• European bourses are firmer whilst US futures slip going into a busy week & after Moody's update
• DXY is lacklustre awaiting US CPI on Tuesday, with AUD extending gains and underpinned by RBA’s Kohler
• Bonds bounce broadly and fairly firmly, though Bunds ultimately unable to reclaim 130.00
• Crude off worst levels and into positive territory despite initial two-way action, OPEC MOMR due
• Looking ahead, highlights include US NY Fed Survey of Consumer Expectations, Federal Budget, Speeches from Fed’s Cook & BoE’s Mann

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +0.7%, despite a relatively tepid APAC handover with performance more in-fitting with that seen on Friday on Wall St.
• Sectors are firmer across the board featuring outperformance in Travel & Leisure as Evolution's CEO purchases shares, Health Care supported by Novo Nordisk obesity data while Banking names derive support from the likes of SocGen and BMPS.
• Stateside, futures trade on the back foot, ES -0.2%, despite firmer European trade with updates since Friday's close unfavourable and include Moody's altering its US rating and time running out for a resolution before a US shutdown; though, reporting on the shutdown has been mixed on Johnson's bill.
• Emirates Airlines announced orders for 90 777-X Boeing (BA) jets worth USD 52bln; ordering General Electric (GE) 9X Engines and updating Dreamliner order for 35 units in total.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• Dollar drifts ahead of NY Fed SCE and US CPI data on Tuesday, DXY slips into a slightly softer 105.85-68 range.
• Aussie outperforms as acting RBA Deputy Governor warns that battle to get inflation back to target will be drawn out, AUD/USD and AUD/NZD cross elevated between 0.6385-51 and 1.0835-1.0775 respective bands.
• Yen lags on yield dynamics and as Japanese corporate goods prices come in softer than expected, USD/JPY nudges closer to 152.00 from 151.40 where 1.3bln option expiries reside.
• Pound and Euro perky vs Buck as the former consolidates on 1.2200 handle and latter probes 1.0700.
• PBoC set USD/CNY mid-point at 7.1769 vs exp. 7.2889 (prev. 7.1771)
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Some respite for debt ahead of key risk events including top-tier data.
• Bunds probe Fib resistance on the way up to 129.89 from 129.48.
• Gilts back on the 95.00 handle within 95.22-94.64 bounds and T-note nearer top of 107-15/07+ range.
• BTPs outpace peers after Fitch affirmed Italian BTP rating and speculation mounts about buyback or exchange auction.
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COMMODITIES

• Crude benchmarks rebounded from session lows and are just about in the green; though, initial price action was somewhat choppy and the move thus far keeps benchmarks well within recent ranges.
• WTI Dec'23 and Brent Jan'24 around USD 77.35/bbl and USD 81.60/bbl respectively; again, headlines have been numerous over the weekend and primarily on geopols (see the section below) while for crude specifically the OPEC MOMR is due at 12:00GMT/07:00EST.
• Spot gold is little changed as the USD eases from best with XAU in a relatively narrow USD 10/bbl intraday range. However, spot silver has come under further pressure after losing the USD 22/oz mark in APAC trade.
• Base metals bolstered with marked gains in the likes of LME Copper and Dalian Iron Ore, attributed to property sector optimism within China by some and comes after a bout of upside in the regions equity bourses just prior to the European cash open.
• Iraq's Oil Minister Abdel-Ghani said on Sunday that he expects to reach an agreement with the Kurdistan Regional Government and foreign oil companies to resume oil production from the Kurdish region’s oilfields within three days.
• Iraq and ExxonMobil (XOM) signed a settlement agreement allowing PetroChina (857 HK) to become a lead contractor at the West Qurna 1 oil field.
• Kuwait Integrated Petroleum Industries Company said there was a sudden interruption of fuel supplies at Kuwait’s Al Zour Refinery due to a defect in one of the main valves which almost halted production, according to state media.
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NOTABLE HEADLINES

• ECB’s Centeno is facing an ethics review by an independent watchdog following a failed proposal by Portugal's outgoing PM Costa for Centeno to replace him instead of holding new elections, according to FT.
• ECB's de Guindos says he expects a temporary rebound in inflation in the coming months as the base effects from the sharp increase in energy and food prices in autumn 2022 drop out of the year-on-year calculation. At the December meeting, will be in a better position to reassess the inflation outlook and required policy action. Also seeing increasing signs of the impact of our policy decisions on the real economy
• German Ifo Survey (Oct): 18.2% of firms reported problems (prev. 24.0% M/M); material shortages in the manufacturing sector have eased significantly, supply situation near pre-COVID levels. Ifo says "firms should plan now for future shortages, diversify their supply chains, and increase inventory levels". The auto sector remained the most affected by supply bottlenecks.
• Fitch affirmed Italy at BBB; Outlook Stable and affirmed Poland at A-; Outlook Stable on Friday.
• UK Home Secretary Braverman sacked, replaced by Cleverley. Former PM David Cameron appointed as UK Foreign Minister.

EUROPEAN DATA

• UK Rightmove House Prices MM (Nov) -1.7% (Prev. 0.5%); YY (Nov) -1.3% (Prev. -0.8%)

NOTABLE US HEADLINES

• US House Speaker Johnson unveiled a GOP stopgap funding bill which includes January and February end dates, while the White House said Republicans are wasting time on an un-serious proposal for a two-step stopgap measure.
• Moody’s affirmed US at AAA; Outlook Cut to Negative from Stable on Friday.
• Goldman Sachs 2024 US outlook: sees higher than consensus growth, inflation to fall, Fed to cut rates from Q4 2024; risks include geopolitics and something 'breaking'.
• Click here for the US Early Morning Note.

GEOPOLITICS

MIDDLE EAST

• Staff at the Al-Shifa Hospital which is the largest in Gaza said patients and refugees were trapped in horrific conditions amid heavy fighting in nearby streets and it was also reported that the hospital had run out of water, food and electricity. Furthermore, WHO’s Tedros said they managed to get in contact with staff at the hospital and that it is no longer functioning as a hospital, according to BBC and Reuters.
• Israel PM Netanyahu said they offered Gaza’s Al-Shifa Hospital fuel but Hamas refused to receive it, according to an interview with NBC. It was also reported that Hamas suspended hostage negotiations over Israeli forces’ handling of Al-Shifa Hospital and denied refusing any amount of fuel from Israel, while it added that Israel’s offer to provide 300 litres belittles the sick and wounded and is enough to last for 30 minutes.
• Israel’s military said Hamas lost control of northern Gaza and residents have evacuated to the south despite Hamas instructions. Furthermore, the Israeli military said that civilians were wounded by an anti-tank missile near the Lebanon border and it retaliated with artillery fire, while Israel warned it was poised to impose quiet on the Lebanese front after hostilities increased on Sunday, according to Reuters.
• Palestinian President Abbas said that their people are facing a genocidal war and that they call on the US to stop the Israeli aggression against Gaza, while he added that they want international protection.
• US President Biden and Qatar’s Emir Al-Thani engaged in discussions to boost aid to Gaza. It was also reported that US Secretary of State Blinken and Qatar’s PM discussed efforts to evacuate the critically wounded and urgently increase the flow of humanitarian aid into Gaza, as well as discussed efforts to ensure the safe passage of foreign nationals out of Gaza and immediate return of hostages during a phone call on Saturday, according to Reuters citing a State Department spokesperson.
• White House National Security Adviser Sullivan said the US does not want to see firefights in hospitals and that the US is involved in negotiations between Israel and Qatar over hostages. Sullivan also stated that President Biden is determined to see a re-establishment of military-to-military ties with China and the question of Iran’s nuclear program and the threat it poses will be on the agenda meeting with Chinese President Xi.
• EU’s top diplomat Borrell called for immediate humanitarian pauses in Gaza and the establishment of humanitarian corridors. Borrell also stated that they call on Hamas to immediately and unconditionally release all hostages, while they condemn the use of hospitals and civilians as human shields by Hamas.
• Egyptian President Sisi called for an immediate sustainable ceasefire in Gaza without restrictions or conditions. It was separately reported that Egyptian security sources said the first group of Gaza evacuees crossed the Rafah border following the reopening of Sunday.
• Iranian President Raisi said the Gaza siege should end immediately and called on Islamic countries to impose oil and goods sanctions on Israel, while he added that there is no other way but to resist Israel and that they kiss the hands of Hamas for its resistance against Israel.
• Syrian President Assad urged a halt to any political process with Israel.
• US Air Force conducted two airstrikes against Iranian proxy targets in eastern Syria, according to Fox News.
• Iraq’s Harir Airbase hosting US and international forces was targeted by an armed drone which caused damage to infrastructure.
• "IRGC Air Force Commander: Israel's war on Gaza has expanded and Lebanese Hezbollah is involved in it", according to Al Jazeera.. "There is a possibility of Israel's war on Gaza expanding and we are ready for all eventualities"

OTHER

• German Chancellor Scholz’s government agreed to double military assistance to Ukraine for next year to EUR 8bln.
• Russian Foreign Minister Lavrov said the EU isn’t hiding its intentions to push Russia out of Central Asia and that these attempts are futile, while he added that Russia has been historically present there and is not going to disappear from there, according to AFP.
• US, Japan and South Korean defence officials assessed growing nuclear and missile threats from North Korea at a meeting on Sunday, while the US and South Korea revised their tailored deterrence strategy in the face of North Korean nuclear advancements, according to Yonhap. It was separately reported that North Korea criticised the UN Command meeting scheduled in South Korea as confrontational for the region and it called for the UN Command to be dissolved which it said was an illegal war organisation, according to KCNA.
• Russia's Kremlin says Polish plans to deploy tanks closer to the Belarus border would escalate tensions.

CRYPTO

• Bitcoin is under modest pressure and has lost the USD 37k handle. But, action overall is limited in nature with overall newsflow fairly limited thus far in European hours and as such BTC remains well within familiar ranges.

APAC TRADE

• APAC stocks were mostly subdued and failed to sustain the early momentum from last Friday’s rally on Wall St with the region cautious ahead of this week’s key risk events including US CPI and Chinese activity data, the Biden-Xi meeting on the sidelines of the APEC summit and the US government shutdown deadline.
• ASX 200 was lacklustre amid weakness in the top-weighted financial sector after ANZ Bank earnings which posted a record FY cash profit but missed analysts’ forecasts and noted the external environment is likely to remain challenging.
• Nikkei 225 initially gained after softer-than-expected PPI data which printed its slowest pace of annual growth since February 2021 although the index eventually reversed its gains amid rising yields and a slew of earnings.
• Hang Seng and Shanghai Comp traded cautiously as optimism from Alibaba and JD.com’s higher Singles Day sales was offset by cautiousness ahead of the approaching Chinese data and Biden-Xi summit.

NOTABLE HEADLINES

• Chinese NDRC officials said the state planning agency will set up six platforms to facilitate private business, as well as monitor and solve problems, while the NDRC head said China's private economy is expected to receive more favourable policies in the future, according to Global Times.
• Chinese officials met with US Treasury Secretary Yellen in the past week and raised concerns about investment restrictions, while China and the US agreed to avoid escalation of frictions.
• China is considering ending the freeze on Boeing (BA) with a 737 Max deal in the US, according to Bloomberg.
• US and Indonesia are to discuss the potential for a deal on electric vehicle minerals with Indonesia President Widodo to meet US President Biden at the White House on Monday, according to Reuters sources cited.
• RBA's acting Assistant Governor Kohler said the decline in inflation is to be more gradual than previously thought and bringing inflation back to the target is likely to be more drawn out. Kohler also stated that domestically sourced inflation has been widespread and slow to decline, while she noted the key risk is that high inflation today feeds into inflation expectations.
• Japanese Finance Minister Suzuki says sudden FX moves are undesirable; does not comment on FX levels; will monitor markets and respond with a sense of urgency. Currency rates should be set by markets reflecting fundamentals.
• PBoC will step up monitoring and analysis of systemic risks, shadow banks and financial technological innovation, via Reuters citing sources. Will handle risks of small and medium-sized financial institutions in a timely manner.

DATA RECAP

• Japanese Corporate Goods Price MM (Oct) -0.4% vs Exp. 0.0% (Prev. -0.3%); YY (Oct) 0.8% vs. Exp. 0.9% (Prev. 2.0%)
• October China New Yuan Loans (CNH) 738.4bln (exp. 665bln); Yuan Lending +10.9% Y/Y (exp. +10.9%); M2 Money Supply +10.3% (exp. +10.3%).