• APAC stocks were mostly negative as the recent data-driven momentum eventually lost steam.
• US Senate voted to pass the stopgap funding bill to avert a government shutdown, as expected.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 -0.1% after the cash market closed +0.6% yesterday.
• Biden-Xi meeting was said to be constructive and productive as they agreed to restart cooperation on counter-narcotics and create forums for military-to-military contact.
• DXY has continued to grind higher to circa 104.50, USD/JPY remains on a 151 handle, antipodeans lag peers.
• Looking ahead, highlights include US IJC, BoE’s Ramsden, ECB’s Lagarde & de Guindos, Fed’s Barr, Waller, Cook, Mester & Williams, Supply from Spain, France & US, Earnings from Alibaba & Walmart.

US TRADE

EQUITIES

• US stocks were choppy but ultimately closed higher as data releases remained at the forefront of investors' attention after mostly encouraging data releases including better-than-expected US Retail Sales and Empire Manufacturing, while PPI data softened. Conversely, retailer sentiment was varied after mixed fortunes from the likes of Target and TJX post-earnings which comes ahead of Walmart's results on Thursday.
• SPX +0.16% at 4,503, NDX +0.03% at 15,817, DJI +0.47% at 34,991, RUT +0.16% at 1,801.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (2024 voter) said hope to eventually bring interest rates back to normal and noted that a lot of frenzy has been taken out of the housing market, while they are seeing banks pull back credit which he added is not unexpected.
• Fed's Daly (2024 voter) said data showing a further deceleration in inflation was "very, very encouraging" and indicative of effective Fed policies, while she refused to rule out another interest rate hike and said rate cuts are "not happening for a while", according to an FT interview.
• US Senate voted to pass the stopgap funding bill to avert a government shutdown, as expected.

APAC TRADE

EQUITIES

• APAC stocks were mostly negative as the recent data-driven momentum eventually lost steam.
• ASX 200 was lower with the energy and mining-related sectors pressured by a deterioration in the commodities complex and with stronger-than-expected employment data doing little to spur risk appetite.
• Nikkei 225 failed to sustain its early gains despite better-than-expected exports and machinery orders.
• Hang Seng and Shanghai Comp weakened amid mixed tech earnings ahead of Alibaba’s results and with participants digesting the rhetoric from the Biden-Xi meeting which was said to be constructive and productive as they agreed to restart cooperation on counter-narcotics and create forums for military-to-military contact. However, reports noted that Biden said Xi was a dictator and he also raised concerns about human rights abuses.
• US equity futures were rangebound with price action contained amid the glum mood in Asian peers.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 -0.1% after the cash market closed +0.6% yesterday.

FX

• DXY continued to claw back its post-CPI losses and sits just below 104.50 with the recovery helped after Retail Sales and NY Fed Manufacturing topped forecasts, while the Senate also voted to pass the stopgap funding bill to avert a shutdown.
• EUR/USD marginally softened as the dollar regained some composure; trades within a 1.0831-55 range.
• GBP/USD dipped beneath the 1.2400 handle in an extension of its pullback following softer UK inflation.
• USD/JPY was steady after returning to the 151.00 territory alongside yesterday’s rebound in US yields.
• Antipodeans were pressured amid the soured risk appetite and commodity weakness.
• PBoC set USD/CNY mid-point at 7.1724 vs exp. 7.2474 (prev. 7.1752)

FIXED INCOME

• 10-year UST futures rebounded from yesterday’s trough after they were dragged lower in the aftermath of the better-than-expected US retail sales and NY Fed survey, with some slight overnight reprieve as sentiment waned.
• Bund futures remained contained beneath the 131.00 level in the absence of any major pertinent catalysts.
• 10yr JGB futures were uneventful following better-than-expected data releases from Japan and slightly improved demand at the enhanced-liquidity auction for 2yr-20yr JGBs.

COMMODITIES

• Crude futures extended on declines amid headwinds from the subdued risk tone and firmer dollar.
• Spot gold traded rangebound with the precious metal contained after the recent dollar rebound.
• Copper futures were subdued alongside the soured risk appetite in the major Asian bourses.

CRYPTO

• Bitcoin traded lower overnight amid a pullback from the prior day's firm crypto rally.

NOTABLE ASIA-PAC HEADLINES

• US President Biden told Chinese President Xi that they have to ensure competition does not lead to conflict and they can work together on AI and climate, while Xi told Biden that the US and China should be fully capable of rising above differences and said protectionism is weighing on the global economy.
• US President Biden said talks with Xi were constructive and productive, while they made real progress and are restarting cooperation on counter-narcotics, as well as resuming military-to-military contact. Biden also raised concerns about people detained in China and about China's human rights abuses in Xinjiang, Tibet and Hong Kong, while he emphasised the US would take actions to prevent US technology from being used to undermine US security and said that Chinese President Xi is a dictator.
• Chinese President Xi said China has no plan to replace the US and that he hopes the two countries can be partners, respect each other and coexist peacefully. Xi added that both sides should have more dialogue, discuss more and handle differences calmly, as well as promote mutually beneficial cooperation in fields including the economy, trade, agriculture, climate change and AI. Furthermore, he said the US should stop arming Taiwan and support China's peaceful reunification with Taiwan, while he hopes the US will lift its unilateral sanctions and provide a fair and just environment for Chinese companies.
• Chinese President Xi said during his APEC address that the door of US-China relations cannot be shut and the world needs China and the US to work together. Xi also stated China is ready to be a partner and friend of the US and that the US should not bet against China, while he added that there is plenty of room for US-China cooperation and that it is wrong to view China as a threat and play a zero-sum game.
• US senior administration official said the Biden-Xi meeting lasted for over 4 hours and both leaders acknowledged that they want to keep lines of communication open, while there are no plans for another visit between Biden and Xi at this time although they kept the door open to it.
• China objected to a US proposal for APEC countries to incorporate sustainability and exclusivity principles into their trade and investment policies, according to a Reuters source. Furthermore, USTR Tai noted that APEC negotiations on investment principles are continuing, and she is optimistic that "San Francisco principles" can be finalised soon.
• China's state planner said it will continue to expand domestic demand and promote high growth in services consumption. NDRC added it will coordinate the link between macro policies this year and next year and make sure there is a good start to the economy in 2024, while it will roll out policy measures to attract foreign investment with bigger efforts and will increase household income in urban and rural areas, as well as improve consumption capability of low- and mid-level income groups.

DATA RECAP

• Chinese House Prices YY (Oct) -0.1% (Prev. -0.1%)
• Japanese Trade Balance (JPY)(Oct) -662.5B vs. Exp. -735.7B (Prev. 62.4B, Rev. 72.1B)
• Japanese Exports YY (Oct) 1.6% vs. Exp. 1.2% (Prev. 4.3%)
• Japanese Imports YY (Oct) -12.5% vs. Exp. -12.2% (Prev. -16.3%, Rev. -16.6%)
• Japanese Machinery Orders MM (Sep) 1.4% vs. Exp. 0.9% (Prev. -0.5%)
• Japanese Machinery Orders YY (Sep) -2.2% vs. Exp. -3.6% (Prev. -7.7%)
• Australian Employment Change (Oct) 55.0k vs. Exp. 20.0k (Prev. 6.7k)
• Australian Unemployment Rate (Oct) 3.7% vs. Exp. 3.7% (Prev. 3.6%)
• Australian Participation Rate (Oct) 67.0% vs. Exp. 66.7% (Prev. 66.7%)

GEOPOLITICS

• The main gap in the indirect negotiations between Israel and Hamas regarding a possible deal for the release of prisoners is the length of the ceasefire that Israel will agree to as part of the move, according to Axios sources.
• US President Biden said he does not know how long the conflict in Gaza will last and he made it clear to Israeli PM Netanyahu that a two-state solution is the only answer, while he is doing everything in his power to get hostages out of Gaza but added that does not mean sending US military.
• US senior official said Chinese President Xi said there were no such plans for China military action against Taiwan in the coming years, while Xi told Biden China's preference was for a peaceful reunification but also talked about conditions in which force could be used.
• Iran is still breaching restrictions on its atomic activities imposed by the 2015 nuclear deal, according to the quarterly IAEA report seen by Reuters.
• North Korea said the US and its allies are raising tensions in the region, while it will respond to military threats by the US and its allies with more aggressive and strategic military acts, according to KCNA.
• Pentagon said the State Department approved a potential sale of sidewinder missiles to South Korea.

EU/UK

NOTABLE HEADLINES

• Bank of Portugal instructed Santander (SAN SM), Millennium BCP, BPI and Novo Banco to create a capital buffer for home mortgages from October 2024 which will be equivalent to 4% of loan portfolios collateralised by home mortgages in Portugal.