• European bourses and US futures in the green ahead of a packed week of Tier 1 events
• DXY slips with AUD outperforming post-data while EUR & JPY are conscious of OpEx
• Debt fades from initial highs with Gilts and USTs now in the red but Bunds still just firmer post-data
• Crude & XAU a touch softer as geopolitical risk premium unwinds slightly from Friday
• Looking ahead, highlights include German Prelim CPI, Japanese Unemployment & Retail Sales, Speech from ECB’s de Guindos, US Treasury Financing estimates Earnings from McDonald's & Lowes.

EUROPEAN TRADE

EQUITIES

• European bourses, Euro Stoxx 50 +0.7%, began the week on the front foot after a mixed APAC handover. Focus since has been on the geopolitical front and data, with reports of tanks around Gaza City briefly halting sentiment for the region.
• Sectors are all in the green with no overarching bias, Energy and Banks lagged initially given benchmarks and an update from JPM on the European sector respectively.
• Stateside, futures are in the green ES +0.6% ahead of the latest Treasury Estimates before Wednesday's refunding announcement. As it stands, the NQ is experiencing some modest outperformance and perhaps aided by the modest EGB bid on data.
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FX

• Dollar drifts ahead of busy agenda into month end and early November as DXY straddles 106.50 within a 106.71-42 range.
• Aussie outperforms after much stronger than expected final retail sales add to rationale for RBA rate hike.
• AUD/USD solid around 0.6350 and AUD/NZD elevated mostly above 1.0900.
• Yen and Euro conscious of decent option expiries nearby as USD/JPY pivots 149.50 on the eve of BoJ and EUR/USD grinds higher between 1.0548-86 parameters.
• PBoC set USD/CNY mid-point at 7.1781 vs exp. 7.3165 (prev. 7.1782)
• Eskom's CEO Cassim said they must delay plans to wind down its ageing coal power plants in order to reduce the number of blackouts, according to the FT.
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FIXED INCOME

• Debt futures fade to varying degrees after extending recovery rally in early EU trade.
• Bunds and EGB peers still firm as latter holds within 128.68-129.43 range.
• Gilts retreat below par between 93.30-92.75 parameters and T-note closer to 106-05+ bottom than 106-14+ top.
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COMMODITIES

• WTI and Brent futures are softer intraday amid an unwinding of the geopolitical risk premium that baked in on Friday, as the weekend lacked any major regional escalation.
• Crude markets remain heavy with WTI Dec around USD 84/bbl (in a USD 83.71-85.30/bbl range), while Brent Jan trades under USD 88/bbl (in a USD 87.51-88.94/bbl parameter).
• Spot gold has, in a similar way to crude, been unwinding some geopolitical risk premium with prices back under the USD 2,000/oz mark from a USD 2,006/oz intraday high, and still within Friday’s USD 2,009.56-1,976.92/oz range; base metals are higher across the board following a pick-up in sentiment after the European cash open.
• Saudi Arabia may refrain from raising its flagship oil price for Asian customers for the first time in six months as refinery margins weaken across the region which undercuts demand for physical cargoes, according to Bloomberg.
• The EU and UK are seeking a ban on subsidies for fossil fuel projects, according to FT.
• Russia’s Medvedev said Europe’s energy cooperation with Russia has been ruined or frozen for a very long time and that hard times have come for the EU, while he added that the EU can no longer act on its own and that energy cooperation with the EU is pointless, according to Reuters.
• Chevron (CVX) Australia spokesperson said proposed enterprise agreements for frontline field operations employees at Gorgon and Wheatstone gas facilities were backed by a majority of employees in a vote.
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NOTABLE EUROPEAN HEADLINES

• ECB’s Vujcic said the ECB is finished with rate hikes for now and that a bigger part of hikes have already been transmitted to households and businesses, while he added that 2% inflation is attainable by 2025 and that they held rates as they have hiked adequately, according to an interview with Croatian state broadcaster HRT1.
• ECB's Kazimir says it is too soon to declare victory and say the job is done; additional tightening could arise if data forces the ECB; bets on rate cuts happening already in H1-2024 are entirely misplaced. December forecasts are one of the milestones, March is the next - only then will the ECB be able to say the tightening cycle is completed and move on to the monitoring phase.
• ECB's Simkus, when asked about December, reiterates that unless especially surprising data comes up, current levels of restriction is sufficient.
• SNB: As of 1 December 2023, will lower the threshold factor for the remuneration of sight deposits of account holders subject to minimum reserve requirements from 28 to 25. The changes have no impact on the current monetary policy stance. Thus, the entire minimum reserve requirement will now no longer be remunerated, irrespective of whether it is met using cash or sight deposits.
• Fitch affirmed France at AA; Outlook Stable and affirmed Sweden at AAA; Outlook Stable, while it affirmed Bulgaria at BBB; Outlook Stable.

EUROPEAN DATA

• Spanish HICP Flash YY (Oct) 3.5% vs. Exp. 3.7% (Prev. 3.3%); MM (Oct) 0.3% vs. Exp. 0.4% (Prev. 0.6%); YY Flash NSA (Oct) 3.5% (Prev. 3.5%); Core 5.2% (prev. 5.8%)
• German GDP Flash QQ SA (Q3) -0.1% vs. Exp. -0.3%; YY SA (Q3) -0.3% vs. Exp. -0.7% (Prev. -0.2%)
• German North Rhine-Westphalia State CPI YY (Oct) 3.1% (Prev. 4.2%); MM (Oct) -0.1% (Prev. 0.2%)
• EU Selling Price Expectations (Oct) 3.6 (Prev. 3.6, Rev. 3.4); Cons Inflation Expectations (Oct) 11.4 (Prev. 12.0)
• UK Mortgage Approvals (Sep) 43.328k vs. Exp. 45.0k (Prev. 45.354k, Rev. 45.447k); Lending (Sep) -0.94B GB (Prev. 1.218B GB, Rev. 1.116B GB)

NOTABLE US HEADLINES

• Former US Vice President Pence is suspending his presidential campaign, according to Politico.
• Stellantis (STLA) announced a tentative labour deal was reached with the UAW, although Canada's Unifor said strike action will commence at all Stellantis facilities in Canada. It was separately reported that UAW’s tentative agreement with Ford (F) includes a USD 5,000 ratification bonus, a USD 1,500 voucher towards a vehicle purchase and all new temporary employees will be converted to in-progress employees after 9 months. Conversely, UAW broadened its strike against GM (GM) with a walkout at the Spring Hill, Tennessee plant.

GEOPOLITICS

SINCE 07:00GMT/03:00ET

• Israeli tanks on the outskirts of Gaza City block the road between the north and south of the Strip, according to Sky News Arabia citing AFP; Israeli tanks are now stationed in the central Gaza Strip, according to Al Arabiya.
• "Israeli artillery shelling on the western sector of southern Lebanon and throwing phosphorous shells", according to Sky News Arabia citing its correspondent; Israeli artillery shells Wadi Shebaa with phosphorus shells, according Ashaq News.
• Israel's Military spokesperson says we are gradually moving ahead according to plan, forces deployed across the northern border and prepared for any scenario.

ISRAEL-GAZA

• Israeli PM Netanyahu said the ongoing ground operation in Gaza is the second stage of the war and said the war inside the Gaza Strip will be difficult and long, while he added that contacts to secure the hostage release are continuing even during the ground operation.
• Israeli Defence Minister Gallant said the army is inflicting heavy blows on Hamas and they have no interest in expanding the war but are prepared on all fronts.
• Israel conducted a strike on a military base in the western Daraa countryside in Syria where Iranian militias are stationed Furthermore, IDF carried out airstrikes against Hezbollah positions in southern Lebanon in response to the rocket and missile fire on northern Israel.
• US Marine rapid response force is moving towards the eastern Mediterranean, according to officials cited by CNN amid concerns the war in Gaza is broadening into a regional conflict.
• US President Biden spoke with Egyptian President El-Sisi and briefed him on US efforts to ensure that regional actors do not expand the conflict in Gaza, while the leaders committed to the significant acceleration and increase of assistance flowing into Gaza. It was separately reported that President Biden said the US is ready to take further action following attacks by Iran-linked groups against US forces in Iraq and Syria, according to Reuters.
• White House’s National Security Adviser Sullivan said it is unacceptable to have extremist settler violence against innocent people in the West Bank and that the US believes Israeli PM Netanyahu has the responsibility to rein in extremist settlers in the West Bank.
• UK PM Sunak and French President Macron discussed in a call the importance of getting urgent humanitarian support into Gaza and expressed their shared concern at the risk of escalation in the wider region, in particular in the West Bank.
• French Foreign Ministry said France strongly condemns attacks by settlers that have led to the deaths of several Palestinian civilians over the past few days in the West Bank, while it called on Israeli authorities to take immediate measures to protect the Palestinian population.
• UAE asked the UN Security Council to meet as soon as possible following Israel’s expanded ground operation in Gaza and condemned the ground operation, according to Reuters.
• Jordan's army said the kingdom asked the US to deploy Patriot air defence systems to help bolster border defences, according to Reuters.
• Turkish President Erdogan told a pro-Palestinian rally in Istanbul that Hamas is not a terrorist organisation and that Israel is the occupier, while he added that they will tell the whole world that Israel is a war criminal and are making preparations for this.
• Russia's aviation authority said Dagestan’s main airport will be closed until November 6th after it was stormed by a mob in protest against a plane carrying Israelis.

OTHER

• Russian Defence Minister Shoigu called the Russia-China relations model exemplary and said the West has openly set a course to inflict strategic defeat on Russia in a hybrid war unleashed against Moscow. Furthermore, Shoigu said the West, having provoked the crisis in Europe, is seeking to potentially expand the conflict to the Asia-Pacific region, while he added Moscow revoking the nuclear test ban treaty does not mean the destruction of military strategic balance, according to Reuters.

CRYPTO

• Bitcoin is firmer on the session but remains shy of the USD 35k mark and last week's highs by extension. Action which occurs as broader market moves have slowed down somewhat going into a blockbuster week of events.

APAC TRADE

• APAC stocks ultimately traded mixed but with the major indices mostly in the red as geopolitics continued to dominate headlines ahead of month-end and this week’s slew of upcoming risk events.
• ASX 200 was led lower by underperformance in energy and the top-weighted financial sector although the index moved off intraday lows as participants also digested stronger-than-expected Australian Retail Sales data.
• Nikkei 225 suffered as yields edged higher and the BoJ kick-started its 'live' 2-day policy meeting.
• Hang Seng and Shanghai Comp were both initially lower with financials pressured after mixed earnings from some of the large banks including China’s biggest commercial lender ICBC which posted flat profit for Q3, while there was turbulence in Evergrande shares owing to a wind-up hearing which was adjourned to December 4th. Nonetheless, the declines were stemmed in the mainland amid hopes of improving US-China ties after US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November.

NOTABLE ASIA-PAC HEADLINES

• US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November in San Francisco. Furthermore, Wang Yi said both sides hope Sino-US relations will stabilise as soon as possible, while he added that the road to San Francisco will not be smooth and is not on autopilot.
• Japanese Trade Minister Nishimura said G7 agreed to build reliable supply chains for critical minerals and chips to reduce dependency on a particular country.
• China's Embassy in Japan said G7 members undermine the level playing field and disrupt the security and stability of global production and supply chain, which followed calls by the G7 for a repeal of Japanese food bans.
• Japan keeps overall view on economy for October, saying it is recovering moderately; Japan warns middle east situation could affect economy via energy cost.

DATA RECAP

• Australian Retail Sales MM (Sep F) 0.9% vs. Exp. 0.3% (Prev. 0.2%, Rev. 0.3%)