• European bourses are mixed to flat in a relatively lacklustre session thus far while US futures remain supported, ES +0.7% ahead of the Democrats stimulus deadline
• US Chief of Staff Meadows spoke with Treasury Secretary Mnuchin on COVID-19 relief, said there has been progress but no breakthrough yet
• Moderna (MRNA) CEO said its COVID-19 vaccine could get authorisation for emergency use in December, contingent on positive interim results in November, WSJ
• EU Chief Brexit Negotiator Barnier & UK Counterpart Frost to speak again at 14:00BST/09:00ET today
• FX features a downbeat DXY edging ever closer to the 93.00 mark to the modest benefit of major peers though performance is mixed amid substantial central bank updates
• Looking ahead US Building Permits/Housing Starts, Fed’s Williams, Quarles & Evans; President Trump on Fox at 13:00BST/08:00ET
• Looking ahead, highlights include Phillip Morris, P&G, Lockheed Martin & Netflix

CORONAVIRUS UPDATE

US reported 47,035 (prev. +53,157) new COVID-19 cases and 475 (prev. +593) additional deaths. New York reported 9,98 (prev. +1,390), positivity rate 1.21% (prev. 1.08%), hospitalizations 934 (prev. 913), and deaths +14 (prev. +7) (Newswires)

US CDC has issued a new "strong recommendation" for all US airplane and train passengers/employees to wear masks to prevent the spread of COVID-19. (Newswires)

Under UK plans to open international travel, passengers will undergo a one-hour COVID-19 test when leaving Britain, according to the Times. Rapid tests will be introduced from today at Heathrow airport to permit travelers to enter countries where negatives tests are required. (Times)

Germany reported 6,868 (Prev. 4,325) new COVID-19 cases and 47 (Prev. 12) additional deaths. (Newswires)

Moderna (MRNA) CEO said its COVID-19 vaccine could get authorisation for emergency use in December, contingent on positive interim results in November from the large clinical trials. (WSJ) Note, in an FT article in late September, Moderna CEO said the Co. would not be ready to seek emergency use authorisation from the FDA before November 25 at the earliest, and added that he did not expect to have full approval to distribute the drug to all sections of the population until next spring. (FT)

60k individuals have taken China's vaccine candidates in their Phase 3 trials with no serious side effects seen thus far, Science & Tech Ministry Officials. (Newswires)

ASIA

Major Asia-Pac indices traded with losses across the board after Wall Street suffered a broad decline following reports which suggested a State-side stimulus deal is not sounding imminent based on comments from the House Speaker and Committee Chairs. US equity futures opened electronic trade in modest positive territory, but have since came off highs and traded sideways throughout the night, with ES, NQ and YM still holding onto some gains heading into the European open. Back to APAC, ASX 200 (-0.7%) was pressured by its mining sector, albeit the index saw some fleeting upside in light of further the dovish RBA rhetoric, this time from Assistant Governor Kent. Nikkei 225 (-0.5%) failed to benefit from the JPY dynamics as the index felt the weight of losses across its industrial sector. KOSPI (+0.5) initially conformed to the losses in the region, with Hyundai and its affiliate Kia posting losses between 3-4% after the former warned that Q3 profits will be hit by charges related to engine problems. Meanwhile, SK Hynix traded in the red after the chipmaker confirmed that it is to purchase Intel’s NAND memory business. Elsewhere, the humdrum tone reverberated into China, with Hang Seng (U/C) and Shanghai Comp. (+0.4%) modestly softer for much of the session despite another PBoC liquidity injection and a non-event LPR setting as anticipated; however, the bourse did pick up somewhat in the tail-end of APAC trade.

PBoC set USD/CNY midpoint at 6.6930 (Prev. 6.7010) (Newswires)

PBoC injected a net CNY 70bln via 7-day reverse repos at a maintained rate of 2.20%.

S&P affirmed Australia at "AAA"; outlook Negative. (Newswires)

Softbank (9984 JT) is said to plan to renew it commitment towards its asset management division with a stock trading strategy that will focus on earnings in Q3. Co. is said to have accumulated USD 20bln in its public stock unit. (Newswires)

CENTRAL BANKS

RBA Assistant Governor Kent said the Board is considering the case for further easing, there is some room to cut the Cash Rate further, one option is to purchase longer-dated bonds - bond purchases would be regular and aimed to bring down yield. Kent also said expansion of balance sheet is adding monetary stimulus, need policy support to be provided for some time given. Kent remarked that the Bank Bill Swap Rate (BBSW) could move into negative territory in the case of further RBA easing. He also reiterated that the central bank will not increase Cash Rate until actual inflation is sustainably in the target range. RBA has not done a formal policy framework review. (RBA/Newswires)

RBA Minutes noted the Board discussed the case for additional monetary easing to support jobs and the overall economy. As in previous meetings, members discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative, and buying government bonds further along the yield curve. While members noted that the Australian dollar exchange rate was broadly consistent with its fundamental determinants, a lower exchange rate would provide more stimulus to the Australian economy in the recovery phase. (RBA)

RBNZ Governor Orr said there is plenty of room left in its QE programme, will update on tools in November. (Newswires)

PBoC Loan Prime Rate 1Y (Oct) 3.85% vs. Exp. 3.85% (Prev. 3.85%). (Newswires) 

PBoC Loan Prime Rate 5Y (Oct) 4.65% vs. Exp. 4.65% (Prev. 4.65%)

China's Securities Journal suggests the PBoC could increase reverse repos. (Newswires)

BoJ sources stated the Bank is to cut the FY economic and price forecasts in the quarterly projections due next week; such a downgrade is unlikely to trigger an immediate shift in policy. Inflation forecast downgrade is largely due to discounts on domestic travel, sources said. (Newswires) Note, the next monetary policy decision will be published on Oct 29th.

BoE's Vlieghe says it appears as if the downside risks to the economic outlook have begun to materialise; in his view, outlook for monetary policy is skewed towards adding further stimulus; my own view is that the risk that negative rates end up being counterproductive to the aims of monetary policy is low. Since it has not been tried in the UK, there is uncertainty about this judgement, and the MPC is not at a point yet when it can reach a conclusion on this issue. Tiering systems have been effective in getting some of the negative rate benefits while reducing costs. Adds, QE is probably less potent now than in March. (BoE) Link to full headline & release

US

House Committee Chairs told rank and file members that “language” continues to be a problem in getting a universal coronavirus agreement, and testing and contact tracing continues to be an issue, as per sources cited by Fox's Pergram. (Twitter)

US Chief of Staff Meadows spoke with Treasury Secretary Mnuchin on COVID-19 relief, said there has been progress but no one is "popping the champagne corks yet", via Fox's Pergram. (Twitter) US Senate Majority Leader McConnel says Senate will vote on GOP virus relief this week. (Newswires)

US Debate Commission adopted new rules to mute microphones to allow President Trump and Democratic Candidate Biden two minutes of uninterrupted time per segment. (AP) US President Trump is committed to a debate with Democratic Candidate Biden despite the last-minute rule change, according to the Trump Campaign. (Twitter) US President Trump confirmed that he will partake in the next presidential debate but thinks it is unfair. (Newswires)

US Supreme Court has rejected the Republican request to limit mail-in voting in Pennsylvania, (Newswires)

US President Trump said the FBI should investigate Candidate Biden. (Newswires) Note, reports last week noted that the FBI is investigating whether the exposure of Hunter Biden's emails was linked to a foreign intelligence effort to undermine the US election.

Goldman Sachs (GS) is set to pay over USD 2bln in the DOJ's 1MDB probe, according to sources. (Newswires) GS holds a 4.8% weighing in the DJIA

Walmart (WMT) Media Group is expected to earn almost USD 1bln in sales in 2020, according to sources. (Newswires)

Microsoft (MSFT) is to team up with Elon Musk's Space X, among others, opening a new front in the cloud computing battle with Amazon (AMZN), WSJ. (WSJ)

UK/EU

EU Chief Brexit Negotiator Barnier & UK Counterpart Frost to speak again this afternoon, AFP's Zampa; reports indicate this will be at 14:00BST today. (AFP/Twitter)

EU's Chief Brexit Negotiator Barnier has reportedly given no indication that the bloc is prepared to cede to UK PM Johnson's demands regarding concessions to get a deal, particularly on fishing, according to the Times. (Times)

UK Conservatives are reportedly putting together a strategy aimed at countering increasing support for Scottish independence, according to sources. (Newswires)

GEOPOLITICAL         

Support is growing within the Indian government for India to formally start trade talks with Taiwan. (Newswires)

EQUITIES

European equities (Eurostoxx 50 +0.1%) trade mixed to flat in what has been a relatively indecisive session thus far with little in the way of incremental macro newsflow since yesterday’s close. Slightly outperformance has been observed in the CAC 40 (+0.3%) with Accor (+6.0%) top of the index after a broker upgrade from JP Morgan with the bank upbeat on the Co. “as it streamlines costs, simplifies its business, whilst its sound BS should support small/midscale M&A, allowing the company to emerge from the crisis stronger”. Sectors are mixed with not much in the way of breadth across the broader categories; oil & gas is the main outlier to the downside amid modest losses in the crude complex. Travel & leisure names have been granted some reprieve amid plans to open up international travel to the UK with Heathrow implemented a rapid COVID-19 testing operation for some destinations. As such, IAG (+6.3%), whose British Airways will be one of the first to offer testing, sit at the top of the Stoxx 600, gains are slightly less pronounced for some of the budget airlines such as easyJet (+4.0%) and Ryanair (+2.5%). Elsewhere, support has also been observed in the banking sector post-earnings from UBS (+2.2%) with the Co. far exceeding Q3 net income expectations in what was its “best Q3 earnings in a decade”. Additionally, the Co. announced it has set aside USD 1.5bln for potential share buybacks and currently has USD 1bln available to be paid out as a cash dividend in 2021. Reckitt Benckiser (+1.4%) are another gainer this morning after Q3 earnings were boosted by surging Dettol sales throughout the pandemic. To the downside, Tele2 (-1.5%) are the Stoxx 600 laggard post-earnings, albeit having pared back much of the initial downside, in a session that has featured several Scandi updates, including Stora Enso, Swedbank and Yara International.

FX

NZD/AUD – The race to the bottom is back on down under, and even though a 15 bp RBA rate cut looms larger than the next batch of RBNZ stimulus, the tables have turned to the detriment of the Kiwi. Indeed, Nzd/Usd has relinquished 0.6600+ status and breached the 100 DMA at 0.6586, as the Aud/Nzd cross rebounds from sub-1.0700 and Aud/Usd pivots 0.7050. To recap, minutes from the October policy meeting coupled with comments from RBA Deputy Governor Kent all but sealed an ease early next month, with the latter also noting that Bank Bill Swap rates may also fall below 0% if benchmark rates are reduced further, while RBNZ Governor Orr remarked that there is ample room to deliver more QE and an update on tools will be forthcoming in November.

USD – Antipodean underperformance aside, the Buck is mixed vs G10 rivals as broad risk sentiment recovers and the DXY hovers just above Monday’s base within a 93.204-512 range ahead of US housing data, a few Fed speakers and House Speaker Pelosi’s deadline for a pre-election fiscal stimulus deal that looks unrealistic or optimistic at this stage.

EUR/CHF/GBP/CAD/JPY – The Euro is maintaining momentum above 1.1750 vs the Greenback and seems well flanked by decent option expiry interest at 1.1745 (1.4 bn) and between 1.1790-1.1800 (1.3 bn) to the upside that also incorporates yesterday’s high and the 50 DMA (1.1795). Meanwhile, the Franc continues to straddle 0.9100 with little reaction to Swiss trade data showing a narrower surplus, but key watch exports declining at a similar pace to the previous month, and the Pound is holding around 1.2950 awaiting BoE commentary from Vlieghe and any further Brexit developments ahead of speeches by the European Commission President von der Leyen and her VP Sefcovic. However, Sterling looks a bit leggy against the single currency as Eur/Gbp probes 0.9100 amidst reports of RHS flows, though recent peaks circa 0.9120-25 may cap further upside irrespective of charts indicating a break of a descending channel. Elsewhere, the Loonie is hovering just above 1.3200 in advance of Canadian inflation on Wednesday and the Yen has slipped a fraction to trade either side of 105.50 following overnight source reports suggesting that the BoJ will downgrade GDP and CPI forecasts when it meets next week.

SCANDI/EM – Not a lot of movement or deviation in Eur/Sek around 10.2800 on the back of standard Riksbank rhetoric, but Usd/Cnh and Usd/Cny have fallen further to fresh 2+ year troughs near 6.6700 and 6.6800 respectively as the PBoC gradually lowers its daily midpoint setting for the onshore Yuan and maintained LPRs for the 6th consecutive month.

US and Brazil have signed a new protocol regarding transparency and trade rules. (Newswires)

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1745 (1.4BLN), 1.1790-1.1800 (1.3BLN), 1.1850 (250M), 1.1865-75 (600M)

FIXED INCOME

No sign of indigestion via Germany’s latest 2 year issuance even at a more punitive -80 bp, while BoE’s Vlieghe is veering towards more policy easing and not averse to deploying NIRP if the necessary criteria are satisfied. However, the 10 year benchmarks are also taking stock of wider risk appetite that is improving on balance in terms of EU equities paring worst losses and oil prices stabilising off recent lows. Hence, Bunds, Gilts and US Treasuries are respecting resistance in the form of October peaks, albeit retaining an underlying bid between 176.24-01, 136.75-51 and 138-28+ to 138-24+ parameters. Ahead, US housing data and more Fed speakers.

EU is to raise EUR 10bln from the 10yr bond and EUR 7bln from the 20yr (investor demand is at a record EUR 233bln), according to the lead manager. (Newswires)

COMMODITIES

A relatively slow session for the commodity space thus far in terms of fundamental updates as the dust settles following yesterday’s JMMC meeting, which ended up making no recommendation to change policy prior to 2021; the next gathering is November 17th ahead of the full OPEC+ event at the month’s end. Perhaps most notably from the meeting, reports highlight there was no indication of Russia putting forward a compensation plan for their 430k/bbl of overproduction; as such, attention will turn to whether the likes of Saudi put pressure on Russia to unveil a plan and whether some of the other over-complying members follow Russia’s lead on this matter in the months ahead. Price action throughout the session has been choppy but relatively contained compared with the action seen yesterday; currently, benchmarks remain in proximity to the unchanged mark but closer to the top-end of the day’s range. Crude explicitly, the sessions highlight will be the private inventory report which may well display another crude drawdown given a significant magnitude of production remained shut-in last week given the after-effects of Hurricane Delta. As a reminder, last week’s report printed a draw of 5.4mln which was followed by the EIA reading of a 3.818mln draw. Moving to metals, spot gold has been uneventful and in proximity to flat levels for the majority of the session following similar price action in the later-half of APAC trade. However, most recently the precious metal has gleaned some strength from further downside in the DXY as sentiment stateside remains cautiously firm as the Democrats stimulus deadline approaches. Separately, BHP updated that their copper operations in South America are still being affected by COVID-19 related measures but nonetheless copper production came in at 413k/T vs. Exp. 394k/T for Q1.

Spot premium for Russian ESPO crude Dec loadings have reportedly risen to a 3mth high at USD 1.55-1.65/bbl to Dubai, with sources citing China demand. (Newswires)

BHP (BHP LN) said copper operations in South America continue to be impacted by COVID-19 measures. (Newswires)