General Trend:

  • China President Xi said China to focus more on imports, affirmed China to further lower tariffs and open up (Keynote address at China Import Expo)
  • RBA suggested recent easing measures are supporting economy, affirmed sees growth gradually picking up to around 3% in 2021 and unemployment seen declining to below 5%; Aussie and bond yields extend rise
  • Some analysts now don’t expect RBA rate cut until 2020
  • Japanese equities rise upon return from holiday; The trade-sensitive Marine/Transportation index rises, financials supported by recent rise in US Treasury yields
  • Fast Retailing expected to report Oct sales after Nikkei close
  • Japanese companies expected to report earnings today include Softbank Corp, Marubeni and Suzuki.
  • Financial and property shares rise in Shanghai after easing move by PBOC
  • China Oct Caixin Services PMI hits 8-month low, matches expectations
  • PBOC cuts rate on medium-term lending facility (MLF) for first time since 2016
  • China government bond yields decline amid MLF rate cut, Chinese Finance Ministry set pricing guidance for multi-tranche EUR-denominated bond issuance [offering 7-year, 12-year and 20-year maturities in first EUR issuance since 2004]
  • Australia Treasury said the RBA’s 2-3% inflation target would be maintained, noted global uncertainties
  • BoJ again cut its 10-25 yr JGB purchases, Kuroda reiterated prior concerns about excessive declines in long and super-long bond yields
  • BoJ Gov Kuroda suggested more longer-dated bond issuance in Japan would prevent declines in super-long JGB yields [Reminder: In early Oct, Japan Fin Min Aso said not thinking of issuing 100-year bonds at the current time]
  • New Zealand Q3 labor market data due on Wednesday (Nov 6th)

Headlines/Economic Data

Australia/New Zealand

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  • ASX 200 opened +0.1%
  • (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 0.75%; AS EXPECTED
  • (AU) Australia Treasury leaves RBA 2-3% inflation target intact; says there will be no changes to official agreement on monetary policy due to global uncertainties – Australia press
  • (AU) Australia Oct Final PMI Services: 50.1 v 50.8 prelim; PMI Composite: 50.0 v 50.7 prelim
  • (AU) Australia Oct AiG Performance of Services Index: 54.2 v 51.5 prior

Japan

  • Nikkei 225 opened +1.2%
  • 8318.JP Sumitomo Mitsui to partner with Shenzhen bourse on China startup companies – Nikkei
  • (JP) Japan Fin Min Aso: Cash reserves at Japan companies are on a rising trend, they should use some for wages; Not in a state to soon raise sales tax to Europe levels
  • (JP) Japan Econ Min Nishimura: Will make a decision this week on disaster support package from ¥500B reserves and consider spending beyond that if needed
  • (JP) Japan Trade Min Kajiyama: Aim to reach agreement will all RCEP members soon, see reaching an agreement with everyone including India
  • (JP) Japan Oct Car sales in South Korea y/y: -58% v -60% prior
  • (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ will persistently continue with easing; have not limited easing tools to just rate cuts, can combine, enhance easing tools depending on economic and price developments
  • (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts 10-25 year
  • 9984.JP Planning to impose stricter governance standards and restrictions on dual-class share structures as it takes a writedown due to its bad investments – FT

Korea

  • Kospi opened +0.2%
  • (KR) South Korea Oct Foreign Reserves: $406.3B v $403.3B prior
  • (KR) US and South Korea military to hold a smaller joint exercise – press

China/Hong Kong

  • Hang Seng opened +0.2%; Shanghai Composite opened +0.1%
  • (CN) US said to be considering removing some tariffs from China goods in order to secure partial trade deal – FT
  • *(CN) CHINA PBOC CONDUCTS CNY400B V CNY200B PRIOR IN 1-YEAR MEDIUM TERM LENDING FACILITY (MLF) OPERATIONS AT 3.25% V 3.3% PRIOR; NET DRAINS CNY3.5B VIA MONETARY POLICY TOOLS V CNY403.5B MATURING TODAY
  • (CN) China PBoC Open Market Operation (OMO): Skips for 7th consecutive session
  • (HK) Hong Kong Oct PMI: 39.3 v 41.5 prior (lowest since Nov 2008)
  • (CN) China sets initial guidance for euro sovereign bond offering: For 7-year bonds the guidance is mid-swap +45-50bps; For 12-year bonds the guidance is mid-swap +60-65bps
  • (CN) China PBOC sets Yuan Reference Rate: 7.0385 v 7.0382 prior
  • (CN) China President Xi: confirms China will implement foreign investment law, effective Jan 1; have made achievements in adding imports and cutting tariffs; China willing to sign more high standard free trade deals – keynote address at CIIE
  • (HK) Hong Kong Chief Secretary Cheung: Government will launch a second round of dialogue after district council elections on Nov 24; freedom of press will be cherished and safeguarded
  • (CN) China Pres Xi met today with Hong Kong chief executive Lam and reiterated his support for her – Xinhua

Other

  • (SG) Singapore Oct PMI: 47.4 v 48.3 prior (lowest since Aug 2012)
  • (PH) Philippine Central bank expects inflation to be within 2.0-4.0% target range until 2021; Oct reading of 0.8% was likely the lowest CPI will go

North America

  • (US) Fed’s Daly (dove, non-voter): doesn’t see negative rates on the table for the US at the moment; Fed still has an ample toolkit for influencing the economy
  • (US) Former National Sec Advisor Bolton to testify to House impeachment inquiry on Thursday; also seeing contradicting reports he is not testifying
  • (US) Comm Sec Ross: Reasonably optimistic that a China deal can be reached; structural issues to be addressed in later rounds; Phase 1 deal will rebuild US-China trust
  • (US) National Security Adviser O’Brien: US President Trump has invited China President Xi to the US to sign phase 1 trade agreement – US press

Europe

  • (UK) Oct BRC Sales Like-For-Like Y/Y: 0.1% v 0.0%e
  • (UK) Reportedly Northern Ireland’s Pro-EU Nationalist parties have agreed to stand back from 3 seats in parliament to boost chances for Anti-Brexit candidates – press
  • (FR) Pres Macron: China must consolidate and reinforce the opening of the Chinese market – speaking at Shanghai Import Expo

Levels as of 12:15ET

  • Hang Seng +0.7%; Shanghai Composite +1.0%; Kospi +0.5%; Nikkei225 +1.9%; ASX 200 +0.2%
  • Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.3%
  • EUR 1.1114-1.1131; JPY 108.56.-108.83; AUD 0.6877-0.6907; NZD 0.6391-0.6414
  • Commodity Futures: Gold -0.2% at $1,508/oz; Crude Oil -0.0% at $56.52/brl; Copper +0.4% at $2.67/lb
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