• Chinese GDP slows for Q3, while solid Australian jobs data briefly supports AUD.
• NZD underperforms following decision by New Zealand First Party Leader Peters who chooses to back The Labour Party.
• Looking ahead, highlights include UK Retail Sales, US Weekly Claims and Philly Fed Index.

ASIA

Asia equity markets traded mixed despite a mostly positive close on Wall St. where all 3 majors posted fresh intraday records and the DJIA extended above 23K powered by IBM’s best performance in 8 years, as the region also digested a slew of tier 1 Chinese data including Q3 GDP which slightly slowed. ASX 200 (+0.1%) and Nikkei 225 (+0.7%) were positive in which the latter outperformed as it coat-tailed on USD/JPY’s brief reclaim of the 113.00 handle. Conversely, Hang Seng (-0.2%) and Shanghai Comp. (-0.4%) were less enthusiastic as participants mulled over the latest Chinese data in which GDP met expectations but still slowed from prior and although Industrial Production and Retails Sales mildly topped estimates, Fixed Asset Investments grew at its slowest pace in nearly 18yrs. Finally, 10yr JGBs were flat for most the session with demand subdued amid the positive risk tone in Japan, although mild support was seen following a 5yr JGB auction in which the b/c rose from prior.

Chinese GDP (Q3) Q/Q 1.7% vs. Exp. 1.7% (Prev. 1.7%, Rev. 1.8%). (Newswires)

Chinese GDP (Q3) Y/Y 6.8% vs. Exp. 6.8% (Prev. 6.9%)

Chinese Industrial Production (Sep) Y/Y 6.6% vs. Exp. 6.5% (Prev. 6.0%)

Chinese Retail Sales (Sep) Y/Y 10.3% vs. Exp. 10.2% (Prev. 10.1%)

Chinese Fixed Assets Investment Ex-Rural YTD (Sep) Y/Y 7.5% vs. Exp. 7.7% (Prev. 7.8%); lowest since December 1999.

PBoC injected CNY 80bln via 7-day reverse repos and CNY 60bln via 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6093 (Prev. 6.5991)

PBoC Governor Zhou stated the trading band is not too important and that expanding the band is not currently in focus, while PBoC’s Yi stated that China will continue to expand macroprudential measures for the property sector. (Newswires)

Bank of Korea kept the 7-day Repo Rate unchanged at 1.25% as expected. BoK Governor Lee said that there was one board member who dissented at today's rate decision, while the Governor added that monetary policy is to remain accommodative and that conditions are getting ripe to adjust monetary easing. (Newswires)

EUROPE

Catalan leader reportedly told party meeting that he would formally declare independence if Spain suspends regional autonomy. (Newswires)

UK

UK PM May promised to streamline process for EU nationals to register for settlement in UK and giving them a say on how it will work, while PM May added that they are near to reaching agreement on citizens' rights which was one of the points that stalled Brexit discussions. (Newswires)

UK Brexit Secretary Davis said that hard exit is a remote possibility. (Le Figaro)

EU’s Tusk said there is promising progress in Brexit talks with London and that he will recommend the start of internal preparations for the next phase of Brexit talks. However, Tusk later added that he doesn't expect any breaktspanough in Brexit talks on today and that concrete proposals are needed from the UK. (Newswires)

Reports state that Brexiteers including former cabinet members and business leaders urged that PM May be willing to walk out on discussions if EU leaders do not agree to trade talks. (Telegraph)

FX

In FX markets, AUD/USD was initially supported after better than expected jobs data in which Employment Change topped estimates and the Unemployment Rate unexpectedly declined, although the upside in AUD/USD was later pared in the wake of the Chinese data which showed a mild slowdown in Y/Y growth. NZD/USD was pressured with participants jittery ahead of the New Zealand First Party’s announcement on which side to back to form the next government, with selling exacerbated as stops were tripped tspanough 0.7100 and amid some unsubstantiated speculation that a meeting by the Green Party later today could be a sign that its partnership with the Labour Party could get the nod from the kingmaker. Elsewhere, the rest of major currencies were relatively uneventful in which JPY remained weak, while EUR/USD and GBP/USD attempted to hold onto the prior session’s gains as well as the 1.1800 and 1.3200 handles respectively.

Australian Employment Change (Sep) 19.8k vs. Exp. 15.0k (Prev. 54.2k, Rev. 53.0k). (Newswires)

Australian Unemployment Rate (Sep) 5.5% vs. Exp. 5.6% (Prev. 5.6%)

New Zealand National Party leader and incumbent PM English said he doesn't know if New Zealand First Party will support National, while he added he will present to caucus broad parameters of an agreement with New Zealand First and will seek their backing. (Newswires)

NZ Herald article stated that the Green Party is expected to go ahead with a meeting of its delegates tonight, which the article speculated could be a sign Labour could receive nod from New Zealand First Party. (NZ Herald)

COMMODITIES

Commodities were uneventful with WTI relatively unchanged after meandering around the USD 52/bbl level, while gold also lacked drivers and languished near the prior day’s lows. Elsewhere, copper conformed to the uninspiring tone with demand subdued as participants mulled over the somewhat mixed Chinese data releases.

US

The US Treasury curve bear-steepened, though some of the major curves saw further flattening: the gap between 5s30s fell to the lowest since November 2007, 2s10s flattest since August 2016. Additionally, the spread between US and German 2-year paper rose to the highest since February 2000. Analysts were content to attribute the weakness on expectations of a December hike which is now around 80% priced-in according to money markets, while Fed speakers Robert Kaplan and William Dudley offered little by way of new information. The 10-Year T-Note Futures settled 9+ ticks lower at 125-04+.

Fed Beige Book noted modest-to-moderate wage growth (unchanged from the prior assessment) and noted modest price pressures. Beige Book added that there was a moderate to modest expansion on Manufacturing activity. (Newswires)

Fox reported that the Alexander-Murray Healthcare Bill will fail in the House as many in the GOP want a full repeal and replace, while a White House press spokeswoman stated President Trump is not to support the bill in its current form. (Newswires)

US Republican Senator Cornyn said GOP has votes to pass measure that advances tax reform. (Newswires)