• APAC stocks traded mixed following a weak lead from Wall Street (S&P 500 -0.9%) with newsflow also quiet overnight
• Chinese Retail Oct Sales contracted Y/Y, whilst Industrial Output missed expectations; Japanese Q3 GDP unexpectedly contracted
• DXY traded on either side of 107.00, EUR/USD and GBP/USD were flat, AUD was unfazed by RBA minutes, JPY lagged
• European equity futures traded with modest gains throughout the session with the Euro Stoxx 50 future +0.2% after cash markets closed +0.5%.
• Looking ahead, highlights include UK Jobs, Swedish CPIF, German ZEW Survey, US PPI, Speeches from Fed's Harker, Cook, Barr, ECB's Villeroy, Elderson, Supply from UK, Germany, and the EU

US TRADE

• US stocks were lower on Monday after unwinding NY morning strength. Fed Vice-Chair Brainard supported both stocks and bonds into midday after saying that it is probably appropriate to "soon" move to a slower pace of rate hikes.
• SPX -0.89% at 3,957, NDX -0.98% at 11,700, DJIA -0.63% at 33,536, RUT -1.14% at 1,861.
• Click here for a detailed summary.

OTHER NOTABLE HEADLINES

• Fed's Brainard (voter) said the most recent CPI suggests core PCE measure might also show a reduction, via Bloomberg; within core inflation finally starting to see goods inflation turn. She said it is probably appropriate "soon" to move to a slower pace of increases, and the Fed has done a lot but has more to do. She said it will take time for cumulative tightening to flow through so makes sense to move to a more deliberate pace, and the questions of peak rate will be informed by the flow of data; even for the December meeting, more information will come in. She added exactly what the rate path looks like is difficult to see right now. Brainard said the Fed has a 2% inflation target and that is what policy will be designed to achieve; Fed will be balancing considerations but is focused on achieving the 2% goal.
• Fed's Barr (voter) said inflation is far too high, the Fed is heightening its focus on liquidity, credit, and interest rate risks. Barr said the US economic outlook has weakened amid tighter financial conditions and added that the Fed is reviewing the stance of banking mergers to see if any adjustments to the Fed approach are appropriate.
• Edison Research projects Republicans have won 215 seats in US House and Democrats have won 207 seats; 218 is required for control.

APAC TRADE

EQUITIES

• APAC stocks traded mixed following a weak lead from Wall Street with newsflow also quiet overnight.
• ASX 200 saw pressure from its Metals & Mining sector, whilst the RBA minutes provided little in terms of hints for the upcoming meeting and left all options open.
• Nikkei 225 saw some downside after Q3 Japanese GDP unexpectedly fell into contraction, but losses were trimmed as the JPY weakened.
• KOSPI was contained whilst Taiwan’s Taiex outperformed as TSMC was boosted by a Berkshire Hathaway stake in the name.
• Hang Seng and Shanghai Comp cheered the meeting between US President Biden and Chinese President Xi, which was telegraphed as candid, whilst Chinese stocks saw little action to the Retail Sales contraction and sub-forecast IP metrics.
• US equity futures traded with modest gains across the board, with the ES still under 4,000 following some late selling pressure on Wall Street.
• European equity futures traded with modest gains throughout the session with the Euro Stoxx 50 future +0.2% after cash markets closed +0.5%.
• Click here for a detailed summary.

FX

• DXY traded on either side of 107.00 after printing a 107.27-106.47 range on Monday with little overnight to drive price action overnight.
• EUR/USD and GBP/USD were also relatively flat with the former holding onto a 1.0300-handle whilst the latter traded on either side of 1.1750.
• USD/JPY was firmer as Q3 Japanese GDP printed an unexpected contraction, whilst the pair sees its 100 DMA at 140.85 today.
• Antipodeans were flat with the AUD unreactive to the RBA minutes which left all options open whilst the Board also released a review of its forward guidance.
• CNH saw some strength after the PBoC maintained its MLF rate, although the gains then pared back in the run-up to Chinese activity data.
• PBoC set USD/CNY mid-point at 7.0421 vs exp. 7.0420 (prev. 7.0899)
• Click here for a detailed summary.

FIXED INCOME

• 10yr UST futures were flat after paring back from their CPI peaks on Monday with rising consumer inflation expectations and Fed officials jawboning against market optimism
• Bund futures were similarly uneventful and took a breather from yesterday’s choppy price action.
• 10yr JGB futures traded horizontally with the corresponding yield under the 25bps mark.
• Click here for a detailed summary.

COMMODITIES

• Crude futures were softer but off worse levels following China’s COVID-induced losses from the prior session.
• Spot gold was flat intraday around USD 1,770/oz and not far away from yesterday’s USD 1,775/oz peak.
• Freeport LNG told customers it will likely scrap more cargoes; Major US LNG exporter may extend plant outage through December, via Reuters.
• Base metals were flat/mixed with little reaction seen to the downbeat Chinese activity data, but 3M LME copper remained under USD 8,500/t.
• Click here for a detailed summary.

CRYPTO

• Bitcoin saw modest gains and traded on either side of USD 16,750 overnight.
• BlockFi said withdrawals continue to be paused and see a recovery of obligations owed to them by FTX delayed.
• BlockFi denied rumours that all or a majority of its assets are custodied at FTX. Most activity at the crypto lender remains halted and withdrawals are still on pause, according to CoinDesk.

NOTABLE ASIA-PAC HEADLINES

• China reports 1,661 new confirmed COVID cases in mainland (prev. 1,794 a day earlier), via Reuters.
• PBoC injected CNY 850bln via 1yr MLF at a maintained rate of 2.75%; PBoC injected CNY 172bln via 7-day reverse repos with the rate at 2.00% for a CNY 170bln net injection.
• PBoC said longer-term fund injection exceeds Nov MLF maturities, according to Bloomberg.
• Chinese Vice President Wang said China will maintain strong policy continuity, according to Bloomberg.
• China's Stats Bureau said will actively expand demand, stabilise employment and prices; will consolidate the foundation of economic recovery; economic recovery slows due to COVID flare-ups, via Reuters.
• China's stats bureau spokesman said the property market shows some positive changes but the downward trend continues; expects China's CPI to remain benign, via Reuters.
• RBA Minutes said the board expects to increase interest rates further over the period ahead. Members did not rule out returning to larger increases if the situation warranted. Conversely, the Board is prepared to keep rates unchanged for a period while it assesses the state of the economy and the inflation outlook. The minutes suggested interest rates are not on a pre-set path. Expects to increase interest rates further over the period ahead, and the size and timing of future interest rate increases will continue to be determined by the incoming data. The board also conducted a forward guidance review in which forward guidance will generally be flexible and conditionality will likely focus on the Board’s policy objectives – namely, inflation and unemployment – rather than the drivers of these variables (e.g. wages). Forward guidance on interest rates will not always be provided, the Board does not intend to publish its own forecasts of the expected policy path. When policy rates are at, or near, the effective lower bound, a stronger form of forward guidance will be considered, via the RBA.

APAC DATA

• Chinese Retail Sales YY (Oct) -0.5% vs. Exp. 1.0% (Prev. 2.5%)
• Chinese Urban Investment (YTD)YY (Oct) 5.8% vs. Exp. 5.9% (Prev. 5.9%)
• Chinese Industrial Output YY (Oct) 5.0% vs. Exp. 5.2% (Prev. 6.3%)
• Japanese GDP QQ (Q3) -0.3% vs. Exp. 0.3% (Prev. 0.9%, Rev. 1.1%)
• Japanese GDP QQ Annualised (Q3) -1.2% vs. Exp. 1.1% (Prev. 3.5%, Rev. 4.6%)
• Japanese GDP QQ External Demand (Q3) -0.7% vs. Exp. -0.2% (Prev. 0.1%, Rev. 0.2%)
• Japanese GDP QQ Pvt Consmp Prelim (Q3) 0.3% vs. Exp. 0.2% (Prev. 1.2%)
• Japanese GDP QQ Capital Expend. (Q3) 1.5% vs. Exp. 2.1% (Prev. 2.0%, Rev. 2.4%)

GEOPOLITICS

RUSSIA-UKRAINE

• US military official said Russia has ceded significant territory, via Reuters.
• Chinese President Xi said China advocates a ceasefire in the Ukraine crisis and calls for peace talks, via state media.

OTHER

• Chinese President Xi told US President Biden that China will make all efforts for peaceful "reunification" with Taiwan, according to the Chinese Foreign Minister. China upholds the "one country, two systems" proposal for Taiwan, according to Reuters
• Chinese President Xi told French President Macron that China and Europe should expand two-way trade and investments, via state media.

EU/UK

NOTABLE EU/UK HEADLINES

• UK PM Sunak will accept an official recommendation to increase the living wage from GBP 9.50 an hour to about GBP 10.40 an hour — a rise of nearly 10%, according to The Times.
• UK Chancellor Hunt is considering a 40% windfall tax on "excess returns" made by electricity generators as part of his Autumn Statement, according to Bloomberg sources.
• ECB's Villeroy said ECB will probably continue to hike rates but may do so in a more flexible and less rapid manner; jumbo hikes will not become a new habit. We are clearly approaching the normalisation range of around 2%, via Reuters.
• SNB's Jordan said the nominal appreciation of the Franc helps guard against inflation; great probability that the SNB will need to further tighten monetary policy. SNB stand ready to buy or sell to keep Franc FX rate appropriate to steer inflation to target level, via Reuters.
• EU Parliament and member states agreed on an EU budget for 2023, according to dpa.
• G20 draft declaration noted that central banks will continue to appropriately calibrate the pace of monetary policy tightening, via Reuters.