10th October 2019 


China is reportedly open to a partial trade deal despite the tech blacklist. China offered to buy an extra USD 10bln of US goods per year to ease the trade war, reports the FT. (FT) Chinese officials said Beijing has lowered expectations for progress from the US trade talks this week, citing goodwill damaged by the blacklisting of the 28 Chinese companies. US President Trump does not lower his expectations for a trade deal with China this week (Newswires)

The Chinese clearly will make the case that they don't need to change their laws to enforce intellectual property rights. The question is what is the US Trade Representative willing to accept, according to FBN's Lawrence. (Fox Business News)

China's Global Times editor refuted reports saying Chinese delegation will cut short its stay in Washington; says Chinese delegation plans to leave Fri night, which means they will complete the scheduled consultation agenda. (Twitter)



Most policymakers believed 25bp cut was needed, pointing to economic outlook, risk management and inflation objectives; several noted statistical models of recession in medium term increased notably. Several favoured keeping rates unchanged, saying baseline economic projection had changed very little and that uncertainties would not derail the expansion. A couple of policymakers preferred a 50bp cut and stressed that forward guidance might also be needed. A couple said a rate cut might be too much insurance and could leave policy with less scope for future shocks. A few said markets see more future accommodation than they see as appropriate, might need to better align market expectations with their expectations. Generally, more concerned about risks associated with trade, geopolitics and global economy. Although readings on labour markets and overall economy is strong a clearer picture emerged on weakness on investment, factories and exports. Several suggested the consideration of an SRF as part of monetary policy. Few noted the possibility of resuming trend growth of balance sheet to stabilise the reserves. Policymakers agreed recent money market developments implied they should soon talk about the appropriate level of reserve balances. (Newswires)



EU is not about to make a bold offer to allow Stormont to exit part of the Brexit withdrawal agreement., Guardian's Rankin citing EU sources. (TwitteR)

UK Brexit Minister Barclay's visit to Brussels has been delayed until Friday, according to AFP citing an EU source. (Twitter)

UK PM Johnson will meet Irish PM Varadkar on October 10th at 12pm. (Newswires)

Downing Street position is still very much that PM could adopt a 'straight no-deal' position if talks collapse, despite UK PM Johnson assuring he will not commit the conservative party to a no-deal manifesto, according to The Times. (Times)

EU Chief Brexit Negotiator Barnier said we are not in a position to be able to find a (Brexit) agreement with the UK. (Twitter)

EU Parliament would support a request from the UK Gov to extend the withdrawal period in order to have time for a general election or second referendum, EU Parliament President tells UK Speaker of Commons Bercow. (Newswires)



Turkish Armed forces have reportedly launched Operation Peace Spring against organisations in Northern Syria., EHA News. Turkish troops have entered Northern Syria and started ground operations, according to the Defence Ministry. Reports also noted that the Turkish bombing in border region killed 3 SDF fighters and 5 civilians with dozens injured. Further, the White House called the Turkey operation in Syria a "bad idea". (Newswires/Twitter)

Framework for Turkey sanctions include targeting Turkish President Erdogan's assets, imposing Visa restrictions and defining the purchase of Russian S-400 Missile System as "significant" and subject to sanctions. (Newswires)

US President Trump reportedly knew ‘precisely’ about the scope of the Northern Syria operation, according to CNN citing Gulnur Aybet, Senior Adviser to the President of Turkey.  (Newswires)



US EIA Weekly Crude Stocks w/e 2.927M vs. Exp. 1.413M (Prev. 3.1M) (Newswires)

US EIA Weekly Crude Production Change Barrels 200K (Prev. -100K) to 12.60M (Prev. 12.40M) – New record high



* CLOSING LEVELS: S&P 500 0.9% at 2919, NASDAQ-100 1.1% at 7691, Dow Jones 0.7% at 26346,* SECTORS: Consumer Discretionary 0.9%, Consumer Staples 0.8%, Energy 1.1%, Financials 1%, Health Care 0.7%, Industrials 0.9%, Information Technology 1.5%, Materials 1%, Telecommunication Services 0.4%, Utilities 0.5%. * STOCK SPECIFICS: Netflix (NFLX) were hit after PT cuts at both Rosenblatt and Moness Crespi with the former anticipating a Q4 subscriber guidance being more conservative ahead of competition from Disney (DIS) and Apple (AAPL), and the latter lowering its Q3 estimates and FY19/20 subscriber estimates due to a weaker macro environment and an “increasingly fierce competition”. American Airlines (AAL) traded higher; the airline announced it will extend the Boeing (BA) 737 MAX cancellations through to middle of January, expecting it to resume to service from January 16th. Following the move AAL, narrowed its Total Revenue per Available Seat Mile (TRASM) to 1.5-2.5% from 1-3% y/y. Johnson and Johnson (JNJ) were lower after it has to pay USD 9bln in punitive damages in a trail over risk of male breast growth related to its Risperdal drug. Semiconductors (SOX) were higher today after TSMC (TSM) September sales increased 7.6% y/y, although note, M/M the figures did fall. LVMH (MC FP) reported its earnings after the European close where revenue beat expectations, noting EU, US and Asia performed strong despite the difficult backdrop in Hong Kong

* US T-NOTE FUTURES (Z9) SETTLED 13+ TICKS AT 131-09: The TPLEX drifted lower through the session as risk appetite improved in reaction to (somewhat) progressive developments out of the Chinese delegation, who showed interest in making some progress in talks. The September meeting FOMC minutes had a muted reaction on the Treasury curve with market pricing for future cuts little changed. By settlement yields were higher by 4.5bps across the entire curve. The 10-year Treasury auction held-up decent, stopping through the WI by 0.1bps and covered 2.43x, above the six-auction average of 2.38x, although indirects took a haircut off their average.

09 Oct 2019 - 22:00- ForexResearch Sheet- Source: RANsquawk

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