• APAC stocks were mixed with the region cautious after the lacklustre handover from the US ahead of the FOMC
• DXY slightly softened after the choppy performance yesterday, EUR/USD traded marginally higher, USD/JPY retreated overnight
• North Korea reportedly fired at least 10 missiles from the east and west coasts; South Korea launched air-to-ground missiles which were fired towards the north of the maritime border
• China locked down the area around the world's largest iPhone factory, according to Bloomberg
• Looking ahead, highlights include German Unemployment, EZ Manufacturing PMI (Final), Australian Services & Composite PMI (Final), FOMC Policy Announcement & Press Conference, Germany Supply, earnings from GSK, Maersk, Osram, Vestas Wind & Qualcomm
• Click here for the Week Ahead preview

US TRADE

• US stocks were lower with the declines led by the Nasdaq as Communication, Consumer Discretionary and Tech suffered the largest sectoral losses, while Amazon (AMZN) closed beneath the USD 1tln market cap after falling 5.5% in the session on continued post-earnings weakness. The sell-off accelerated after strong JOLTS data spurred fresh hawkish market pricing which implied a Fed terminal rate north of 5% and led to pronounced flattening in Treasuries.
• SPX -0.41% at 3,856, NDX -1.02% at 11,288, DJIA -0.24% at 32,653, RUT +0.25% at 1,851.
• Click here for a detailed summary.

APAC TRADE

EQUITIES

• APAC stocks were mixed with the region cautious and price action mostly rangebound after the lacklustre handover from the US where strong JOLTS data spurred a more hawkish Fed terminal rate pricing and as markets await the FOMC.
• ASX 200 was kept afloat by strength in the commodity-related sectors but with upside capped after PM Albanese rejected providing cash handouts and with the property industry pressured after home loans and building approvals fell.
• Nikkei 225 was indecisive as earnings releases remained in focus and officials continued their currency jawboning.
• KOSPI wiped out nearly all its early gains amid geopolitical concerns after North Korea reportedly fired at least 10 missiles and which was the first time its missiles fell near South Korea’s territorial waters.
• Hang Seng and Shanghai Comp eventually extended their recent rumour-driven surge regarding China reopening despite the denial by a Foreign Ministry spokesperson and with officials pledging policy support measures, while Hong Kong markets were closed after half-day due to a storm signal 8.
• US equity futures were marginally higher but with upside was capped ahead of the FOMC announcement.
• European equity futures were modestly higher overnight with the Euro Stoxx 50 future +0.5% after cash markets closed up by 0.9% yesterday.

FX

• DXY slightly softened after the choppy performance yesterday in which initial losses were reversed as higher-than-expected JOLTS data resulted in a more hawkish pricing of the terminal Fed rate to north of 5%, while price action was lacklustre overnight with the FOMC policy decision on the horizon.
• EUR/USD traded marginally higher but with gains capped by resistance at the 0.9900 level.
• GBP/USD was firmer in tandem with the rebound in other activity currencies.
• USD/JPY retreated overnight amid a slew of FX jawboning by Japanese officials.
• Antipodeans were mildly underpinned alongside firmer commodity prices and despite mixed data releases.
• PBoC set USD/CNY mid-point at 7.2197 vs exp. 7.2344 (prev. 7.2081)
• BoC Governor Macklem said they expect the policy rate will need to rise further and how much further rates will go up depends on how monetary policy is working, how supply chains are resolving and how inflation is responding to tightening. Macklem added that there are no easy outs to restoring price stability and reiterated the tightening phase will draw to a close and they are getting close but are not there yet.

FIXED INCOME

• 10yr UST futures were contained near the prior day’s lows following the pronounced flattening in the aftermath of the stronger-than-expected JOLTS data and with participants awaiting the FOMC.
• Bund futures remained lacklustre after a failure to reclaim the 139.00 level and recent hawkish ECB rhetoric.
• 10yr JGB futures conformed to the subdued mood in treasuries ahead of the Fed policy decision and with the BoJ sticking to its scheduled Rinban operations.

COMMODITIES

• Crude rose alongside gains across most of the complex and following bullish private sector inventory data.
• US Energy Inventory Data (bbls): Crude -6.5mln (exp. +0.4mln), Gasoline -2.6mln (exp. -1.4mln), Distillate +0.9mln (exp. -0.6mln), Cushing +0.9mln.
• OPEC October crude output rose 30k BPD to 29.98mln BPD and output was steady last month after the group pledged a symbolic cut, according to a Bloomberg survey.
• WSJ's senior Middle East correspondent Said tweeted that sources noted Emirati National Security Adviser Sheikh Tahnoun bin Zayed attempted to talk the Saudi Crown Prince out of cutting output and echoed American arguments that a cut wasn't necessary.
• Spot gold traded rangebound with participants sidelined ahead of the FOMC policy decision.
• Copper was firmer as commodities sustained the momentum from China's reopening rumours and with officials from the PBoC and the government pledging policy support.

CRYPTO

• Bitcoin was rangebound but reclaimed the USD 20,500 level, while Ethereum rose 1.0%.

NOTABLE ASIA-PAC HEADLINES

• PBoC Governor Yi said China's economy is broadly on track and potential growth is to remain in a reasonable range, and noted that inflation remains subdued and accommodative monetary policy is to support the economy. PBoC Governor Yi added that they will continue to improve the business environment, while they will deepen supply-side reforms and step up targeted support for key and weak sectors, according to Reuters.
• China state planner official said China's foreign investment increased steadily so far this year and will encourage more foreign investment in the manufacturing industry, according to Reuters.
• China locked down the area around the world's largest iPhone factory, according to Bloomberg.
• BoJ September Meeting Minutes stated a few members said they need to be vigilant to the impact monetary tightening by some central banks could have on global markets, while several members said a weak yen could hurt households, small firms and non-manufacturers. Members agreed that Japan's economy is picking up and several members said the BoJ must communicate to the public its monetary policy does not directly target FX moves.
• RBNZ Financial Stability Report noted that the financial system remains resilient but added some households and businesses will be challenged by the rising interest rate environment, while it also stated that there are increasing downside risks to the global economic outlook and the extent to which the economic activity will slow due to monetary policy tightening remains uncertain. Furthermore, the RBNZ later stated it will consider tightening policy faster or slower at the Monetary Policy Statement.

DATA RECAP

• Australian Building Approvals (Sep) -5.8% vs. Exp. -7.0% (Prev. 28.1%, Rev. 23.1%)
• Australian Home Loans MM (Sep) -8.2% vs Exp. -3.0% (Prev. -2.7%)
• New Zealand HLFS Job Growth QQ* (Q3) 1.3% vs. Exp. 0.5%
• New Zealand HLFS Unemployment Rate* (Q3) 3.3% vs. Exp. 3.2% (Prev. 3.3%)
• New Zealand Labour Cost Index - YY* (Q3) 3.8% vs. Exp. 3.8% (Prev. 3.4%)

GLOBAL

• Former Israeli Netanyahu's Likud is seen winning 31 of 120 seats in Parliament and current PM Lapid is seen winning 24 of 120 seats, while far-right Ben-Gvir party placed third, according to a CH13 exit poll.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said they need reliable, long-term defence for the grain corridor and that Russia must be told it will receive a firm world response if it takes steps to disrupt Ukrainian food exports, according to Reuters.
• Turkey's Defence Minister spoke with his Russian counterpart and believes the UN-brokered grains deal will continue, according to Reuters.

OTHER

• North Korea reportedly fired at least 10 missiles from east and west coasts on Wednesday which prompted South Korea to place its Ulleung Island under an air raid warning and was the first time North Korean missiles fell near the South's territorial waters, according to Yonhap and YTN.
• South Korean President Yoon ordered a swift and firm response and South Korea launched air-to-ground missiles which were fired towards the north of the maritime border, while South Korea closed some air routes off the east coast of the Korean peninsula after North Korea's missile launches, according to the Transport Ministry cited by Reuters.
• US National Security Council spokesperson said the US is concerned about threats from Iran against Saudi Arabia and remains in contact with the Saudis, according to Reuters.

EU/UK

NOTABLE EU/UK HEADLINES

• ECB's Nagel said there is still a long way to go on rate hikes and inflation is persistent, while the ECB must be more stubborn than stubborn inflation. Nagel added that price pressures in the Eurozone have broadened and there is a danger long-term inflation expectations will exceed the target, while he stated the ECB must act decisively as they have done in the last three meetings and that QT should start in early 2023.
• ECB's de Cos said progress on unwinding monetary accommodation is significant and they have yet to reach the end of rate increases, while long-term inflation expectations remain firmly anchored. De Cos added that nobody knows how far they have to raise interest rates and said QT must be very careful and very gradual.
• It was initially reported that Denmark's Centre-left bloc was expected to win 85 seats in the 179-seat parliament which would fall short of a majority, while non-aligned moderates are expected to win 17 seats and the Centre-right bloc is to win 73 seats, according to a DR Exit Poll. However, Danish broadcaster DR later projected the centre-left bloc could win a majority based on the final vote count.

DATA RECAP

• UK BRC Shop Price Index YY (Oct) 6.6% (Prev. 5.7%)