• US Midterm Elections are mostly as expected so far with GOP's leading the House while the Senate is seen as a toss-up.
• There has been very little market reaction in response to the mid-terms with the Dollar, US indices and T-notes all contained.
• European equity futures were subdued with Eurostoxx 50 futures down 0.4% after the cash market closed up 0.8% yesterday.
• DXY is marginally firmer vs. peers, EUR/USD is contained above parity, Cable ran out of steam ahead of 1.16.
• Looking ahead, highlights include US Midterm Election Results, Speeches from Fed's Williams & Barkin, ECB's Elderson, BoE's Haskel, Supply from UK, Germany, & US.

US TRADE

• US stocks finished higher amid a softer yield environment although price action was choppy as the session was characterised by cratering crypto prices in which a mid-session dive in stock indices coincided with Bitcoin making fresh YTD lows in the wake of Binance's acquisition of FTX and a 76% drop in FTX token.
• SPX +0.56% at 3,828, NDX +0.75% at 11,059, DJIA +1.02% at 33,160, RUT -0.05% at 1,808.
• Click here for a detailed summary.

US MIDTERM ELECTION

• US Midterm Elections were mostly as expected so far with GOP's leading the House while the Senate is seen as a toss-up with several of the key states still awaiting results, although it was projected that the Democrats are to flip the key battleground state of Pennsylvania from the Republicans, while Georgia, Nevada and Arizona all could go either way and are expected to have long waits. Furthermore, Edison Research noted that Republicans have taken a net 4 seats from Democrats in the House with dozens of races still to be called. There has been very little market reaction in response to the mid-terms with the Dollar, US indices and T-notes all contained, while Asian stocks were cautious with many of the races going as expected and with some of the key Senate races still awaiting to be called.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously and US equity futures were indecisive as attention centred on the trickling results from the US Midterm Elections where a red wave has so far not yet materialised although Republicans are in a strong position to take control of the House, while the Senate race is still widely viewed as a toss-up.
• ASX 200 was led higher by strength in the mining-related sectors although upside was capped as financials are subdued following results from National Australia Bank which posted an increase in FY profit but warned of a significant slowdown in lending growth for the current fiscal year.
• Nikkei 225 faded its initial gains with price action lacklustre amid a slew of earnings and despite Japan’s Cabinet approving a JPY 29.1tln extra budget to fund the stimulus package.
• Hang Seng and Shanghai Comp swung between gains and losses with early strength in property names after China’s state planner asked large banks to step up lending for manufacturing infrastructure and developers, with China to provide initial support of around CNY 250bln in bond financing to private firms, although COVID-related headwinds persisted following a further increase in China’s daily infections and participants also reflected on the mixed-to-soft inflation data.
• US equity futures traded rangebound overnight as participants await the conclusion of the midterms.
• European equity futures were subdued with Eurostoxx 50 futures down 0.4% after the cash market closed up 0.8% yesterday.

FX

• DXY lacked direction as markets awaited a more conclusive picture to emerge from the results of the US Midterm Elections with price action stuck beneath the 110.00 after the prior day's selling pressure.
• EUR/USD traded sideways above parity, which follows recent hawkish ECB rhetoric including from de Guindos who noted they will continue raising rates, while ECB's Nagel said he will do his utmost to make sure the ECB does not let up in the inflation fight and suggested that large rate hikes were needed.
• GBP/USD was off the prior day’s highs after a failed attempt at the 1.1600 handle but with the pullback from resistance limited after BoE's Pill suggested that the BoE hasn't defeated second-round inflationary effects and with a report also noting that the UK and EU are close to a breakthrough in the Brexit spat.
• USD/JPY languished near the prior day’s lows after the Japanese currency benefitted yesterday from narrowing yield differentials.
• Antipodeans were uneventful amid the non-committal risk tone and overall flat picture in the FX space.
• PBoC set USD/CNY mid-point at 7.2189 vs exp. 7.2015 (prev. 7.2150)

FIXED INCOME

• 10yr UST futures were rangebound around the prior day’s highs after rallying throughout US trade amid the US midterm elections and with further support seen in the New York afternoon amid the crypto turmoil.
• Bund futures remained firmer after reversing the losses seen from reports that German net debt will more than double next year, while prices have also shrugged off the latest bout of hawkish ECB rhetoric.
• 10yr JGB futures tracked the recent gains in global counterparts, while the latest 30yr JGB auction results were mixed although attracted firmer demand.

COMMODITIES

• Crude was marginally lower amid ongoing COVID woes in China and bearish private sector inventory data, while there were also comments from Oman's Energy Minister who sees oil prices falling after the winter season and said the December OPEC+ meeting will be driven by messaging from Europe regarding its outlook.
• US Energy Inventory Data (bbls): Crude +5.6mln (exp. +1.4mln), Cushing -1.8mln, Gasoline +2.6mln (exp. -1.1mln), and Distillate -1.8mln (exp. -0.9mln).
• US EIA STEO raised 2022 world oil demand growth forecast by 140k BPD to 2.26mln BPD Y/Y increase but cut the forecast for 2023 world oil demand by 320k BPD and now sees 1.16mln BPD Y/Y increase, while it sees US crude output to rise 580k BPD to 11.83mln BPD in 2022 (prev. forecast last month rise of 500k BPD) and sees US crude output to rise 480k BPD to 12.31mln BPD in 2023 (prev. rise of 610k BPD).
• Oman Energy Minister sees oil prices declining after the winter season and said the Oman budget set a USD 55/bbl oil price to give a comfortable cushion, while he added the December OPEC+ meeting will be largely driven by messaging from Europe on its economic outlook, according to Reuters.
• UK officials have been stalling negotiations in long-term gas deals amid the latest tumble in prices, although PM Sunak is still keen on securing supply contracts, according to FT citing officials.
• Spot gold plateaued above the USD 1700/oz level amid the flat performance in the greenback.
• Copper was subdued by the cautious mood and with prices not helped by further increases in China's daily COVID numbers.

CRYPTO

• Bitcoin fell to a YTD low and briefly beneath the 18,000 level as FTX Token fell over 70% amid news of large withdrawals in recent days and which resulted in a double-digit percentage drop for Ethereum on Tuesday.
• FTX's CEO told staff that the exchange saw around USD 7bln of withdrawals in the 72 hours before Tuesday morning, according to Reuters citing a memo. It was also reported that the US Commodity Futures Trading Commission is monitoring the Binance-FTX situation, while Binance will start to conduct proof-of-reserves soon.

NOTABLE ASIA-PAC HEADLINES

• China's Guangzhou reportedly locked down a second district due to coronavirus. However, it was separately reported that China lifted the lockdown in the area around Foxconn's Apple (AAPL) iPhone plant as planned, according to Bloomberg.
• China reported 1,346 (prev. 890) new coronavirus cases in the mainland for November 8th, 1,294 (prev. 843) new local cases and 6,989 (prev. 6,801) new asymptomatic cases, according to Reuters.
• US President Biden will highlight a commitment to rules-based international order in the South China Sea during the ASEAN summit and will talk about the need for peace and stability throughout the Indo-Pacific region and across the Taiwan Strait, according to a senior administration official cited by Reuters.

DATA RECAP

• Chinese CPI MM * (Oct) 0.1% vs. Exp. 0.3% (Prev. 0.3%)
• Chinese PPI YY * (Oct) -1.3% vs. Exp. -1.5% (Prev. 0.9%)
• Chinese CPI YY * (Oct) 2.1% vs. Exp. 2.4% (Prev. 2.8%)
• Australian Building Approvals MM (Sep F) -5.8% (Prev. 23.1%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin's turn towards hardliners reportedly fuels fear among the Kremlin elite, according to Bloomberg.

OTHER

• US warplanes reportedly launched airstrikes against a convoy carrying logistics including several tanks along the Iraqi-Syrian border, according to Iran's state broadcaster cited by Iran International English.
• US State Department spokesperson said Armenia and Azerbaijan foreign ministers agreed to expedite their negotiations in talks with Washington, according to Reuters.

EU/UK

NOTABLE EU/UK HEADLINES

• UK PM Sunak could raise the top rate of income tax, according to The Telegraph. Options being discussed include raising the 45% top rate, or lowering the GBP 150k annual income threshold at which it kicks in.
• UK Chancellor Hunt is set to scrap former PM Truss's plan for investment zones, according to FT.
• London Underground workers will conduct a strike on Thursday after talks failed, according to PA Media.
• ECB's Wunsch said pandemic stimulus did not spur current inflation and that consumer inflation expectations have risen a lot, while he added that the view of a terminal rate at 3% may be optimistic.