• FOMC Minutes stated that officials generally judged risks to achieving the FOMC's goals had become more two-sided.
• APAC stocks were firmer after the region took impetus from the intraday rebound on Wall St.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.4% after the cash market closed down 0.1% yesterday.
• DXY remains on a 105 handle, GBP/USD and USD/JPY are back on 1.23 and 149 handles respectively.
• Crude futures remained subdued after having faded the entire geopolitical risk premium from the weekend.
• Looking ahead, highlights include UK GDP Estimate, Services, Industrial Output, Trade Balance, US Core CPI, Earnings, IJC & Cleveland Fed CPI, ECB & Banxico Minutes, ECB’s Elderson & Panetta, Fed’s Bostic, Logan & Collins, Supply from US & Italy.

US TRADE

EQUITIES

• US stocks were choppy although the major indices eventually finished higher amid buying heading into the close and after manoeuvring throughout the day against the backdrop of the above-forecast PPI numbers, a fresh bout of central bank rhetoric and the latest FOMC Minutes release.
• SPX +0.43% at 4,377, NDX +0.72% at 15,241, DJI +0.19% at 33,805, RUT -0.15% at 1,773.
• Click here for a detailed summary.

FOMC MINUTES

• FOMC Minutes stated that officials generally judged risks to achieving the FOMC's goals had become more two-sided and most participants continued to see upside risks to inflation. Furthermore, many participants noted data volatility and potential data revisions as supporting the case for proceeding carefully in determining the extent of additional tightening, while several participants commented that with the policy rate at or near peak, decisions and communications should shift to how long rates stay restrictive versus how high they will rise.

NOTABLE US HEADLINES

• Fed's Bostic (non-voter) said they need to do all they can to get inflation down to 2% and there are a lot of signs the economy is starting to slow. Bostic added he does not think the Fed needs to do anything more with rates and stated that inflation stalling would be a sign that they need to do more.
• Fed's Collins (non-voter) said the Fed is at or near the peak of the rate cycle and a further hike could be warranted depending on incoming data, while she expects the Fed to keep policy restrictive for some time and said policy must stay restrictive until clear sign inflation moves to target of 2%.
• White House is preparing a supplemental funding request to submit to Congress that includes money for Israel, Ukraine, Taiwan and US border security, according to NBC News.
• UAW said the 8,700 UAW members at Ford's (F) Kentucky plant joined the strike after Ford refused to make further movement in bargaining, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were firmer after the region took impetus from the intraday rebound on Wall St where dovish Fed rhetoric offset the hot PPI data, while stale FOMC Minutes provided no major fireworks.
• ASX 200 was led higher by early outperformance in its top-weighted financial industry although the gains in the index were limited as energy and the defensive sectors lagged.
• Nikkei 225 was boosted on a break above the 32,000 level following softer-than-expected PPI data and comments from BoJ Board Member Noguchi who continued to toe the dovish line.
• Hang Seng and Shanghai Comp. were underpinned in which the Hong Kong benchmark gapped above the 18,000 level and spearheaded the advances in the region, while Chinese banks were buoyed after China’s sovereign wealth fund raised its stake in the largest banks for the first time since 2015.
• US equity futures (ES +0.3%) prodded this week's highs but with upside capped ahead of US CPI data.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.4% after the cash market closed down 0.1% yesterday.

FX

• DXY was flat heading into the upcoming US inflation data and after yesterday’s choppy performance in which it briefly tested the 106.00 level to the upside but then unwound the gains as the latest bout of less hawkish Fed rhetoric offset the impulse from hotter-then-expected PPI data.
• EUR/USD was steady as it took a breather from the recent whipsawing through the 1.0600 level and with the latest comments from ECB officials providing very little incrementally.
• GBP/USD traded rangebound after having reclaimed the 1.2300 status and with participants now awaiting the UK monthly GDP and activity data.
• USD/JPY was slightly higher after soft data releases and with a floor seen at the 149.00 level.
• Antipodeans were constrained in the absence of any pertinent data and amid a slightly softer CNH.
• PBoC set USD/CNY mid-point at 7.1776 vs exp. 7.2932 (prev. 7.1779)
• Russian President Putin introduced mandatory FX sales for six months for Russian companies which need to provide the central bank with plans and schedules for FX purchases and sales, in efforts to stabilise the Rouble, according to local media.

FIXED INCOME

• 10yr UST futures remained afloat but were off intraday highs as the treasury complex took a breather from the recent pronounced flattening and following a weak 10-year auction stateside.
• Bund futures were steady and held on to most of the prior day’s spoils but with further upside capped by resistance near the 130.00 level.
• 10yr JGB futures tracked the recent gains in global peers amid soft data releases from Japan.

COMMODITIES

• Crude futures remained subdued after having faded the entire geopolitical risk premium from the weekend's attack on Israel with prices not helped by the bearish weekly private sector inventory data.
• US Private Inventory Report (bbls): Crude +12.9mln (exp. +0.5mln), Cushing -0.5mln, Gasoline +3.6mln (exp. -0.8mln), Distillates -3.5mln (exp. -0.8mln).
• EIA STEO noted 2023 world oil demand growth forecast was cut by 50k BPD to a 1.74mln BPD Y/Y increase and the 2024 forecast was cut by 40k BPD to a 1.32mln BPD Y/Y increase.
• Kuwait sets November KEC crude OSP for Asia at Oman/Dubai + USD 3.05/bbl
• Spot gold slightly edged higher alongside an uneventful greenback.
• Copper futures eked marginal gains alongside the positive risk appetite.

CRYPTO

• Bitcoin was lacklustre following a recent retreat to beneath the USD 27,000 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese securities regulator banned brokerages and their offshore units from taking on new mainland clients for offshore trading and it set an end-October deadline for the removal of apps and websites soliciting mainland clients, according to Reuters sources.
• Chinese GDP growth might slow in Q3 to above 4.0% Y/Y from 6.3% growth in Q2 but is expected to improve after Q3, according to Securities Daily.
• BoJ Board Member Noguchi said the biggest focus is whether wage hike momentum will be maintained or not and the raising of the YCC band does not signify a tightening of monetary policy, while he added when inflation expectations are rising, some flexibility is needed to continue easy policy under YCC. Furthermore, Noguchi said there are signs upward price pressures are coming down and the BoJ's near-term mission is to realise a situation where wage growth does not fall short of inflation as soon as possible through persistent monetary easing.

DATA RECAP

• Japanese Corp Goods Price MM (Sep) -0.3% vs. Exp. 0.1% (Prev. 0.3%)
• Japanese Corp Goods Price YY (Sep) 2.0% vs. Exp. 2.3% (Prev. 3.2%, Rev. 3.3%)
• Japanese Machinery Orders MM (Aug) -0.5% vs. Exp. 0.4% (Prev. -1.1%)
• Japanese Machinery Orders YY (Aug) -7.7% vs. Exp. -7.3% (Prev. -13.0%)

GEOPOLITICAL

• US President Biden said the US is sending military assistance to Israel and they made it clear to the Iranians to "be careful". Furthermore, President Biden held a call with UAE's President and stressed his condemnation of Hamas, while the leaders discussed the importance of ensuring humanitarian assistance reaches those in need.
• White House's Kirby confirmed a second US aircraft is heading to the Middle East.
• US believes that Iran knew about the Hamas attack plan but not the timing and scale of the attack, according to WSJ.
• UN Security Council is due to meet on Friday to discuss the Israel-Gaza conflict, according to diplomats.

EU/UK

NOTABLE HEADLINES

• BoE's Dhingra said they think only about 20%-25% of the impact of interest rate hikes has been fed through to the economy and suggested that when growth is as slow as it is now, the chances of a recession or not recession are going to be pretty equally balanced so they should be prepared for that and it is not going to be great times ahead. Furthermore, she added that if growth falls by much more than the BoE expects from here, a cut may happen sooner, according to the BBC.
• ECB's Holzmann said inflation might turn out stronger than thought and the next crisis may hit before ECB's QE losses are recouped, while he wants the ECB to cap the remuneration of bank deposits at 90% and would allow a faster return to the corridor and limit central bank losses.
• ECB's Kazaks said interest rates are appropriate to get inflation to 2% in H2 2025 but added the door on rate hikes cannot be closed and an early end to reinvestments in PEPP should be discussed.
• ECB's Vujcic said if the outlook holds, no more rate hikes are needed and the economy is facing stagnation rather than recession, while he added the ECB won't be able to declare victory before spring 2024.

DATA RECAP

• UK RICS Housing Survey (Sep) -69 vs. Exp. -63 (Prev. -68)