• APEC summit ended without an agreement on a joint communique for the first time in its history after China refused to sign amid US-China tensions
• Apple have reportedly cut production orders for their 3 new iPhone models and are down 1.9% pre-market
• DXY remains capped below a key Fib level (96.590) and the Dollar overall is mixed vs major counterparts
• Looking ahead, highlights include potential comments from Fed’s Williams. With a lack of Tier 1 data on the calendar

ASIA

Asian equity markets began the week somewhat cautious on lingering trade concerns and after disunity at the APEC summit over the weekend which failed to agree on a joint communique for the first time in history due to US-China tensions.  ASX 200 (-0.6%) and Nikkei 225 (+0.6%) traded mixed in which nearly all of Australia’s sectors were in the red aside from miners, while Nikkei 225 was positive as participants digested mixed trade data which showed a jump in imports. Elsewhere, Hang Seng (+0.7%) and Shanghai Comp (+0.9%) were choppy amid trade-related uncertainty following the verbal jabs between US and China in which Chinese President Xi warned that countries which embraced protectionism were doomed to fail and US Vice President Pence later commented the US could more than double the tariffs imposed on Chinese goods. Finally, 10yr JGBs futures rose to match the YTD high as they tracked the recent upside in T-notes and with the BoJ also present in the market for JPY 800bln of JGBs in the belly to the short-end of the curve.

APEC summit ended without an agreement on a joint communique for the first time in its history after China refused to sign amid US-China tensions, while there had been comments from Chinese President Xi Jinping that countries which embraced protectionism were "doomed to failure" and US Vice President Pence later commented that he was prepared to "more than double" the tariffs imposed on Chinese goods. (BBC/AFR)

China's recent trade offer to the US is said to include additional purchases of US natgas and improved intellectual property protection. (Newswires)

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.9245 (Prev. 6.9377)

Japanese Trade Balance Total (JPY)(Oct) -449.3B vs. Exp. -70.0B (Prev. 139.6B, Rev. 131.3B). (Newswires)
Japanese Exports (Oct) Y/Y 8.2% vs. Exp. 9.0% (Prev. -1.2%, Rev. -1.3%)
Japanese Imports (Oct) Y/Y 19.9% vs. Exp. 14.5% (Prev. 7.0%)

UK/EU

UK PM May stated over the weekend that there has not yet been enough number of letters required to trigger a no-confidence vote, while she added that that lawmakers should think about the need to deliver on Brexit and that the government would come back with proposals for the next step if Parliament votes against the deal. In separate reports, 42 Tory MPs have given assurances in letters to not support PM May which is still 6 below the 48 needed for a no-confidence vote, while ERG sources are said to be confident of reaching the 48 letters required on Monday to trigger a no-confidence vote against UK PM May. (Newswires/Twitter)

The Sun’s Political Editor said the Brexit Secretary role is being stripped down to just cover the domestic delivery of Brexit and that PM May will have sole charge of the final negotiations. (The Sun)

EU Chief Negotiator Barnier reportedly floated the idea of extending Brexit transition period by 2 years to end of 2022. (Newswires)

UK Labour Party leader Corbyn said the Labour Party cannot support PM May's Brexit deal. There were also separate comments from former UK Foreign Minister Johnson that the UK should massively speed up preparations to exit the EU on WTO terms and Former UK Brexit Secretary Raab said PM May's plan is fatally flawed but can be saved, while Raab added the EU is bullying UK and that he still supports PM May. (Newswires) Furthermore, Raab refused to rule himself out of the running if PM May is removed from office. (Telegraph)

UK Business Minister Clark states that a longer transition period could be implemented if we ask for it; adding that an extension to 2022 is an option; also, that the withdrawal treatment text will not change in any substantial sense. (BBC)

Sky's Faisal Islam reports "backers of the PM’s compromise say they will be forced into supporting a second referendum if “arch-Brexiters” vote it down or force a “self-indulgent” leadership contest... leading to “no Brexit”

Former UK Brexit Secretary David Davis says that he does not believe there will be a leadership contest

EU's Chief Negotiator Barnier says he is pleased that EU ministers support the draft accord and in future relationship both sides will have control of their own rules. Procedures on how to extend the transition period still need to be agreed, and that the focus must stay on the UK leaving in an orderly fashion. A possible transition extension would involve talks on the UK financial contribution; cannot say how much the UK should pay during an extended transition period, transition extension must have a fixed end date, with no date agreed as of yet. Finally, EU governments all agree on the principle of extending the transition period. Aim is to use the transition period to find a global accord on trade to avoid a hard border in Ireland. (Newswires)

UK PM May spokesman says the government believes the UK does not need any extension to the implementation period, but it makes sense to have that option as an alternative to the backstop. (Newswires)

Telegraph's Deputy Political Editor Swinford tweets "Senior Eurosceptics plotting to remove Theresa May are this morning fairly relaxed about the 48 letters. The letters will come, they say. It's just a matter of time." (Twitter)

Times' Matt Chorley tweets "Of the 48 needed to trigger a vote of no confidence, 25 have gone public so far.. Senior Brexiteers tell The Times they have "firm pledges" from 50+ MPs to submit letters by this evening, with a vote triggered within two days" (Twitter)

Spain require more assurance on Gibraltar in order to back a Brexit deal. (Newswires)

UK business morale deteriorated to its lowest since 2009, according to data firm IHS Markit. (Newswires)

UK Rightmove House Price Index (Nov) M/M -1.7% (Prev. -1.0%). (Newswires)
UK Rightmove House Price Index (Nov) Y/Y -0.2% (Prev. +0.9%)

ECB's Villeroy (Dovish) said asset purchases are probably to end in December and that the outlook for inflation in the Euro area is firmer., while he also commented that the ECB could contemplate new TLTROs again if warranted and that he does not view a need for precise reinvestment horizon in December. Furthermore, Villeroy commented we are on track to normalise policy, but it will be gradual and predictable. (Newswires)

GEOPOLITICAL

US is said to seek high-level talks with North Korea by early next month, while there were also reports that South Korea and US to set up working group regarding North Korea. (Newswires/Yonhap)

US special envoy to Afghanistan said hopes to strike a final peace agreement with the Taliban by April next year. (Newswires)

CIA has reportedly concluded that the killing of journalist Khashoggi was ordered by Saudi Crown Prince Mohammed bin Salman. (Newswires)

EQUITIES

Major European indices are in the green, with the Italy’s FTSE MIB (+0.4%) bolstered by news that Luigi Gubitosi has been appointed as the new CEO of Telecom Italia (+3.8%). The SMI (-0.3%) gave up initial gains and is lagging its peers, weighed on Swatch (-3.7%) and Richemont (-1.6%) following unfavourable price outlook for both by Bank of America Merill Lynch.

Sectors are mostly all in the green, with outperformance in telecom names, while energy names are lower given pullback in oil prices in recent trade and consumer discretionary names are weighed on by Renault (-10.6%), with the company shares extending losses following reports that Nissan’s boss has been arrested in Japan regarding allegations of financial violations. Renault shares are hit given the Renault-Nissan-Mitsubishi alliance. Elsewhere, BPost (-7.1%) shares are hit following a downgrade at HSBC, while Tele2 (+1.6%), are near the top of the Stoxx 600 after being upgraded at Berenberg.

Furthermore, tech-giant Apple shares are lower by 1.9% pre-market after WSJ reported the company cut production orders for three new iPhone models.

FX

USD - The Greenback has regained some composure following its downturn at the end of last week amidst soft US data and cautious if not concerned or outright dovish Fed rhetoric (Clarida conscious about contagion from slower global growth, Kaplan envisaging headwinds from rising debt and Harker opposed to a December rate hike), but the DXY remains capped below a key Fib level (96.590) and the Dollar overall is mixed vs major counterparts.

NZD/AUD/CAD - All on the back foot against their US peer and underperforming other G10 currencies, with the Kiwi retreating below 0.6850 and undermined by cross flows as Aud/Nzd rebounds further from recent lows towards 1.0700 and Aud/Usd holds above 0.7300 in wake of last week’s strong Aussie jobs data.

GBP - The Pound has derived some comfort, or is simply just relieved that the Tory uprising and challenge to UK PM May has not reached the minimum level required to trigger a no confidence vote and adding another potential spanner in the Brexit works. However, the situation remains far from stable and certain given that Parliament still has to vote on the Withdrawal Agreement and the room for further renegotiation with the EU looks limited at best ahead of Sunday’s Summit and more meetings planned in the run up to try and sound out whether there is scope to tweak elements of the draft. Cable has tested and marginally breached last Friday’s peak at 1.2877, but far from convincingly amidst supply ahead of 1.2900, and with the 21 DMA also representing formidable tech resistance just above the big figure (1.2918-20). Meanwhile, Eur/Gbp has not pulled back too far below 0.8900, as the single currency holds firm in its own right.

CHF/JPY/EUR - The Franc and Jpy have both regained a safe-haven bid, as US-China trade, Italian-EU budget and Brexit uncertainty persists, with the former back up above parity vs the Buck and over 1.1400 against the Euro, while Usd/Jpy is probing further below 113.00 and inching closer to decent option expiry interest at the 112.50 strike (1 bn). However, Eur/Usd has reclaimed 1.1400+ status, largely due to the weaker Greenback, and eyeing a key chart level circa 1.1421 (bear channel resistance) for further upside towards a major Fib (1.1445).

EM - The Rand has made an encouraging start to the week, with a break through 14.0000 vs the Usd exposing recent peaks and momentum to re-test 13.8700 ahead of 13.6000 (50% Fib).

COMMODITIES

Brent (+0.2) and WTI (+0.1%) are in positive territory, albeit off highs following market expectations that Saudi Arabia will steer OPEC and Russia to cut oil supply. Overnight gains in the complex were driven by reports that Saudi is said to want oil prices around USD 80.00/bbl. Gains later eroded after Iranian President Rouhani emerged on state TV and stated that the US has failed to reduce Iran’s oil exports to zero and Iran will continue to sell their crude. Meanwhile, Russian Energy Minister Novak said the country is planning to sign an output agreement with OPEC at their December 6th meeting in Vienna.

Conversely, Gold (-0.2%) prices fell this morning, with traders citing profit taking from last week’s gains, while Palladium is nearing parity with gold as an all-time high of USD 1185.4/oz was hit on Friday. Separately, copper is lower following tension between the US and China at the APEC summit which ended without an agreement on a joint communique for the first time in its history.

FIXED INCOME

It’s been gradual, but no less apparent given the outright change in direction and ensuing divergence vs Bunds, with Gilts rebounding firmly from 122.53 lows to trade at 122.90 (+18 ticks). Nothing really new to prompt the recovery, or at least not that we do not already know in terms of ongoing Brexit risk and perhaps some chart impulses turning as deeper downside technical support held. Back to Eurex, and the core German or Eurozone bond has pared some lost ground to 160.48 (-17 ticks) vs 160.24, with BTPs easing back just ahead of 122.00. Elsewhere, US Treasuries are essentially straddling parity after some choppy moves during overnight trade, with the curve slightly steeper ahead of a relatively light Monday agenda (only NAHB and Fed’s Williams on the docket).