• Asian equities were mixed as the region struggled to sustain the rebound seen on Wall St, where a recovery in the energy and tech sectors underpinned most major US indices
• UK PM May's spokesperson said PM May and EU's Juncker failed to finalise a deal on terms of Brexit but added that very good progress has been made in talks
• FX markets were uneventful with the USD subdued as US participants headed into the Thanksgiving holiday
• Looking ahead, highlights include SARB rate decision, ECB minutes, BoE’s Haldane, Saunders, ECB’s Mersch, supply from Spain and France. US markets closed for Thanksgiving

ASIA

Asian equities were mixed as the region struggled to sustain the rebound seen on Wall St, where a recovery in the energy and tech sectors underpinned most major US indices, but which subsequently closed off their highs on position squaring heading into Thanksgiving. ASX 200 (+0.9%) and Nikkei 225 (+0.8%) traded positive with Australia led by healthcare as Primary Health Care shares outperformed following encouraging updates at its AGM, while sentiment in Japan was turbulent ahead of its long weekend and as financials lagged including MUFG shares on news US prosecutors are investigating the Japanese banking powerhouse. Hang Seng (-0.1%) and Shanghai Comp. (-0.4%) failed to hold onto opening gains as the PBoC remained side-lined and refrained from liquidity operations for a 20th consecutive occasion, although downside was stemmed amid trade related hopes after reports US Trade Advisor and known ‘China hawk’ Navarro is to be excluded from the Trump-Xi summit. Finally, 10yr JGBs were quiet with price action subdued by the choppy risk sentiment and after weaker demand at today’s enhanced liquidity auction for longer-dated JGBs.

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.9391 (Prev. 6.9449)

Japanese National CPI (Oct) Y/Y 1.4% vs. Exp. 1.4% (Prev. 1.2%). (Newswires)
Japanese National CPI Ex. Fresh Food (Oct) Y/Y 1.0% vs. Exp. 1.0% (Prev. 1.0%)
Japanese National CPI Ex. Fresh Food & Energy (Oct) Y/Y Oct 0.4% vs. Exp. 0.4% (Prev. 0.4%)

UK/EU

UK PM May's spokesperson said PM May and EU's Juncker failed to finalise a deal on terms of Brexit but added that very good progress has been made in Brexit talks, while PM May is to return to Brussels on Saturday. In related news, Brexit negotiators were reportedly to work through the night to finalise the deal and a Sun reporter suggested if they were successful, there could be a new draft Withdrawal Agreement and Political Declaration published Thursday afternoon. (Newswires/Twitter)

UK Foreign Minister Hunt reportedly warned PM May of the possibility the Brexit deal may be rejected at Parliament and was among the 6 Cabinet ministers that raised serious concern regarding the extent of opposition from within the Tory party to the Brexit deal. In related news, 84 Tory MPs were said to have declared they will not vote for May's Brexit deal according to Tweets by a Buzzfeed reporter. (Telegraph/Twitter)

UK Chancellor Hammond said Brexit backstop is not a good arrangement and smooth Brexit is worth billions of pounds to the UK, while he added that there might not be a Brexit if lawmakers reject the deal and that markets will react negatively if parliament reject the deal. (Newswires)

Irish PM Varadkar proposed a motion requesting the Irish Parliament support draft Brexit agreement. (Newswires)

German Finance Ministry said October tax revenue rose 9.2% Y/Y, while it added that German growth is to continue although not as strong. (Newswires)

FX

FX markets were uneventful with the USD subdued as US participants headed into the Thanksgiving holiday and amid meagre attempts by its major counterparts across the pond to nurse recent losses. In terms of the latest Brexit-related developments, EU's Juncker and UK PM May failed to finalise a deal on terms of Brexit but were said to have made very good progress and PM May will return to Brussels on Saturday, while negotiators were said to work through the night in the hope of finalising an agreement. Elsewhere, AUD/USD and NZD/USD were lacklustre as the rebound in oil prices stalled overnight, while USD/JPY and its related-crosses traded indecisive amid a similar risk tone and inconclusive inflation data from Japan in which all components conformed to expectations.

COMMODITIES

Commodities flatlined overnight with oil prices back below the USD 55.00/bbl level after prices slipped post-settlement as US participants headed into Thanksgiving. Elsewhere, gold and copper were little changed amid an uneventful greenback and with the red metal also restricted by underperformance in its largest consumer China.

Baker Hughes Rig Count (21/Nov): Oil down 3 rigs at 885, gas unchanged at 194, total rigs down 3 at 1079. (Newswires)

CME raised January 2019 (CL F9) oil futures margins to USD 3650 from USD 3550 per contract. (Newswires)

US President Trump tweeted that brutal and extended cold blast could shatter all records. (Newswires)

China is said to be returning to the US crude market as a minimum of 3 very large crude carriers have been booked for late next month. (Platts)

GEOPOLITICAL

US Defence Secretary Mattis said will reduce the scope of military exercise with South Korea to ensure the exercises will not be harmful to diplomatic efforts, while he also commented that it appears Yemen peace talks will take place in early December in Sweden. (Newswires)

Iran Revolutionary Guard commander said US bases and aircraft carriers are within range of Iranian missiles. (Tasnim News)
 

US

Volumes and action were light on Wednesday ahead of Thursday Thanksgiving market holiday. After trading lower in Asia, T-Notes ticked up in European trade, but once again found some sellers around the US open, with dealer positioning ahead of the TIPS supply being cited. The bias was for yield curve narrowing, with 2s5s tightening to levels not seen in 11-years+. The Treasury sold USD 11bln of 10-year TIPS, tailing 0.2bps. US T-note futures (Z8) settled 3+ ticks lower at 119-07+.