• European bourses are following the APAC handover and reside well into the red, US futures lower but nearer unch.
• USD struggling for direction in somewhat narrow parameters as USD/JPY probes 150.00 while GBP slips post-data/BoE speak
• Crude and precious metals firmer with geopolitics continuing to drive action while base metals dip post-APAC trade
• Bunds and USTs remain firmer with long-end yields pulling back a touch
• Looking ahead, the highlights are ratings which include Moody's on France & UK, S&P on UK, Italy, Greece & Netherlands, Fed's Harker & Mester, Earnings from Kering, Schlumberger & American Express.

EUROPEAN TRADE

EQUITIES

• European bourses are in the red, Euro Stoxx 50 -1.0%, in a continuation of APAC pressure with fresh catalysts comparably light and the region on track for a week of marked downside.
• Sectors feature pressure in Basic Resources closely followed by Travel/Leisure given IHG after earnings, while Healthcare is bucking the trend given its defensive status and after pronounced losses on Thursday following Roche.
• Stateside, futures reside in the red but are yet to deviate significantly from the unchanged mark, ES -0.3%, and holding just below the 4300 figure post-Powell and ahead of Fed's Harker & Mester alongside a handful of pre-market earnings.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• Buck betwixt and between as USTs bull-flatten amidst heightened geopolitical risk heading into the weekend, DXY underpinned within a 106.170-420 range.
• Loonie firmer pre-Canadian retail sales in contrast to Pound-post weak UK consumption data, consumer sentiment and dovish BoE commentary, USD/CAD and Cable towards base of 1.3683-1.3734 and 1.2093-1.2145 respective parameters.
• Euro firm vs Dollar and flanked by decent option expiry interest either side of 1.0565-95 band.
• Yen on the brink of 150.00 against the Greenback after dovish BoJ rhetoric and relying on barriers, export offers and expiries to keep afloat.
• Aussie and Kiwi hang on 0.6300 and 0.5800 handles vs US peer in face of rising Middle East conflict tension.
• PBoC set USD/CNY mid-point at 7.1793 vs exp. 7.3055 (prev. 7.1795).
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FIXED INCOME

• Debt futures decouple and diverge in volatile pre-weekend trade.
• Bunds hold just above par within 127.90-52 bounds, Gilts reverse from 91.90 to 91.28 and into negative territory awaiting UK rating reviews and T-note firm between 105-28/135 parameters ahead of Fed's Harker and Mester.
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COMMODITIES

• Crude futures are on a firmer footing in a continuation of the geopolitically induced gains seen after the benchmarks settled higher by USD 1.10/bbl and USD 0.88/bbl respectively.
• Currently, WTI Dec'23 hovers around USD 85.50/bbl (in a USD 88.88-89.60/bbl range) and Brent edges towards USD 93.50/bbl (in a USD 92.78-93.46/bbl range.)
• Spot gold/silver remain firmer going into a weekend with geopolitical tensions/risk high, XAU at highs of USD 1985/oz. Conversely, the downbeat risk tone and poor APAC performance have dented base metals with LME Copper near lows just above USD 7.9k/T.
• US and EU reportedly stalled on a steel accord although both sides are seeking a deal to avoid the return of Trump-era levies, according to Bloomberg.
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EUROPEAN HEADLINES

• UK PM Sunak's Conservatives lost the by-elections in Tamworth and Mid-Bedfordshire to the Labour Party where the Conservatives previously had a large majority.
• BoE's Bailey expected a "marked fall" in inflation next month, via Belfast Telegraph; September inflation figures were not far from what the BoE had expected. Core inflation fell slightly from what we had expected, this is "quite encouraging", pay growth as measured is still well above anything consistent with the inflation target.
• Riksbank sold USD 1.34bln (between October 6-13th) vs. prev. 390mln, sold EUR 80mln vs. prev. EUR 0 in its currency FX reserve hedging.

EUROPEAN DATA RECAP

• UK GfK Consumer Confidence (Oct) -30.0 vs. Exp. -20.0 (Prev. -21.0)
• UK Retail Sales MM (Sep) -0.9% vs. Exp. -0.2% (Prev. 0.4%); YY (Sep) -1.0% vs. Exp. -0.1% (Prev. -1.4%, Rev. -1.3%)

NOTABLE US HEADLINES

• Fed's Logan (voter) has seen welcome progress on inflation but it is still too high and she is not yet convinced they are moving to 2% inflation, while she added the economy continues to outperform and labour markets are still tight. Logan said it is important to have restrictive financial conditions broadly speaking and the Fed has time to watch the economy and markets before deciding on monetary policy. Furthermore, she said some part of the bond yield rise is tied to term premiums and some part of the rise is also tied to the strength of economic data, as well as noted that the persistent rise in bond yields could mitigate the need for Fed rate hikes.
• Fed's Bostic (non--voter) said cooling inflation remains the Fed's main mission, while he added they have not seen a wage-price spiral take place and that wages are a lagging indicator in the current economy. Furthermore, he believes the Fed can control inflation without causing large damage to the job market.
• US House is to vote again on GOP Rep. Jordan's speaker bid at 10:00EST on Friday, according to a Jordan staffer.

GEOPOLITICS

• US President Biden said they are facing an inflection point in history and the US is pursuing every avenue to bring hostages home, while he added the assault on Israel echoes the brutality inflicted on Ukraine and that Hamas and Putin share a want to annihilate neighbouring democracies. Furthermore, Biden said making sure Israel and Ukraine succeed is vital for US national security and they will continue to hold Iran accountable, while he confirmed he is sending an urgent budget request to Congress today.
• US President Biden's supplemental spending request to Congress will include USD 60bln for Ukraine, USD 14bln for Israel, USD 10bln for humanitarian aid, USD 14bln for border security and USD 7bln for the Indo-Pacific, according to sources cited by Reuters.
• EU Commission President von der Leyen said 93% of Hamas's equipment comes from Iran and it is important to step up sanctions on Iran and crackdown on evasion, while she added that Western sanctions on Russia are crippling the economy but ongoing pressure is necessary.
• China's Middle East envoy met with the Russian President's Special Representative for Middle East and African Countries on Thursday and said China is saddened by the large number of civilian casualties from the Israeli-Palestinian conflict. China's envoy added that China and Russia share the same position on the Palestinian issue and China is ready to maintain communication and coordination with Russia in order to cool down the situation.
• North Korean leader Kim met with Russian Foreign Minister Lavrov and expressed resolve to fulfil commitments made at the summit with Russian President Putin, while they discussed expanding cooperation to actively respond to regional and global issues. It was also reported that North Korea said it has already enacted action plans to be triggered when signs of an imminent nuclear attack are detected, according to KCNA.

CRYPTO

• Bitcoin convincingly broke above the USD 29k mark and has continued to climb to within relative proximity of the USD 30k handle, though the move has currently stalled/paused for breath around the USD 29.85k current session high. Action which takes BTC to a fresh WTD peak and to levels not seen since early August.
• Coinbase's (COIN) legal officer Grewal said he is confident that the US SEC will approve a US Bitcoin ETF, via CNBC; adding, it is likely the approval will be "soon".

APAC TRADE

• APAC stocks mostly declined after the losses on Wall St where the curve steepened as markets digested various comments from Fed Chair Powell and with sentiment pressured by the escalating geopolitical situation.
• ASX 200 was dragged lower with broad weakness seen across all sectors aside from energy which is kept afloat by the geopolitical risk premium uplift in oil prices.
• Nikkei 225 retreated at the open but then gradually pared its losses amid reports of potential temporary income tax cuts and with participants also digesting the latest Japanese CPI data which printed mostly firmer than expected but softened from the previous month’s pace.
• Hang Seng and Shanghai Comp. were subdued albeit with the downside cushioned after the PBoC’s actions in which it unsurprisingly maintained its benchmark lending rates but boosted liquidity in the interbank market with its largest-ever open market operation net daily injection.

NOTABLE ASIA-PAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Oct) 3.45% vs. Exp. 3.45% (Prev. 3.45%)
• PBoC 5-Year Loan Prime Rate (Oct) 4.20% vs. Exp. 4.20% (Prev. 4.20%)
• PBoC injected CNY 828bln via 7-day reverse repos with the rate kept at 1.80% for a CNY 733bln net daily injection.
• BoJ Financial Stability Report: Financial system has been maintaining stability on the whole; Japanese banks have sufficient capital bases even amid global tightening of financial conditions; vigilance against tail risks continues to be warranted.
• BoJ's Ueda says the economy is recovering moderately, exports and output are moving sideways. Aim at stably and sustainably achieving 2% inflation target, by patiently maintaining current easy policy. Inflation likely to narrow the pace of its rise, then re-accelerate, reflecting changes in corporate wages and price-setting behaviour. Uncertainty surrounding the domestic economy is very high. Need to manage interest rate risk increasing, given very high uncertainty on the domestic economic/price outlook.

DATA RECAP

• Japanese National CPI YY (Sep) 3.0% vs. Exp. 3.0% (Prev. 3.2%); Ex. Fresh Food YY (Sep) 2.8% vs. Exp. 2.7% (Prev. 3.1%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Sep) 4.2% vs. Exp. 4.1% (Prev. 4.3%)
• New Zealand Trade Balance (NZD)(Sep) -2329.0M (Prev. -2291.0M, Rev. -2273M)
• New Zealand Exports (NZD)(Sep) 4.87B (Prev. 4.99B, Rev. 4.97B); Imports (NZD)(Sep) 7.2B (Prev. 7.28B, Rev. 7.24B)