• European bourses are somewhat mixed after a predominantly soft cash open, Euro Stoxx 50 -0.5%; though, the breadth of the market remains narrow.
• Stateside, futures are in relative proximity to the unchanged mark and are yet to meaningfully deviate from overnight ranges, ES -0.2%
• USD is mixed vs G10 peers, though the DXY itself, while negative on the session, remains underpinned around 105.50.
• Crude benchmarks are softer intraday given the cautious tone and resilient USD impacting the complex, despite further constructive China COVID updates.
• Overall, fundamentals little changed for the fixed complex. Core benchmarks have drifted slightly down from intraday peaks.
• Looking ahead, highlights include BoC Policy Announcement, Speech from ECB's Panetta.
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EUROPEAN TRADE

EQUITIES

• European bourses are somewhat mixed after a predominantly soft cash open, Euro Stoxx 50 -0.5%; though, the breadth of the market remains narrow.
• Stateside, futures are in relative proximity to the unchanged mark and are yet to meaningfully deviate from overnight ranges, ES -0.2% at circa. 3935.
• In Europe, Health Care outperforms following Zantac updates for GSK (9.0%) & Sanofi (+5.5%) while Energy & Basic Resources lag given benchmark pricing.
• Key Apple (AAPL) supplier expects iPhone orders to drop on weak demand, via Bloomberg; "Mobile industry bellwether Murata Manufacturing Co. expects Apple Inc. to reduce iPhone 14 production plans further in the coming months because of weak demand, which would force the supplier to again cut its outlook for its handset-component business."
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FX

• USD is mixed vs G10 peers, though the DXY itself remains underpinned above 105.50.
• Overall, peers are narrowly mixed with EUR modestly outpacing and testing 1.05 while JPY lags as USD/JPY rebounds to near 138.00
• CAD remains pressured given benchmark crude pricing with attention turning to the BoC with expectations split between 25bp and 50bp.
• NOK knocked on crude and domestic data, SEK gleaned limited traction from significantly better than forecast GDP.
• PBoC set USD/CNY mid-point at 6.9975 vs exp. 6.9941 (prev. 6.9746)
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Notable FX Expiries, NY Cut:

• USD/CAD: 1.3200 (1.3BN), 1.3300 (571M), 1.3395 (200M), 1.3540 (2.2BN), 1.3600 (1.27BN)
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FIXED INCOME

• Overall, fundamentals little changed for the complex. Core benchmarks have drifted slightly down from intraday peaks.
• Bunds holding around 142.00 vs 142.65 peak, with USTs similarly at the bottom of a 114.03 to 114.13+ band yields marginally firmer, as such.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are softer intraday given the cautious tone and resilient USD impacting the complex, despite further constructive China COVID updates.
• WTI has dipped under USD 73/bbl (vs USD 74.82/bbl high) while Brent Feb had lost the USD 78/bbl handle (vs USD 79.93/bbl high).
• US Energy Inventory Data (bbls): Crude -6.4mln (exp. -3.3mln), Cushing +0.0mln, Gasoline +5.9mln (exp. +2.7mln), Distillate +3.6mln (exp. +2.2mln)
• Price cap coalition official said nearly all 20 tankers waiting to cross Turkey's straits are loaded with Kazakh oil and not subject to the G7's Russian oil price cap, while the delays in tanker traffic from Russia's Black Sea ports to the Mediterranean stem from the Turkish insurance rule and not the price cap, according to Reuters.
• Hungarian government is to scrap its fuel price cap, according to PM Orban's chief of staff cited by Reuters.
• Chinese nickel buyers are seeking to use Shanghai Future Exchange contracts not London Metal Exchange for 2023 pricing, according to Reuters sources; participants write this is due to the decline in liquidity and low stocks which has resulted in persistently high prices within London this year, which have not reflected market fundamentals.
• Spot gold is contained around USD 1775/oz, while base metals are mixed but with an underlying downward bias.
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NOTABLE EUROPEAN HEADLINES

• UK PM Sunak is reportedly under pressure from Tory MPs to speed up anti-strike legislation, according to FT.
• ECB Consumer Expectations Survey (October): Consumer expectations for inflation 12 months ahead increased further, while expectations for inflation three years ahead remained unchanged.

NOTABLE EUROPEAN DATA

• UK Halifax House Prices MM (Nov) -2.3% (Prev. -0.4%)
• EU GDP Revised YY (Q3) 2.3% vs. Exp. 2.1% (Prev. 2.1%, Rev. 4.2%); QQ (Q3) 0.3% vs. Exp. 0.2% (Prev. 0.2%)

NOTABLE US HEADLINES

• NBC projected that Democrat incumbent Warnock defeated Republican challenger Walker in the Senate run-off in Georgia, which would provide the Democrats with a 51-seat majority at the Senate vs 49 seats for Republicans.
• Click here for the US Early Morning Note.

CRYPTO

• A new proposed amendment under National Defense Authorization Act (NDAA) could require the US Department of State to justify crypto rewards and disclose any crypto payouts within 15 days of making it, according to a document via CoinTelegraph.

GEOPOLITICS

RUSSIA-UKRAINE

• US Secretary of State Blinken said the US has neither encouraged nor enabled Ukraine to strike within Russia, according to Reuters.

OTHER

• US Defense Secretary said the US military will increase the rotational presence of bomber task forces and other forces in Australia, according to Reuters.
• US State Department approved the sale of aircraft spare parts worth around USD 300mln to Taiwan and the sale of non-standard spare parts worth an estimated USD 98mln, according to the Pentagon, while Taiwan's Defence Ministry said the aircraft parts sale will help air force operations in the face of China's military activities, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued after the losses on Wall St where risk sentiment was dampened by tech sector woes and recession concerns, while participants also digested weak trade data and an easing of restrictions in China.
• ASX 200 was pressured after Australian GDP data for Q3 missed forecasts and with the declines in the index led by tech and energy following similar weakness in US counterparts.
• Nikkei 225 was lacklustre but with downside limited by a lack of domestic catalysts and with BoJ’s Nakamura reiterating that the central bank must patiently maintain monetary easing.
• Hang Seng and Shanghai Comp were indecisive as the announcement of an easing of COVID restrictions was offset by the dismal trade data from China.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo said China will maintain its prudent monetary policy and that monetary policy should be targeted and forceful, while it urged coordinating COVID controls and economic development. China will also fine-tune COVID control measures and allow home quarantine, as well as ease testing, according to Xinhua.
• China's Health Commission said asymptomatic patients and cases with mild symptoms can undergo home quarantine, while it will accelerate vaccination of the elderly against new coronaviruses. Furthermore, China bans COVID movement restrictions in non-high-risk zones and scraps COVID test rules in most public venues nationwide, according to Reuters and Bloomberg.
• "Latest optimized measures against COVID do not represent a full re-opening or relaxation, but rather show that the country's anti-epidemic measures are becoming more scientific, more active and more accurately targeted", according to Global Time
• China is said to be considering a 5.0% GDP target for next year, according to Bloomberg.
• Shanghai Disneyland (DIS) to reopen on Thursday, December 8th.
• US Senators scaled back a proposal that placed new curbs on the use of Chinese-made chips by the US government and its contractors, according to a draft seen by Reuters.
• EU will proceed with two cases against China at the World Trade Organization on Wednesday after talks to resolve the issues with its largest trading partner failed to yield results, according to Bloomberg.
• RBI hiked the Repurchase Rate by 35bps to 6.25%, as expected, through 5-1 vote, while the Standing Deposit Facility was raised by 35bps to 6.00% and the Marginal Standing Facility was raised to 6.5%. RBI Governor Das said that inflation remains high and broad-based, as well as noted that the MPC will remain focused on the withdrawal of accommodation with 4 out of 6 in the MPC voting in favour of retaining the policy stance. Das added that further calibrated monetary policy is warranted to anchor inflation expectations and that they stand ready to act as necessary from time to time, while the focus on inflation continues and there will be no let-up in efforts to bring inflation to more manageable levels.

DATA RECAP

• Chinese Trade Balance USD (Nov) 69.84B vs. Exp. 78.1B (Prev. 85.15B)
• Chinese Exports YY (USD)(Nov) -8.7% vs. Exp. -3.5% (Prev. -0.3%); Imports YY (USD)(Nov) -10.6% vs. Exp. -6.0% (Prev. -0.7%)
• Chinese Trade Balance (CNY)(Nov) 494.3B vs Exp. 486.0B (Prev. 586.8B)
• Chinese Imports YY (CNY)(Nov) -1.1% vs Exp. 7.1% (Prev. 6.8%); Exports YY (CNY)(Nov) 0.9% vs Exp. 8.2% (Prev. 7.0%)
• Australian Real GDP QQ SA (Q3) 0.6% vs. Exp. 0.7% (Prev. 0.9%); YY SA (Q3) 5.9% vs. Exp. 6.2% (Prev. 3.6%)