• European bourses are incrementally weaker, whilst US futures teeter around the unchanged mark; DAX 40 outperforms post-Siemens
• DXY is slightly firmer with underperformance in the Antipodeans on fairly muted risk sentiment
• USTs/EGBs back in the green after briefly retreating alongside downside in Gilts amid hawkish remarks from BoE’s Green
• Crude remains on the backfoot while metals march higher, although iron declined overnight amid Chinese intervention
• Looking ahead, highlights include US IJC, BoE’s Ramsden, ECB’s Lagarde & de Guindos, Fed’s Barr, Waller, Cook, Mester & Williams, Supply from US, Earnings from Walmart

EUROPEAN TRADE

EQUITIES

• European bourses are struggling for direction, Euro Stoxx 50 -0.1%, as newsflow slows considerably in European hours and the tailwind from US data begins to fizzle out.
• Sectors are tilting negative with stock specifics dictating, aside from Energy which lags on recent benchmark action. Elsewhere, Luxury names slump post-Burberry's concerns around attaining guidance while Utilities and Industrials benefit from broker action and Siemens results respectively.
• Stateside, futures are in the red but as above action is very contained and limited thus far with futures flat/0.10% lower ahead of a number of Fed speakers incl. Williams and key earnings from WMT & M, among others.
• NetEase Inc (NTES) Q3 2023 (USD): EPS 1.84 (exp. 1.47), Revenue 3.7bln (exp. 3.82bln). Cuts quarterly dividend to 0.495/ADS (prev. 0.525/ADS).
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
• Click here for more details.

FX

• Buck continues to recover from post-US CPI lows as DXY forms a base above 104.00 between 104.30-56 parameters.
• Euro and Yen relatively firm within 1.0831-60 and 151.13-47 respective ranges on yield spread and data dynamics.
• EUR/USD flanked by hefty option expiries and USD/JPY solidly underpinned.
• Sterling gleans some support around 1.2400 via hawkish remarks from BoE's Greene and Aussie on either side of 0.6500 via strong payroll gain.
• Kiwi lags sub-0.6000 in the face of big upside expiry and AUD/NZD headwinds
• PBoC set USD/CNY mid-point at 7.1724 vs exp. 7.2474 (prev. 7.1752)
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Debt futures regroup and rebound after early buying petered out for a while.
• Bunds off lower 130.56 low having peaked at 130.89.
• Gilts extend both ends of the Liffe range to 96.34-74 amidst hawkish BoE rhetoric.
• T-note hovers towards the top of 108-17/07 band awaiting US IJC, IP and a host of Fed speakers.
• Click here for more details.

COMMODITIES

• WTI Dec'23 and Brent Jan'24 futures are softer around USD 76.30/bbl (vs high 76.61/bbl) and USD 80.90/bbl (vs high 80.98/bbl) following a session of selling on Tuesday; as mentioned, newsflow has been slow with specifics for crude equally limited.
• Spot gold moving back above its 50 DMA (USD 1,962.30/oz) from a USD 1,956.55/oz trough, but off its intraday peak of USD 1,968.61; Spot silver found support at its 200 DMA.
• 3M LME copper has reclaimed a USD 8,300/t handle for the first time since the end of September, although iron ore futures fell overnight after China’s NDRC yesterday said it is investigating “unreasonably high prices; LME zinc prices meanwhile slipped some 3% following a larger-than-usual build in zinc inventories (+65kt).
• US and the EU discussions on a permanent steel agreement have reportedly reached a stalemate, according to Bloomberg sources; Biden admin has proposed prolonging the status quo until the end of 2025 to hammer out a permanent deal.
• Click here for more details.

NOTABLE HEADLINES

• BoE's Greene says the latest inflation data is good news and labour market data is positive. The question is whether BoE policy is restrictive enough and we may need to be restrictive for longer; Greene makes clear that we are in restrictive territory. Markets globally have not really clocked on to how long central banks will need to stay restrictive. UK wage growth is still incredibly high. I am not thinking about cuts.

NOTABLE US 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.
• US Senate voted to pass the stopgap funding bill to avert a government shutdown, as expected.
• Click here for the US Early Morning Note.

GEOPOLITICS

• 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.
• 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.

CRYPTO

• Bitcoin under modest pressure but stuck in very narrow USD 37-37.5k parameters with specifics for BT C light and general macro developments limited.

APAC TRADE

• 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.

NOTABLE HEADLINES

• 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'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.
• "China's Ministry of Commerce said on Thu it will implement tariff reduction and exemption for imported equipment for foreign investment projects encouraged by the government", according to Global Times. "The Ministry also urged responsible authorities to study relevant policies encouraging foreign investment and help the involved enterprises to report corresponding projects in accordance to national policies."

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%); 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%); YY (Sep) -2.2% vs. Exp. -3.6% (Prev. -7.7%)
• Australian Employment Change (Oct) 55.0k vs. Exp. 20.0k (Prev. 6.7k); 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%)