• Cable wings clipped by customs concerns ahead of 14:00GMT Cabinet meeting
• Source reports of a possible 1.4mln BPD oil supply cut by OPEC fails to stop the rot
• Looking ahead, highlights include, UK Brexit Cabinet meeting, 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 (+0.2%) 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 (-0.5%) and Shanghai Comp. (-0.9%) 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%)

BREXIT

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)

EU sources say they envisage a July 2020 decision on the future of the Irish border, where the UK could extend the transition period once if there is no new trade deal. (Newswires)

Deputy Political Editor of The Telegraph Steven Swinford tweets Hearing Geoffrey Cox, the Attorney General, has raised significant concerns about customs backstop review mechanism. He's warned that from a legal perspective it will be very difficult to enforce & therefore to get out of.  His advice will be critical in how today plays out. From what I've heard exit mechanism hinges on demonstrating during backstop that EU has failed to show good faith - known as 'best endeavours' - & UK is entitled to break off. Sounds like there is concern that 'best endeavours' is not legally enforceable (Twitter)

EU/US/UK

Swedish CPI YY Oct 2.3% vs. Exp. 2.4% (Prev. 2.3%)

German GDP Flash YY NSA Q3 1.1% vs. Exp. 1.3% (Prev. 2.3%)

German GDP Flash QQ SA Q3 -0.2% vs. Exp. -0.1% (Prev. 0.5%)

German Economy Ministry say that the economic upturn was only disrupted in Q3 due to the problems of car industry adjusting to WLTP pollution standards. These adjustment problems likely took up to 0.4% points off of Q3 GDP

UK Core CPI YY Oct 1.9% vs. Exp. 2.0% (Prev. 1.9%)

UK CPI YY Oct 2.4% vs. Exp. 2.5% (Prev. 2.4%)

UK CPI MM Oct 0.1% vs. Exp. 0.2% (Prev. 0.1%)

UK RPI MM Oct 0.1% vs. Exp. 0.2%

UK RPI YY Oct 3.3% vs. Exp. 3.4% (Prev. 3.3%)

EU Commission are to publish their opinion of the revised Italian budget for 2019 on November 21st. (Newswires)

EU GDP Flash Estimate QQ Q3 0.2% vs. Exp. 0.2% (Prev. 0.2%)

EU GDP Flash Estimate YY Q3 1.7% vs. Exp. 1.7% (Prev. 1.7%)

TRADE

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)

EU Trade Commissioner Malmstrom thinks if the US imposes car tariffs, the EU will hit back; with the ability to set up countermeasures quickly on cars agricultural products and machinery

EQUITIES

Major European indices, excluding FTSE 100 (+0.1%), are in the red (albeit off of worst levels, amid a mild uptick in crude prices and positive earnings from Tencent), with the FTSE MIB (-1.2%) lagging its peers amid political jitters and negativity from Mediaset (-8.1%) post earnings and Telecom Italia (-4.0%) following a negative broker move amid board unrest; of note, reports suggest that Alfredo Altavia is the lead candidate for CEO. Sectors are mixed with energy names and materials lagging whilst utilities lead.

Elsewhere, Smiths Group (+6.3%) are in the green after confirming their full year management expectations and spinning-off their Healthcare unit. E.ON (+2.5%) are firmer after reporting a beat on earnings, Wirecard (-4.0%) are at the bottom of the Stoxx 600 post-earnings, whilst Rio Tinto (-3.0%) shares have been hampered after a downgrade at Liberum.

FX

GBP - It’s Brexit day for the Pound, or at least another pivotal moment in the process towards reaching a deal before the UK officially leaves the EU as the Cabinet decides whether to back or reject the withdrawal agreement. The session kicks off at 14GMT and the outcome remains uncertain even though PM May appears to have persuaded key Ministers to vote in favour, as the minority DUP coalition partner has already indicated its strong opposition. Hence, some retracement in Sterling from the highs seen when news broke that UK and EU negotiators had finally agreed resolved the outstanding issues, with Cable back below 1.3000 and almost retesting 1.2900 on negative legal observations on the terms of the backstop, while Eur/Gbp is firmly back above 0.8700. Note, benign inflation data has also kept the Pound in consolidative/defensive mode.

EUR - The single currency remains partly in lock-step with the Gbp on Brexit-related moves, but also depressed by the ongoing Italian-EU budget stand-off and further evidence of slowing momentum in the Eurozone economy, with German GDP weaker than forecast in Q3. Eur/Usd has lost grip of 1.1300 as a result, and from a technical perspective is back below the 100 HMA at 1.1312.

NZD/AUD - More divergence down under, as cross-winds continue to favour the Kiwi over the Aud, while the latter also took heed of some mixed Chinese data overnight. Aud/Nzd is only just above 1.0600, with Aud/Usd retreating from 0.7200+ yet again vs Nzd/Usd maintaining a firmer line within 0.6755-0.6800 parameters.

SEK/NOK - Another weak Scandi macro release has seen the Sek underperform and Nok decline in sympathy, as Swedish CPI missed consensus and raised more doubt over a Riksbank hike in December rather than February 2019. Moreover, the domestic political backdrop remains clouded as PM candidate Kristersson did not get Parliament consent to try and form a new Government. Eur/Sek up to 10.2980 and toughing strong chart resistance vs circa 10.2135 at one stage, Eur/Nok just shy of 9.6400 from 9.5850 at the low.

COMMODITIES

Brent (+0.3%) and WTI (+0.1%) break their downward streak, following sources reporting that OPEC+ are debating a 1.4mln BPD oil supply reduction. This followed today’s IEA monthly stating that OPEC crude output rose by 200kbpd in October, which is up 240k compared to last year; and Q3 stocks posting their largest gain since 2015. At the time, this added to the recent downward pressure on prices before the aforementioned sources suggesting an OPEC+ supply reduction. Of note, we APIs will be released today due to Monday's Veterans Day Holiday.

Gold (-0.1%) is marginally softer amidst a firmer dollar with Gold breaching USD 1200/oz to the downside and unable to benefit from the current risk environment. Separately, shanghai rebar prices have recovered from recent lows, as expectations of economic stimulus from Beijing offsets record October steel output.

FIXED INCOME

UK debt and STIR contracts are building some positive momentum or simply a hedge and an insurance premium in the event that the Brexit deal fails at the first hurdle, with the Cabinet vote far from certain, let alone its passage through Parliament. Indeed, the core 10 year bond has advanced further from an initial 12 tick mark-up to 122.06 compared to Tuesday’s 121.74 close, while the 3 month strip has been 1-2 ticks ahead vs flat to a tick down off the Liffe open. Moreover, a market contact and subscriber notes upside (dovish) positioning via options with the Sep19 99.375/99.50 call spread bought for 0.8 tick in a hefty 39k lots (vs 98.86 in the underlying at present). Back to debt futures, Bunds have seen a fraction more upside, at 160.38 (+30 ticks) as BTPs retreat further to a 120.59 low (-113 ticks), but not enough to trigger intraday short covering yet, with the next/nearest chart resistance level beyond that at 160.45.