• European bourses are under modest pressure as geopolitical developments keep tensions elevated and the tone tentative
• Israeli military spokesperson said their goal is to completely destroy the governing and military capabilities of Hamas.
• Iranian Foreign Minister said ‘If the Zionist aggressions do not stop, the hands of all parties in the region are on the trigger’
• DXY towards the lower-end of bounds with CHF lagging after recent haven demand while JPY notes Kanda’s remarks
• Fixed benchmarks continue to ease as upward momentum fades, numerous central bank officials provide commentary
• WTI, Brent and XAU are subdued/flat intraday after Friday’s marked advances
• Looking ahead, highlights include NY Fed Manufacturing, NZ CPI, Speeches from Fed’s Harker & ECB’s Lagarde, Earnings from Charles Schwab Corp.

EUROPEAN TRADE

EQUITIES

• European bourses are under modest pressure as the weekend's deluge of geopolitical developments keeps tensions elevated and the tone tentative, Euro Stoxx 50 -0.2%.
• As such, sectors are tilting into the red overall despite an initially firmer start to European trade with the morning's main movers driven by individual updates around stocks including Telecom Italia, Atos and Ocado.
• Stateside, futures are slightly firmer on the session awaiting fresh catalysts with the aforementioned tentative tone capping and real action, ES +0.1%.
• Apple (AAPL) iPhone 15 sales -4.5% in the China debut YY, via Counterpoint.
• Click here for more details.

FX

• Greenback gravitates ahead of NY Fed manufacturing survey and Fed's Harker, while keeping tabs on geopolitical news, DXY towards base of narrow 106.400-610 range.
• Franc sags after pre-weekend safe haven advance, USD/CHF back above 0.9000.
• Yen pivots 149.50 vs Dollar eyeing yields and latest verbal intervention from Japan's top FX diplomate Kanda.
• Kiwi back on 0.5900 handle vs Buck and Zloty above 4.5000 against Euro after NZ and Polish elections.
• Euro flanked by decent option expiries vs Dollar at 1.0500 and between 1.0540-50.
• Cable straddles 1.2150 as Pound digests hawkish-leaning comments from BoE's Pill on inflation.
• Loonie tethered to 1.3650 against its US rival pre-Canadian data and BoC outlook survey.
• PBoC set USD/CNY mid-point at 7.1798 vs exp. 7.3121 (prev. 7.1775).
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• More momentum fading in debt as Bunds test 129.00 after topping 130.00 last week, Gilts lose grip of 94.00 handle compared to 95.50+ m-t-d peak and T-note touches 107-09+ vs 108-16 pre-US CPI.
• BTPs also underwater within 109.76-31 range and digesting Italy's EUR 24bln budget of tax cuts and spending.
• Click here for more details.

COMMODITIES

• WTI Nov and Brent Dec futures were subdued intraday settling higher by almost USD 5/bbl each on Friday amid the growing Middle Eastern tensions heading into the weekend; however, benchmarks have lifted incrementally off of lows with WTI edging into positive territory most recently.
• WTI Nov resides around USD 87.75/bbl (in a USD 87.07-87.98/bbl range) while Brent Dec sits around USD 90.75/bbl (in a USD 90.18-91.20/bbl parameter).
• Dutch TTF prices are softer intraday to the tune of around 2.5% at the time of writing, but prices remain around EUR 52/MWh as LNG workers in Australia are poised to resume strike action.
• Spot gold has reversed some of its marked upside from Friday, as we await the next set of updates on the geopolitical front; though, the yellow metal remains above the USD 1915/oz mark but has lost the 100-DMA at USD 1922/oz.
• Russian Deputy PM Novak says Russia and Venezuela have agreed to seek ways of boosting cooperation in oil and increasing oil output.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• BoE Governor Bailey said he is puzzled by stubborn pay growth in the UK but added that they have had some good news on inflation recently, while he also commented that workforce dropouts hit the UK growth and stoke prices.
• BoE's Pill says we must not declare premature victory after mechanical fall in headline inflation; if we look at market inflation expectations, we cannot be complacent. Thinks more of BoE rate rise has been transmitted than 20-25% but not dramatically so.
• ECB President Lagarde said the labour market shows no real sign of weakening.
• ECB’s Nagel reiterated that inflation remains too high and policy is to remain restrictive for the foreseeable future.
• ECB's de Cos said higher borrowing costs underline governments’ need to reduce deficits next year, while the surge in global borrowing costs, triggered by a sell-off in US Treasuries means eurozone rate-setters may have done enough to tame inflation, according to FT.
• ECB's Wunsch (Hawkish) says that discussing PEPP is not a pressing issue, a matter of consistency. Fine with it being discussed in October or a bit later, via Econostream. On whether they are at terminal rate "maybe, maybe not". Chances of hiking after pausing are far from marginal.
• Polish PM Morawiecki said the ruling nationalists PiS will try to form a government if the president gives them this task after exit polls showed the ruling nationalists with 36.8% of votes and the largest opposition group Civic Coalition received 31.6% of votes, according to Reuters.
• Italian PM Meloni says 2024 budget contains measures worth circa EUR 24bln in tax cuts and higher spending.
• German Finance Minister Lindner said to the UK "If you want to intensify your trade relationship with the EU - call us!", via BBC
• UK government is reportedly "quietly drawing up plans to hold key trade talks with China for the first time in five years", via Politico citing officials, adding that the government is considering a range of options for strengthening ties.

EUROPEAN DATA RECAP

• UK Rightmove House Price Index MM (Oct) 0.5% (Prev. 0.4%); YY (Oct) -0.8% (Prev. -0.4%)
• German Wholesale Price Index YY (Sep 2023) -4.1% (Prev. -2.7%); MM (Sep 2023) 0.2% (Prev. 0.2%)

NOTABLE US HEADLINES

• US House will vote on GOP Rep. Jim Jordan’s nomination for House Speaker on Tuesday at approximately 12:00EDT/17:00BST, according to Reuters.
• UAW said they unfortunately had to escalate their action and that they came to get another offer from Ford which gave them the exact same offer as two weeks ago, according to Reuters.
• US SEC chair Gensler urged regulators to tame AI risks to financial stability.
• Fed's Goolsbee (2023 voter) said progress was not stalling on getting inflation back to the 2% target; cautioned tying upcoming decisions to a narrow set of data, according to an FT interview.
• Click here for the US Early Morning Note.

GEOPOLITICS

ISRAEL-HAMAS

• Israeli military spokesperson said forces are preparing to implement a wide range of operational offensive plans which include combined coordinated strikes from the air, sea and land, while their goal is to completely destroy the governing and military capabilities of Hamas and other terrorist organisations. Furthermore, the spokesman said the operation will take a long time and that residents of Gaza should leave and not return until told to for their own safety but Hamas has been preventing people from leaving, according to Reuters.
• Israeli military spokesperson said Hezbollah is escalating the situation on the Lebanon border to hinder the Gaza counter-offensive and Israel is prepared to fight on two fronts and even more if required, while an Israeli military spokesman said more than 600,000 Gazans have relocated southwards and that more than 200 Hamas members in the West Bank were detained since October 7th.
• Israeli PM Netanyahu’s national security adviser said Israel is not trying to be drawn into a two-front war and that Hezbollah's actions are under the escalation threshold so far, while the adviser added they hope Hezbollah won’t de facto bring about the destruction of Lebanon, according to Reuters.
• Iranian President Raisi said in a phone call with French President Macron that ’the Zionist regime’s actions are a reminder of Nazi actions’, while he also stated that Palestinian resistance groups make their own decisions and urged France to prevent oppression and injustice, according to Reuters.
• Iranian Foreign Minister said ‘If the Zionist aggressions do not stop, the hands of all parties in the region are on the trigger’ and warned heavy losses will be inflicted on the US if the scope of the Gaza war widens. Iran’s Foreign Minister also said that Iran will not remain an observer in this situation and informed Israel via its allies that ‘tomorrow will be too late’ if its crimes in Gaza continue.
• Iran has reportedly made no decision about whether to open a new front against Israel, according to an Iranian source close to the government, but added that a meeting was to be held on Sunday night in a Hezbollah command center in Lebanon, NYT reported.
• Iran’s mission to the UN said if Israel’s ‘war crimes, genocide’ is not halted immediately, the situation could ricochet far-reaching consequences.
• US President Biden said deploying US troops in the Middle East war is not necessary and Israel has one of the finest fighting forces, while he is confident Israel is going to act under the rules of war and said it would be a mistake for Israel to occupy Gaza. Biden stated he believes Hamas must be eliminated entirely but said there must be a path to a Palestinian state and his message to Iran is don't come across the border and don't escalate the war, while it was also reported that President Biden is considering visiting Israel in the coming days.
• US National Security Adviser Sullivan said the US does not have new intelligence that the threat on the ground is different today and there is a risk of conflict escalation. Sullivan added that they cannot rule out that Iran would choose to get directly engaged in some way and that the US is concerned about proxy forces, Lebanon’s Hezbollah and Iran, according to a CBS interview.
• US Secretary of State Blinken will head back to Israel on Monday for further consultations with Israeli leaders.
• US officials said the US is sending a second aircraft carrier to the eastern Mediterranean, according to ABC News.
• US Senate Majority Leader Schumer said he will lead an effort in the Senate to provide Israel with the support required to fully defend itself, while he told Israeli leaders it is important to minimise civilian casualties in Gaza.
• US Secretary of State Blinken said his meeting with Saudi Crown Prince MBS was very productive, while the Saudi Crown Prince stressed in a meeting with US Secretary of State Blinken the kingdom’s refusal to target civilians in any way or disrupt infrastructure and vital interests that affect the lives of the Palestinian people. Furthermore, the Saudi Crown Prince emphasised the Kingdom’s desire to intensify communication while working to calm the situation in Gaza and help lift the siege, according to Reuters.
• UN peacekeeping force UNIFIL said its headquarters in South Lebanon was hit by a rocket and military escalation continues at the Lebanon-Israel border despite their efforts.
• Syria said Aleppo airport is out of service following an Israeli air strike.
• Russia asked the UN Security Council to vote on Monday on the draft resolution on Israel and Gaza calling for an immediate humanitarian ceasefire.
• Egypt proposed a summit on current developments and the future of the Palestinian issue, according to Reuters.
• Israeli Communications Minister said they are seeking cabinet approval for a proposed shutdown of Al Jazeera and said Qatar’s Al Jazeera is helping Hamas, inciting against Israel, and is filming Israeli troops in vulnerable areas.
• US, Israel and Egypt agree to a ceasefire in southern Gaza to commence at 07:00BST, coinciding with the re-opening of the Rafah border crossing, via Reuters citing Egyptian security sources. Subsequently, Hamas said it had no information on this. Reports after the time indicated that the border had not been reopened.
• Israeli military says Iran instructed Lebanon's Hezbollah to carry out Sunday's attacks at the Lebanon-Israel border.

OTHER

• Azerbaijan’s President Aliyev raised the Azerbaijani flag in the city of Khankendi which is the capital of Nagorno-Karabakh which is known as Stepanakert by Armenians, according to state news.
• Ukraine’s Finance Minister said donor tiredness is growing as the war drags on, according to Reuters.
• Russian President Putin said Russian forces improved their position at almost the entire contact line with Ukrainian forces.
• Russia’s Black Sea fleet conducted drills with rocket launchers in Crimea, according to the Sevastopol Governor.
• Russia scrambled a SU-27 as a US Global Hawk drone approached the Russian border over the Black Sea, according to IFAX the Russian Defence Ministry.
• Russian Foreign Minister Lavrov said Russian President Putin and Chinese President Xi will discuss all aspects of bilateral relations this week and Moscow sees China's One Belt One Road summit as essential to promote cooperation in Eurasia, according to Russian agencies.

CRYPTO

• Bitcoin bolstered but failed to breach the USD 28k mark in European hours and as such remains just shy of the early-October best around the figure. Action which follows gains in APAC trade which have been attributed by some to the SEC's decision not to appeal the Grayscale ruling.

APAC TRADE

• APAC stocks were mostly lower amid ongoing geopolitical concerns with the Israel-Hamas conflict threatening to spill over to neighbours in the region.
• ASX 200 was subdued amid underperformance in tech, telecoms and industrials but with losses stemmed by resilience in commodity-related industries.
• Nikkei 225 underperformed and gapped below the 32,000 level despite the lack of fresh pertinent catalysts.
• Hang Seng and Shanghai Comp. saw somewhat varied price action with the Hong Kong benchmark choppy and the mainland ultimately pressured as participants digested several recent developments including the PBoC’s decision to maintain the 1-year MLF rate, as expected, with the operation the largest MLF net injection since December 2020. Furthermore, it was confirmed that the US is to take steps to prevent American chipmakers from selling AI chips to China that circumvent government restrictions and that China’s securities regulator will restrict securities lending which local press suggested could help support markets as it would tighten rules for short selling.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 789bln in 1-year MLF with the rate kept unchanged at 2.50% vs CNY 500bln maturing.
• PBoC said the number of bright spots in China’s economy is increasing and China will pay more attention to the balance between economic growth and sustainability, while China will focus on expanding domestic demand, boosting confidence and accelerating the virtuous circle of the economy, according to Reuters.
• PBoC Governor Pan met with IMF MD Georgieva and said China is looking forward to the timely conclusion of the 16th IMF quota review increase and realignment with the quota realignment fundamental to IMF’s governance form. PBoC’s Pan also stated the IMF’s quota realignment should reflect members’ relative weights in the global economy and strengthen the voice and representations of emerging markets and developing countries.
• US is to take steps to prevent American chipmakers from selling AI chips to China that circumvent government restrictions with the US efforts part of upcoming restrictions on AI chip exports to China to be announced this week.
• China’s securities regulator said will restrict securities lending and appropriately curb securities lending by strategic investors and senior management of listed firms, according to Reuters. Furthermore, Chinese press suggested the latest securities rule is to help support markets and cited efforts to tighten rules for short selling.
• EU foreign policy chief Borrell said the EU has ties with China that are independent of other nations, while it was also reported that EU’s Mora is to visit China for follow-up talks.
• New Zealand shifted to the right in a rejection of the Labour Party and PM Hipkins conceded defeat, while National Party leader Luxon is set to become the next PM.
• Japanese top currency diplomat Kanda says interest rates is merely one factor in FX; intervention is one option when excessive FX moves are seen; JPY is still perceived as a safe asset, alongside the CHF and USD.