• BoJ maintained NIRP and the 10yr JGB yield target at 0% but widened the reference range to 100bps up or down from target
• European bourses & US futures in the green, with Europe unreactive to CPI & GDP data
• Action which followed mixed APAC trade given numerous data release incl. disappointing Chinese PMIs
• USD/JPY to 150.76 peak, DXY below 106.0 with EUR bid while Antipodeans diverge
• Fixed benchmarks underpinned into month-end and largely unreactive to EZ data
• Looking ahead, highlights include US Employment Costs & Consumer Confidence, Speech from ECB’s de Guindos & Nagel. Earnings from Pfizer, SYSCO, AMD & Yum China.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +0.8%, following a mixed APAC handover and solid US lead with the region unreactive to the latest CPI & GDP metrics.
• APAC trade was mixed on account of numerous data points including soft Chinese official PMIs.
• Sectors are mostly firmer though Energy lagging given benchmark pricing and a poorly received update from BP while Healthcare slips after a disappointing drug update from Roche. At the other end of the spectrum, Chemical names outperform given cost-cutting measures from BASF.
• Stateside, futures are modestly firmer and have been moving directionally with European peers ahead of US data and a handful of earnings, ES +0.3%.
• Caterpillar Inc (CAT) Q3 2023 (USD): EPS 5.52 (exp. 4.79), Revenue 16.8bln (exp. 16.59bln), Financial Rev 822mln (exp 766mln), Adj. Operating Income 3.50bln (exp 3.09bln).
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FX

• Hawkish sources set Yen up for steep fall as BoJ sticks to dovish guidance after fixing flexible YCT ceiling at 1%, USD/JPY rebounds from 149.03 to 150.75 alongside Yen crosses.
• Euro boosted by breach of 160.00 in EUR/JPY as EUR/USD reclaims 1.0600+ status and and leans on the DXY, Dollar index retreats from 106.45 to 105.89
• Kiwi encouraged by upbeat ANZ business survey, with NZD/USD probing 0.5850 and AUD/USD cross reversing through 1.0900.
• Aussie hampered with Yuan after disappointing Chinese PMIs, AUD/USD capped around 0.6350, USD/CNY above 7.3100 and USD/CNH over 7.3300.
• PBoC set USD/CNY mid-point at 7.1779 vs exp. 7.3024 (prev. 7.1781)
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FIXED INCOME

• Bonds firmly underpinned approaching month end.
• Gilts and T-note pick up the baton from EGBs to hover towards upper end of respective 93.51-09 and 106-19/02 ranges.
• Bunds off best levels between 129.33-128.65 parameters and BTPs regroup within 110.70-15 bounds in relief post-Italian month end supply.
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COMMODITIES

• Crude futures consolidated overnight after settling lower by USD 3.23/bbl and USD 2.85/bbl respectively on Monday, paring all of Friday’s gains and more after an unwind of some of the geopolitical risk.
• Currently, WTI Dec resides just under USD 83/bbl (in a USD 82.29-83.17/bbl range) while Brent Jan trades around USD 87/bbl (in a USD 86.30-87.22/bbl parameter).
• Spot gold is flat after seeing a similar unwinding of geopolitical premia while base metals are mixed but with modest gains given the risk tone; Dalian** iron ore** bid on Chinese optimism and as the likes of ING highlight potential strike action in Australia.
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NOTABLE EUROPEAN HEADLINES

• UK insolvency service Q3 insolvencies in England and Wales total 6208; after seasonal adjustment, the number of company insolvencies in Q3'23 was 2% lower than in Q2'23, but 10% higher than Q3'22.
• ECB's Visco says ECB needs to be cautious in coming months after hiking rates so much and so quickly; EZ inflation is falling as expected and demand seen further contained in coming months due to delayed impact of rate hikes. A reason for recent rises in Italian bond spreads is probably that investors doubt Italy's economic growth potential and control of public finances. Fears of a wage-spiral in EZ and unanchored inflation expectations have sharply diminished.

EUROPEAN DATA

• UK BRC Shop Price Index YY (Oct) 5.2% (Prev. 6.2%)
• German Import Prices MM (Sep) 1.6% vs. Exp. 0.7% (Prev. 0.4%); YY (Sep) -14.3% vs. Exp. -15.3% (Prev. -16.4%)
• German Retail Sales MM Real (Sep) -0.8% vs. Exp. 0.5% (Prev. -1.2%); YY Real (Sep) -4.3% vs. Exp. -4.0% (Prev. -2.3%)
• French CPI Prelim YY NSA (Oct) 4.0% vs. Exp. 4.0% (Prev. 4.90%); MM NSA (Oct) 0.1% vs. Exp. 0.2% (Prev. -0.50%)
• French CPI (EU Norm) Prelim YY (Oct) 4.5% vs. Exp. 4.5% (Prev. 5.7%)
• EU HICP Flash YY (Oct) 2.9% vs. Exp. 3.1% (Prev. 4.3%); X F&E Flash YY (Oct) 5.0% vs. Exp. 5.1% (Prev. 5.5%); X F,E,A&T Flash YY (Oct) 4.20% vs. Exp. 4.20% (Prev. 4.50%)
• EU GDP Flash Prelim QQ (Q3) -0.1% (Prev. 0.1%); YY (Q3) 0.1% vs. Exp. 0.2% (Prev. 0.5%)

NOTABLE US HEADLINES

• Apple (AAPL) announced a new family of chips with the M3, M3 Pro and M3 Max, while the chips will use 3-nanometer technology and it also introduced the new MacBook Pro which will have up to 22 hours of battery life. Furthermore, the M3 Max and M3 Pro MacBook models will come in a new colour called Space Black with prices of the 14-inch MacBook Pro models beginning at USD 1,599 and the 16-inch MacBook Pro models beginning at USD 2,499.

GEOPOLITICS

• White House National Security Adviser Sullivan met with the Saudi Defence Minister and confirmed President Biden's commitment to support the defence of US partners against threats from state and non-state actors including those backed by Iran.
• Drone intercepted over the Red Sea reportedly launched from Yemen, according to Walla News' Elster; "drone launched by Yemen's Houthi rebels have been intercepted by the IDF over the Red Sea", according to Faytuks News.
• Yemeni Houthis claim launch of drone towards Israel, according to Sky News Arabia citing AFP.

CRYPTO

• Bitcoin is modestly softer on the session with action contained and very much rangebound thus far as we await key US catalysts including the ECI before the week's main Tier 1 events begin from a US perspective. Currently, holding around the USD 34.5k mark within 34.057-34.634k parameters.

APAC TRADE

• APAC stocks traded mixed amid a deluge of data releases at month-end including disappointing Chinese official PMIs, while participants also digested a slew of earnings releases and the conclusion of the BoJ’s live meeting.
• ASX 200 finished flat as strength in real estate, financials and the consumer sectors was offset by underperformance in mining stocks and after the weak factory activity data from Australia’s largest trading partner.
• Nikkei 225 was initially choppy after Industrial Production and Retail Sales missed estimates although the index was later supported following the BoJ policy announcement in which the central bank announced a less aggressive than anticipated tweak to YCC.
• Hang Seng and Shanghai Comp were pressured following disappointing PMI data which showed China’s factory activity returned into contractionary territory for October, while there were also plenty of earnings releases including from the likes of Bank of China, BYD and PetroChina.

BOJ

• BoJ maintained NIRP at -0.10% and the 10yr JGB yield target at 0% but widened the reference range to 100bps up or down from the target from 50bps and made YCC more flexible with the decision on YCC made by 8-1 vote in which board member Nakamura dissented. BoJ said it will regard the upper bound of 1% for the 10yr JGB yield as a reference in market operations and will guide market operations nimbly, while it will flexibly increase JGB buying, fixed-rate operations and collateral fund-supplying operations. Furthermore, it will determine the offer rate for fixed-rate JGB buying operations each time by taking into account market rates and other factors.
• BoJ Governor Ueda says will patiently continue monetary easing with decided new measures; Will not hesitate to take additional easing measures if necessary; Getting gradually closer to achieving price target. Closely working with government and monitoring the situation on FX.** FX could affect policy if it impacts price outlook. Next spring's wage talks will be an important factor**. Click here for more detail.
• Japanese PM Kishida says excessive FX moves are not desirable; weak JPY has various reasons including yield differentials.

NOTABLE ASIA-PAC HEADLINES

• China's Foreign Minister Wang met with the French Foreign Affairs Adviser to the President and the sides had friendly, in-depth exchanges regarding China-France and China-EU relations, as well as international and regional issues. Furthermore, Wang said he hopes the EU will adopt a more pragmatic and rational attitude in cooperation with China and avoid external interference, ensure mutual openness and promote stable bilateral relations.
• US is to send its strongest-ever delegation to the China import expo amid improving relations, according to SCMP.
• China interbank overnight repo rate rate jumps to as high as 50%, via official data.

DATA RECAP

• Chinese NBS Manufacturing PMI (Oct) 49.5 vs. Exp. 50.2 (Prev. 50.2); Non-Manufacturing PMI (Oct) 50.6 vs. Exp. 51.8 (Prev. 51.7)
• Chinese Composite PMI (Oct) 50.7 (Prev. 52.0)
• Japanese Industrial Production MM (Sep P) 0.2% vs. Exp. 2.5% (Prev. -0.7%)
• Japanese Retail Sales YY (Sep) 5.8% vs. Exp. 5.9% (Prev. 7.0%)
• Japanese Unemployment Rate (Sep) 2.6% vs. Exp. 2.6% (Prev. 2.7%)
• New Zealand ANZ Business Confidence (Oct) 23.4 (Prev. 1.5); Activity Outlook (Oct) 23.1 (Prev. 10.9)