• European bourses & US futures are mixed to modestly pressured as a better-than-expected ZEW is overshadowed by geopolitics
• EUR off lows given the data and support via expiries at 1.05, action which has pulled the DXY away from its 106.49 peak, JPY action on BoJ sources re. inflation outlook
• Geopolitical updates incl. confirmation that Biden will travel to Israel on Wednesday, since then there has been bouts of punchy rhetoric from Iran’s Khamenei
• ZEW was better than expected, bringing Bunds back below the 129.00 mark which was breached pre-release with USTs directionally in-fitting
• Crude benchmarks are near the unchanged mark with action choppy & rangebound, base metals pressured by the overall tone
• Looking ahead, highlights include US Retail Sales, Industrial Production, Capacity Utilisation & Business Inventories, Speeches from Fed's Williams, Bowman, Barkin, Kashkari & ECB's de Guindos, Fed Discount Rate Minutes. Earnings from JNJ, Prologis, Goldman Sachs, Bank of America & Lockheed Martin.

EUROPEAN TRADE

EQUITIES

• European bourses are near the unchanged mark with performance mixed as some regions manage to eke out mild gains while others reside slightly in the red as geopolitical tensions continue to dominate newsflow, Euro Stoxx 50 -0.3%.
• After the cash open, a bout of pressure occurred in proximity to remarks from the Iranian Supreme Leader Khamenei, commentary which aired just prior to the ZEW release which sparked a recovery from the rhetoric-driven session lows in European equity benchmarks.
• Sectors are mixed with defensively inclined components such as Real Estate, Health Care and Utilities outperforming while Basic Resources is the laggard alongside underlying benchmarks and after Rio Tinto's update.
• Stateside, futures are slightly softer but the ES -0.1% remains in relative proximity to the 4400 handle ahead of Fed's Williams, more key earnings and data points incl. Retail Sales; ahead of earnings in the pre-market, GS -0.5% & LMT +0.5%.
• Johnson & Johnson (JNJ) Q3 2023 (USD): adj. EPS 2.66 (exp. 2.51), Revenue 21.35bln (exp. 21.03bln); recognises a one-time USD 21bln gain relating to separation of consumer business. FY EPS view 10.07-10.13 (exp. 10.03), Revenue view 84.4-84.8 (exp. 84.53bln).
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FX

• Hawkish RBA minutes underpin Aussie as AUD/USD pivots 0.6350 and AUD/NZD approaches 1.0800 from just shy of 1.0700, Kiwi undermined by softer than forecast NZ Q3 CPI metrics, with NZD/USD under 0.5900.
• Pound soft in line with headline UK average earnings vs consensus and BoE's Dhingra chiming with others that the weekly numbers inflate the real picture, Cable tests 1.2150 to the downside from 1.2200+ at one stage.
• Euro supported by 1.0500 expiries and better than expected ZEW survey, Yen initially reliant on 150.00 expiry interest as DXY forms base on 106.000 handle within 106.200-490 range.
• Most recently, USD/JPY has been hit by a BoJ sources piece around the inflation outlook which pushed it down to a brief 148.75 trough, a move which has since partially retraced and as such USD/JPY is currently around 149.40.
• Loonie sits between 1.3650-00 band awaiting Canadian inflation data.
• PBoC set USD/CNY mid-point at 7.1796 vs exp. 7.3038 (prev. 7.1798).
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FIXED INCOME

• Gilts bolstered between 93.91-41 parameters by benign UK wage data, dovish comments from BoE's Dhingra and IFS predicting PSBR undershoot.
• Bunds lag within 128.71-129.14 range after better than forecast German ZEW survey and irrespective of solid Schatz sale.
• T-notes rooted towards base of 106-29/107-08 band ahead of US retail sales, ip and quartet of Fed orators.
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COMMODITIES

• Crude benchmarks are modestly firmer on the session but price action has been choppy within relatively tight ranges thus far with geopolitical updates driving action thus far.
• WTI & Brent Dec futures currently post gains of circa. 0.5% on the session, at the top-end of respective USD ~1.00/bbl parameters.
• Spot gold is essentially flat, holding just above the USD 1920/oz figure and as such well within Monday's USD 1908-32 boundaries.
• Base metals are pressured given the cautious mood and as the USD benefits from this, LME Copper towards USD 7.9k/T, pressure perhaps also emanating from the latest Rio Tinto update.
• Commerzbank now sees gold price around USD 1,900/oz at the end of December (prev. USD 2,000/oz); 2024 forecast remains unchanged at USD 2,100/oz.
• Chevron (CVX) Australia spokesperson said they are continuing work to conclude the drafting of proposed enterprise agreements for Gorgon and Wheatstone facilities based on clarification provided by the Fair Work Commission, according to Reuters.
• US State Department said it welcomes the announcement by Maduro representatives and the unitary platform to resume negotiations, while it added the US will continue efforts to unite the international community to support the Venezuelan-led negotiation process.
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NOTABLE EUROPEAN HEADLINES

• Poland Election Final Results: PiS 35.38%, Civic Coalition (KO) 30.7%, Third Way 14.4%, New Left 8.6%, far-right Confederation 7.16%. As a reminder, the first exit poll had PiS with 40.36%, Civic Coalition with 26.4%, Third Way 13.6%, Left 8.3% & far-right Confederation 7.4%.
• BoE's Dhingra says average weekly earnings data appear to give a more inflated picture of the wage outlook vs other measures; she expects some letting-up of wage growth. Says the labour market is really loosening and does not see further wage growth momentum. Should see some relenting of domestic inflation pressures.

EUROPEAN DATA RECAP

• UK Average Earnings (Ex-Bonus)* (Aug 2023) 7.8% vs. Exp. 7.8% (Prev. 7.8%, Rev. 7.9%); 3M YY (Aug 2023) 8.1% vs. Exp. 8.3% (Prev. 8.5%)
• UK HMRC Payrolls Change (Sep) -11k (prev. 0k. rev. -8k)
• German ZEW Economic Sentiment (Oct 2023) -1.1 vs. Exp. -9.3 (Prev. -11.4); Current Conditions (Oct 2023) -79.9 vs. Exp. -80.8 (Prev. -79.4)
• ZEW: It appears the lowest point has been passed. Assessment of the current economic situation in Germany has barely changed. Heightened economic expectations are accompanied by the expectations that inflation rates will fall further. Negative factors such as the Israeli conflict, cited by some respondents as the reason for revising their growth forecasts downwards - had only limited impact on the overall more optimistic outlook.

NOTABLE US HEADLINES

• Fed's Harker (voter) said the Fed should not be considering more rate increases, while he is seeing signs of a better-balanced labour market and easier wage pressures.
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GEOPOLITICS

• Israeli PM Netanyahu spoke With Russian President Putin and made it clear that Israel will not stop the Gaza operations until Hamas is destroyed, according to Reuters. It was separately reported that Russian President Putin told Israeli PM Netanyahu that Russia is ready to help end the confrontation in the region and resolve it peacefully, according to TASS
• US Secretary of State Blinken confirmed US President Biden will travel to Israel on Wednesday and will reaffirm US solidarity with Israel, while he added that Biden will make it clear that Israel has the right to defend itself and will underscore their message to any actor trying to take advantage of the crisis to attack Israel. Furthermore, Blinken said US and Israel agreed to develop a plan that will allow aid to reach Gaza civilians and noted it is critical that aid begin to flow into Gaza as soon as possible.
• White House's Kirby said US President Biden expects to hear from Israeli officials about what they need, while he added that President Biden will then travel to Amman to meet with Jordan's King Abdullah, Egyptian President El-Sisi and Palestinian Authority President Abbas.
• US Central Command head General Kurilla flew to Israel for talks with military leaders with the visit aiming to ensure Israel has what it needs to defend itself and is focused on avoiding expansion of the conflict.
• Russia's draft UN Security Council resolution on Israel and Gaza failed to receive the minimum nine votes needed, while the Russian UN envoy said the UN Security Council is hostage to Western countries and the UN vote shows who is in favour of a truce in Gaza and delivery of humanitarian aid. Furthermore, the US envoy to the UN accused Russia of giving cover to a terrorist group that brutalises civilians by not condemning Hamas in a draft resolution, according to Reuters.
• US Defense Secretary Austin has put in "be ready to deploy" orders for a select number of American troops should Israel need them, while a separate report stated that about 2,000 troops were told to prepare for deployment.
• The delay in the Israeli ground attack on Gaza is reportedly due to a growing concern that Hezbollah is waiting for the moment that most IDF forces are committed to Gaza to open a full front with the IDF in the north, according to Jerusalem Post sources.
• Russian President Putin said China's proposal for peace talks with Ukraine could become a realistic basis for a peace agreement, according to an interview with Chinese television. However, he also accused Ukraine of not allowing peace negotiations, according to DPA.
• AJA Breaking reports, citing Israeli Radio, that the "Israeli army is intensively bombing many targets in southern Lebanon after bombing the town of Metulla" & "Israeli bombing targets the road between the towns of Kafr Kila and Al-Adisa in the eastern sector of southern Lebanon"
• Iranian Supreme Leader Khamenei says if Israel's crimes continue then no one can stop "Muslims around the world and resistance forces". Gaza bombardments must stop immediately.
• Lebanese Foreign Minister says Israeli attack in south Lebanon pours "oil on fire" and threaten to ignite a front.
• Iran Guard's Deputy Chief says "another shockwave" is on the way if Israel does not end atrocities in Gaza, according to Fars News.

CRYPTO

• Israel ordered a freeze on some crypto accounts in a bid to block funding for Hamas with about 100 accounts on Binance closed after appeals for donations appeared on social media, according to FT.
• ESMA says there is no such thing as a "safe" crypto asset, crypto investors will not be protected under new rules until at least December 2024; warns firms not to circumvent bloc's new crypto rules.

APAC TRADE

• APAC stocks were mostly positive following the gains across global counterparts which unwound the recent geopolitical hedging and with President Biden to travel to the Middle East on Wednesday, although the upside was capped as risks of a widening conflict in the Middle East conflict lingered amid threats from Iran.
• ASX 200 was led by outperformance in tech and telecoms, while mining names also benefitted following Rio Tinto’s quarterly update which showed an increase in iron ore shipments despite a decline in output.
• Nikkei 225 was boosted at the open and briefly climbed above 32,000 although has since pulled back from intraday highs and proceeded to oscillate around the key aforementioned level.
• Hang Seng and Shanghai Comp. were both positive although the mainland lagged amid developer debt concerns with Country Garden on the cusp of a default as the grace period for a USD 15mln coupon payment expires today and with an Evergrande unit to seek creditor approval to extend yuan-denominated bonds.

NOTABLE ASIA-PAC HEADLINES

• RBA Minutes from the October meeting stated the board considered raising rates by 25bps or holding steady and agreed the case for holding steady was the stronger one, while members noted data on inflation, jobs and updated forecasts would be available at the November meeting. RBA Minutes stated members acknowledged upside risks to inflation were a significant concern and said progress in lowering service sector inflation was slow, while the Board had a low tolerance for a slower return of inflation to the target and it stated that further tightening may be required if inflation is more persistent than expected.
• Japan's Rengo (labour organisation) intends to ask for more than a 5% wage hike in the spring 2024 wage discussions, via NHK; is planning to ask for a "more than 3%" base wage hike in Spring 2024 wage discussions.
• PBoC has instructed state banks are to roll over local govt loans with longer term and lower rates; PBoC is to set up an emergency liquidity tool with banks; loans made via tool should be repaid in two years, according to Reuters sources. New interest rates should not be lower than China's Treasury bonds, with terms no longer than 10 years.
• BoJ reportedly mulls raising its FY23 price view closer to 3%; mulls raising FY24 price view to 2% or above; inflation outlook is said to keep FY25 around 1.6%, according to Bloomberg sources.

DATA RECAP

• New Zealand CPI QQ (Q3) 1.8% vs. Exp. 2.0% (Prev. 1.1%); YY (Q3) 5.6% vs. Exp. 5.9% (Prev. 6.0%)
• RBNZ Sectoral Factor Model Inflation Index (Q3) 5.2% (Prev. 5.8%)