• Asian equities traded lacklustre following a similar performance on Wall St where the energy sector was hit by a further aggressive slide in oil prices
• All eyes are now on events at 10 Downing Street as UK PM May’s cabinet meets to discuss her Brexit deal
• Tensions between Italy and the European Commission remain after the nation left growth and deficit targets unchanged in its budget draft
• Looking ahead, highlights include German and Eurozone flash GDP, Swedish, UK and US CPI, Fed’s Quarles, Powell, Supply from Germany and UK cabinet to meet to discuss Brexit deal

ASIA

Asian equities traded lacklustre following a similar performance on Wall St where the energy sector was hit by a further aggressive slide in oil prices but with losses in the broader market stemmed amid resilience in financials and tech. ASX 200 (-1.7%) was led lower by weakness in energy names after WTI crude fell nearly 8% on its record 12th consecutive decline, while Nikkei 225 (+0.1%) shrugged off a contraction to GDP data with the benchmark index kept afloat for most the session by JPY weakness and as automakers cheered reports the US was said to be planning to hold off on implementing auto tariffs for now. Elsewhere, Hang Seng (-0.6%) and Shanghai Comp. (-0.7%) were also downbeat as participants digested mostly uninspiring releases from China including softer than expected New Yuan Loans, Aggregate Financing and Retail Sales, although Industrial Production and Fixed Assets Investment data topped estimates. Finally, 10yr JGBs were higher as the lacklustre risk tone across the region underpinned demand and in which upside gained traction as the Japanese benchmark stock index momentarily gave up all its gains.

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.9402 (Prev. 6.9626)

Chinese Industrial Output (Oct) Y/Y Oct 5.9% vs. Exp. 5.7% (Prev. 5.8%). (Newswires)
Chinese Retail Sales (Oct) Y/Y 8.6% vs. Exp. 9.1% (Prev. 9.2%)
Chinese Urban Investment YTD (Oct) Y/Y Oct 5.7% vs. Exp. 5.5% (Prev. 5.4%)

Japanese GDP (Q3 P) Q/Q -0.3% vs. Exp. -0.3% (Prev. 0.7%, Rev. 0.8%). (Newswires)
Japanese GDP Annualised (Q3 P) -1.2% vs. Exp. -1.0% (Prev. 3.0%)

UK/EU

UK PM May's 5 senior ministers will back the Brexit deal, according to The Sun's political editor citing Cabinet Sources which stated that Raab, Hunt, Javid, Gove and Cox are all in support of the plan, while there were later reports that Tory Whip Julian Smith was confident PM May will get a deal through Parliament. Furthermore, a Number 10 source said PM May will tell the Cabinet (at 1400GMT/same time that representatives of EU governments will meet) the negotiation has been pushed as far as it can go and the UK cannot get any better deal than this one, while PM May is said to be firmly of the view that the deal will not be improved by dragging it out any longer. (Twitter/Newswires)

The Sun's Political Editor Tom Newton Dunn also tweeted details of the Irish backstop which include a UK-wide customs union and no NI-only version which he notes is a win for the UK, while there will also be an independent panel to arbitrate a ‘good faith’ end mechanism. In addition, there will be no backstop end date or time limit and that a full level playing field of rules will apply throughout. (Twitter)

Whitehall official said the Cabinet will have to decide in the next few weeks if a no-deal is to be the main planning scenario for Brexit and that December 1st could be a key date for it, while there were also reports that PM May is to warn the Cabinet of Brexit deadline for contingencies in case the agreement falls. (FT)

UK opposition parties call for a meaningful vote on any Brexit withdrawal agreement and joined together to sign a letter to the PM demanding that Commons has the right to make amendments to the meaningful vote motion on Brexit Deal in advance of main vote, unlike Raab proposals. (Newswires/Twitter)

Eurosceptic lawmaker Rees-Mogg said UK PM May's Brexit deal fails to meet promises of conservative manifesto and hopes Cabinet and parliament will block May's Brexit deal, while former UK Foreign Secretary Boris Johnson said he will vote against the deal. Eurosceptic lawmaker Duncan Smith said if the deal is as reported, the government's days are numbered and UK Liberal Democrat Leader also commented that UK PM May will not get her Brexit deal through parliament. (Newswires)

DUP spokesperson said if the deal is as it is reported, it will be voted down and DUP Deputy Leader Dodds said the party's concern is that the backstop becomes the default position. (Newswires)

Times reporter tweeted a senior EU official said there are proposals but nothing is agreed until UK PM May agrees it, while parliamentary numbers for UK PM May were said to be looking very bad now. (Twitter)

Italian PM Conte's office said growth and deficit targets unchanged in budget draft. Italian Deputy PM Salvini also commented that they will keep targets for 2019 deficit and GDP growth unchanged, while he added Italy will sell off assets including property valued at 1% of GDP and will also keep spending in check through monitoring. (Newswires)

FX

In FX markets, the greenback was softer following the prior day’s pullback and the DXY just about held above the 97.00 level as its major counterparts recovered loss ground in which EUR/USD briefly reclaimed the 1.1300 handle. GBP/USD was underpinned overnight following the recent Brexit developments in which EU and UK negotiators agreed the text of a draft withdrawal agreement that will be discussed at a Cabinet meeting today, while there were also reports that PM May’s 5 senior ministers will support the Brexit deal although several prominent Eurosceptics have already declared they would vote against it. Elsewhere, AUD/USD was indecisive after the inconclusive Wage Price Index data from Australia and mixed Chinese releases, with choppy price action in AUD/NZD adding to the mild turbulence.

COMMODITIES

Commodities were subdued overnight with WTI crude futures despondent following another aggressive slump in prices, which dropped nearly 8% the prior day to briefly test USD 55.00/bbl to the downside and post a record 12th consecutive loss after the monthly OPEC report showed bearish revisions to supply and demand forecasts. Elsewhere, copper prices were dampened amid the cautious risk tone in the region, while gold prices were uneventful alongside the lacklustre tone across the complex and with prices stuck near the psychological key USD 1200/oz level.
 

CME raised December Nat Gas Henry Hub futures maintenance margins by 14.3% to USD 2800 per contract from USD 2450. (Newswires)

US

The Treasury complex edged higher as European traders left their desks and as US equities began to slide with risk-sentiment deteriorating. Most of the action was concentrated in the front and belly of the curve were yields were lower by c.5bps. The curve was mixed as 2s5s and 2s10s narrowed by c,1bps while 5s30s and 10s30s steepened by c.2bps. US T-note futures (Z8) settled 4 ticks higher at 118-16+.

US is said to be planning to hold off on implementing auto tariffs for now following Trump meeting with trade advisers, according to sources. (Newswires)

US President Trump has decided to remove Homeland Security Secretary Nielsen and is mulling former ICE Director Homan to succeed Nielsen as Homeland Security Secretary, while there were also reports that Trump may remove White House Chief of Staff Kelly and that the First Lady called for the firing of top national security aide Mira Ricardel. (Newswires/WSJ/Politico)

Fed's Senior Loan Officer Survey showed banks loosened standards on commercial and industrial loans in Q3 2018 and that Banks said they would tighten standards if there were a prolonged, moderate inversion of the yield curve. (Fed)