• European cash bourses trade mixed with the breadth of the market narrow, US futures softer though off lows and varied
• TSLA -5.0% in the pre-market post-earnings; in Europe, Ericsson and Nokia hit on margins
• Pound pressured alongside PM Truss and after BoE's Broadbent, USD/JPY through 150.00 while DXY slips from 113.00
• Debt remains depressed though notably off worst levels after dovish remarks from BoE's Broadbent, yields bid but have similarly slipped
• Crude complex is buoyed by the USD's pause and after China COVID source reports
• Looking ahead, highlights include US Philly Fed. Speeches from Fed's Bowman, Cook, Harker & Jefferson, ECB's de Cos. Earnings from American Airlines, Phillip Morris.

As of 11:00BST/06:00ET

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EUROPEAN TRADE

EQUITIES

• European cash bourses trade mixed with the breadth of the market narrow (Euro Stoxx 50 -0.2%; Stoxx 600 -0.4%).
• Sectors in Europe are mostly negative with no overarching theme – Energy and Banks outperform amid price action in underlying crude and yields respectively. Meanwhile, Telecom names sit at the bottom of the pile as Ericsson (-14%) and Nokia (-5.3%) slide following red flags on margins.
• US equity futures are softer across the board but to varying degrees, with the NQ (-0.9%) lagging the ES (-0.5%) and RTY (-0.4%), with Tesla carrying a larger weight in the NDX (circa. 4.0%) than the SPX (circa. 1.8%).
• 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. -5.0% in the pre-market
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FX

• Pound precarious as pressure continues to build against UK PM Truss and BoE's Broadbent infers that market expectations on rates may be too hawkish, Cable pivots 1.1200
• Yen slips under 150.00 mark vs Dollar as yields continue to rally, but rebounds amidst further Japanese verbal, if not actual intervention
• Franc remains on the backfoot due to as a funding currency, but Euro gleans traction from data and EGB/UST spread convergence, USD/CHF straddles 1.0050 and EUR/USD bounces ahead of 0.9750 to reclaim 10 and 21 DMAs
• Aussie labours after payrolls miss consensus by some distance and before recovery in tandem with Yuan on reports that China may relax some Covid rules for inbound travellers, AUD/USD eyes 0.6300 from sub-0.6250 and USD/CNH off peaks near 7.2800
• Riksbank's Ingves, to Swedish parliament, says easing mortgage repayment rules would be inappropriate.
• RBI is continuing spot USD sales and receiving December forwards, according to traders cited by Reuters.
• Click here for more detail. Notable FX Expiries, NY Cut:
• EUR/USD: 0.9695-05 (1.9BN), 0.9715-25 (744M), 0.9750 (942M), 0.9775-85 (878M), 0.9800 (1.98BN), 0.9825-3.0 (364M), 0.9850 (1.25BN), 0.9870-80 (1.01BN)
• USD/JPY: 147.75 (445M), 147.90-00 (3.74BN), 149.50-60 (405M)
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FIXED INCOME

• Debt remains depressed though notably off worst levels after dovish remarks from BoE's Broadbent lifted Gilts to the mid-98.00 region.
• In turn, both USTs and Bunds have climbed off lows of 109.19+ and 134.86 respectively, though still post downside of circa. 3 and 50 ticks respectively.
• The complex looks to US data and Fed speak while BTPs await updates out of Italy as potential PM Meloni is set to begin constructing her cabinet, with particular focus on the Berlusconi's Foreign Minister nominee.
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COMMODITIES

• WTI and Brent December contracts are firmer intraday with the former around USD 86/bbl (84.49-86.27 range) whilst the latter resides around USD 93.50/bbl (91.95-93.92 range).
• The crude complex is buoyed by the pullback in the Dollar after receiving a boost from source reports that China is considering easing its COVID rules for travellers.
• Spot gold sees some support from the DXY remaining under 113.00, although remains well off recent highs, with the yellow metal still around the USD 1,630/oz mark (vs yesterday’s 1,654.50/oz high).
• LME metals are mixed but 3M copper receives a boost from the Buck alongside the aforementioned China source reports, but the red metal remains under USD 7,500/t.
• MMG's (1208 HK) Las Bambas copper mine in Peru reportedly halted copper transportation due to protests.
• German Energy Regulator says potential gas emergency is now end of February at the earliest, rather than end of November which was part of the scenario analysis in the August forecast, via Reuters.
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NOTABLE EUROPEAN HEADLINES

• BoE's Broadbent says the MPC is likely to respond relatively promptly to news about fiscal policy. Remains to be seen if rates need to rise as much as currently priced in by markets, via BoE. The justification for tighter policy is clear. If government support mitigates the effect of import costs, there is more at the margin for monetary policy to do. If Bank Rate really were to reach 5.25%, the cumulative impact on GDP of the entire hiking cycle would be just under 5% - of which only around one quarter has already come through
• 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. However, recent reporting indicates the Committee will not be meeting today.
• UK PM Truss's office noted that the Tory party's chief whip and deputy chief whip remain in their posts.
• ITV's Peston, citing a member of UK Cabinet, that it is clear there is a will among ministers to attempt to keep PM Truss in office until October 31st (when the budget will be announced). A view that contrasts the recent update from ITV's Brand, citing a 1922 member, that the “odds are against” PM Truss surviving the day as PM

NOTABLE EUROPEAN DATA

• German Producer Prices YY (Sep) 45.8% vs. Exp. 44.7% (Prev. 45.8%); MM (Sep) 2.3% vs. Exp. 1.3% (Prev. 7.9%)

NOTABLE US HEADLINES

• 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.

CRYPTO

• Overall, Bitcoin is contained and essentially unchanged on the session around USD 19.1k with specific updates relatively limited and participants focused on broader market action.

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.
• EU states have agreed on new sanctions against Iran regarding the supply of drones to Russia, according to the Czech EU presidency; to freeze assets of three individuals and one entity responsible for the drone sale.

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.

NOTABLE APAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Oct) 3.65% vs. Exp. 3.65% (Prev. 3.65%); 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.
• Indonesian 7-Day Reverse Repo (Oct) 4.75% vs. Exp. 4.75% (Prev. 3.75%); will intervene in FX to prevent imported inflation.
• Japanese Finance Minister Suzuki provides no comment on FX levels; cannot tolerate speculative moves; will take action against any speculative, excessive and sudden moves, via Reuters. Japanese currency diplomat Kanda says excessive and disorderly FX moves have a negative impact on the economy, will not comment on whether Japan is intervening now or has intervened today.

DATA RECAP

• Australian Employment (Sep) 0.9k vs. Exp. 25.0k (Prev. 33.5k); 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%); Imports YY (Sep) 45.9% vs. Exp. 45.0% (Prev. 49.9%)