• APAC stocks traded lower across the board as the downbeat sentiment from Wall Street reverberated to the region following the poor 30-year US auction coupled with Powell’s hawkish lean, whilst the APAC region itself digested earnings and China’s ongoing woes.
• Fed Chair Powell leant hawkish following the dovish repricing seen last week in the wake of the FOMC and NFP jobs report. Powell did not comment on the NFP report specifically, but maintained his view the labour market remains tight but is coming into better balance.
• A ransomware attack on the Industrial and Commercial Bank of China has disrupted the US Treasury market by stopping China's largest bank from settling Treasury trades, according to market participants cited by FT; ICBC Financial Services confirmed they experienced a ransomware attack.
• European equity futures are indicative of a lower open as the region played catch-up to the Wall Street losses, with the Euro Stoxx 50 -0.7% after cash markets closed +1.2% the day before.
• Looking ahead, Highlights include UK GDP Estimate, Services, Trade Balance, US UoM, Chinese M2 Money Supply, BoC SLOOS, Fed’s Logan, Bostic; ECB’s Lagarde, and supply from Italy. Earnings: Allianz, Richemont, GN Store Nord

US TRADE

EQUITIES

• US stocks and bonds tumbled after a historically downbeat US 30-year auction was followed by Powell's hawkish reaffirmations.
• SPX -0.81% at 4,347, NDX -0.82% at 15,188, DJI -0.65% at 33,892, RUT -1.57% at 1,687
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Chair Powell leant hawkish following the dovish repricing seen last week in the wake of the FOMC and NFP jobs report. Powell did not comment on the NFP report specifically, but maintained his view it remains tight but is coming into better balance. The Fed Chair also repeated the line that the Fed is not confident they have achieved a sufficiently restrictive stance, and that if it becomes appropriate to tighten policy further, they will not hesitate. Powell is attentive to risks that stronger growth could undermine its inflation progress, which could warrant a monetary response. He added he is gratified by the inflation progress, but there is still a long way to go. He does expect GDP growth to moderate in the coming quarters, but that is yet to be seen. He also stated in the Q&A that the Fed is still trying to judge if it needs to do more, then they will consider how long the Fed needs to keep rates high, adding the bigger mistake is not getting rates high enough. On the move in yields, Powell said it is hard to draw a direct line from things like higher bond yields to a monetary policy response, but noted the Fed is not going to ignore a significant bond tightening, but it does not have to make a decision now. Powell added the Fed will be looking carefully at the reasons behind the recent yield surge. Click here for the full initial release and here for the panel discussion.
• Fed's Paese (non-voter) said not sure public expectations are aligned with likely Fed policy path, according to Reuters. Fed's Paese said it is too soon to rule out further rate hikes; the central bank has time to decide the next step on monetary policy. Click here for more headlines.
• BoC's Rogers said it's easy to forecast a world where rates are persistently higher than people have grown used to in recent years, according to the BoC. Click here for more headlines.
• NY Fed RRP op demand falls beneath USD 1tln for first time in two years to USD 993bln (prev. 1.024tln) across 94 counterparties (prev. 98).
• Meta (META) has reportedly struck a preliminary deal to sell a new, lower-priced version of its virtual-reality headset in China; the deal was struck with Tencent (700 HK), according to WSJ sources.
• Netflix (NFLX) and Warner's Max (WBD) team up with Verizon (VZ) to offer a discounted streaming bundle, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks traded lower across the board as the downbeat sentiment from Wall Street reverberated to the region following the poor 30-year US auction coupled with Powell’s hawkish lean, whilst the APAC region itself digested earnings and China’s ongoing woes.
• ASX 200 initially saw the shallowest losses among the majors as the RBA’s SoMP suggested the economy had been a bit stronger than previously thought, while sectoral losses were led by Tech, Financials, and Energy although Metal and Mining bucked the trend.
• Nikkei 225 was dragged lower by hefty post-earnings losses in Nissan, Sony, and Softbank, which were all lower by 3-6%, although the index later clambered off worst levels and rose back above 32,500.
• Hang Seng and Shanghai Comp conformed to the tone but Hong Kong was the regional underperformer with Tech and Financials, among the biggest losers.
• US equity futures resumed trade flat but gradually inched higher, although the NQ narrowly lagged amid the recent rise in yields.
• European equity futures are indicative of a lower open as the region played catch-up to the Wall Street losses, with the Euro Stoxx 50 -0.7% after cash markets closed +1.2% the day before.

FX

• DXY sat within a tight 105.84-95 range after printing a post-Powell peak of 105.97 (vs a 105.37 low), with the index in close proximity to its 50 DMA (105.826). G10s were flat against the Dollar.
• EUR/USD hovered near yesterday's lows after printing a 1.0658-1.0725 range the day before, with most of the losses as a function of the Dollar strength seen in the Wall Street afternoon. GBP/USD similarly traded around yesterday’s trough, and closer to its 21 DMA (1.2198) than its 50 DMA (1.2267).
• USD/JPY traded flat but not far off yesterday’s 151.38 peak, with the overnight range between 151.23-37, with the nearest upside level the 1st November high at 151.70.
• Antipodeans were mixed with the Kiwi flat but the AUD subdued following the RBA SoMP which suggested the Board considered the option to continue to hold policy rates steady at the meeting earlier in the week, whilst also noting there are both upside and downside risks to the outlook for inflation.
• PBoC sets USD/CNY mid-point at 7.1771 vs exp. 7. 2963 (prev. 7.1772)

FIXED INCOME

• 10-year UST futures were consolidating after the sell-off in the US afternoon, both ahead of and after the historically bad 30-year auction before a hawkishly received Powell speech added more pressure.
• Bund futures underperformed but were off worse levels as the contract attempted to reclaim 130.00 from a 129.71 low.
• 10yr JGB futures also held a softer bias but clambered off session lows, although the corresponding 10yr yield remained above 85bps.
• US sells USD 24bln of 30yr bonds at 4.769%; tails by 5.3bps.

COMMODITIES

• Crude futures titled modestly firmer after the contracts found some reprieve from the recent selling to settle modestly firmer, but most of the gains seen in the European session the day before were pared during the Wall Street afternoon.
• Spot gold was rangebound above USD 1,950/oz after printing a USD 1,965.50/oz high the day before, with the yellow metal uneventful for most of the session.
• Copper futures traded lower amidst the broader risk sentiment coupled with China’s ongoing economic woes.
• Over 60 countries are reportedly backing a deal to triple renewable energy and shift away from coal, according to Reuters citing officials.

CRYPTO

• Bitcoin was flat overnight around the USD 36,700 mark whilst Ethereum soared some 10% yesterday on ETF reports.
• Blackrock is growing increasingly confident the SEC will approve its BTC ETF by January, according to FBN's Gasparino citing sources.
• BlackRock's Ethereum (ETH) ETF plan is confirmed in Nasdaq filing, according to CoinDesk.

NOTABLE ASIA-PAC HEADLINES

• A ransomware attack on the Industrial and Commercial Bank of China has disrupted the US Treasury market by stopping China's largest bank from settling Treasury trades, according to market participants cited by FT. SIFMA told members on Thursday that ICBC had been hit by ransomware software. The attack prevented ICBC from settling Treasury trades on behalf of other market participants. ICBC (1398 HK) Financial Services confirmed they experienced a ransomware attack that resulted in disruption to certain FS systems, according to Reuters.
• US President Biden said he will not let China dominate the EV market, according to Reuters.
• PBoC Governor said they are closely watching financial risks in some sectors; some provinces are facing a certain degree of debt risks and the central government is paying high attention to the matter, via state media
• PBoC policy adviser said China is able to achieve slightly above 5% GDP growth this year; consumption recovery still remains weak; fiscal deficit ratio can be raised next year. China's exports are still expected to face relatively big pressure next year. Weak external demand and inadequate domestic demand increase overcapacity pressure in China, according to Reuters.
• China Vice Premier He Lifeng said the important task for the meeting with US Treasury Secretary Yellen is to implement tasks from US President Biden and Chinese President Xi. He added talks with Yellen have been constructive, and will communicate China’s concerns about their economic and investment relationship with the US. Looking for effective measures to put US-China economic and trade relations back on track, according to Reuters.
• Country Garden Holdings (2007 HK) reportedly aims to inform key bondholders of its cash flow projections by year-end, according to Reuters sources; aims for a tentative plan to restructure offshore debt by year-end, and aims to start formal negotiations with offshore bondholders by February or March next year, sources added.
• PBoC injected CNY 203bln via 7-day reverse repos with the rate at 1.80% for a CNY 160bln net daily injection.
• Japanese government to top up fiscal loan and investment program with additional JYP 886bln in a second extra budget to beef up supply chain, according to a draft cited by Reuters.
• RBA SoMP: considered the option to continue to hold policy rates steady but decided a hike would provide more assurance on inflation; Whether further tightening of monetary policy will depend on data. Click here for the full headline.
• New Zealand PM Hipkins said the Governor General will be advised to extend current caretaker government arrangements until a new government is formed, according to Reuters.

DATA RECAP

• China Oct vehicle sales +13.8% Y/Y (prev. +9.5%); new energy vehicle sales +33.5% Y/Y, according to the Industry Association

GEOPOLITICS

• "The Israeli army announces the cessation of its airstrikes in the Gaza Strip to mitigate civilian casualties", according to Sky News Arabia.
• Israeli military said it struck a position in Syria in response to Thursday's drone attack in Eilat, according to Reuters.
• Iranian Foreign Minister said expanding the scope of war has become inevitable with the increase in escalation in Gaza, according to Sky News Arabia.
• China's Ambassador to the US Feng says US-China relations are still facing severe challenges, and there is still a long way to go to stabilise and improve relations, according to Reuters.
• China Coast Guard, on the Philippines' resupply mission on Nov 10th, urged the Philippines to immediately stop infringing on China's sovereignty; Followed the Philippines' resupply vessels and took control measures, according to Reuters.

EU/UK

NOTABLE HEADLINES

• SNB's Schlegel said banks need to better prepare collateral in the future to get emergency liquidity from central banks; crucial to slow the speed at which deposits can be withdrawn. Credit Suisse got the largest amount of liquidity assistance ever provided to a single bank anywhere in the world. Liquidity assistance alone would not have resolved the crisis.
• French Finance Minister Le Maire said Europe was able to make the right decisions to tackle inflation; 'Don't think so', when asked if ECB rate hikes did go too far, according to Reuters.
• Portugal's president dissolves parliament and calls snap elections, according to dpa. Portugal is to hold an election on March 10, 2024 according to AFR.

LATAM

• Mexican Interest Rate (Nov) 11.25% vs. Exp. 11.25% (Prev. 11.25%); Will be necessary to maintain reference rate at the current level for some time (prev. extended period). Inflation forecasts are unchanged throughout the horizon on headline and core inflation. The balance of risks for inflation remains biased to the upside.
• Peru Central Bank cuts reference rate by 25bps to 7.00%, as expected.