• European bourses are firmer across the board with commodity stocks leading the way on the overnight China COVID rumours.
• Stateside, futures are similarly supported though magnitudes a touch more contained ES +0.8%; NQ outperforms as global yields pullback.
• Unconfirmed reports that a Chinese committee is being formed to assess how to exit COVID Zero; however, this was subject to push back
• USD pressured as risk rebounds and yields retreat, with new month and pre-FOMC positioning also potentially impacting; DXY sub-111.00.
• Core and periphery fixed benchmarks are bid with Gilts currently leading amid the latest fiscal musings and as we look to the BoE's QT starting in the short-end
• Commodities are lifted across the board in wake of the China COVID-related updates; crude complex remains attentive to ADIPEC
• Looking ahead, highlights include US Manufacturing PMI (Final), US ISM Manufacturing PMI, JOLTS, New Zealand Unemployment, Earnings from Marathon, Phillips 66, Pfizer, Uber & AMD.

• Click here for the Week Ahead preview.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board with commodity stocks leading the way on the overnight China COVID rumours, Euro Stoxx 50 +1.40%.
• Sectors are all in the green and show clear outperformance in Basic Resources while some of the more defensively inclined sectors lag, but remain positive overall.
• Stateside, futures are similarly supported though magnitudes a touch more contained ES +0.8%; NQ outperforms as global yields pullback post-RBA with key data and more Central Bank action looming.
• Click here for more detail.

FX

• USD pressured as risk rebounds and yields retreat, with new month and pre-FOMC positioning also potentially impacting; DXY sub-111.00 to a 110.80 low.
• USD/JPY slumps amid fresh remarks from Finance Minister Suzuki, approaching a test of the 147.00 mark vs earlier 148.80 best.
• Antipodeans benefit from the USD but NZD outpaces its AUD peer following the RBA sticking with a 25bp hike and Governor Lowe thereafter keeping their options open.
• Both EUR and GBP benefitting from the USD's dip with Cable reclaiming 1.15 after an upward revision to Manufacturing PMI while EUR/USD remains just shy of hefty OpEx at 0.9950.
• Petro-FX benefits from benchmark pricing with Norwegian data adding impetus for the Scandi's while the CAD awaits its own PMI release.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 0.9800 (1.6BN), 0.9860 (558M), 0.9900 (312M), 0.9950 (1.97BN), 0.9970 (274M), 1.0000 (1.17BN)
• Click here for more detail.

FIXED INCOME

• Both core and periphery benchmarks are bid amid a broad pullback in yields post-RBA and as participants await upcoming Central Bank announcements and key data readings.
• Gilts are the current outperformer and have topped 103.00 amid the latest reporting around the upcoming Autumn statement.
• Specifically for the complex, today sees the commencement of the BoE's QT with the first operation focused on the short-end.
• Both Bunds and USTs are similarly supported in tandem with a busy afternoon and week-ahead docket stateside, USTs peaking at 111.15 thus far.
• UK DMO reschedules the 0.35% 2025 Gilt to November 23rd (prev. November 16th).
• Click here for more detail.

COMMODITIES

• Crude benchmarks are firmer intraday but off best levels, deriving support in tandem with broader risk sentiment on the China COVID rumours and associated USD pullback.
• Specifically, WTI Dec and Brent Jan futures are around USD 87.00/bbl (85.92-88.24 range) and USD 93.50/bbl (92.33-94.74) respectively.
• Russia Deputy PM Novak says Russia and Iran discussed an oil swap and gas supply, according to TASS.
• Iranian Oil Minister says "our relations with Russia are closer than ever, and the level of cooperation will increase day by day", according to Al Jazeera.
• Libya's NOC chief says oil output at 1.2mln BPD (vs 1.163mln BPD reported in September due to power issues).
• Spot gold is bolstered by the USD's retreat and has surpassed the 10-DMA but met resistance thereafter around USD 1650/oz amid the constructive risk tone.
• Base metals are firmer across the board on the China reports, with LME copper briefly extending past USD 7.6k/T for instance.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• ECB President Lagarde said they have not reached the destination on rates yet and reiterated that the ECB is committed to doing whatever it takes to get inflation back to the 2% target, while she added that inflation is too high throughout the eurozone and the possibility of a recession has increased.
• Europe is set for mild weather in November, via Bloomberg citing forecasters.

NOTABLE EUROPEAN DATA

• German Import Prices YY (Sep) 29.8% vs. Exp. 31.0% (Prev. 32.7%); MM (Sep) -0.9% vs. Exp. 0.6% (Prev. 4.3%)
• UK S&P Global/CIPS Manufacturing PMI Final (Oct) 46.2 vs. Exp. 45.8 (Prev. 45.8)

NOTABLE US HEADLINES

• WSJ's Timiraos reiterates that another 75bps FOMC rate rise is likely this week as the pace of future moves takes the spotlight.
• Click here for the US Early Morning Note.

CRYPTO

• Bitcoin is firmer but in contained ranges above the USD 20k mark, while more pronounced upside is seen in the likes of ETH and Dogecoin.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher as the region shrugged off the losses on Wall St and with Chinese Caixin PMI data not as bad as feared, although some cautiousness remained ahead of the looming risk events.
• ASX 200 finished positive with all sectors in the green after the RBA rate decision whereby it stuck to a 25bps rate increase instead of reverting to a more aggressive pace.
• Nikkei 225 eked modest gains amid a slew of earnings releases which were the catalyst for the biggest movers.
• Hang Seng and Shanghai Comp were both positive with notable outperformance in Hong Kong amid a tech-led surge and bargain buying after its brief retreat beneath the 15,000 level, while Caixin Manufacturing PMI data printed better than forecast despite remaining at a contraction.

NOTABLE APAC HEADLINES

• Bloomberg suggests that the gains in Chinese stocks are due to an unverified social media post that circulated online overnight that a committee was being formed to assess scenarios on how to exit COVID Zero; subsequently, China's Foreign Ministry says they are not aware of the situation.
• Zhengzhou in C.China's Henan said on Tue that the city will lift the temporary control for COVID-19 low-risk regions and gradually resume normal life "after over 10-day fight against the virus", according to Global Times.
• RBA hiked the Cash Rate Target by 25bps to 2.85%, as expected. RBA said the board remains resolute in determination to return inflation to the target and expects to increase interest rates further over the period ahead, as well as reiterated that the size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. RBA also noted that the central forecast for GDP growth has been revised down a little with growth of around 3% expected this year and 1.5% in 2023 and 2024, while inflation is now forecast to peak at around 8% later this year and the central forecast is for CPI inflation to be around 4.75% over 2023 and a little above 3% over 2024.
• RBA Governor Lowe says the board has judged it appropriate to raise rates at a lower magnitude, will return to larger rate hikes if deemed necessary, will hold rate if the situation requires it.
• Hong Kong Exchange is to to cut trading tariff on cash market to boost market efficiency, effective 1st Jan 2023.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Oct) 49.2 vs. Exp. 49.0 (Prev. 48.1)