• APAC stocks followed suit to the global risk-on mood after softer-than-expected US CPI, while the region also digested better-than-expected Chinese activity data.
• US House voted 336-95 to pass a temporary spending bill that would avert a government shutdown; bill now goes to the Senate.
• European equity futures are indicative of a slightly firmer open with the Euro Stoxx 50 +0.2% after the cash market closed +0.8% yesterday.
• DXY is stuck just above the 104 mark, USD/JPY is sub-151, whilst other majors hold onto gains vs. the greenback.
• Looking ahead, highlights include French Unemployment, UK CPI & RPI, French & Italian CPI (Final), EZ Trade Balance & Industrial Production, US Retail Sales, Japanese Trade, Fed's Barr & Barkin, Biden-Xi Meeting, Supply from Germany

US TRADE

EQUITIES

• US stocks and treasuries rallied, whilst yields were pressured and the dollar nosedived after US CPI data printed softer-than-expected across the board. This spurred firm advances for the major indices with the S&P 500 up nearly 2.0% although this was dwarfed by the small-cap Russell 2000 index which surged by over 5% for its largest gain in a year.
• SPX +1.91% at 4,496, NDX +2.13% at 15,812, DJI +1.43% at 34,828, RUT +5.39% at 1,798
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Goolsbee (voter) said inflation progress continues, economic growth has been strong and labour markets are vibrant, while he added that they still have a way to go before the Fed's 2% inflation goal is reached.
• US House voted 336-95 to pass a temporary spending bill that would avert a government shutdown, while it was separately reported that Senate Majority Leader Schumer said the Senate would act quickly on the funding bill.
• UAW President Fain said Detroit Three contract voting is trending in favour of approval with early results "very favourable".

APAC TRADE

EQUITIES

• APAC stocks followed suit to the global risk-on mood after softer-than-expected US CPI data spurred dovish Fed repricing amid hopes that the Fed could be done with its hiking cycle, while the region also digested better-than-expected Chinese activity data.
• ASX 200 was led higher by notable outperformance in real estate and tech following a decline in yields and with the index unfazed by the acceleration in the quarterly Wage Price Index.
• Nikkei 225 extended on gains after it gapped above the 33,000 level alongside the broad heightened risk appetite which helped markets shrug off disappointing preliminary Q3 GDP.
• Hang Seng and Shanghai Comp were underpinned after Chinese Industrial Production and Retail Sales topped forecasts, while sentiment was also supported by reports that China is mulling CNY 1tln of new funding to boost the housing market and after the PBoC conducted the largest MLF net injection in seven years.
• US equity futures (ES +0.3%) remain on the front-foot following the prior day's data-induced stock rally.
• European equity futures are indicative of a slightly firmer open with the Euro Stoxx 50 +0.2% after the cash market closed +1.4% yesterday.

FX

• DXY traded rangebound with some slight reprieve from yesterday’s post-CPI selling which had dragged the index to test the 104.00 level to the downside as money markets began to price in 100bps of rate cuts for next year.
• EUR/USD took a breather with a firm footing above 1.0800 after it benefitted from the dollar's recent demise.
• GBP/USD was contained by resistance near the 1.2500 level and as the focus turned to incoming UK CPI data.
• USD/JPY moved off its lows amid the positive risk appetite and weaker-than-expected GDP data but remained beneath the 151.00 level owing to the recent narrowing of yield differentials.
• Antipodeans were kept afloat amid the constructive mood and stronger-than-expected Chinese activity data.
• PBoC set USD/CNY mid-point at 7.1752 vs exp. 7.2564 (prev. 7.1769).
• Brazilian President Lula met with the economic team and Economy Minister Haddad to discuss a possible change in the fiscal target but the meeting was inconclusive over a new target ranging between 0-1%, according to Estadão sources.

FIXED INCOME

• 10-year UST futures held on to its gains after CPI data pressured yields and ramped up rate cut expectations.
• Bund futures marginally extended on the previous day's advances to above the 131.00 level.
• 10yr JGB futures tracked the gains in global peers following the disappointing GDP data from Japan and with the BoJ also present in the market for nearly JPY 1.3tln of JGBs.

COMMODITIES

• Crude futures lacked conviction after the prior day's whipsawing and inconsequential private sector inventory data.
• US Private Energy Inventory Data (bbls): Crude +1.3mln (exp. +1.8mln), Cushing +1.1mln, Gasoline +0.2mln (exp. +0.6mln), Distillates -1.0mln (exp. -1.2mln)
• Vitol said its expects a fairly balanced to slight surplus in the global oil market for 2024, while it added that non-OPEC supply has surpassed previous highs and continues to grow. Furthermore, it stated that it is premature to call for peak gasoline demand in China as gasoline car sales are still being added to the fleet.
• Spot gold retained its post-CPI gains owing to the recent pressure in the greenback.
• Copper futures only marginally benefitted from the positive mood and encouraging Chinese activity data.

CRYPTO

• Bitcoin was lacklustre after prices slipped below the USD 36,000 level and with crypto shunned in favour of more traditional risk assets.

NOTABLE ASIA-PAC HEADLINES

• PBoC announced CNY 1.45tln in 1-year MLF vs CNY 850bln maturing with the rate kept at 2.50%.
• China's stats bureau official said the foundation of the economic recovery is yet to be consolidated and noted expectations that China's price situation to improve with no deflation seen. The stats bureau also said there will be twists and turns in the economic recovery with more efforts needed to promote continued economic recovery and that China's manufacturers still face inadequate market demand. However, the official also commented that the property market is still in adjustment and transformation, while they expect consumption recovery to continue due to policy support and there is still strong demand for infrastructure investment.
• US President Biden and Chinese President Xi will meet on Wednesday at 10:45PST (18.45GMT/13:45EST) and Biden will hold a press conference at 16:15PST (00:15GMT/19:15EST)
• US President Biden said US and Chinese militaries need to be able to make contact and the US is trying to improve bilateral relations with China.
• US and China reaffirmed their commitment to the Paris Agreement and agreed to restart the energy efficiency forum, while they will work together on a global and legally binding agreement to tackle plastic pollution.

DATA RECAP

• Chinese Industrial Production YY (Oct) 4.6% vs. Exp. 4.4% (Prev. 4.5%)
• Chinese Retail Sales YY (Oct) 7.6% vs. Exp. 7.0% (Prev. 5.5%)
• Chinese Property Investment YTD YY (Oct) -9.3% vs Exp. -9.1%
• Japanese GDP QQ (Q3) -0.5% vs. Exp. -0.1% (Prev. 1.2%, Rev. 1.1%)
• Japanese GDP Annualised (Q3) -2.1% vs. Exp. -0.6% (Prev. 4.8%, Rev. 4.5%)
• Australian Wage Price Index QQ (Q3) 1.3% vs. Exp. 1.3% (Prev. 0.8%, Rev. 0.9%)
• Australian Wage Price Index YY (Q3) 4.0% vs. Exp. 3.9% (Prev. 3.6%)

GEOPOLITICS

• Israeli PM Netanyahu said he instructed the army to prepare for all scenarios to deal with Hezbollah, according to Al Arabiya. It was also reported that Israel conducted an operation against Hamas in Gaza's Al Shifa hospital and it noted that its forces had undergone specified training to prepare for the complex and sensitive environment, while it called on all Hamas operatives in the hospital to surrender.
• Israel and Hamas were reportedly close to reaching a hostage release agreement in exchange for a temporary truce, although talks are volatile and could still collapse, according to CNN.
• US, South Korean and Japanese foreign ministers said Russia-North Korea cooperation is a serious threat to international peace, while it was also reported that North Korea developed a new type of solid-fuel engine for intermediate-range ballistic missiles, according to KCNA and Yonhap

EU/UK

NOTABLE HEADLINES

• ECB's Villeroy said he is confident inflation will get towards the 2% target by 2025.