• APAC stocks traded mixed/mostly firmer following a similar lead from Wall Street, with the breadth of markets in APAC hours particularly narrow.
• DXY held a modest upward bias with G10s mostly subdued in what was a contained session for FX.
• European equity futures are indicative of a subdued open with Euro Stoxx 50 future -0.3% after cash markets closed -0.1% yesterday.
• US Treasury said no trade partners manipulated currencies; China remains on the monitoring list due to a lack of transparency for its foreign exchange practices.
• Looking ahead, highlights include German CPI (Final), NBP Policy Announcement; Norges Bank FSR, ECB Consumer Expectations Survey, BoC Minutes, Speeches from Fed’s Cook, Powell, Williams, Barr & Jefferson; BoE’s Bailey; ECB’s Lane & Makhlouf, Supply from UK, Germany & US.
• Earnings: Adidas, Airbus, Bayer, Telecom Italia, Ralph Lauren, Kellogg, Disney, BlackRock, Warner Bros Discovery

EQUITIES

• US stocks were mixed on Tuesday with the tech-heavy NDX leading the gains, aided by the lower yield environment, while the real economy-levered Russell 2k index felt the brunt of weakening global economic data.
• SPX +0.28% at 4,378, NDX +0.93% at 15,296, DJIA +0.17% at 34,152, RUT -0.28% at 1,733.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Logan (2023 voter, hawk) said inflation remains too high and the core question is if financial conditions today are sufficiently restrictive; all of them have been surprised with the resiliency of the US economy. She said the labour market is still too tight, and they have seen some important cooling in the labour market. She still looks like trending toward 3% inflation, and her expectation is that growth will start to slow, but the Fed has been wrong before. She said the Fed will need to forecast tight financial conditions to bring inflation to 2%, and since July there has been a tightening in financial conditions driven by the climb in long-term rates. She said the key question is what is driving the increase in long-term rates, and if long rates are climbing on the back of strong economic growth, FOMC would have to deliver on those expectations. She said if the climb in long rates is driven by term premiums, it could do some of the Fed's work.
• Fed's Bowman (voter, hawk) said she continues to expect the Fed will need to increase the FFR further; the Fed rate currently appears restrictive and financial conditions have tightened since September. She said some tightening is due to higher longer-term bond yields, which can be volatile, and she doesn't yet know the effects of tightened financial conditions on economic activity and inflation. She said there is also a risk that higher energy prices could reverse some progress on inflation, and the US economy has remained strong; labour market supply and demand may be coming into better balance, according to a released speech.
• US Senate Minority Leader McConnell said he spoke with President Biden and Treasury Secretary Yellen on Monday; says will be difficult to get a supplemental spending bill across the floor with a credible border solution, according to Reuters.
• CFPB proposes rules to regulate big tech's payments and digital wallets like banks; it will examine tech firms to ensure compliance with funds transfer, privacy, and other consumer protection laws Companies subject to proposal would be the likes of Alphabet (GOOGL), Apple (AAPL), and PayPal (PYPL), or any companies handling more than 5mln transactions a year. The proposal is now subject to a notice-and-comment period expected to conclude in early 2024.

DATA RECAP

• US Consumer Credit* (Sep) 9.06B vs. Exp. 10.0B (Prev. -15.63B)

APAC TRADE

EQUITIES

• APAC stocks traded mixed following a similar lead from Wall Street, with the breadth of the markets in early APAC hours particularly narrow.
• ASX 200 saw the tech sector leading the gains following a similar yield-driven sectoral performance on Wall Street.
• Nikkei 225 was initially supported by the Electronics sector with Nintendo shares rising over 6% post-earnings, whilst the Oil sector limited gains and the index eventually fell into losses as BoJ governor Ueda said the Bank doesn't necessarily need to wait until real wages actually turn positive in exiting YCC and negative rates, and if the BoJ thinks there is a strong chance real wages will turn positive in the future, that may be sufficient in making a decision on whether to continue with YCC and negative rate.
• Hang Seng and Shanghai Comp moved between modest gains and losses with little action seen despite a slew of comments from the PBoC governor, while markets braced for next week’s Biden-Xi meeting in San Francisco, although no major breakthrough is expected.
• US equity futures were flat/subdued with the ES under the 4,400 level throughout the APAC session albeit with all contracts trading within tight parameters.
• European equity futures are indicative of a subdued open with Euro Stoxx 50 future -0.3% after cash markets closed -0.1% yesterday.

FX

• DXY held a modest upward bias with G10s mostly subdued in what was a contained session for FX. DXY traded in a 105.51-105.68 range and within the previous day’s 105.25-77 parameter, as traders look ahead to Fed Chair Powell.
• EUR/USD traded sideways and remained under the 1.0700 and within the previous day's 1.0662-0723 range while GBP/USD was similarly uneventful as it meandered on either side of its 50 DMA (1.2283).
• USD/JPY saw a slight pickup of momentum as it breached 150.50 very early in the APAC session, although the pair lost steam after printing a peak at 150.61, then stabilised around 150.50 for most of the session, before resuming a gradual march higher to fresh session highs, while commentary from BoJ Governor Ueda failed to materially impact the JPY.
• Antipodeans consolidated following the prior day’s hefty losses after the dovish hike by the RBA and mixed Chinese trade data. NZD narrowly outperformed the AUD as the AUD/NZD cross fell under 1.0850.
• PBoC set USD/CNY mid-point at 7.1773 vs exp. 7.2839 (prev. 7.1776)

FIXED INCOME

• 10-year UST futures were subdued after Treasuries bull-flattened on Wednesday amid softening global economic data and well-received supply, with traders looking ahead to Fed Chair Powell’s remarks in the upcoming US session.
• Bund futures held a modestly firmer bias throughout the APAC session and meandered beneath the 130.50 mark versus the previous day’s 130.56 peak and Friday’s 130.76 high.
• 10-year JGB futures were also modestly firmer as BoJ governor Ueda spoke for most of the session and suggested the BoJ was continuing to buy huge amounts of government bonds via market operations.
• US sold USD 48bln 3yr notes at 4.701%; stops-through by 0.1bps.

COMMODITIES

• Crude futures consolidated in APAC hours following the previous day’s hefty losses which saw the contracts settle lower by around USD 3.50/bbl apiece, with an added downside seen from a large surprise build in private inventories.
• Spot gold was flat within recent ranges.
• Copper futures were uneventful in fitting with the non-committal tone across the markets.
• US Private Energy Inventories (bbls): Crude +11.9mln (exp. -0.3mln), Gasoline -360k (exp. -0.8mln), Distillates +980k (exp. -1.5mln). Note, the cushing number was not released.
• EIA STEO: 2023 world oil demand growth forecast cut by 300k BPD (M/M) to a 1.46mln BPD Y/Y increase, 2024 forecast raised by 80k BPD to a 1.40mln BPD Y/Y increase. Click here for the full release.

CRYPTO

• Bitcoin was rangebound overnight following the prior day's gains to levels above USD 35,000.

NOTABLE ASIA-PAC HEADLINES

• Chinese Vice Premier reiterated that the domestic economy is rebounding and improving as a whole, according to Bloomberg.
• PBoC Governor said PBoC will resolutely guard against overshooting risks of yuan exchange rate, and will resolutely deal with behaviours that disrupt market order, whilst preventing the formation of one-sided and self-reinforced mark, according to a Central Bank publication;
• PBoC Governor said shifting economic growth model is more important than pursuing high growth rate, via Securities Times. He added China's economy continues to improve, with the 5% growth target expected to be successfully achieved, and economic growth momentum has improved recently in China, production and consumption have recovered steadily, and employment and consumer prices are stable. He said monetary policy will pay more attention to cross-cyclical and counter-cyclical adjustments in the next stage, and the PBoC will always keep prudent monetary policy, and support stable growth of the real economy. He said they will strictly control new government-invested projects in areas with high debt burdens and will guide financial institutions to resolve debt risks through debt extension and replacement.
• China's top securities regulator vows to prevent excessive leverage, via state media.
• PBoC injected CNY 474bln via 7-day reverse repos with the rate at 1.80% for a CNY 83bln net daily injection.
• BoJ Governor Ueda said the BoJ doesn't necessarily need to wait until real wages actually turn positive in exiting YCC and negative rates, and if BoJ thinks there is a strong chance real wages will turn positive in the future, that may be sufficient in making a decision on whether to continue with YCC and negative rate, according to Reuters. Governor Ueda said it is desirable for FX to move stably reflecting fundamentals, according to Reuters. Governor Ueda says BoJ is continuing to buy huge amounts of govt bonds via market operations. Ueda said there is no statistical evidence that interest rate levels have a direct correlation with wage moves. BoJ Governor Ueda says the fact the central bank stands ready to step in to buy ETFs in times of market turbulence could be underpinning recent stock prices, and it may be possible to end ETF buying when there's no concern over the risk of a sharp rise in risk premia, according to Reuters.
• Japanese Finance Minister Suzuki sees June next year as the critical point where Japan can see inflation-adjusted real wages turn positive, according to Reuters.
• Japan is to reportedly include JPY 1.9tln in chip subsidies in its draft budget, according to NHK.
• Moody's affirms Japan's sovereign rating at A1; outlook stable, according to Reuters.
• Magnitude 6.8 earthquake strikes Banda Sea region near Indonesia; no tsunami warning, according to EMSC and PTWC.

DATA RECAP

• Japanese Foreign Reserves (Oct) 1.238T (Prev. 1.237T)
• Japanese Leading Indicator* (Sep) -0.5 (Prev. 1.0)
• Japanese Coincident Index* (Sep) 0.1 (Prev. 0.1, Rev. 0.4)
• New Zealand Monetary Conditions Current* (Q4) Q1 91.89% (Prev. 90.0%)
• New Zealand Inflation Forecast 1 Yr* (Q4) Q1 3.6% (Prev. 4.17%)
• New Zealand Inflation Forecast 2 yrs* (Q4) Q1 2.76% (Prev. 2.83%)

EU/UK

NOTABLE HEADLINES

• ECB's Nagel (hawk) said lively wage growth and falling labour supply will keep up pressure on inflation; still face risks that inflation outlook could turn out higher than expected. He said it's imperative to remain vigilant, according to Reuters.

GLOBAL

• US Treasury said no trade partners manipulated currencies; China remains on the monitoring list due to lack of transparency for its foreign exchange practices. Vietnam is back on the monitoring list; removing Switzerland and South Korea from the same scrutiny.

GEOPOLITICS

• US President Biden and Chinese President Xi are to meet on November 15th, according to Nikkei citing government officials.
• US President Biden told Israeli PM Netanyahu that a 3-day fighting pause could help secure the release of some hostages, according to Axios.
• Israeli Defence Minister Gallant says IDF forces are in the heart of Gaza City; hostages must return before any humanitarian pause, according to Reuters.
• Saudi Arabian investment minister says that discussions aimed at normalising ties with Israel will continue despite KSA's criticism of Israeli military actions in Gaza, according to Bloomberg. Adds will be contingent on a peaceful resolution to the Palestinian conflict.

LATAM

• Brazilian Economic Policy Secretary Mello said Brazil will not raise spending if the fiscal target changes, and sees the Brazilian economy growing 3% in 2023, and growth rebounding in Q4 after stagnating in Q3, according to Reuters.
• Brazilian government will not ask Congress to alter fiscal target for now, according to Reuters sources.