• European bourses slip into the red while US futures remain afloat with fresh catalysts somewhat light
• Crude bolstered after Friday's pressure alongside ongoing geopols and a handful of bullish catalysts
• DXY sub-105.00 with peers generally extending gains, though JPY & NZD are capped
• Bonds hand back some of Fridays post-data gains, yields modestly firmer across the curve
• Looking ahead, highlights include Canadian PMI, FOMC Senior Loan Officer Opinion Survey & BoC Market Participants Survey, Speech from BoE's Pill, Fed's Cook and Earnings from NXP Semiconductor.

EUROPEAN TRADE

EQUITIES

• European bourses are in the red with trade thus far relatively cagey and contained after last week's action and as the region awaits fresh catalysts, Euro Stoxx 50 -0.3%.
• Sectors are mixed with outperformance in Travel & Leisure post-Ryanair while the likes of Real Estate, Construction and Chemicals lag.
• Stateside, futures are modestly firmer in a continuation of Friday's action going into a week that features numerous Fed speakers incl. Chair Powell and data prints such as Manheim & UoM; ES & NQ +0.2%.
• Berkshire Hathaway (BRK): Reported a +40.6% increase in Q3 operating earnings to USD 10.76bln (exp. 8.95bln), or around USD 4.96/shr per Class B share (exp. 4.42), and around USD 7,442 for each Class A share (exp. 6,625). Q3 revenue USD 93.2bln (exp. 88.1bln); Q3 insurance underwriting operating income USD 2.422bln (vs USD 1.247bln Q/Q), Q3 insurance investment income USD 2.47bln (vs 2.369bln Q/Q). Ended the quarter with USD 157.2bln of cash. Executed USD 1.1bln of share repurchases in Q3 (vs USD 1.4bln in Q2). Its outlook acknowledges challenges like the pandemic's impact, geopolitical risks, and inflation pressures. +0.6% in pre-market trade.
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FX

• Buck continues to buckle after 'dovish' Fed, NFP and ISM misses as DXY slips into a softer 105.15-104.84 range, Pound, Euro and Franc all extend gains vs Dollar to form 1.2400+ triple top, probe 1.0750 and approach 0.8950 respectively.
• EUR/USD faces decent option expiry interest below 1.0800.
• USD/JPY capped by 21 DMA and expiries at 150.00 strike after BoJ Governor Ueda maintains that patient monetary easing is still needed.
• Aussie prepares for likely RBA hike, with AUD/USD holding above 0.6500 and AUD/NZD cross eyeing return to 1.0900.
• Loonie underpinned by a bounce in crude and hawkish line from BoC's Rogers ahead of Canadian Ivey PMIs and Market Participants Survey.
• PBoC sets USD/CNY mid-point at 7.1780 vs exp. 7.2868 (prev. 7.1796)
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FIXED INCOME

• Bonds hand back more of Friday's post-payrolls and services ISM gains.
• Bunds towards the lower end of 129.90-130.38 band alongside EGB peers after stronger than expected German factory orders and not as weak as feared EZ Sentix index.
• Gilts and T-note near base of 94.78-95.15 and 108-02/07+ respective ranges.
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COMMODITIES

• Crude benchmarks are firmer and have continued to climb despite a lack of fundamental updates occurring in European hours, with the move primarily a recovery from Friday’s pressure and aided by geopolitics alongside a softer USD.
• As it stands, WTI Dec’23 and Brent Jan’24 contracts are at the top end of circa. USD 1.50/bbl parameters but remain well within Friday’s and by extensions last week’s parameters.
• Spot gold is little changed with the overall tone a tentative one as we await fresh catalysts and continue to analyse last week’s data and potential associated Fed implications. Finally, base metals are generally firmer owing to the constructive APAC tone.
• 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.
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NOTABLE EUROPEAN 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.
• 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.

EUROPEAN DATA

• EU Sentix Index (Nov) -18.6 vs. Exp. -22.2 (Prev. -21.9)
• EU S&P Global Composite Final PMI (Oct) 46.5 vs. Exp. 46.5 (Prev. 46.5); Services Final PMI (Oct) 47.8 vs. Exp. 47.8 (Prev. 47.8)
• German HCOB Composite Final PMI (Oct) 45.9 vs. Exp. 45.8 (Prev. 45.8); Services PMI (Oct) 48.2 vs. Exp. 48.0 (Prev. 48.0)
• UK S&P Global/CIPS Construction PMI (Oct) 45.6 vs. Exp. 46.0 (Prev. 45.0)

NOTABLE US HEADLINES

• 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.
• US Treasury Secretary Yellen says will meet with the Chinese VP in San Francisco on November 9-10th ahead of the APEC summit; US-China working groups will also meet. Will raise serious concerns about large Chinese industrial subsidies.
• Click here for the US Early-Morning note.

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.
• Russian President Putin has decided to run for President again in 2024, via Reuters citing sources; Russian President Putin has not announced he would run for another presidential term and no campaign yet, via Peskov.

APAC TRADE

• 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.

NOTABLE 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.
• China's Shenzhen state asset regulator says if Vanke (2202 HK) faces extreme conditions it has sufficient liquidity to assist, via Reuters citing sources.
• 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.
• Japanese government is to hold a meeting with management and labor unions this month, via Nikkei.
• 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); Composite PMI (Oct Final) 50.5 (Prelim. 49.9)
• ANZ Australian Job Ads index (Oct) -3% (Prev. -0.5%)