• APAC stocks traded with firm gains as the region followed suit to the post-CPI global stock surge which saw the Nasdaq 100 close higher by 7.5%.
• Chinese stocks were boosted in late trade after China relaxed some of its COVID protocols for close contacts and inbound travel.
• European equity futures were marginally higher with Eurostoxx 50 futures up by 0.9% after the cash market closed with gains of 3.2% yesterday.
• DXY remains at depressed levels following yesterday's aggressive sell-off which saw the index post its largest fall since 2009.
• Looking ahead, highlights include German CPI (Final), UK GDP (Prelim.), Speeches from ECB's de Guindos & Panetta, BoE's Tenreyro, ECB's Lane, Supply from Italy & UK I/L Syndication, US Veteran's Day with Floor Trade on CME closed.

US TRADE

• US stocks rocketed higher alongside Treasuries and the dollar cascaded lower after the softer-than-expected US October CPI data triggered a significant dovish reaction across markets in which the Nasdaq 100 led the major US indices and closed with gains of 7.5% as the rate-sensitive index feasted off the tumble in yields, while Fed pricing for the December meeting is now heavily tilted towards 50bps.
• SPX +5.54% at 3,956, NDX +7.49% at 11,605, DJIA +3.70% at 33,715, RUT +6.11% at 1,867.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's George (2022 voter) said a more measured approach allows policymakers to judge the economy's response to rate hikes, while she added that a steady and deliberate approach to rate hikes is advantageous.
• Fed's Mester (2022 voter) said the main risk on inflation is that the Fed doesn't hike rates enough, while she added October CPI shows signs of inflation moderating and the Fed needs to press forward on rate rises to cool inflation.
• US judge declares President Biden's plan to cancel student loans as unconstitutional, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded with firm gains as the region followed suit to the post-CPI global stock surge, while the adjustment of COVID protocols in China including a shorter quarantine for close contacts provided a late tailwind.
• ASX 200 was led by tech and the real estate sector amid the lower yield environment.
• Nikkei 225 jumped above the 28,000 level amid the risk-on mood and as participants digested a deluge of corporate earnings which have largely influenced the list of best and worst performers for the index.
• Hang Seng and Shanghai Comp conformed to the heightened risk appetite with the Hong Kong benchmark frontrunning the advances as it gained by more than 1,000 points, while the mainland was also boosted in late trade on China relaxing its COVID protocols.
• US equity futures remained supported (ES +0.9%) after US stocks rallied by the most in more than two years.
• European equity futures were marginally higher with Eurostoxx 50 futures up by 0.9% after the cash market closed with gains of 3.2% yesterday.

FX

• DXY initially saw some respite after having suffered its largest fall since 2009 following the softer-than-expected US CPI data. However, there was late pressure in the dollar as the yuan strengthened and activity currencies benefitted from China's relaxing its COVID protocols.
• EUR/USD eased off the prior day’s highs although the pullback was limited and the single currency remained near the 1.0200 level after the recent slump in the greenback.
• GBP/USD held on to most of its recent spoils, while the BoE recently announced a plan to unwind temporary gilt purchases and with participants now looking towards the upcoming UK GDP data.
• USD/JPY nursed some of its losses after it found support near 140.50 but the rebound was relatively minimal in comparison to yesterday’s underperformance which coincided with a substantial narrowing of yield differentials
• Antipodeans were steady near their monthly highs amid the positive risk sentiment and commodity gains.
• PBoC set USD/CNY mid-point at 7.1907vs exp. 7.1890 (prev. 7.2422)
• Mexican Interest Rate (Nov) 10.0% vs. Exp. 10.0% (Prev. 9.25%) via 4-1 voted as Esquivel voted for a 50bps hike Banxico said available indicators anticipate a moderate expansion of world economic activity during the third quarter, although the outlook for 2023 has continued to deteriorate.

FIXED INCOME

• 10yr UST futures took a breather from the prior day’s 2-point surge in the aftermath of the US CPI data which had dragged US yields for the 10yr and in the belly to below 4%, while the momentum has since petered out with price action also hindered by the closure of US cash bond trading for Veterans Day.
• Bund futures marginally pulled back albeit with downside stemmed by support around the 140.00 level
• 10yr JGB futures were firmer but off their highs with slight pressure seen following weaker demand at the enhanced liquidity auction.

COMMODITIES

• Crude was rangebound for most of the session after the prior day's choppy performance and with only marginal gains seen despite the broad heightened risk appetite and recent retreat in the dollar, although prices were later underpinned after China's National Health Commission marginally relaxed its COVID protocols.
• Spot gold was sideways at its best levels in more than 2 months after the recent declines in the dollar and yields.
• Copper extended on its advances as risk assets in Asia joined in on the post-CPI relief rally.

CRYPTO

• Bitcoin briefly tested the 17,000 level to the downside as it pulled back from the prior day's relief rally.
• White House said it will continue to monitor developments on cryptocurrencies but didn’t comment on what actions regulators should take.
• FTX CEO Sam Bankman-Fried is seeking up to USD 9.4bln for FTX's rescue, according to a Reuters source. Furthermore, Bankman-Fried is facing an SEC probe related to his crypto empire, according to Bloomberg
• FTX reached an agreement with Tron to establish a special facility to allow holders of TRX, BTT, JST, SUN, and HT to swap assets from FTX 1:1 to external wallets, while FTX US said trading may be halted in a few days but noted that withdrawals are and will remain open, according to Bloomberg.
• FTX Digital Markets assets were frozen by the Bahamas regulator, according to Bloomberg.
• Crypto exchange BlockFi tweeted that it is unable to operate business as usual and is pausing client withdrawals, citing a lack of clarity from FTX.com.

NOTABLE ASIA-PAC HEADLINES

• China's National Health Commission released adjusted protocols for COVID prevention and control with quarantine for close contacts cut to 5 days centralised isolation and 3 days home quarantine from 7 days centralised isolation and 3 days home quarantine. China is also to cut COVID quarantine for inbound travellers from 10 days to 8 days and it cancelled the circuit breaker for inbound flights, according to Reuters.
• China disease control researcher earlier said that China is to continually improve its COVID-19 policies and will not relax them while the virus mutates and the epidemic situation changes, according to Reuters.
• Haizhu district of Guangzhou extended its COVID lockdown until November 13th, according to Reuters.
• China is expected to take additional measures to support the economy by conducting the largest cash injection this year through MLF loans or by reducing RRR, according to Bloomberg.
• US customs said it had seized 1,053 shipments of solar equipment since June under the China forced labour ban, while the shipments are primarily from Longi (601012 CH), Trina (688599 CH) and Jinkosolar, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian Defence Minister said intelligence shows Russia has not started real movement from Kherson and its forces remain in and around the city, as well as in the western bank of the Dnipro river. Ukraine’s Defence Minister said it will take at least a week for Russia to withdraw troops from the city of Kherson, while he does not believe Russia will use nuclear weapons in Ukraine and said they have to assess all risks in Russia's case but added that it would not be a pragmatic and practical step for Russia.
• US Secretary of State Blinken tweeted that he has directed another USD 400mln worth of arms and equipment from Department of Defense inventories to Ukraine.
• US issued a general licence authorising certain transactions relating to energy with some Russian banks. It was also reported that insurers said gaps in the G7/EU Russian oil price cap plan could leave tankers stranded at sea and disputes over compliance with the oil price cap could lead to a loss of insurance cover and refusal to discharge, according to Reuters.

OTHER

• Iran's Foreign Minister held a call with the UN Secretary-General in which they discussed JCPOA talks, the Ukraine war and the contribution to extending the ceasefire in Yemen, while the Iranian Foreign Minister criticised some western states for encouraging the use of violence in Iran protests, according to a Twiter source.

EU/UK

NOTABLE EU/UK HEADLINES

• BoE plans a demand-led unwinding for longer-dated and index-linked gilt purchases that were carried out during its emergency bond-buying scheme. The unwind will be conducted in a timely but orderly way.
• UK Chancellor Hunt is plotting a stealth tax raid on small businesses that will force thousands more to pay VAT as he scrambles to balance the country’s books, according to The Telegraph.
• ECB's Nagel sees the prospect of further rate hikes and said ECB balance sheet reinvestments are breaking the move higher in bond yields. Nagel added it is inconsistent to move longer-term rates in one direction while short-term rates move in the opposite direction and said that German inflation will most likely exceed 7% in 2023.
• EU Ambassador Lambrinidis is very hopeful that negotiations with the US will lead to the elimination of discriminatory provisions in the US Inflation Reduction Act.