Asian bourses failed to benefit from the record closes seen on Wall Street with Chinese stocks hampered by ongoing regulatory concerns

In FX, the greenback was firmer as both EUR/USD and GBP/USD languished near the prior day’s lows

Looking ahead, highlights include UK inflation, German ZEW and US PPI, supply from Germany and the US

ASIA

Asia equity markets traded subdued as momentum from Wall St where S&P 500 and DJIA posted fresh record closes, was lost on the region. ASX 200 (+0.3%) and Nikkei 225 (-0.3%) were mixed in which strength in commodity related stocks kept the Australian benchmark afloat. This was after copper rose to above USD 3/lb and Brent crude rallied to a 2-year high on reports the Forties pipeline, which carries 40% of UK North Sea oil production, will be shut for weeks due to repairs. Hang Seng (-0.4%) and Shanghai Comp. (-0.7%) were subdued on plans of further regulatory steps for insurers to help curb risks and reports of possible contingency measures such as higher interest rates and tighter capital controls to combat possible outflows and support CNY from the impact of US tax reform and Fed hikes. Finally, 10yr JGBs traded relatively flat, although some mild support was observed following a 5-yr auction in which the b/c and accepted prices were higher than previous.

China outlined a contingency plan to battle US tax changes and the Fed’s expected decision to hike rates tspanough higher interest rates, more regular currency intervention and tighter capital controls to keep money at home and support CNY. (WSJ)

China's insurance regulator plans to revise certain guarantee fund rules for insurance industry as China seeks to strengthen insurers' capability to curb risks. (Newswires)

PBoC injected CNY 80bln via 7-day reverse repos and CNY 70bln via 28-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6162 (Prev. 6.6152)

UK/EU

German Chancellor Merkel told party members that a mandate for Brexit is not likely to occur until February. (Newswires)

UK Chancellor Hammond has sided with four other European treasury ministers to warn Donald Trump that he could start a trade war with a series of proposed tax reforms. (Telegraph)

UK International Trade Secretary Fox has stated that the U.K. would like a trading relationship with the EU post-Brexit that is “virtually identical” to the one its current one. (Newswires)

FX

FX markets were quiet as focus remained fixed on this week’s plethora of central bank announcements. The greenback was firmer with the USD-index eyeing 94.00 to the upside, as both EUR/USD and GBP/USD languished near the prior day’s lows. Conversely, antipodeans fared better in which AUD/USD rebounded from weak House Price and NAB Business Survey data, while NZD/USD continued to benefit following the RBNZ succession announcement and after the 0.6900 level acted as support.

Australian Home Price Index (Q3) Q/Q -0.2% vs. Exp. 0.5% (Prev. 1.9%). (Newswires)

Australian House Price Index (Q3) Y/Y 8.3% vs. Exp. 8.8% (Prev. 10.2%)

Australian NAB Business Conditions (Nov) 12 (Prev. 21). (Newswires)

Australian NAB Business Confidence (Nov) 6 (Prev. 8)

COMMODITIES

Oil prices extended on upside in which WTI crude gained a firmer footing above USD 58/bbl while Brent crude outperformed and broke above USD 65/bbl for the first time in more than 2 years after reports of a shutdown to the Forties pipeline which carries 40% of UK North Sea oil & gas production. As, such this also saw the Brent-WTI spread increase to above USD 7/bbl and its widest since May 2015. Elsewhere, the metals complex was less eventful with a mild pull back seen in copper and as gold only partially nursed Monday’s losses.

China's Cabinet reportedly gave approval for Shanghai oil futures contract. (Newswires)

US Department of Interior reportedly will unveil a 5-year proposal to allow oil drilling off US East Coast. (Newswires)

GEOPOLITICAL

Twitter sources reported that tunnel work at North Korean nuclear test site continues. (Twitter)

US

Treasuries saw a brief bout of volatility on Monday with an early bid seen after a reported terrorist attempt in New York, although shortly pared the gains as police caught the suspect. Furthermore, pressure was later seen after a weak 10-year auction with a tail of 0.05bps, a weaker B/C than the 6 auction average, and with dealers taking higher than the average.