• European bourses are flat/mixed and have struggled for direction all morning despite fleeting hawkish reactions to the region's PMIs
• Stateside, action is similarly ahead of a somewhat busier data docket on the last full session before Thanksgiving
• DXY reclaims but struggles to advance on 107.00 while Kiwi flies post 75bp RBNZ hike, GBP bolstered by PMIs & a court ruling
• Gilts outperform ahead of supply and BoE's Pill while core EGBs are more contained after brief hawkish moves
• Crude capped by oil cap reports ahead of a potential EU Ambassadors discussion; benchmarks gave up their initial modest consolidation and now post downside of near 2.0%
• Looking ahead, highlights include US Flash PMIs, US Durable Goods, IJC, New Home Sales, FOMC Minutes, Speeches from ECB's de Guindos & BoE's Pill.
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EUROPEAN TRADE

EQUITIES

• European bourses are flat/mixed and have struggled for direction all morning despite fleeting hawkish reactions to the regions PMIs, Euro Stoxx 50 +0.1%
• Sectors are mixed given the broader tone, though defensives are the marginal underperformers.
• Stateside, futures are similarly contained and have been pivoting the Unch. mark on the week's last full, and somewhat busier than usual, session given Thanksgiving, ES +0.1%.
• Deere & Co (DE) Q3 2022 (USD): EPS 7.44 (exp. 7.11), Revenue 15.536bln (exp. 13.39bln).
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FX

• Kiwi flies as RBNZ lives up to hawkish hype, and more, NZD/USD eyes 0.6200 and AUD/NZD cross breaches 1.0800 as Aussie lags vs Buck around 0.6650 in wake of weaker PMIs and more Chinese COVID contagion
• DXY clings to 107.00 ahead of packed US agenda on the eve of Thanksgiving, Euro faded from 1.0300+ against Greenback after post-EZ PMI pop, but may glean support from hefty option expiries
• Sterling underpinned around 1.1900 after better than forecast UK flash PMIs and Supreme Court rules against Scotland holding Independence vote independently
• Yen flags following flirt above 141.00 in Japanese holiday-impacted trade
• PBoC set USD/CNY mid-point at 7.1281 vs exp. 7.1307 (prev. 7.1667)
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• UK debt rampant ahead of DMO supply and comments from BoE's Pill, with Gilts posting a fresh 107.00+ post-mini budget collapse high
• Bunds tag along, but lag BTPs, former flat between 140.59-139.77 parameters and latter nearer top of 119.42-118.31 range
• US Treasuries trailing with no cash trade overnight and a hectic agenda looming on the eve of Thanksgiving, T-note subdued within a 112-21+/112-12 band
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COMMODITIES

• Crude capped by oil cap reports ahead of a potential EU Ambassadors discussion; benchmarks gave up their initial modest consolidation and now post downside of near 2.0%.
• WTI and Brent Jan’23 futures fell to session lows USD 78.94/bbl and USD 85.96/bbl vs circa. USD 81.30/bbl and USD 88.80/bbl respectively prior to the below source reports.
• US Private Energy Inventory Data (bbls): Crude -4.8mln (exp. -1.1mln), Cushing -1.4mln, Gasoline -0.4mln (exp. +0.4mln), and Distillate +1.1mln (exp. -0.6mln).
• OPEC+ delegates said Saudi's denial of a production increase at the December meeting reflected an unease with public discussion of the group's decision-making before an agreement with Russia was struck, according to WSJ.
• US Treasury Department issued new guidance on the implementation of a price cap policy for Russian crude and said the price cap will be set after a technical exercise is conducted by the price cap coalition. A Treasury official also noted hopes that the EU price cap consultation is concluded relatively soon to allow the coalition to announce a price, while the official added there is no reason to expect Russia will retaliate to a price cap by cutting oil output and warned that violation of price cap could be subject to civil or criminal penalties, according to Reuters.
• EU is considering a price cap on Russian oil of USD 65-70bbl, according to Bloomberg sources; several EU diplomats reportedly said the proposed level was too high. Subsequently, the G7 is looking at a price cap on Russian seaborne oil in the USD 65-70/bbl level, via Reuters citing a European official.
• EU Ambassadors will revert to the oil price cap discussion this afternoon in an attempt to agree on legislation for it today, according to WSJ's Norman's understanding.
• For metals, spot gold and silver are diverging modestly but remain in close proximity to the unchanged mark as sentiment struggles for clear direction alongside a gradual pick-up in the USD, with base metals pressured by China's latest crackdown measures.
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NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt and BoE Governor Bailey are to reduce the maximum authorised size of the APF to GBP 871bln (prev. GBP 886bln), according to a BoE statement.
• Moody's said the UK government set out an ambitious consolidation plan but added that low confidence in the delivery hampers its credibility, according to Reuters.
• UK Supreme Court rules that Scotland cannot hold an independence referendum without approval from the British government.
• ECB's de Guindos says it is likely we will see negative Q4 growth rates within the EZ. Upcoming inflation projections will still be high, before starting to slow in Q1-2023; will show core also remains high.

NOTABLE EUROPEAN DATA

• EU S&P Global Composite Flash PMI (Nov) 47.8 vs. Exp. 47.0 (Prev. 47.3); **"A recession therefore looks likely, though the latest data provide hope that the scale of the downturn may not be as severe as previously feared.” **
• EU S&P Global Manufacturing Flash PMI (Nov) 47.3 vs. Exp. 46.0 (Prev. 46.4); Services Flash PMI (Nov) 48.6 vs. Exp. 48.0 (Prev. 48.6)
• German S&P Global Composite Flash PMI (Nov) 46.4 vs. Exp. 44.9 (Prev. 45.1); “November’s flash PMI survey doesn’t alter the narrative that Germany is likely heading for a recession... perhaps be shallower than first feared"
• UK Flash Composite PMI (Nov) 48.3 vs. Exp. 47.5 (Prev. 48.2); “A further steep fall in business activity in November adds to growing signs that the UK is in recession, with GDP likely to fall for a second consecutive quarter in the closing months of 2022".
• UK Flash Services PMI (Nov) 48.8 vs. Exp. 48.0 (Prev. 48.8); Manufacturing PMI (Nov) 46.2 vs. Exp. 45.8 (Prev. 46.2)

APAC TRADE

EQUITIES

• APAC stocks took impetus from the positive handover from Wall St where sentiment was underpinned amid a global risk revival despite the lack of fresh catalysts but with upside capped amid Japan's holiday closure, tighter COVID rules in China and following the RBNZ's historic rate hike.
• ASX 200 was led by strength in the mining-related industries and with the energy sector front running the advances although the index is limited by underperformance in tech.
• NZX 50 was the laggard following the RBNZ’s 75bps rate hike and hawkish revisions to its OCR view which it now expects to peak at 5.50% (prev. 4.10% view), while the Committee had considered either a 75bps or 100bps move compared with analysts’ forecasts of either a 50bps or 75bps hike heading into the meeting.
• Hang Seng and Shanghai Comp were both higher, albeit with price action in the mainland choppy amid COVID concerns after several key cities tightened restrictions and testing requirements.

NOTABLE ASIA-PAC HEADLINES

• PBoC adviser Wang Yiming sees China's 2023 GDP growth to likely be above 5% if the impact of COVID ends but noted growth will depend on the rollout of support measures and that support measures are needed to lift market confidence and consumption. Wang stated there is limited room for China to cut interest rates and slower Fed hikes in H1 2023 will provide China with more policy room.
• Shenzhen will require 48-hour COVID tests to access public venues and Chengdu will conduct mass testing on November 23rd-27th, while Tianjin is to conduct complete city testing on November 24th-25th.
• RBNZ hiked the OCR by 75bps to 4.25%, as expected, while it stated that monetary conditions need to tighten further and that the Committee considered a 75bps or 100bps rate increase. RBNZ said consumer price inflation is too high and the Committee agreed the OCR needs to reach a higher level and sooner than previously indicated. Furthermore, the RBNZ noted near-term inflation expectations have risen and it raised its OCR projections with the OCR expected to peak at 5.5% by December 2023 vs prev. forecast of 4.10%.
• RBNZ Governor Orr said during the press conference that there will be a shallow recession but noted economic activity remains high and spending is strong, while the RBNZ also noted that they are mature in the tightening cycle and closer to the end than the beginning but added that new shocks are arriving all the time.
• Beijing is set to maintain COVID curbs until a turning point appears, according to reports via Bloomberg; requests residents do not unnecessarily leave the city.
• China's cabinet will make adjustments to the RRR at an appropriate time, via Reuters citing State Media; will encourage commercial banks to issue loans to guarantee the delivery of homes.

DATA RECAP

• Singapore GDP QQ (Q3 F) 1.1% vs Exp. 1.3% (Prelim. 1.5%); YY (Q3 F) 4.1% vs Exp. 4.3% (Prelim. 4.4%)