• Major bourses in Europe are mostly firmer following CPI-induced optimism, with added tailwinds from China easing COVID measures; FTSE 100 lags 
• DXY tumbles with G10s all firmer against the Buck, whilst the Yuan outperforms in the EM-space
• Crude futures and base metals are extending the gains seen overnight which were sparked by China’s COVID update
• Chinese President Xi will meet with US President Biden, according to the Chinese Foreign Ministry
• Looking ahead, highlights include Uni of Michigan Prelim survey, speeches from ECB's de Guindos & Panetta, BoE's Tenreyro, ECB's Lane, US Veteran's Day with Floor Trade on CME closed

11th November 2022

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EUROPEAN TRADE

EQUITIES

• Major bourses in Europe are mostly firmer following CPI-induced optimism which saw further gains on Wall Street after the European cash close, with the sentiment then reverberating in APAC before seeing another boost on reports that China is easing its COVID measures.
• Sectors in Europe are mostly in the green with the laggards comprising of defensives, whilst the top performers include Tech, Real Estate, Retail, and Basic Resources.
• US equity futures are trading sideways with modest gains across the board, with futures holding onto yesterday's upside.
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FX

• DXY remained downtrodden amidst further fallout, or capitulation on the back of October’s comparatively soft CPI data that ramped up Fed pivot expectations.
• G10s are firmer across the board against the Dollar, with the Japanese Yen the outperformer as USD/JPY fell under 140.00.
• The Yuan stands as the EM outperformer after China said it will ease some COVID measures.
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FIXED INCOME

• US Treasuries are hovering midway between its 112-18/03+ overnight range ahead of prelim UoM sentiment and inflation expectations.
• Gilts pared more losses to get within 2 ticks of 105.00 having been down to 104.06.
• Bunds have recovered from a deeper low, at 139.38 and perhaps on technical grounds as 139.35 represents a 50% Fib retracement of Thursday’s rally.
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COMMODITIES

• WTI and Brent are extending the gains seen overnight which were sparked by China easing its COVID measures.
• Saudi Energy Minister said OPEC+ will remain cautious on production, via Bloomberg; OPEC+ will not lose sign of what the oil market needs.
• Chinese refiners will reportedly reduce Saudi crude oil term volume loading in December, according to sources cited by Reuters.
• Spot gold extends its gains above its 100 DMA (1,714/oz) and above the USD 1,750/oz mark as the Dollar crumbles.
• Base metals also firmer across the board with added tailwinds from China’s easing of COVID measures – 3M LME copper eyes USD 8,500/t to the upside from a USD 8,271/t intraday base.
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CRYPTO

• Bitcoin is modestly softer intraday but holds onto USD 17,000+ status.
• FTX CEO Bankman-Fried is facing an SEC probe related to his crypto empire, 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 EUROPEAN HEADLINES

• BoE Governor Bailey said efforts to bring inflation under control are likely to take between 18-24 months, via BusinessLive; more rate hikes will be seen in the coming months.
• EU Commission forecasts EZ GDP to grow 3.2% in 2022, 0.3% in 2023, and 1.5% in 2024; EZ inflation seen at 8.5% in 2022, 6.1% in 2023 and 2.6% in 2024.

NOTABLE EUROPEAN DATA

• UK GDP Estimate MM (Sep) -0.6% vs. Exp. -0.4% (Prev. -0.3%)
• UK GDP Estimate YY (Sep) 1.3% vs. Exp. 0.9% (Prev. 2.0%)
• UK GDP Estimate 3M/3M (Sep) -0.2% vs. Exp. -0.5% (Prev. -0.3%)
• UK GDP Prelim YY* (Q3) 2.4% vs. Exp. 2.1% (Prev. 4.4%)
• UK GDP Prelim QQ* (Q3) -0.2% vs. Exp. -0.5% (Prev. 0.2%)

NOTABLE US HEADLINE

• US judge declares President Biden's plan to cancel student loans as unconstitutional, according to Reuters.
• Tesla (TSLA) CEO Musk said that 2023 will probably be tough, but his companies are well positioned

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Kremlin said goals of the special military operation can be achieved with peace talks but peace talks are not possible due to the Ukrainian position. Russian Kremlin said grain deal contacts ongoing, number of issues need to be resolved, via Reuters.
• 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.
• Chinese President Xi will meet with US President Biden, according to the Chinese Foreign Ministry.
• US Treasury Secretary Yellen is to meet which PBoC Governor Yi Gang on the sidelines of the G20; to discuss global economic situation and hopes to learn more about China's property sectors; Yellen to update Yi on US economic conditions, via Reuters.
• Russian President Putin to skip the APEC summit (13-17th Nov), according to a Thai official
• Russian Deputy Foreign Minister said Russia-US Commission on New START treaty is to meet late November/early December in Cario, according to Ria.

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.

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.
• Arm IPO unlikely to take place by March 2023, according to Softbank (9984 JT) sources cited by Reuters.
• PBoC set USD/CNY mid-point at 7.1907vs exp. 7.1890 (prev. 7.2422)