• APAC stocks were mostly subdued and failed to sustain the early momentum from last Friday’s rally on Wall St.
• US House Speaker Johnson unveiled a GOP stopgap funding bill which includes January and February end dates; proposal was criticised by the White House.
• Moody’s affirmed US at AAA; Outlook Cut to Negative from Stable on Friday.
• DXY is steady on a 105 handle, JPY lags G10 FX, most other majors are broadly stable.
• Hamas suspended hostage negotiations over Israeli forces’ handling of the Al-Shifa Hospital.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.2% after the cash market closed -0.8% on Friday.
• Looking ahead, highlights include US NY Fed Survey of Consumer Expectations, Speeches from ECB’s de Guindos & BoE’s Mann.

US TRADE

EQUITIES

• US stocks rallied on Friday as post-Powell shorts were covered into the weekend despite an extension of Thursday's hawkish Fed pricing shift seen in treasuries, while the advances were driven by the mega-cap names with outperformance in the Nasdaq 100 as the likes of Microsoft hit all-time highs.
• SPX +1.53% at 4,414, NDX +2.25% at 15,529, DJIA +1.15% at 34,283, RUT +0.98% at 1,704.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Daly (non-voter) said on Friday that policy is in a very good place and she is not ready to say what the Fed's next move will be, while the risks of overtightening and under-tightening policy are balanced. Furthermore, Daly said if financial conditions eased more, the Fed would need to take note but added that the Fed would likely have to hike again if inflation doesn't ebb further, according to a CNBC interview.
• US House Speaker Johnson unveiled a GOP stopgap funding bill which includes January and February end dates, while the White House said Republicans are wasting time on an un-serious proposal for a two-step stopgap measure.
• Moody’s affirmed US at AAA; Outlook Cut to Negative from Stable on Friday.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued and failed to sustain the early momentum from last Friday’s rally on Wall St with the region cautious ahead of this week’s key risk events including US CPI and Chinese activity data, the Biden-Xi meeting on the sidelines of the APEC summit and the US government shutdown deadline.
• ASX 200 was lacklustre amid weakness in the top-weighted financial sector after ANZ Bank earnings which posted a record FY cash profit but missed analysts’ forecasts and noted the external environment is likely to remain challenging.
• Nikkei 225 initially gained after softer-than-expected PPI data which printed its slowest pace of annual growth since February 2021 although the index eventually reversed its gains amid rising yields and a slew of earnings.
• Hang Seng and Shanghai Comp traded cautiously as optimism from Alibaba and JD.com’s higher Singles Day sales was offset by cautiousness ahead of the approaching Chinese data and Biden-Xi summit.
• US equity futures (ES -0.4%) mildly pulled back after last Friday's rally as participants braced for upcoming events.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.2% after the cash market closed -0.8% on Friday.

FX

• DXY was kept afloat in rangebound trade with participants tentative ahead of tomorrow’s CPI data and as the threat of a government shutdown lingered.
• EUR/USD was uneventful and remained contained at sub-1.0700 amid quiet newsflow from the bloc.
• GBP/USD struggled for direction and largely ignored the fall seen in UK Rightmove House Prices.
• USD/JPY gradually edged higher following the softer-than-expected PPI data from Japan,.
• Antipodeans lacked conviction as risk sentiment waned and with the hawkish-leaning RBA comments counterbalanced by a subdued commodities complex.
• PBoC set USD/CNY mid-point at 7.1769 vs exp. 7.2889 (prev. 7.1771)

FIXED INCOME

• 10-year UST futures prodded last week’s lows as yields edged higher with moves led by the long-end which briefly lifted the 20yr yield above 5% despite the lingering government shutdown concerns and Moody’s recent US outlook cut.
• Bund futures remained subdued and languished firmly beneath the 130.00 level after recent selling pressure.
• 10yr JGB futures failed to benefit from the soft PPI data and instead tracked the declines in global peers amid the absence of BoJ purchases.

COMMODITIES

• Crude futures faded some of Friday's advances as risk sentiment gradually waned and amid prospects of a looming agreement to resume oil output from oil fields in Iraq's Kurdistan region.
• Iraq's Oil Minister Abdel-Ghani said on Sunday that he expects to reach an agreement with the Kurdistan Regional Government and foreign oil companies to resume oil production from the Kurdish region’s oilfields within three days.
• Iraq and ExxonMobil (XOM) signed a settlement agreement allowing PetroChina (857 HK) to become a lead contractor at the West Qurna 1 oil field.
• Kuwait Integrated Petroleum Industries Company said there was a sudden interruption of fuel supplies at Kuwait’s Al Zour Refinery due to a defect in one of the main valves which almost halted production, according to state media.
• Spot gold traded indecisively amid a quiet dollar and as participants await the latest US inflation numbers.
• Copper futures were rangebound owing to the flimsy risk appetite and ahead of incoming Chinese activity data.

CRYPTO

• Bitcoin lacked firm direction and eventually trickled below the USD 37,000 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese NDRC officials said the state planning agency will set up six platforms to facilitate private business, as well as monitor and solve problems, while the NDRC head said China's private economy is expected to receive more favourable policies in the future, according to Global Times.
• Chinese officials met with US Treasury Secretary Yellen in the past week and raised concerns about investment restrictions, while China and the US agreed to avoid escalation of frictions.
• China is considering ending the freeze on Boeing (BA) with a 737 Max deal in the US, according to Bloomberg.
• US and Indonesia are to discuss the potential for a deal on electric vehicle minerals with Indonesia President Widodo to meet US President Biden at the White House on Monday, according to Reuters sources cited.
• RBA's acting Assistant Governor Kohler said the decline in inflation is to be more gradual than previously thought and bringing inflation back to the target is likely to be more drawn out. Kohler also stated that domestically sourced inflation has been widespread and slow to decline, while she noted the key risk is that high inflation today feeds into inflation expectations.

DATA RECAP

• Japanese Corp Goods Price MM (Oct) -0.4% vs Exp. 0.0% (Prev. -0.3%)
• Japanese Corp Goods Price YY (Oct) 0.8% vs. Exp. 0.9% (Prev. 2.0%)

GEOPOLITICS

MIDDLE EAST

• Staff at the Al-Shifa Hospital which is the largest in Gaza said patients and refugees were trapped in horrific conditions amid heavy fighting in nearby streets and it was also reported that the hospital had run out of water, food and electricity. Furthermore, WHO’s Tedros said they managed to get in contact with staff at the hospital and that it is no longer functioning as a hospital, according to BBC and Reuters.
• Israel PM Netanyahu said they offered Gaza’s Al-Shifa Hospital fuel but Hamas refused to receive it, according to an interview with NBC. It was also reported that Hamas suspended hostage negotiations over Israeli forces’ handling of Al-Shifa Hospital and denied refusing any amount of fuel from Israel, while it added that Israel’s offer to provide 300 litres belittles the sick and wounded and is enough to last for 30 minutes.
• Israel’s military said Hamas lost control of northern Gaza and residents have evacuated to the south despite Hamas instructions. Furthermore, the Israeli military said that civilians were wounded by an anti-tank missile near the Lebanon border and it retaliated with artillery fire, while Israel warned it was poised to impose quiet on the Lebanese front after hostilities increased on Sunday, according to Reuters.
• Palestinian President Abbas said that their people are facing a genocidal war and that they call on the US to stop the Israeli aggression against Gaza, while he added that they want international protection.
• US President Biden and Qatar’s Emir Al-Thani engaged in discussions to boost aid to Gaza. It was also reported that US Secretary of State Blinken and Qatar’s PM discussed efforts to evacuate the critically wounded and urgently increase the flow of humanitarian aid into Gaza, as well as discussed efforts to ensure the safe passage of foreign nationals out of Gaza and immediate return of hostages during a phone call on Saturday, according to Reuters citing a State Department spokesperson.
• White House National Security Adviser Sullivan said the US does not want to see firefights in hospitals and that the US is involved in negotiations between Israel and Qatar over hostages. Sullivan also stated that President Biden is determined to see a re-establishment of military-to-military ties with China and the question of Iran’s nuclear program and the threat it poses will be on the agenda meeting with Chinese President Xi.
• EU’s top diplomat Borrell called for immediate humanitarian pauses in Gaza and the establishment of humanitarian corridors. Borrell also stated that they call on Hamas to immediately and unconditionally release all hostages, while they condemn the use of hospitals and civilians as human shields by Hamas.
• Egyptian President Sisi called for an immediate sustainable ceasefire in Gaza without restrictions or conditions. It was separately reported that Egyptian security sources said the first group of Gaza evacuees crossed the Rafah border following the reopening of Sunday.
• Iranian President Raisi said the Gaza siege should end immediately and called on Islamic countries to impose oil and goods sanctions on Israel, while he added that there is no other way but to resist Israel and that they kiss the hands of Hamas for its resistance against Israel.
• Syrian President Assad urged a halt to any political process with Israel.
• US Air Force conducted two airstrikes against Iranian proxy targets in eastern Syria, according to Fox News.
• Iraq’s Harir Airbase hosting US and international forces was targeted by an armed drone which caused damage to infrastructure.

OTHER

• German Chancellor Scholz’s government agreed to double military assistance to Ukraine for next year to EUR 8bln.
• Russian Foreign Minister Lavrov said the EU isn’t hiding its intentions to push Russia out of Central Asia and that these attempts are futile, while he added that Russia has been historically present there and is not going to disappear from there, according to AFP.
• US, Japan and South Korean defence officials assessed growing nuclear and missile threats from North Korea at a meeting on Sunday, while the US and South Korea revised their tailored deterrence strategy in the face of North Korean nuclear advancements, according to Yonhap. It was separately reported that North Korea criticised the UN Command meeting scheduled in South Korea as confrontational for the region and it called for the UN Command to be dissolved which it said was an illegal war organisation, according to KCNA.

EU/UK

NOTABLE HEADLINES

• ECB’s Centeno is facing an ethics review by an independent watchdog following a failed proposal by Portugal's outgoing PM Costa for Centeno to replace him instead of holding new elections, according to FT.
• Fitch affirmed Italy at BBB; Outlook Stable and affirmed Poland at A-; Outlook Stable on Friday.
• As of Sunday, a Whitehall source places the odds of a UK Cabinet Reshuffle occurring on Monday "as high as 90%", according to Sky's Coates.

DATA RECAP

• UK Rightmove House Prices MM (Nov) -1.7% (Prev. 0.5%)
• UK Rightmove House Prices YY (Nov) -1.3% (Prev. -0.8%)