• Major Asian equity markets mostly followed suit to the sell-off on Wall St where tech led the declines
• UK PM May said Brexit talks are now reaching their "endgame" and that both sides are working hard to reach an agreement but added that significant issues still remain
• Senior ministers led by UK Brexit Secretary Raab told UK PM May no deal is preferable to the current offer from the EU, according to Buzzfeed
• Looking ahead, highlights include German CPI (F), UK jobs report, German ZEW, Italian Budget Resubmission Deadline, ECB’s Praet, Lautenschlager, Stournaras, de Guindos, Fed’s Brainard, Harker, Daly, Supply from Italy and Germany

ASIA

Major Asian equity markets mostly followed suit to the sell-off on Wall St where tech led the declines after Apple shares dropped 5% following an outlook cut by supplier Lumentum Holdings and with energy names hit again after oil posted an 11th consecutive decline. ASX 200 (-1.7%) and Nikkei 225 (-2.2%) weakened from the open with the tech sector the underperformer in the region as another Apple supplier Japan Display reported a loss for H1 and downgraded its outlook. Furthermore, Japanese exporters suffered from recent flows into the JPY and large automakers were pressured after the US Commerce Department submitted a draft recommendation on potential auto tariffs to the White House. Elsewhere, Shanghai Comp. (+0.9%) and Hang Seng (-0.1%) both opened lower although mainland stocks gradually recovered amid hopes for an improvement in US-China trade relations amid reports that US Treasury Secretary Mnuchin and Chinese Vice Premier Liu He spoke by phone on Friday about a deal that could ease trade tensions and with some US officials reportedly expecting China to make a trade offer ahead of the Trump-Xi meeting. Finally, 10yr JGBs were initially supported as the broad risk averse tone spurred a flight to safety, but then failed to hold on to the marginal gains as prices mirrored a pullback in T-notes despite stronger 30yr auction results.

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.9629 (Prev. 6.9476)

US Treasury Secretary Mnuchin and Chinese Vice Premier Liu He spoke by phone on Friday about a deal that would ease trade tensions. Reports also noted that China officials do not expect to resolve the trade dispute at G20 but are instead hoping for a broad framework deal, while some US officials expect China to make a trade offer ahead of the Trump-Xi meeting and USTR Lighthizer is said to want tariffs to continue to force China into concessions. (WSJ) In related news, China Vice Premier Liu He is to visit the US to pave the way for the Xi-Trump meeting. (Newswires)

Chinese Premier Li said China's economy faces fresh challenges and is slowing down but long-term fundamentals are good. Premier Li also commented that China aims to persist with deepening reforms through measures including tax cuts, while he added that China hopes to solve trade differences with US through discussions and that both sides will find a solution that meets common interest. (Newswires)

UK/EU

UK PM May said Brexit talks are now reaching their "endgame" and that both sides working hard to reach an agreement but added that significant issues still remain and that the government will not accept a deal at any cost. Furthermore, there were reports that UK PM May had rejected the latest draft Brexit deal with the EU as it didn’t provide a clear exit from the customs union if the EU began acting in bad faith in discussions regarding a future trade agreement. (Newswires/The Sun)

Senior ministers led by UK Brexit Secretary Raab told UK PM May no deal is preferable to the current offer from the EU and that the current deal will not get through Parliament. (Buzzfeed)

DUP's Robinson said it sounds like UK PM May is in the right place regarding Brexit and that the mood has improved but there is still work that remains to be done. (Newswires)

UK Visa Consumer Spending (Oct) Y/Y -0.2% (Prev. 0.2%); 1st decline in 3 months. (Newswires)

ECB's Lautenschlaeger (Hawk) said she is very much in favour of ending the asset purchase programme, while she also favours designing reinvestments in a flexible way and not too long. (Newswires)

Italy's Deputy PM Salvini said fundamentals of the budget will not change. (Newswires) Furthermore, recent reports suggested that Italy will maintain their 2019 deficit/GDP target of 2.4% but could alter their 2019 growth target of 1.5%. (Il Sole)

FX

In FX markets, the USD held on to most the prior day’s gains although has pulled back from 17-month highs, which provided EUR/USD and GBP/USD some much needed reprieve below the 1.1300 and 1.2900 handles respectively. Elsewhere, JPY-crosses were initially pressured as the risk averse tone continued to spur flows into the safe-haven JPY and commodity-linked currencies began the session subdued following the 11th consecutive drop in oil prices. However, currencies then staged an intraday comeback amid some encouraging trade-related reports and as CNY strengthened on suspected intervention with major state-owned banks seen to have been selling USD against CNY in the onshore spot market at around 6.9700.

COMMODITIES

Commodities were mixed with WTI crude futures subdued after prices dropped over 2% to briefly below USD 59.00/bbl in the prior session on further Trump jawboning, which was its 11th consecutive loss and longest losing streak on record. Elsewhere, gold and copper prices nursed losses as the USD pulled back from 17-month highs and with the red metal also underpinned by outperformance in its largest consumer amid US-China trade-related hopes.

US President Trump tweeted "Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!". (Twitter)

US

Treasury futures were thin, with cash markets closed for Veteran’s Day, leaving the complex to trade off broader risk themes. With the risk-off tone begotten by a stronger USD, weighing on equities, and seeing the VIX rise above 20, the mood was defensive, and as such, Treasuries rose. US T-note futures (Z8) settled 8+ ticks higher at 118-12+.

US Commerce Department submitted a draft recommendation on potential auto tariffs to the White House which are undergoing interagency review and are sign of US administration's increasing frustration at EU and Japan over lack of progress on auto trade issues, while the Section 232 recommendations will be discussed at White House trade meeting on Tuesday. (Newswires)

Fed's Daly (Voter) said she will not be surprised by a December hike and sees at least a couple of hikes in 2019, while she added that the "modal" forecast is for 2-3 hikes over the next period of time and that she is thinking seriously about December rate hike but not definite. Daly also commented that the Fed should head towards neutral and that neutral is uncertain so doesn't see it as a stopping point. (Newswires)