• European bourses are pressured across the board, Euro Stoxx 50 -0.6%, as China's COVID crackdown weighs on sentiment
• Stateside, futures are similarly impaired at the start of a holiday-thinned week with today's US docket particularly thin ex-supply
• USD has benefited from above risk-aversion with G10 peers lower across the board, particularly Yen & Yuan
• Despite pronounced action earlier on, core fixed benchmarks are in relative proximity to the unchanged mark with Bunds just 20 ticks lower overall
• Commodities slip amid the COVID updates and USD upside, factors which are overshadowing BP's Rotterdam refinery closure and union action
• Fed’s Bostic said he is ready to move away from 75bps hikes at the Dec. meeting, believes another 75bps-100bps tightening will be warranted & sufficient to rein in inflation
• Looking ahead, highlights include US 2 & 5 yr supply.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -0.6%, as China's COVID crackdowns weighs on sentiment in an otherwise limited European morning.
• Sectors feature a defensive bias with those most sensitive to renewed COVID controls posting modest underperformance.
• Stateside, futures are similarly pressured, ES -0.6%, given the above headwinds with the US docket slim today at the start of a holiday shortened week.
• Goldman Sachs equity strategy: bear market is not over, continue to think near-term path is likely to be volatile and down before reaching a final trough in 2023, via Reuters.
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FX

• Dollar benefits from short squeeze amidst latest bout of China-related risk aversion, DXY eyes 108.000 from 106.890 low.
• Yen sinks alongside Yuan, towards 142.00 after breach of 100 DMA near 141.00.
• Euro loses 1.0300+ status as Buck bounces and overshadows hawkish-leaning ECB commentary and firm rebound in EGB yields.
• Aussie undermined by deteriorating Chinese COVID situation, but Kiwi holds up better in hope of hawkish RBNZ hike on Wednesday; AUD/USD hovers on 0.6600 handle, NZD/USD hangs above 0.6100.
• Sterling loses Fib support just over 1.1800 after failing to breach round number above convincingly.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Despite pronounced action earlier on, core fixed benchmarks are in relative proximity to the unchanged mark with Bunds just 20 ticks lower overall.
• Bunds were bid on a surprising MM domestic PPI decrease; however, ECB's Lane then pushed the complex back down before the latest Beijing, China updates saw that downside dissipate to leave the benchmark only modestly softer.
• Stateside, USTs have been directionally in-fitting though magnitudes slightly more contained ahead of a holiday-thinned weak and with two lots of supply due later.
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COMMODITIES

• Crude benchmarks are weighed on by China's COVID controls, with a stronger USD also impacting and adding to the broader complex's woes.
• Specifically, WTI and Brent are lower by around USD 0.50/bbl or 0.50% on the session, but have lifted from earlier lows and as such are some way from Friday's base.
• BP (BP/ LN) - Stopped production at its Rotterdam Refinery (400k BPD), been taken "completely and safely out of operation". Follows reports via Bloomberg on Friday of a serious incident re. a steam outage, via BP. Subsequently, workers will not assist in restarting operations at the Rotterdam refinery (400k BPD) unless their wage demands are met, via Union.
• A large explosion reportedly hit Russia’s Gazprom pipeline amid suspicions of sabotage related to Russia’s war in Ukraine, according to the Daily Mail.
• Kuwait’s oil revenues for FY21/22 rose 84.5% Y/Y to KWD 16.33bln, according to the Finance Ministry.
• US VP Harris said the US will use its APEC host year to set new ambitious sustainability goals and she proposed setting a new aggregate target for reducing carbon emissions from the power sector in APEC, while she also proposed to set a goal for reducing methane emissions and said the US will introduce a new initiative on a just energy transition, according to a White House official cited by Reuters.
• UN climate agency published a new COP27 cover decision draft deal text and approved a proposal covering funding arrangements loss and damage from climate change suffered by vulnerable countries. However, it was also reported that EU climate policy chief Timmermans said the deal is not enough of a step forward and that the mitigation programme agreement allows some parties to hide from their commitments, while he added that too many parties are not ready to make more progress, according to Reuters.
• Goldman Sachs cut its Q4 Brent oil outlook by USD 10/bbl to USD 100/bbl due to China COVID concerns, while it sees elevated oil flows from China ahead of EU curbs and a price cap; UBS forecasts Brent to recovery to USD 110/bbl in 2023, expects oil demand to increase at an above trend rate of circa. 1.6mln BPD in 2023.
• Russia is now the largest fertiliser supplier to India for the first time as it provides discounts, according to Reuters sources.
• China's NDRC is to lower retail prices of gasoline and diesel by CNY 175/tonne and CNY 165/tonnes respectively as of November 22nd.
• Spot gold/silver are unable to glean any haven-related upside in wake of the USDs strength, with the yellow metal over USD 10/oz below the USD 1751/oz 10-DMA despite briefly surpassing the figure overnight; base metals similar dented.
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NOTABLE EUROPEAN HEADLINES

• ECB's Lane says (when questioned on the increment of upcoming hikes) "what matters is the level we're going to arrive at. The exact allocation across different meetings is a secondary issue", via ECB. Does not think December is going to be the last rate hike, "The logic of a pause for the ECB: we’re not at that point".
• UK PM Sunak will be urged by businesses on Monday to seek better EU relations and will face pressure from businesses to soften the impact of Brexit such as by opening doors to more immigration to fill holes in the nation's labour market, according to FT.
• UK was reportedly considering Swiss-style ties with the EU and the government believes that EU relations are thawing which could lead to 'frictionless' trade, according to The Times. However, UK Health Minister Barclay said he did not recognise a report that the government wants to shift to a Swiss-style relationship with the EU, according to Reuters.

NOTABLE EUROPEAN DATA

• German Producer Prices MM (Oct) -4.2% vs. Exp. 0.9% (Prev. 2.3%); YY (Oct) 34.5% vs. Exp. 41.5% (Prev. 45.8%)

NOTABLE US HEADLINES

• Fed’s Bostic (2024 voter) said he is ready to move away from 75bps hikes at the December meeting and believes that another 75bps-100bps tightening will be warranted and sufficient to rein in inflation over a reasonable time horizon, according to Reuters.
• US Pentagon is in discussions with China regarding a meeting between US Defence Secretary Austin and China's Defence Ministry Fenghe at the upcoming ASEAN ministerial, via ForeignPolicy's Detsch.

GEOPOLITICS

RUSSIA-UKRAINE

• IAEA said powerful explosions shook the area of Ukraine’s Zaporizhzhia nuclear power plant on Saturday evening and Sunday morning with more than a dozen blasts heard within a short period during the morning. It was also reported that Ukraine’s Energoatom said Russia's military shelled the Zaporizhzhia nuclear power plant on Sunday morning and that there were at least 12 hits on the plant’s infrastructure facilities, while Russia’s Defence Ministry said Ukraine fired shells at power lines supplying the nuclear power plant, according to Reuters and TASS.
• US Defense Secretary Austin said Russia is carrying out atrocities in Ukraine and said that ‘these aren’t just lapses’, while he added that China, like Russia, is seeking a world where ‘might makes right’. Austin said autocrats like Russian President Putin are watching the Ukraine conflict and could seek nuclear weapons, while he added autocrats could conclude obtaining ‘nuclear weapons would give them a hunting licence of their own’, according to Reuters.
• UK PM Sunak told Ukrainian President Zelensky that the UK will provide a GBP 50mln air defence package to Ukraine which will include 125 anti-aircraft guns and technology to counter Iranian-supplied drones, according to Reuters.
• Russian President Putin spokesperson says there is no discussion in the Kremlin of a fresh wave of military mobilisation, via Reuters.
• German Defence Ministry spokesperson says air policing is being discussed with Poland, via Reuters.

NORTH KOREA

• G7 Foreign Ministers condemned North Korea’s latest intercontinental ballistic missile launch and said North Korea’s launches pose a serious threat to regional and international peace, while they added that the UN Security Council needs to take further significant measures, according to Reuters. Furthermore, it was separately reported that the US and its allies called for a UN Security Council meeting on November 21st to address North Korea.
• North Korea said the UN Secretary-General has failed to maintain impartiality and objectivity, according to KCNA.
• South Korea said the US sent strategic bombers for joint air defence drills, according to Sky News.

OTHER

• Turkish air strikes destroyed 89 Kurdish militant targets in northern Syria and northern Iraq, according to Reuters. There were also reports that a Turkish soldier and two police were wounded in a rocket attack on Turkey’s Kilis province on the Syrian border, according to Anadolu Agency.
• Iranian ballistic missiles and drones reportedly hit targets near Erbil, Iraq and sirens were sounded at the US consulate, according to ELINT News. Furthermore, it was stated that the Iranian ballistic missiles hit the HQ of the Kurdish Democratic Party in Erbil and other Kurdish camps including near Suleimaniya were attacked with missiles.
• Two rockets have struck the Turkish border district of Karkamis and has led to some casualties, according to CNN Turkey

APAC TRADE

EQUITIES

• APAC stocks began the week mostly lower amid headwinds from China after several areas announced fresh virus restrictions including lockdowns and the country also reported its first COVID-19 deaths in about six months.
• ASX 200 was constrained by underperformance in the mining-related sectors amid a decline in commodity prices and with BHP shares pressured amid reports its chairman is considering retiring next year.
• Nikkei 225 lacked direction amid further political tremors in the Kishida government after Internal Affairs Minister Terada resigned due to involvement in a funding scandal and was the third cabinet member to step down in under a month.
• KOSPI declined amid geopolitical concerns after North Korea's recent missile launches and with sentiment subdued as data for the first 20 days of November showed exports fell 16.7% Y/Y and imports fell 5.5% Y/Y.
• Hang Seng and Shanghai Comp suffered losses due to the worsening COVID situation in the mainland, while the Hong Kong benchmark was the worst hit with the special administrative region said to be near to cutting non-emergency services at public hospitals amid a surge in COVID cases and its Chief Executive Lee also tested positive for COVID-19. Furthermore, the PBoC maintained its key lending rates with the 1-Year and 5-Year LPR kept at 3.65% and 4.30%, respectively, although this was widely expected.

NOTABLE ASIA-PAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Nov) 3.65% vs. Exp. 3.65% (Prev. 3.65%)
• PBoC 5-Year Loan Prime Rate (Nov) 4.30% vs. Exp. 4.30% (Prev. 4.30%)
• China reported 2,365 (prev. 2,267) new coronavirus cases in the mainland on November 20th, 24,730 (prev. 22,168) new asymptomatic cases and 2 COVID deaths, which follows its first COVID-related death in six months on Saturday.
• Beijing’s Chaoyang district urged residents to remain at home on Monday as cases continue to rise, according to Reuters. It was also reported that the Baiyun district in China's Guangzhou imposed a 5-day lockdown from November 21st-25th and China's Shijiazhuang city is to conduct mass coronavirus testing in certain areas.
• Beijing City has tightened testing requirements for travellers entering Beijing, according to an official; will now require 3 PCR tests in 3 days upon arrival, via Reuters.
• Hong Kong is near to cutting non-emergency services at public hospitals again amid a surge in COVID cases, according to SCMP. It was also reported that Hong Kong Chief Executive John Lee tested positive for COVID-19.
• Taiwan’s representative at APEC Morris Chang said he had a very happy interaction with Chinese President Xi during a brief meeting, according to Reuters.
• US VP Harris met with Chinese President Xi briefly at APEC and she noted to Xi that they must maintain open lines of communication to responsibly manage the competition between their countries, according to a White House official. Furthermore, Harris said that the US does not seek conflict or confrontation and welcomes competition, while she added that her Asia trip signifies the significance of the relationship between the US and its allies and partners in the region, according to Reuters.
• US House GOP leader McCarthy said he will form a select committee on China if he is elected as House Speaker, according to Reuters.
• Germany plans to tighten disclosure rules for companies exposed to China and plans to assess company disclosures to decide whether they should conduct stress tests on China risks, according to a draft document cited by Reuters.
• APEC leaders’ declaration affirmed the commitment to promote strong, balanced, secure sustainable and inclusive growth and stated that they are determined to uphold and further strengthen the rules-based multilateral trading system, while they welcomed progress this year in advancing the free-trade area of the Asia-Pacific. Furthermore, APEC is determined to achieve a post-COVID economic recovery and recognised that more intensive efforts are needed to address challenges such as rising inflation, food security, climate change and natural disasters, according to Reuters.
• Japanese PM Kishida accepted the resignation of Internal Affairs Minister Terada in order to prioritise parliamentary debate and which follows the latter’s involvement in funding scandals, while it was later reported that Japan appointed former Foreign Minister Matsumoto as the new Internal Affairs Minister, according to Reuters.
• South Korean November 1st-20th Exports fell 16.7% Y/Y, Imports fell 5.5% Y/Y and Trade Balance was at a provisional deficit of USD 4.42bln.
• Malaysia's election ended in a hung parliament with opposition leader Anwar Ibrahim’s coalition securing 82 of 222 parliamentary seats, while former premier Muhyiddin Yassin’s coalition followed with 73 seats and the ruling BN coalition only won 30 seats, according to Al Jazeera.
• NZIER said the majority of its RBNZ Shadow Board favours a 75bps rate increase this week.