• European bourses are firmer across the board as the complex benefits from further rumours around an easing of China's COVID policy, Euro Stoxx 50 +1.4%
• Stateside, futures are firmer across the board with magnitudes a touch more contained vs Europe pre-NFP
• DXY has pulled back from overnight peaks, where it tested but failed to attain 113.00, Antipodeans & Yuan outperform
• Core fixed benchmarks are little changed overall with USTs essentially flat while Gilts lag post-Pill
• Commodities are bolstered amid the USD's pullback and on further reopening rumours re. China
• Looking ahead, highlights include US & Canadian Labour Market Reports, Speech from Fed's Collins.
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EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board as the complex benefits from further rumours around an easing of China's COVID policy, with a presser on prevention due on the weekend; Euro Stoxx 50 +1.4%.
• Additional upside occurred in wake of upward revisions to the regions PMI metrics; however, the magnitude of this was limited as internal commentary remained downbeat and the metrics are still in contractionary territory.
• Stateside, futures are firmer across the board with magnitudes a touch more contained vs Europe, ES +0.7%, as the region awaits the NFP print.
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FX

• DXY has pulled back from overnight peaks, where it tested but failed to attain 113.00; a pullback in the context of constructive overall sentiment amid China-COVID rumours/reports and upward PMI revisions.
• Antipodeans outperform given base metal action on the mentioned COVID rumours, a narrative which has also buoyed the Yuan which itself was subject to a firmer-than-expected Yuan midpoint.
• EUR/USD has been unable to reclaim 0.98 despite favorable PMI revisions and the USD's pullback; note, substantial OpEx lies between 0.9790-0.9800.
• Cable was unreactive to the BoE's Chief Economist reiterating lines from Bailey in pushing-back on market pricing; nonetheless, the Pound has eclipsed 1.12 and is among the outperformers following Thursday's underperformance.
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Notable FX Expiries, NY Cut:

• EUR/USD: 0.9650 (260M), 0.9750 (615M), 0.9790-00 (1.62BLN), 0.9825-35 (902M), 0.9870 (254M), 0.9900 (1.28BLN), 0.9925-30 (348M), 0.9950-55 (487M), 1.0000 (2.48BLN) USD/JPY: 146.00 (607M), 147.00 (1.05BLN), 148.00 (680M), 149.00 (583M), 150.00 (940M)
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FIXED INCOME

• Core benchmarks are little changed overall with USTs essentially flat on the session and yields holding within recent parameters as we count down to the NFP print.
• Bund has trimmed initial 50 tick upside following remarks from ECB's Lagarde which incl. hawkish undertones on the wage front, German benchmark now little changed overall.
• In contrast, Gilts continue to slip and are lower by 50 ticks around 101.50 post-Pill highlighting that recent turmoil has not distracted them from their QT goals.
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COMMODITIES

• Commodities are bolstered amid the USD's pullback and on further reopening rumours re. China
• WTI and Brent front-month futures are firmer on the day with the former just under USD 91/bbl and the latter around USD 97.00/bbl.
• Saudi Arabia set December Arab light crude OSP to Asia at Oman/Dubai + USD 5.45/bbl, while it set OSP to NW Europe at ICE Brent + USD 1.70/bbl and to the US at ASCI + USD 6.35/bbl.
• MMG said it has been forced to commence a progressive slow-down of its Las Bambas operation amid disruptions due to blockades by communities, while it continues to work with the government of Peru and communities along the site's logistic route.
• US and allies have reached agreement on which sales of Russian oil will be subject to a price cap, WSJ reports; "Each load of seaborne Russian oil will only be subject to the price cap when it is first sold to a buyer on land, meaning resales of the same oil won’t have to fall under the cap", according to WSJ sources.
• Spot gold has struggled to surpass the USD 1650/oz mark where its 21-DMA lies just above at USD 1651.7/oz, while base metals are deriving broad support on the China/COVID narrative
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NOTABLE EUROPEAN HEADLINES

• BoE's Pill says we still think there is more to do on inflation pressures, via CNBC; not for BoE to tell market how to price assets. Thinks lag in transition of monetary policy to activity is about a year. We need to raise bank rate and shrink QT portfolio, recent disturbances have not distracted us from key goal.
• ECB President Lagarde says we must not let high inflation become entrenched, rate path ahead will look different depending on the contingencies ECB faces. We are likely to see wages 'catching up' to some extent with higher inflation.
• BoE's Hauser (non-MPC) says we must execute a timely and orderly unwind of the assests accumulated as part of financial stability purchase operations. Need to remain sensitive to and if necessary respond appropriately to still-febrile market conditions.
• UK Chancellor Hunt is mulling an increase in the headline rate of Capital Gains Tax, according to The Telegraph.

NOTABLE EUROPEAN DATA

• German Industrial Orders MM (Sep) -4.0% vs. Exp. -0.5% (Prev. -2.4%)
• EU S&P Global Services Final PMI (Oct) 48.6 vs. Exp. 48.2 (Prev. 48.2); Composite Final PMI (Oct) 47.3 vs. Exp. 47.1 (Prev. 47.1)
• “After a weak third quarter of PMI and official GDP data, the latest survey results for the start of the fourth quarter suggest the eurozone economy is now headed for a winter recession."
• UK S&P Global/CIPS Construction PMI (Oct) 53.2 vs. Exp. 50.5 (Prev. 52.3)

CRYPTO

• Bitcoin has broken out of the last few sessions tight parameters and resides towards the top end of this range just above the USD 20.5k mark.

GEOPOLITICS

• US officials have no clear timing for when North Korea might conduct a nuclear test and would like to see China and Russia use their leverage on North Korea to head off a nuclear test. Furthermore, the US is prepared to engage directly with North Korea and has sought to communicate with North Korea in private channels and through third parties, while it rejects the notion that the international community should treat North Korea as a nuclear power, according to a senior US administration official.
• At least 180 North Korean warplanes take off in apparent show of force, via Yonhap; subsequently, South Korean has scrambled around 800 jets.
• Taiwan Defence Ministry says 12 Chinese air force planes crossed the Taiwanese Strait Median Line on Friday, via Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mixed with Chinese stocks rallying on unverified reopening rumours, although the rest of the region was contained after the wave of central bank rate hikes and ahead of the NFP jobs data.
• ASX 200 was kept afloat by strength in the commodity-related sectors although gains were limited by weakness in defensives and the top-weighted financial sector, while the RBA’s quarterly Statement on Monetary Policy provided little in the way of fresh insight and included a downgrade to growth projections.
• Nikkei 225 was hit on return from holiday and reacted to the recent FOMC and Powell’s hawkish remarks.
• Hang Seng and Shanghai Comp rallied with the Hong Kong benchmark spearheaded by tech and with EV makers boosted following a jump in BYD’s new energy vehicle sales, while sentiment was also boosted as US audit inspectors finished on-site China work ahead of schedule and amid unverified rumours of China reopening.

NOTABLE APAC HEADLINES

• US audit inspectors finished on-site China work ahead of schedule, according to Bloomberg.
• Chinese President Xi met with German Chancellor Scholz and said as big nations with influence, China and Germany should work together all the more in times of change and turmoil to make a greater contribution to world peace and development, according to state media.
• German Chancellor Scholz said his meeting with Chinese President Xi is at a time of big tension and that the Russian war on Ukraine brings big problems for rule-based order, while they will talk about Europe-China relations and the fight against climate change and world hunger. Scholz added they will also talk about how to develop economic relations and on topics where their perspectives are different.
• Japan's government is said to issue JPY 22.8tln in bonds for the extra budget with total issuance for FY22/23 revised upward to a record JPY 62.5tln, according to Reuters.
• RBA Statement on Monetary Policy said the board expects rates will need to increase further and policy is not on a pre-set path, while they will hike in larger steps or pause if considered necessary. Furthermore, the RBA cut economic growth forecasts in which it sees GDP at 2.9% in December 2022, 1.4% in December 2023 and 1.6% in December 2024, while it lifted the inflation forecast which it sees at 8.0% in December 2022, 4.7% in December 2023 and 3.2% in December 2024.
• China is working on a plan to scrap COVID flight suspensions, according to Bloomberg.
• China's Health Authorities are to hold a presser on targeted COVID prevention on November 5th at 15:00 local time (07:00GMT/03:00ET).

DATA RECAP

• Australian Retail Trade (Q3) 0.2% vs. Exp. 0.4% (Prev. 1.4%, Rev. 1.0%)
• Japanese Services PMI (Oct F) 53.2 (Prelim. 53.0); Composite PMI (Oct F) 51.8 (Prelim. 51.7)