• APAC stocks followed suit to the gains on Wall St with risk sentiment underpinned following the FOMC Minutes which supported the view for the Fed to shift to smaller rate hike increments.
• China reported daily new COVID-19 cases in the mainland reached a record high and ordered a lockdown in Zhengzhou following violent protests.
• European equity futures are essentially unchanged in thin trade ahead of numerous Central Bank speakers.
• DXY is on a 105 handle with EUR/USD and GBP/USD above 1.04 and 1.21 respectively. JPY leads G10 FX.
• Looking ahead, highlights include, German Ifo, ECB Minutes, Riksbank, CBRT & SARB Policy Announcements, Speeches from BoE's Pill, Ramsden, Mann, ECB's Schnabel & de Guindos, Supply from Italy.
• US Thanksgiving holiday: Normal service until 18:00GMT/13:00EST, upon which the desk will close and then re-open later at 22:00GMT/17:00EST for the beginning of the Asia Pacific session.
• Click here for the Week Ahead preview

US TRADE

• US stocks finished higher ahead of the Thanksgiving holiday and in the aftermath of the dovish FOMC minutes which noted that a substantial majority of participants judged a slowing in the pace of interest rate hikes would likely soon be appropriate, while participants also digested a slew of US data releases at the beginning of the session including higher-than-expected jobless claims and disappointing PMIs, while new home sales topped forecasts, durable goods were mixed and UoM was better than expected with 1yr inflation expectations lower.
• SPX +0.60% at 4,027, NDX +0.97% at 11,838, DJIA +0.28% at 34,195, RUT +0.17 at 1,863.
• Click here for a detailed summary.

FOMC MINUTES

• A substantial majority of participants judged a slowing in the pace of interest rate hikes would likely soon be appropriate and participants said a slower pace of rate hikes would better allow the FOMC to assess progress toward its goals 'given the uncertain lags' around monetary policy..
• A few participants said slowing the pace of rate hikes could reduce financial system risks, while others said that slowing should await more progress on inflation. Furthermore, participants concurred there were very few signs of inflation pressures abating and many participants noted 'significant uncertainty' about the ultimate level of Fed funds rate needed to tame inflation with 'various participants' suggesting it was higher than previously expected.
• Conversely, a few other participants noted that, before slowing the pace of policy rate increases, it could be advantageous to wait until the stance of policy was more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly.

REACTION

• Overall, the reaction was a dovish one with the DXY hitting session lows of 106.01 while stocks and treasuries both caught a bid. Market pricing leaned more in favour of a 50bp hike in December as opposed to 75bps.
• Markets implied an 80% probability of a 50bp hike, as opposed to a 75% probability heading into the minutes; though, this dynamic has since eased with around a 65% probability of 50bp now priced.

NOTABLE HEADLINES

• US Republican Senator Murkowski won re-election against the Trump-endorsed candidate in Alaska, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks followed suit to the gains on Wall St with risk sentiment underpinned following the dovish FOMC Minutes which supported the view for the Fed to shift to smaller rate hike increments.
• ASX 200 was kept afloat by strength in tech and mining stocks although gains are capped by losses in the top-weighted financials industry and with the energy sector pressured by lower oil prices.
• Nikkei 225 outperformed on return from the holiday closure and briefly tested resistance at 28,500.
• KOSPI gained despite the BoK rate hike which was widely expected and at a slower pace of 25bps.
• Hang Seng and Shanghai Comp were mixed with price action in the mainland choppy as China's record number of daily infections offset the stimulus-related optimism from reports that China's cabinet will make adjustments to the RRR at an appropriate time and that the PBoC issued measures to support the real estate market.
• US equity futures were rangebound with price action contained as the US heads into Thanksgiving.
• European equity futures were flat with the Euro Stoxx 50 future unchanged after cash markets closed up by 0.4% yesterday.

FX

• DXY continued to soften in the aftermath of the dovish FOMC Minutes which dragged the greenback beneath the 106.00 level and added to the early pressure from the deluge of data releases heading into Thanksgiving.
• EUR/USD extended on its gains at the 1.0400 handle post-PMIs. There was another bout of central bank rhetoric including from ECB’s Centeno who said 75bps interest rate hikes cannot be the norm and sees a lower increase in December, while ECB’s Vasle said the current tempo of hikes is adequate and will continue next month.
• GBP/USD remained firmer after the recent outperformance in activity currencies and with commentary from BoE's Pill also continued to factor.
• USD/JPY trickled lower to a sub-139.00 level following the dollar's demise and as the JPY benefitted from the recent narrowing of US-Japan yield differentials.
• Antipodeans were firmer owing to the risk tone, upside in metal prices and yesterday’s RBNZ.
• PBoC set USD/CNY mid-point at 7.1201 vs exp. 7.1138 (prev. 7.1281)
• HKMA said there is no need or intention to change the HKD peg, which follows reports that Bill Ackman said Pershing Square has a large notional short position vs HKD and said the HKD peg no longer makes sense for Hong Kong.
• Brazilian Supreme Court Justice Moraes rejected the complaint by Bolsonaro's coalition for extraordinary verification of the election.

FIXED INCOME

• 10yr UST futures were lifted post-FOMC Minutes and amid growth concerns after data showed rising jobless claims and falling PMIs but with gains capped amid the holiday-shortened week for Thanksgiving.
• Bund futures sat at a monthly high above 141.00 following the prior day’s advances and mixed ECB rhetoric.
• 10yr JGB futures were kept afloat after the recent bid in global counterparts although the upside was limited with the BoJ only present in the market today under its fixed rate buying operations.

COMMODITIES

• Crude was lacklustre after the prior day's losses in the aftermath of the EIA data while the latest reports indicate a price cap deal is yet to be attained.
• Baker Hughes Rig Count: Oil +4 at 627, Nat Gas -2 at 155, Total +2 at 784.
• White House is weighing a plan to increase supply in the northeast home heating oil reserve and is considering using revenues of SPR crude oil sales to buy heating oil to help with the supply crunch, according to Reuters sources.
• EU talks on a Russian oil price cap reportedly stalled but negotiations continued, according to Bloomberg. Furthermore, a WSJ journalist later tweeted that talks ended and they are still some way from an agreement".
• US is reportedly preparing an expanded Venezuela license for Chevron (CVX) if a meeting between the Venezuelan government and opposition occurs, according to Reuters citing sources.
• Spot gold benefitted from the softer dollar, though remains relatively rangebound with base metals also supported despite further China COVID measures/protests.

CRYPTO

• Bitcoin continued its recent recovery with prices north of USD 16,500 amid the positive risk tone.

NOTABLE ASIA-PAC HEADLINES

• China reported daily new COVID-19 cases in the mainland reached a record high, while China also ordered a lockdown in Zhengzhou following violent protests, according to AFP News Agency.
• BoK hiked the 7-Day Repo Rate by 25bps to 3.25%, as expected, with the rate decision unanimous. BoK said South Korea's growth will slow citing an impact from slowing global demand and interest rate hikes, while it added that inflation is to somewhat decrease and it sees continued rate hikes as warranted. BoK Governor Rhee said regarding the terminal rate that 3 board members saw 3.50% as appropriate, two members saw 3.75% as appropriate and one member saw 3.25% as appropriate, while Rhee added that it is too early to discuss when to cut rates and new support measures could be ready should liquidity risks in short-term money market continue.

DATA RECAP

• Japanese Composite PMI (Nov P) 48.9 (Prev. 51.8)
• Japanese Manufacturing PMI (Nov P) 49.4 (Prev. 50.7); Services PMI (Nov P) 50.0 (Prev. 53.2)

GEOPOLITICS

RUSSIA-UKRAINE

• IAEA said Ukraine's Zaporizhzhia nuclear power station has once again been cut off from external power supply and is relying on diesel generators, according to Reuters.

OTHER

• North Korea denounced South Korea's push for additional sanctions, while it noted that sanctions and pressure will only fuel more hostility, according to KCNA.

EU/UK

NOTABLE EU/UK HEADLINES

• BoE will run a series of reverse enquiry windows to sell gilts on Tuesdays, Wednesdays and Fridays, while it will set out minimum price levels for which it will sell gilts, according to Reuters.
• BoE's Pill said they must double down on the 2% inflation target and that the BoE will ensure deviation from the CPI target is temporary.
• UK City Minister Griffith said the government has decided not to proceed with the intervention power in the financial services and markets bill at this time, while Griffith added that existing provisions in the bill are currently sufficient and will already allow them to seize the opportunities of Brexit, according to Reuters.
• EU-based traders could be required to clear a minimum amount of ‘systemic' derivatives contracts inside the bloc as Brussels demands a share of London’s derivatives clearing, according to FT.
• ECB's Centeno said 75bps interest rate hikes cannot be the norm and sees a lower increase in December. Centeno said inflation is likely to peak this quarter and is a key indicator to watch at the December meeting, while he added that any rate hike in Europe has more significance than in the US and a greater restrictive impact on financing conditions.