernod Ricard & Nokia.

US TRADE

• US stocks finished lower amid the higher yield environment due to global inflationary headwinds after hotter-than-expected CPI data from the UK and Canada, which upended the momentum from the recent strong earnings releases. Tesla was down 6.3% after-hours after Q3 sales fell short of estimates.
• SPX -0.67% at 3,695, NDX -0.40% at 11,103, DJIA -0.33% at 30,423, RUT -1.72% at 1,726.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Beige Book stated price growth remained elevated although some easing was noted across several Districts, while national economic activity expanded modestly on net since the previous report but conditions varied across industries and Districts.
• Fed's Bullard (2022 voter) said if inflation starts to decline meaningfully in 2023, the Fed can stay where it is at a higher rate level. Bullard noted the Fed has to get rates to the right level first although he sees the possibility of good inflation dynamics in 2023 and said it does not appear to be a lot of financial stress in the US economy.
• Fed's Evans (departing) said starting rate hikes six months earlier would have made sense, while he added they need to make sure inflation pressures don't broaden further and that Fed policy must be suitably restrictive. Evans also stated if the Fed pushes the policy rate much further than planned, it could start to weigh on the economy and he is worried that at some point rate increases could have a non-linear impact with businesses becoming more pessimistic.
• Fed's Kashkari (2023 voter) said it is possible that headline inflation has peaked but he has not seen evidence core inflation has peaked. Kashkari added that risks of undershooting on rate hikes are bigger than overdoing it and he favours hikes until core inflation starts to cool, while his best guess is that the Fed can pause on rate hikes sometime next year.
• Tesla Inc (TSLA) - Q3 2022 (USD): Adj. EPS 1.05 (exp. 1.00), Revenue 21.45bln (exp. 21.96bln). Q3 FCF USD 3.30bln (exp. 2.89bln). Q3 Automotive gross margin +27.9% (exp. +28.4%). Tesla sees initial phase of semi deliveries begin in December 2022. Tesla still sees 50% avg annual growth in vehicle deliveries. Raw material cost inflation impacted quarterly profitability along with ramp inefficiencies from Gigafactory Berlin-Brandenburg, Gigafactory Texas, 4680 cell production. Battery supply constraints will be main limiting factor. CEO Musk said looking forward to a record-breaking Q4 and the Co. is gaining rapid traction in 4680 cell production. Shares fell 6.3% aftermarket

APAC TRADE

EQUITIES

• APAC stocks were pressured following the weak handover from Wall Street owing to the higher yield environment and as global inflationary headwinds offset the recent earnings momentum.
• ASX 200 was led lower by the underperformance in tech and following disappointing jobs data, although the energy sector bucked the trend after gains in oil prices and strong quarterly output updates from Woodside Energy and Santos.
• Nikkei 225 briefly fell beneath 27,000 with participants on intervention watch, while stronger-than-expected Exports and Imports failed to spur risk appetite as the data also contributed to a record trade deficit for the fiscal first half.
• Hang Seng and Shanghai Comp. declined from the open with the former on course for its lowest close since 2009 amid heavy losses in tech and with the mainland also downbeat after the lack of surprises from the PBoC which maintained its benchmark lending rates unchanged as widely expected, although news of China mulling shortening its quarantine eventually lifted the Shanghai Comp into the green.
• US equity futures were marginally lower overnight (e-mini S&P -0.2%) although were briefly supported by news of China mulling shortening its inbound quarantine to 7 days from the current 10 days.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -0.3% after the cash market closed with gains of 0.2% yesterday.

FX

• DXY held on to most of its gains near the 113.00 status amid the higher yield environment and risk aversion, but was later marginally pressured as its counterparts found solace from hopes of China shortening its quarantine.
• EUR/USD was contained by the firmer greenback and sits on a 0.97 handle.
• GBP/USD was subdued and tested the 1.1200 level to the downside amid the political turbulence in the UK where the Home Secretary stepped down and PM Truss's leadership was seen to be hanging by a thread.
• USD/JPY USD/JPY was rangebound overnight after climbing to within a whisker of the 150.00 handle and although the latest Japan trade data topped forecasts it still resulted in the largest first fiscal half-year deficit on record.
• Antipodeans were softer amid the broad negative sentiment and disappointing Australian jobs data.
• PBoC set USD/CNY mid-point at 7.1188 vs exp. 7.1438 (prev. 7.1105)

FIXED INCOME

• 10yr UST futures extended on losses beneath the 110.00 level after yields gained in the aftermath of the hot CPI data releases from the UK and Canada, while prices were also not helped by a weak 20yr auction stateside.
• Bund futures languished at this week’s lows after the German finance agency increased the amount of outstanding bonds in its account by EUR 54bln.
• 10yr JGB futures were pressured as the 10yr yield sat above the upper level of the BoJ’s target band which prompted the central bank to conduct an emergency bond-buying operation.

COMMODITIES

• Crude held on to yesterday's gains despite President Biden's announcement of a 15mln bbls SPR sale which had been widely telegraphed beforehand, with further upside spurred by news of China mulling cutting its quarantine.
• Spot gold marginally extended on recent losses as the dollar and yields remained firm.
• Copper prices were subdued for most of the session alongside the broad risk aversion although pared losses on reports of China mulling shortening its inbound quarantine requirements.
• MMG's (1208 HK) Las Bambas copper mine in Peru reportedly halted copper transportation due to protests.

CRYPTO

• Bitcoin was marginally lower and briefly dipped beneath the 19,000 level.

GEOPOLITICS

RUSSIA-UKRAINE

• Russia's Deputy UN envoy said Russia would reassess cooperation with the UN Secretariat if the UN chief sends experts to Ukraine to inspect downed drones and is not optimistic about the renewal of the Ukraine grain Black Sea export deal, according to Reuters.
• US State Department said the US, UK and France raised the issue of Iran's transfer of drones to Russia at a meeting of the UN Security Council on Wednesday, according to Reuters.
• US Treasury senior official travelled to Turkey this week and discussed sanctions and export controls imposed on Russia, according to Reuters.

OTHER

• US and South Korea are conducting military drills at their fastest pace in years to show their readiness as tensions rise on the divided Korean Peninsula, according to Nikkei Asia Review.

ASIA

NOTABLE APAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Oct) 3.65% vs. Exp. 3.65% (Prev. 3.65%)
• PBoC 5-Year Loan Prime Rate (Oct) 4.30% vs. Exp. 4.30% (Prev. 4.30%)
• China reportedly held emergency talks with chip firms after US curbs, according to Bloomberg.
• China is reportedly mulling cutting inbound quarantine to 7 days from 10 days which will be presented to the top leaders, according to Bloomberg.

DATA RECAP

• Australian Employment (Sep) 0.9k vs. Exp. 25.0k (Prev. 33.5k)
• Australian Unemployment Rate (Sep) 3.5% vs. Exp. 3.5% (Prev. 3.5%)
• Japanese Trade Balance Total Yen (Sep) -2094B vs. Exp. -2167.4B (Prev. -2817.3B, Rev. -2820.0B)
• Japanese Exports YY (Sep) 28.9% vs. Exp. 27.1% (Prev. 22.1%, Rev. 22.0%)
• Japanese Imports YY (Sep) 45.9% vs. Exp. 45.0% (Prev. 49.9%)

EU/UK

NOTABLE EU/UK HEADLINES

• BoE's Cunliffe said they will set out terms for selling bonds bought after the mini-Budget at the right time. It was also separately reported that BoE's Hauser said the exit for bonds bought after the mini-Budget might be more straightforward than that of QE stock.
• UK Treasury is to transfer GBP 11bln to the BoE to cover QE losses, according to Bloomberg sources.
• UK Tory 1922 Committee officers are expected to meet on Thursday to discuss the leadership crisis in the Tory party, according to The Telegraph's Editor.
• The Times reporter Swinford tweeted that a Tory minister who is publicly very loyal to Truss said it's over and that the only thing holding the party back from removing her is the lack of a unity candidate to replace her.
• UK lawmakers claimed that the Tory chief whip and deputy chief whip resigned, according to The Sun. However, PM Truss's office later noted that the Tory party's chief whip and deputy chief whip remain in their posts.
• Italian President Mattarella will start consultations on a new government on Thursday which will end on Friday morning.