• European bourses & US futures are benefitting from a continuation of the post-Fed/Powell price action
• DXY pressured to a 106.15 trough with fixed income bid and long-end yields under pressure
• USD/JPY pressured on the latest BoJ sources while the NOK is ultimately softer after the Norges Bank
• Commodities lifted given the above with specifics somewhat light thus far
• Iran warned of “harsh consequences” if a ceasefire in Gaza does not occur
• Looking ahead, highlights include US IJC, Factory Orders, BoE Policy Announcement, Speeches from BoE’s Bailey, ECB’s Lane & Schnabel. Earnings from Apple.

LOOKING AHEAD

• US IJC, Factory Orders, BoE Policy Announcement, Speeches from BoE’s Bailey, ECB’s Lane & Schnabel. Earnings from Apple.
• Click here for the Newsquawk Week Ahead.
• Clock Change: UK Clocks switched to GMT from BST on 29th October, as such the London-New York time gap is four hours which will last for one week, until US clocks change on November 5th.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +1.6%, in a continuation of the post-Powell/Fed trade.
• Sectors are all in the green with Real Estate, Tech & Construction benefitting from yields while Travel & Leisure lifts after strong Lufthansa comments. Elsewhere, Delivery names benefit from the main takeaway of DoorDash's numbers.
• Stateside, futures reside in the green but with action slightly more contained than Europe as the region has already had a chance to react to the Fed, ES +0.4%; NQ +0.7% continues its outperformance amid ongoing yield action ahead of Apple earnings after-hours.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
• Click here for more details.

FX

• DXY continues to drift amidst peak Fed rate perceptions with the index towards the base of a 106.490-150 range.
• Antipodes extract most from their US rival's demise and buoyant risk appetite as Kiwi probes 0.5900 and Aussie approaches 0.6450.
• Euro, Franc and Yen all up at Dollar's expense, with EUR/USD back on a 1.0600 handle, USD/CHF straddling 0.9050 and USD/JPY closer to 150.00 than 151.00.
• Pound mixed awaiting BoE as Cable eyes 1.2200 and EUR/GBP rebounds through 0.8700.
• PBoC set USD/CNY mid-point at 7.1797 vs exp. 7.3055 (prev. 7.1778)
• Norwegian Key Policy Rate N/A 4.25% vs. Exp. 4.25% (Prev. 4.25%); "the policy rate will likely be raised in December". "If the Committee becomes more assured that underlying inflation is on the decline, the policy rate may be kept on hold”. Click here for more detail, reaction & analysis.
• Brazil Central Bank cut the Selic rate by 50bps to 12.25%, as expected, while committee members unanimously anticipate similar reductions in the next meetings. BCB added that this pace is appropriate to keep the necessary contractionary monetary policy for the disinflationary process and noted the external environment is adverse due to higher long-term interest rates in the US.
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bonds continue to bull-flatten as markets pre-empt policy pivots from tightening to easing.
• Bunds, Gilts and T-notes are all closer to peaks than troughs within 130.06-129.48, 94.35-93.44 and 107-13+/02+ respective ranges.
• OATs and Bonos firmly underpinned following well-received French and Spanish auctions.
• Click here for more details.

COMMODITIES

• Crude benchmarks are in the green with XAU and base metals also firmer in a continuation of post-Fed/Powell price action.
• WTI Dec’23 and Brent Jan’24 are posting gains of circa. USD 1.50/bbl on the session and reside around the USD 82.00/bbl and USD 86.00/bbl remarks. However, this remains well within Wednesday’s bounds and by extension some way shy of the USD 83.40/bbl and USD 87.00/bbl peaks for that session.
• Spot gold is benefitting from the aforementioned post-Powell trade as the USD and yields continue to slip. However, upside for the yellow metal is capped as the overall risk tone remains very constructive ahead of additional Tier 1.
• Base metals generally benefit from the risk tone with specifics light once again though Dalian Iron Ore continues to outpace in a move attributed to demand, low inventories and improved Chinese sentiment around stimulus.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK housebuilding in Q3 was the weakest since the start of the pandemic, according to surveyors cited by FT.
• ECB's Knot says a restrictive policy will likely be needed for some time; the current policy is "good altitude cruising".

EUROPEAN DATA

• German Unemployment Change SA (Oct) 30.0k vs. Exp. 15.0k (Prev. 10.0k); Rate SA (Oct) 5.8% vs. Exp. 5.8% (Prev. 5.7%)
• German Unemployment Total NSA (Oct) 2.607M vs. Exp. 2.59M (Prev. 2.627M)
• EU HCOB Manufacturing Final PMI (Oct) 43.1 vs. Exp. 43 (Prev. 43); German HCOB Manufacturing PMI (Oct) 40.8 vs. Exp. 40.7 (Prev. 40.7)

NOTABLE US HEADLINES

• US Senate passed three appropriation bills laying out funding plans for agriculture, military and veterans affairs and transportation for the fiscal year ending 30th September 2024.

GEOPOLITICS

ISRAEL-HAMAS

• Lebanon's Hezbollah said it destroyed an Israeli drone with a surface-to-air missile in the airspace of two border villages, according to Reuters.
• Iran's Foreign Minister warned of 'harsh consequences' if an immediate ceasefire in Gaza doesn't take place and "rapid attacks by US and the Zionist Regime continue", according to Reuters.

OTHER

• US military said a US destroyer and Canadian frigate transited through the Taiwan Strait yesterday, while the Chinese military said it followed the bilateral naval transit of the US and Canada in the Taiwan Strait, according to Reuters.
• China's Foreign Ministry says next week China and the US will hold director-general level consultations on arms control and non-proliferation, a delegation to be led by a senior official from the Foreign Ministry. In response to and confirmation of an earlier WSJ article

CRYPTO

• Bitcoin is in little changed on the session after once again eclipsing the USD 35k mark in Wednesday's session; since, BTC has experienced relatively steady trade and holding around the USD 35.4k mark towards the mid-point of its USD 35.09-35.962 parameters as it failed to breach the USD 36k mark in APAC trade.

APAC TRADE

• APAC stocks mostly followed suit to the gains on Wall St where the major indices were lifted by soft data releases and after Fed Chair Powell’s post-FOMC press conference spurred a dovish reaction as he poured cold water over the September dot plots which had pointed to one more hike by year-end.
• ASX 200 was higher with gains led by notable outperformance in tech and real estate amid a drop in yields.
• Nikkei 225 briefly climbed above 32,000 with the biggest movers driven by earnings and automaker updates.
• Hang Seng and Shanghai Comp were mixed with the Hong Kong benchmark boosted by a surge in tech and strength in property, while the mainland lagged after another substantial PBoC liquidity drain.

NOTABLE HEADLINES

• BoJ Governor Ueda will stick to a pattern established, to move gradually toward an exit while maintaining the dovish rhetoric of his predecessor, via Reuters citing sources familiar with the BoJ's thinking. Given the uncertainty on the economic outlook, the BoJ will probably want to wait until at least Spring 2024 to normalise policy. If so, it makes sense to keep guidance dovish. Gradualism, if possible, is the preference. Next focus is ending NIRP and pushing short-term rates to 0 from the current -0.1%; the timing for a move is likely around Spring, when there will be clarity on annual wage negotiations. Do not want to get markets too excited about the likelihood of an early lift-off, given the numerous hurdles to clear. The most likely scenario of an exit, given the cost of a spike in market rates is seen as too high, would be to end YCC and negative rates but to give a loose pledge to intervene if bond yields rise abruptly.
• Japan's PM Kishida says he will prod firms to attain wage hikes next year that surpass those this year; a robust economy is the foundation of all key policies.
• China's regulators reportedly probe liquidity stress that sent rates to 50%, via Reuters citing source; asking institutions why they borrowed at very elevated rates.

DATA RECAP

• South Korean CPI MM (Oct) 0.3% vs. Exp. 0.2% (Prev. 0.6%); YY (Oct) 3.8% vs. Exp. 3.6% (Prev. 3.7%)
• Australian Trade Balance (AUD)(Sep) 6.8B vs. Exp. 9.4B (Prev. 9.64B)
• Australian Exports MM (Sep) -1.4% (Prev. 4.0%); Imports MM (Sep) 7.5% (Prev. 0.0%)