• Asian equity markets resumed the weak performance seen across global peers which culminated in Wall St’s worst day in over a month
• In FX markets, the DXY surrendered the 93.00 level overnight, providing mild support for its major counterparts
• US congressional committees have reportedly made some progress, but not enough to make a stimulus deal anywhere near imminent, according to sources
• US Senate voted 52 vs. 48 to confirm Judge Amy Coney Barrett's nomination to the Supreme Court
• Looking ahead, highlights include US Durable Goods, Consumer Confidence, BoE’s Haldane, ECB’s Centeno, supply from the UK & US
• Earnings: Mediobanca, Santander, BP, HSBC, Novartis, Caterpillar, Pfizer, Merck, 3M, Eli Lilly

CORONAVIRUS UPDATE

US COVID cases +63,195 (prev. +83,851) and deaths +380 (prev. +828), while a major newswire tally stated that US cases increased by at least 69,413 to a total of 8.74mln and deaths rose by at least 515 to a total of 225.8k. (Newswires)

Eli Lilly (LLY) said it will end its COVID-19 antibody clinical trials for patients in a hospital setting after NIH researchers found that BAMLANIVIMAB was unlikely to help hospitalized patients recover from advanced stages of the virus, although Eli Lilly noted that all other studies related to its treatment are ongoing. (Newswires)

Pfizer (PFE) Phase 2/3 trial of its COVID-19 vaccine enrolled 42,113 participants and 35,771 have received their second vaccination. (Newswires)

France COVID cases +26,771 (prev. +52,010) and deaths +257 (prev. +116). France’s government is reportedly mulling a full lockdown for Paris, Lyon and Marseille metro areas which includes 7pm curfew, a public transport shutdown and closing non-essential shops, while reports noted that a three-week lockdown could start from Friday evening with the details to be announced on Wednesday. (Newswires/Bild)

UK COVID cases +20,890 (prev. +19,790) and deaths +102 (prev. +151). (Newswires)

Imperial College London/Ipsos MORI study among 365k randomly selected adults which conducted tests at home, showed that 4.4% had antibodies in September vs. 6.0% in June which suggested the antibody immunity may not last over time in some of those that were infected. (Newswires)

ASIA

Asian equity markets resumed the weak performance seen across global peers amid the ongoing risk-averse themes including the worsening COVID-19 pandemic, tougher lockdown restrictions in Europe and the continued US stimulus stalemate which culminated in Wall St’s worst day in more than a month. ASX 200 (-1.7%) and Nikkei 225 (-0.1%) were lower with the Australian benchmark the underperformer amid losses across all sectors and the declines led by energy as the COVID-19 situation did no favours for the demand outlook, while sentiment in Tokyo was also lacklustre but with downside limited by a relatively stable currency and the KOSPI (-0.9%) briefly nursed opening losses after better than expected GDP data and stronger revenue from Kia Motors which drove shares in the automaker higher by nearly double-digits. Hang Seng (-0.9%) and Shanghai Comp. (Unch.) were both lacklustre after data showed Industrial Profit growth in September moderated to 10.1% from 19.1% and due to lingering US-China tensions after the US government approved potential USD 2.4bln in arms sale to Taiwan despite an earlier announcement by China's Foreign Ministry to impose sanctions on US entities that partake in arms sales to Taiwan, although there were some bright spots with HSBC shares rallying around 5% on return from the lunch break following better than expected Q3 results and with Tencent also buoyed after US Appeals Court rejected an attempt by the Justice Department to impose an immediate ban on WeChat. Finally, 10yr JGBs traded higher as prices conformed to the mild upside seen in T-notes and with demand also spurred by the risk aversion, although gains were capped by the 2 year auction results which were marginally weaker than prior.

PBoC injected CNY 100bln via 7-day reverse repos at a rate of 2.2% for a net injection of CNY 30bln. (Newswires) PBoC set USD/CNY mid-point at 6.6989 vs. Exp. 6.7005 (Prev. 6.6725)

Chinese Industrial Profits (Sep) Y/Y 10.1% (Prev. 19.1%) Chinese Industrial Profits YTD (Sep) Y/Y -2.4% (Prev. -4.4%)

US government approved a potential USD 2.37bln of arms sales to Taiwan. In other news, the US Appeals Court rejected the DoJ bid to impose an immediate ban on Tencent’s WeChat. (Newswires)

China's NDRC and other departments are to boost support for private enterprises including increased efforts to lower corporate costs for private enterprises, as well as strengthening support for scientific and tech innovation. (Xinhua)

China's Global Times tweeted that a merger between the main board and small- and medium-sized boards of the Shenzhen Stock Exchange has already been on the agenda, citing comments from the CSRC. (Twitter)

Hong Kong Chief Executive Carrie Lam will visit Beijing next week and is seeking to conduct a 3-day visit to discuss plans to revive the economy, while she added there is no condition for major easing of social distancing. However, reports later noted Hong Kong is to permit 6 people at a table in restaurants and 4 people at a table in bars. (Newswires)

South Korea GDP (Q3 A) Q/Q 1.9% vs. Exp. 1.7% (Prev. -3.2%). (Newswires) South Korea GDP (Q3 A) Y/Y -1.3% vs. Exp. -1.9% (Prev. -2.7%)

UK/EU

UK PM Johnson is facing a rebellion from over 50 "red wall" Conservative MPs who are demanding a clear route out of lockdown and a post-COVID economic recovery plan. (Sky News) 

FX

In FX markets, the DXY marginally retraced some of yesterday’s haven-driven gains and gave back the 93.00 level as the stimulus deadlock persisted. Elsewhere, Judge Amy Coney Barrett was sworn in as a Supreme Court Judge after the Republican-controlled Senate mostly stuck to party lines and confirmed her nomination, as expected, before being adjourned until November 9th which makes the prospects of a pre-election COVID-19 relief even more unlikely. The weakness in the USD was welcomed by its major counterparts with EUR/USD rebounding off near-term support at 1.1805 where there is an option expiry of EUR 541mln set for today’s New York cut, and GBP/USD made tentative gains as participants await any fresh developments in this week’s Brexit negotiations. Elsewhere, USD/JPY and JPY-crosses were mixed with a mild negative bias due to the subdued risk appetite, while antipodeans benefitted from the softer greenback and with some encouragement after New Zealand Trade data printed inline with expectations and RBA Deputy Governor Debelle touted a return to growth for Q3 GDP.

RBA Deputy Governor Debelle said unemployment goal below 6% is reasonable and that it looks like there was positive GDP growth for Q3. Furthermore, he added that the drag from Victoria was little less than feared and not enough to pull down GDP overall, while he refused to comment regarding the chance of QE at the meeting next week. (Newswires)

New Zealand Trade Balance (NZD)(Sep) -1017M vs. Exp. -1013M (Prev. -353.0M, Rev. -282M). (Newswires) New Zealand Exports (Sep) 4.01B vs. Exp. 4.00B (Prev. 4.41B) New Zealand Imports (Sep) 5.02B vs. Exp. 5.02B (Prev. 4.76B, Rev. 4.69B)

COMMODITIES

Commodities were rangebound amid the lacklustre risk appetite, which nonetheless provided some respite from the prior day’s losses in WTI crude which declined below USD 39/bbl due to several bearish factors including the fallout from the COVID-19 situation and increasing resumption of Libya production, although oil partially recovered overnight amid disruptions due to hurricane Zeta which has strengthened to a hurricane and has prompted an estimated shut-in of 16% oil production in the Gulf of Mexico. Gold prices eked marginal gains with the precious metal benefitting from a weaker greenback to rebound off a floor at the USD 1900/oz level, while copper also nursed losses in tandem with mild retracement across the complex.

NHC announced Zeta strengthened into a hurricane which is expected to bring hurricane conditions and a dangerous storm surge in parts of the Yucatan peninsula, while hurricane and storm surge watches were issued for the northern Gulf Coast. (Newswires)

BSEE estimated that Gulf of Mexico Production shut-in due to Zeta was at 16% of oil and 6% of natgas, while there were separate reported that Chevron was shutting in Gulf of Mexico facilities due to hurricane Zeta. (BSEE/Newswires)

GEOPOLITICS

US Treasury issued fresh Iran related sanctions that target the state oil sector, while there were later comments from Iran's Oil Minister that US sanctions against him and his colleagues are a passive reaction to the US's failure to cut Tehran's oil exports to zero and that their oil industry will not yield to US pressure. Furthermore, other reports stated the US plans to sanction additional critical sectors in Iran and that Chinese firms which are the largest buyers from Iran, will also be subject to sanctions. (Newswires)

US

There was a clear bull-flattening bias in the Treasury complex, primarily helped along by a risk-off macro tone, where COVID infections are mounting, forcing some areas of Europe to adopt tighter restrictions. And while European corporate earnings have generally been decent, SAP had a dreadful report, seeing regional equities come under pressure, supporting fixed income. The last few weeks has been characterised by bear-steepening and downside protection trades in the Treasury options space. However, towards the end of last week, and on Monday, there has been a noticeable pick up in upside protection and bets against rising rates vol. It’s hard to decipher exactly the motivations behind these trades although there is potentially some caution being applied on the consensus Blue Sweep election outcome, in addition to some caution of the velocity of rising interest rates in the context of general expectations that Fed will not be too pleased with a quick spike higher in rates, and the tightening of financial conditions that it could bring. Elsewhere, policymakers continue the charade over stimulus negotiations, though the jawbone from NEC director Kudlow had diminished in efficacy on Monday; the House Speaker and Treasury Secretary are still talking, however. The tone of trading became rangey in afternoon trade, but the complex was still reactive to technical moves in equities. T-note (Z0) futures settled 9 ticks higher at 138-20+.

US House Speaker Pelosi said the White House is refusing to accept Democrats' testing plan as part of a COVID relief bill. However, a spokesperson later noted that Pelosi remains optimistic a stimulus deal can be achieved before the election following a call between Pelosi and Treasury Secretary Mnuchin. (Newswires/Twitter)

US congressional committees have reportedly made some progress, but not enough to make a stimulus deal anywhere near imminent, according to sources. (Politico)

US Senate voted 52 vs. 48 to confirm Judge Amy Coney Barrett's nomination to the Supreme Court and she was later sworn in at a White House ceremony, while the Senate was adjourned until November 9th. (Newswires)

Democratic Presidential nominee Biden will reportedly push for a USD 2trln COVID stimulus package immediately along with tax increases and infrastructure if he is elected, according to reports citing aides. (Newswires)

POLL: Reuters/Ipsos poll showed Biden was ahead of President Trump in Pennsylvania at 50% vs 45% and ahead in Wisconsin at 53% vs 44%, while an NYT/Siena poll showed President Trump was ahead of Biden in Texas by 4 points at 47% vs 43% (prev. Trump led by 3ppts). (Newswires)