• APAC stocks were softer across the board following the prior day’s gains and the choppy/mixed lead from Wall Street.
• DXY gradually inched higher towards the top end of a 105.25-42 APAC range with G10s softer against the Buck to varying degrees.
• RBA hiked its Cash Rate by 25bps as expected to 4.35% from 4.10%, while forward guidance saw a dovish tweak.
• European equity futures are indicative of a softer open with the Eurostoxx 50 -0.3% after cash markets closed -0.4% yesterday.
• Israeli PM Netanyahu says Israel is open to "short pauses" in Gaza, but ruled out a ceasefire.
• Looking ahead, highlights include EZ, German, French & Italian Construction PMI, US International Trade, IBD/TIPP, Manheim Index, NY Fed Q3 Household Debt & Credit Report, UK King's Speech, Speeches from ECB’s de Guindos; Fed’s Schmid, Williams, Logan, Barr & Waller, supply from UK.
• Earnings: Capgemini, CNH Industrial, Daimler Truck, Persimmon, Watches of Switzerland, UBS, eBay, Occidental Petroleum Corp, Datadog.

US TRADE

EQUITIES

• US stocks were choppy on Monday with the Nasdaq outperforming while the Russell tumbled.
• SPX +0.18% at 4,365, NDX +0.37% at 15,154, DJIA +0.10% at 34,095, RUT -1.29% at 1,737.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kashkari (2023 voter) said he would err on the side of overtightening policy than not doing enough in order to bring inflation down, according to WSJ. He noted some prices and wage data indicate that inflation could be “settling somewhere north of 2%". Fed's Kashkari said the economy has proved to be very resilient and inflation has come down, according to Fox News. He added they are making progress on inflation and the job market is strong but has more work to do to get inflation under control. American consumers continue to spend. Need to finish the job of lowering inflation.
• FED SLOOS: Regarding loans to businesses, survey respondents, on balance, reported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over Q3. Click here for the full headline.

APAC TRADE

EQUITIES

• APAC stocks were softer across the board following the prior day’s gains and the choppy/mixed lead from Wall Street. South Korea’s KOSPI is the notable underperformer - slumping over 2.8% - after surging yesterday on the back of the stock short-selling ban.
• ASX 200 saw its downside led by Financials, Energy, and Materials, although the index clambered off worst levels following the RBA's dovish hike.
• Nikkei 225 fell back under 32,500 as the index conforms to the losses across the region.
• Hang Seng and Shanghai Comp opened lower amid the broader market mood. Muted price action was seen after the narrower-than-expected October Chinese Trade Balance, although imports saw surprise growth, while China Vanke’s shares firmed after state shareholders showed signs of providing liquidity support.
• US equity futures were subdued (ES -0.3%) with news flow on the quieter side for most of the session, whilst Fed’s Kashkari suggested the Fed has more work to do to get inflation under control and that he would err on the side of overtightening policy than not doing enough to bring inflation down.
• European equity futures are indicative of a softer open with the Eurostoxx 50 -0.3% after cash markets closed -0.4% yesterday.

FX

• DXY gradually inched higher towards the top end of a 105.25-42 APAC range, with G10s softer against the Buck to varying degrees.
• EUR/USD dipped closer to 1.0700 after breaching yesterday’s 1.0715 low while GBP/USD yesterday found resistance near its 200 DMA (1.2434) before slipping under 1.2350, with traders keeping an eye on the 50 DMA to the downside at 1.2292.
• USD/JPY kept its head above 150.00 with little action seen to the in-line Japanese wages data, with nearby upside levels for the pair including 150.52 (3rd November high), and 150.96 (2nd November peak).
• Antipodeans underperformed and were softer heading into the Chinese Trade Data and the RBA, with the former offering little influence, whilst the dovish hike by the RBA hit the Aussie, and the Kiwi fell in tandem.
• PBoC set USD/CNY mid-point at 7.1776 vs exp. 7.2854 (prev. 7.1780)

FIXED INCOME

• 10-year UST futures took a breather after the selling seen on Monday as the heavy supply calendar began to pare last week's rally. The lows yesterday were seen in the wake of the quarterly Fed SLOOS despite overall being as expected, with lending conditions tightening and demand weakening, although some highlighted chunky SOFR block sales following the release.
• Bund futures traded on softer footing within a 129.46-67 range after printing a 129.41 trough yesterday.
• 10-year JGB futures attempted to trim some of yesterday’s losses before losing steam, with the corresponding cash yield moving back above 88bps overnight.

COMMODITIES

• Crude futures were softer in tandem with the risk-averse tone and the firmer Dollar, whilst Brent Jan gave up the USD 85/bbl level while WTI moved back under USD 80.50/bbl. There was little price action seen on the Chinese trade data.
• Spot gold was weighed on by the Buck with the yellow metal meandering just under the USD 1,975/oz mark, with the next level to the downside the 1st November low at 1,969.60/oz ahead of the 21 DMA at 1,956.28/oz.
• Copper futures weakened alongside the broader market mood.
• US DoE announced a supplemental solicitation for up to 3mln barrels of oil for delivery in January 2024 for US Strategic Reserve.

CRYPTO

• Bitcoin prices were uneventful on either side of USD 35,000.

NOTABLE ASIA-PAC HEADLINES

• RBA hikes its Cash Rate by 25bps as expected to 4.35% from 4.10%, and tweaked its forward guidance to say "Whether further tightening of monetary policy is required...will depend upon the data" (prev. "Some further tightening of monetary policy may be required"). The RBA also noted inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago.
• China's Commerce Ministry has issued new rules to strengthen management of rare earth exports, effective Oct 31 2023 to Oct 31, 2025; issued new rules to strengthen import management of crude oil, iron ore, copper concentrate, potash, according to Reuters.
• PBoC Deputy Governor said he is not too worried about the Chinese economy, and added the overall debt level of the Chinese government is in the mid to lower range by international standards, according to Reuters.
• PBoC injected CNY 353bln via 7-day reverse repos with the rate at 1.80% for a CNY 259bln net daily drain.
• Japan ruling ally Kometo tax chief says should not pre-decide to limit income tax cuts to just a year, according to Reuters.
• South Korean Vice Finance Minister says FX authorities will continue to monitor currency markets as done now even after rule changes in licenses, according to Reuters.

DATA RECAP

• Chinese Trade Balance USD* (Oct) 56.53B vs. Exp. 82.0B (Prev. 77.71B)
• Chinese Imports YY* (Oct) 3.0% vs. Exp. -4.8% (Prev. -6.2%)
• Chinese Exports YY* (Oct) -6.4% vs. Exp. -3.3% (Prev. -6.2%)
• Japanese Total Cash Earnings YY (Sep) 1.2% vs Exp.1.2% (prev. 1.1%, Rev 0.8%)
• Japanese All Household Spending YY* (Sep) -2.8% vs. Exp. -2.7% (Prev. -2.5%)
• Japanese All Household Spending MM* (Sep) 0.3% vs. Exp. -0.4% (Prev. 3.9%)
• Japanese Overtime Pay* (Sep) 0.7% (Prev. 1.0%, Rev. 0.2%)

GEOPOLITICS

• Israeli PM Netanyahu says Israel is open to "short pauses" in Gaza, but ruled out a ceasefire, according to Bloomberg.
• Yemen's Houthis said they have fired a batch of drones on sensitive targets in Israel during the last few hours, according to Masirah TV. Comment was made at 18:27GMT
• Israel's military said it is currently striking Hezbollah targets in Lebanon, according to Reuters.
• The Biden administration is reportedly planning a USD 320mln transfer of precision bombs for Israel, according to WSJ.
• Russian Defence Ministry says Russia destroyed 17 Ukraine-launched drones over Russian territory, according to RIA.

EU/UK

NOTABLE HEADLINES

• BoE's Chief Economist Pill said UK inflation remains too high. Pill is seeing more signs of slowing activity and the slowdown in the UK is hitting the supply side, and is still working to bring inflation down to 2%. Pill is going to see UK inflation fall to more comparable levels with the rest of the world in pretty short order and said the BoE can't make promises about monetary policy outlook and needs to retain agility. He still doesn't know the economic implications of the conflict in the Middle East and said causing demand restraint can be painful but it's crucial the bank get inflation back to target. Pill added the MPC feels it needs to keep rates restrictive at least for a while, and it's premature to talk about cutting rates. He noted the middle of next year does not seem totally unreasonable for considering the rates stance, and as things change over those nine months, BoE might need to reconsider its policy stance. He said if the Bank has a restrictive policy for too long it risks creating recession and pushing inflation below target, and the equilibrium interest rate is still probably positive; interest rates in the future will probably be higher than in the pre-COVID era. He added rates will probably end up somewhere in the middle between now and pre-COVID level, according to Reuters.
• UK PM Sunak watered down proposals to deregulate North Sea oil and gas extraction after UK civil servants warned that policy suggestions from the prime minister’s office would breach international law, according to Bloomberg citing sources.
• EU Commission proposes extending looser EU state aid for crisis-hit companies for three months to March 2024 citing ongoing Ukraine war and Middle East tensions continuing to pose risks. The extension aims to allow EU countries to compensate companies for high energy prices. Easier state aid rules for state guarantees subsided loans and measures supporting electricity demand reduction will end on Dec 31st.EU sees feedback from member states to the proposal before adoption in the coming weeks, according to Reuters.

DATA RECAP

• UK BRC Retail Sales YY (Oct) 2.6% vs Exp. 2.4% (Prev. 2.8%)