• APAC stocks traded higher across the board following the post-NFP tailwinds from Wall Street on Friday; South Korea outperformed after a stock short-selling ban.
• DXY had a softer bias throughout the session, while G10s were largely flat; UST and Bund futures were subdued and JGB futures gapped higher.
• European equity futures are indicative of a flat open, with the Euro Stoxx 50 future -0.1% after cash markets closed +0.2% on Friday.
• Israeli PM Netanyahu said there will be no ceasefire until hostages are returned, according to Reuters.
• Looking ahead, highlights include German Industrial Orders, EZ & UK Final Services and Composite PMIs, EZ Sentix Index, Canadian PMI, FOMC Senior Loan Officer Opinion Survey & BoC Market Participants Survey, Speech from BoE's Pill.
• US clocks moved back an hour on Sunday to EST, as such the London-New York time gap is back to five hours. 

US TRADE

EQUITIES

• US stocks rallied on Friday after the below-forecast US jobs report pointed to a slowing US economy, reducing Fed tightening expectations. There was particular outperformance in the Russell 2k small-cap index vs the SPX and NDX.
• SPX +0.94% at 4,358, NDX +1.21% at 15,099, DJI +0.66% at 34,061, RUT +2.71% at 1,760.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (2024 voter) said the jobs report didn't vindicate the view that the Fed does not have to hike rates again and he is pleased with the jobs number and consistent with the outlook, according to a Bloomberg interview. He said credit is tight and more will happen on that front, and tighter credit conditions will be a drag on the economy. He noted previous rate hikes still working through the economy and he does think the Fed can get to 2% inflation without seeing a recession. He expects growth to moderate to a methodical pace and said if inflation continues to wane it confirms Fed policy is in the right place. He said wage pressures developing in a good direction and welcomes more moderate wage gains. Bostic expects to see inflation cooling into next year and noted down the road the Fed can consider rate cuts (previously said late 2024). He added that as 2% inflation gets closer, the Fed will have to weigh interest rate levels. He hopes the housing market will not be under pressure for years to come and clarified zero is not where interest rates will need to be.
• Fed's Kashkari (2023 voter) said there is a lot of uncertainty around what is driving the yield curve and let's not bet on any one explanation. He said the labour market is slowing and that is helpful, but he does not want to overreact to one report, and said the Fed has to keep watching data, according to Reuters.
• UAW said GM (GM) union leaders support sending this tentative agreement with GM to the membership for a vote. UAW said auto workers at Toyota (7203 JT), Honda (7267 JT), Volkswagen (VOW3 GY), Hyundai (005380 KS), and Tesla (TSLA) deserve record contracts too, according to Reuters.
• Citizens Bank, a small bank in Iowa, closed by regulators, making it the 6th US bank failure this year, according to BNO News.
• BoC's Rogers said a rate hike is on the table until “we are confident that we are clearly on our way”, according to Bloomberg. Rogers added that restoring price stability remains the central bank's focus, and despite the delay, the bank is seeing monetary policy "really starting to take hold".
• Barclays sees Fed hiking rates by 25bps in January (prev. December), citing dovish Fed commentary and softer-than-expected October jobs data.

APAC TRADE

EQUITIES

• APAC stocks traded higher across the board following the post-NFP tailwinds from Wall Street on Friday, with sentiment in the region also boosted by South Korea announcing a ban on stock short-shelling which catapulted the KOSPI index to gain over 4%.
• ASX 200 posted modest gains as the index is hindered by losses in heavyweight Energy and Mining sectors, although gold names outperformed as the yellow metal held onto recent gains, while Financials were boosted by Westpac post earnings. Participants also look ahead to tomorrow’s RBA decision in which 35/39 analysts polled by Reuters expect a 25bps rate hike.
• Nikkei 225 remained comfortably above the 32,500 level and hit levels last seen at the end of September with the Industrial sectors leading the gains, whilst Final Services and Composite PMIs were revised higher from the Prelim.
• Hang Seng and Shanghai Comp conformed to the gains in the region with sentiment supported by weekend comments from the Chinese Premier who stated China will soon release a plan to promote high-standard institutional opening up in the Shanghai Free Trade Zone, whilst the Finance Minister said China will accelerate the issuance and use of government bonds. Traders are also cognizant of the Chinese Trade Balance data due for release tomorrow.
• US equity futures traded flat across the board with the ES finding overnight support just under 4,375 while the RTY very narrowly lags after outperforming on Friday.
• European equity futures are indicative of a flat open, with the Euro Stoxx 50 future -0.1% after cash markets closed +0.2% on Friday.

FX

• DXY traded within a narrow 104.99-15 range after plummeting from a 106.22 high to a 104.93 low post-NFP on Friday, with the next clear level to the downside the 20th of September trough at 104.66.
• EUR/USD and - GBP/USD were flat against the Dollar with the former holding onto a 1.07 handle and the latter hovering around 1.2375 in horizontal trade. EUR/USD traders could be eyeing the 100 and 200 DMAs over this week as they both reside just above 1.0800 at 1.0803 and 1.0805 respectively.
• USD/JPY was modestly firmer and failed to sustain a breach under 149.50 after BoJ Governor Ueda reiterated the central bank will patiently maintain monetary easing to support economic activity, with the pair eyeing its 21DMA to the side at 149.79.
• Antipodeans saw a slight divergence, with the AUD holding a positive bias as it awaits tomorrow’s RBA – whereby a majority of respondents polled by Reuters expect a hike, while the NZD was on a slightly softer footing after NZD/USD met resistance near 0.6000, while the 100 DMA resides at 0.6017.
• PBoC sets USD/CNY mid-point at 7.1780 vs exp. 7.2868 (prev. 7.1796)

FIXED INCOME

• 10-year UST futures were modestly softer after Friday’s significant bull-steepening on the back of the soft US jobs report, which eased inflationary concerns and unwinds "higher for longer" pricing.
• Bund futures were subdued to a similar extent as their US counterparts, with the German future opening under 130.50 and remaining within 130.28-38 confines.
• 10-year JGB futures gapped higher at the open as the contracts played catch-up to post-NFP action in the complex.

COMMODITIES

• Crude futures consolidated after Friday’s hefty losses which saw the contract settle lower by almost USD 2/bbl apiece. Furthermore, Saudi and Russia over the weekend reaffirmed their voluntary cuts whilst the former also refrained from lowering OSPs to Asia as some had expected.
• Spot gold remained within recent ranges amid quiet newsflow and a stable Dollar.
• Copper futures edged higher overnight amid the broader APAC risk appetite with the 3M LME contract back above USD 8,200/t.
• Saudi Arabia December OSPs: Arab Light prices maintained for Asia and the US, but large cut to NW Europe, according to Reuters: Asia +4.00/bbl (prev. +4.00/bbl) vs Oman/Dubai average, NW Europe +4.90/bbl (prev. +7.20/bbl) to Ice Brent settlement, US +7.45/bbl (prev. +7.45/bbl) vs ASCI.
• Saudi Ministry of Energy reaffirmed that Saudi Arabia will continue the voluntary cut of 1mln BPD through December, according to the state news agency SPA.
• Russia's Deputy PM Novak reaffirmed Russia to continue the additional voluntary supply cut of oil and petroleum products exports by 300k BPD until the end of December this year. He said the voluntary cut decision will be reviewed next month to consider deepening the cut or increasing oil production, according to Reuters. Russian Deputy PM Novak reportedly instructed Russia's oil companies to raise winter diesel output, according to Reuters.

CRYPTO

• Bitcoin was rangebound on either side of USD 35,000 overnight and over the weekend.

NOTABLE ASIA-PAC HEADLINES

• China Premier said China will continue to promote opening up and market opportunities, and China will actively expand imports, and promote coordination of trading goods and services. He added China will further expand market access and remove barriers to foreign investment in manufacturing. China Premier said in the next five years, China's imports of goods and services are expected to reach USD 17tln on cumulative terms, and China will soon release a plan to promote high-standard institutional opening up in the Shanghai Free Trade Zone, according to Reuters.
• China's Finance Minister said China will accelerate the issuance and use of government bonds, and China will steadily promote the resolution of local government debt risks, according to Reuters citing state media.
• Alibaba's (9988 HK/BABA) Ant Group has received Chinese government approval to release products powered by its 'Bailing' AI model to the public, according to Reuters.
• PBoC injected CNY 18bln via 7-day reverse repos with the rate at 1.80% for a CNY 658bln net daily drain, according to Reuters.
• South Korea to ban all stock short-selling through the first half of 2024 to help create a "level playing field" for both retail investors and institutional and foreign investors, according to financial regulators cited by Reuters.
• The Japanese government reportedly plans to submit an extra budget to Parliament on November 20th, according to Asahi.
• BoJ Governor Ueda reiterated that Japan's economy is recovering moderately and is likely to continue recovering and repeated that the BoJ will patiently maintain monetary easing to support economic activity, according to Reuters. He said long-term interest rates may rise somewhat, but what's important is to look at the real interest rate that takes into account inflation expectations. He added the BoJ will continue massive bond-buying even under the new operation decided last week and will conduct nimble market operations when interest rates rise, depending on the level and speed of moves of long-term rates. He said even if long-term rates come under upward pressure, he doesn't expect the 10-year JGB yield to sharply exceed 1%, and BoJ needs to carefully weigh the effect of the policy in stimulating the economy and the potential side-effects under YCC. Ueda said the BoJ will keep Yield Curve Control and negative short-term rates intact until the sustained achievement of 2% inflation is foreseen. Ueda said the BoJ needs to have more conviction that wages will keep rising.
• BoJ Minutes from the September 21-22 meeting (two meetings ago) said members expressed the need to continue patiently with monetary easing to achieve the sustainable inflation target, alongside wage growth, according to Reuters.
• RBA Shadow Board calls for a rate hike to curb inflation, according to Canberra Times.

DATA RECAP

• Japanese Services PMI (Oct Final) 51.6 (Prelim. 51.1)
• Japanese Composite PMI (Oct Final) 50.5 (Prelim. 49.9)
• ANZ Australian Job Ads index (Oct) -3% (Prev. -0.5%)

GEOPOLITICS

ISRAEL-HAMAS

• Israeli PM Netanyahu said there will be no ceasefire until hostages are returned, according to Reuters. Israel's army says it has cut the Gaza Strip in two, according to AFP.
• Four civilians, three of them children, were killed by an Israeli airstrike in south Lebanon on Sunday evening, according to Sky News.
• Hezbollah said it fired multiple Grad rockets at the northern Israeli town of Kiryat Shmona in retaliation for an Israeli airstrike in South Lebanon, according to Reuters.
• Hezbollah lawmaker Fadallah said the Israeli strike which killed children is a “dangerous development”, and will have repercussions, according to Reuters.
• Lebanon said it will submit a complaint to the United Nations over the killing of civilians including children in an Israeli strike in South Lebanon, according to the Lebanese Foreign Minister cited by Reuters.
• Israeli military spokesperson said their attacks in Lebanon are made based on intelligence information, according to Reuters.
• Evacuations from Gaza to Egypt through Rafah crossing were reportedly suspended since Saturday after Israeli strikes on ambulances, according to Egyptian official sources cited by Reuters.
• Qatar's Foreign Ministry spokesperson said the Hamas political office in Doha will remain open so long as it can be used towards peace, and there's no reason to close it now, and added that Qatar is working with Egypt to ensure Rafah crossing remains open, according to Reuters.
• Egyptian Foreign Minister Shoukry says he cannot justify Israel's actions against Palestinians as self-defence, according to Reuters.
• Diplomatic adviser to the UAE President said Israel's response to the October 7 attack is disproportionate, and added the Palestinian issue is an Arab issue, according to Reuters.
• Saudi Arabia strongly condemned the statement issued by an Israeli minister regarding dropping a nuclear bomb on the Gaza Strip, according to Reuters.
• US Central Command announced that the Ohio-class nuclear submarine has arrived in the Middle East.
• US President Biden said "yes" when asked if there has been any progress on a humanitarian pause in Gaza, according to Reuters.
• US Secretary of State Blinken said the US is intensely focused on bringing home hostages from Gaza. He said a humanitarian pause could advance the prospect of getting hostages back, while adding the current flow of aid to Gaza is grossly insufficient, according to Reuters.
• US Secretary of State Blinken told Palestinian leader Abbas that the Palestinian Authority should play a central role in what comes next in Gaza, according to a Senior State Department Official cited by Reuters. Blinken made clear that Palestinians must not be forcibly displaced and reiterated US commitment to advancing dignity, and security for Palestinians and Israelis alike, according to Reuters.
• Iran's Defense Minister warned the US it "will be hit hard" if it does not implement a ceasefire in Gaza, according to Tasnim cited by Reuters. Iran's Vice President said the tragedy in Gaza cannot be ignored, according to Reuters.
• The Turkish Foreign Minister reportedly discussed the situation in Gaza with the Egyptian and Jordanian counterparts. They exchanged views on stopping attacks on civilians in Gaza and achieving an urgent ceasefire, according to a Turkish diplomatic source cited by Reuters.
• French Foreign Minister said the humanitarian conference on November 9th will cover the respect of international law, and will call for a concrete mobilization for the civilian population in Gaza, according to Reuters.
• TotalEnergies (TTE FP) has raised security vigilance for its operations in the Middle East, according to Reuters.

OTHERS

• Armed factions claim to target Ain al-Assad base in Iraq with 4 missiles, according to Sky News Arabia citing their correspondent.
• US Secretary of State Blinken in Iraq, said he had a very good and candid conversation with the Iraqi leader and said attacks on US personnel are a matter of Iraqi sovereignty and against its own interests, according to Reuters.
• The Turkish military conducted air strikes against Kurdish militants in northern Iraq, hitting 15 targets, according to the Defense Ministry cited by Reuters.
• Russian Defense Ministry said a new atomic submarine conducted a test launch of a Bulava intercontinental missile in the White Sea, according to Reuters.
• Belarus Foreign Ministry summons Polish Charge D'Affaire over violation of its airspace on Nov 2nd, according to a statement.
• Russia is moving to expand its military presence in eastern Libya, according to Bloomberg.
• Japanese PM Kishida said Japan will continue to contribute to enhancements of Philippine security capabilities and stated that in the South China Sea, a trilateral cooperation to protect the freedom of the sea is underway, according to Reuters.
• China's Defense Ministry, in response to Canada accusing Chinese fighter jets of 'unsafe interception,' states that China's response was professional while adding Canada's move violates China's laws and jeopardizes China's security, according to Reuters.
• Iraqi PM arrived in the Iranian capital as part of an official visit, according to Asharq News.

EU/UK

NOTABLE HEADLINES

• ECB President Lagarde said the ECB is determined to bring inflation down to 2%. “According to our projections, we will get there in 2025”, according to an interview with Greek press conducted on 30th October and released on 4th November.
• BoE's Haskel said an estimate of 6% equilibrium unemployment is an upper bound for him, and higher equilibrium unemployment does put upward pressure on interest rates. He added equilibrium unemployment rate is probably a bit higher than BoE's latest estimate, according to Reuters.
• UK PM Sunak will reportedly unveil a North Sea annual oil and gas licensing bill which will allow companies to bid yearly for new licences to drill for fossil fuels, according to the FT. "There is currently no fixed period between licensing rounds - but this would change under a bill to be announced in Tuesday's King's Speech... Ministers said projects would have to meet net-zero targets and claimed the policy would guarantee energy security.", according to the BBC.
• UK Chancellor Hunt is facing calls from Tory MPs to lower taxes after figures revealed a multi-billion GBP improvement in public finances since March's budget, according to The Times.