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Market movers today

• The most important data release of the day will be the US CPI for October, where consensus is looking for an uptick both in terms of headline and core inflation. The numbers are key to how patient the Fed can allow themselves to be in hiking interest rates. Norwegian inflation will also be released this morning.
• US Weekly Jobless Claims are also interesting given the focus on US labour supply. We have seen continuing claims falling over the past weeks after the extraordinary unemployment benefits ended early September. Consensus looks for a further decline.
• Chinese property developer Evergrande is facing another deadline on a big USD 148.5m interest payment today as the 30-day grace period of the payment expires.

The 60 second overview

Inflation: Chinese producer price inflation jumped more than expected to a 26-year high of 13.5% y/y (consensus 12.3%, previous 10.7% y/y). The rise in coal prices and power shutdowns raised energy costs in October pushing up prices. However, the shortage has eased following government measures and coal prices are down 50% from the peak. Hence, we should see some easing of inflation in coming months. CPI inflation moved up to 1.5% y/y from 0.7% y/y, still comfortably below the 3% inflation target.

Oil: The Brent oil price increased USD2 per barrel last night moving back above USD85 per barrel. The move higher came after a report from US Energy Information Administration (EIA) projecting that gasoline prices would fall over the coming months, which reduced the likelihood of the Biden administration releasing strategic oil reserves.

China property crisis: Another big developer was downgraded to junk yesterday as China's 13th largest developer Shimao Group Holdings saw their rating cut. Rates on Chinese USD high-yield moved above 24% yesterday, a new record.

Biden-Xi meeting: US President Joe Biden and Chinese President Xi Jinping are scheduled to hold a virtual summit next week, according to sources familiar with the planning.

Equities: Global equities moved lower for a change as US stocks broke the long trend of moving higher. Defensive value stocks were outperforming while energy stocks also moved higher. The news flow is more and more focused on inflation. This should not change today as all eyes will turn to US CPI release at 14:30 CET.

In the US yesterday, Dow -0.3%, S&P 500 -0.4%, Nasdaq -0.6%) and, Russell 2000 -0.6%. It does not help overall performance or risk appetite to see a mega cap company such as Tesla loosing 12%(!). Asian market lower this morning with Hang Seng and a property developer once again leading markets lower (Fantasia down over 30% after resuming trade following a long halt). US and European futures in red across the board this morning.

FI: Yesterday, the global government bond markets rallied from the long end with a bullish flattening. 10Y Treasuries rallied some 6bp, while the 2Y segment on the US curve rallied 3bp. Real yields have also rallied strongly.

FX: JPY and CHF rose vis-à-vis AUD and NZD yesterday driven in part by a decline in long-term bond yields and commodity prices. USD/JPY has dropped below 113 again from over 114 last week. EUR/CHF holds steady below the 1.06 level.

Credit: After a period with solid performance, credit markets took a turn for the worse yesterday. CDS indices were most under pressure, with Xover and Main widening 4.8bp and 0.9bp, respectively. Cash bonds held up better and HY widened 1bp while IG closed unchanged.

Nordic macro

In Norway it is time for CPI. Inflation has slowed considerably since summer last year, driven by a stronger NOK and base effects. We believe that (core) inflation will now bottom out as both of these drivers fade or reverse. We nevertheless expect core inflation to drop from 1.2% to 1.0% y/y in October (consensus 1.2% y/y) due to the sharp rise in prices that month last year. The risk is increasingly to the upside, as the strong growth in commodity and energy prices and freight costs will probably push up consumer prices in Norway before long.

General trend

• US equity FUTs have remained modestly lower; On Tues the S&P 500 snapped its 8-day winning streak.
• Nikkei 225 has also remained modestly lower.
• Japanese cos. due to report results include; Nissan Motor rises after earnings/guidance; Softbank Group drops after prior gain.
• Shanghai Composite extended declines following the release of the Oct inflation data; Consumer and Industrial indices lagged.
• Hang Seng has also continued to decline; Property developer Fantasia drops by over 45% after returning from extended trading halt; Evergrande New Energy Vehicle announced stock placement.
• China Evergrande has another payment deadline today, though they are thought to have put together enough cash to avoid default.
• Tencent is due to report earnings after the market close.
• S&P ASX 200 has reversed gain [Resources index declines].
• Has China’s PPI peaked?.
• China MOF is due to price EUR-denominated bonds.
• Australia Oct Labor market data is due on Thursday (Nov 11th).
• Taiwan Semi may release Oct sales later today.
• Companies due to report during the NY morning include Adient, AerCap, Arcos Dorados, Ardmore Shipping, Energizer, National Vision Holdings, Fiverr, Mogo, Navios Maritime Partners, Perrigo, Royalty Pharma, Carrols Restaurant, Wendy’s, Wolverine World Wide.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened -0.0%.
• (AU) Australia Total Weekly Payroll Jobs change Oct 16th: +1.3% v -0.7% prior; Wages Paid -0.9% v +1.8% prior.
• (NZ) New Zealand Oct Preliminary Activity Outlook: 15.6 v 21.1 prior; Business Confidence: -18.1 v -13.4 prior; Inflation expectation 4.33% v 3.45% prior.
• (AU) Australia sells A$1.0B v A$1.0B indicated in 1.50% Jun 2031 bonds, Avg Yield 1.7001% v 1.3348% prior, bid to cover 2.60x v 4.36x prior.

Japan

• Nikkei 225 opened -0.3%.
• (JP) Japan PM Suzuki: Still considering weather to means test cash handouts for those under 18.
• 7201.JP Reports H1 Net +¥54.1B v -¥16.7Be, Op +¥63.5B v -¥1.7Be; Rev ¥3.95T v ¥3.09T y/y; Cuts FY21 Rev outlook on lower deliveries. but raises profit outlook; Raises FY21/22 outlook (yesterday after the close).

Korea

• Kospi opened -0.5%.
• (KR) South Korea Oct Unemployment: 3.2% v 3.1%e (8th consecutive month of job additions, higher rate attributed to more people entering job seeking market).
• (KR) Bank of Korea (BOK) Sells KRW1.27T v 700B indicated in 1-year Monetary Stabilization Bonds (MSB): avg yield 1.32% v 1.20% prior.

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite opened -0.2%.
• (CN) CHINA OCT CPI M/M: +0.7% V 0.7%E; Y/Y: 1.5% V 1.4%E [fastest annual pace since Sept 2020]; PPI Y/Y: 13.5% v 12.3%e.
• (CN) China Embassy in the US: China President Xi said China stands ready to work with US on regional and international issues and properly manage issues.
• (CN) Land purchases by China developers have slowed - China Securities Journal.
• (CN) China PBoC Gov Yi Gang: Will test the eCNY's impact on monetary policy and financial market.
• (CN) China President Xi and US President Biden to have virtual summit next week (no details given).
• (CN) Reportedly China regulators may ease rules for developers to issue bonds in effort to prevent deterioration in developers' finance – press.
• (CN) China PBOC sets Yuan reference rate: 6.3948 v 6.3903 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v CNY100B prior; Net inject CNY50B v Net inject CNY90B prior.

North America

• RIVN Prices upsized 153M share IPO (prior 135M) at $78/shr v $72-74/shr range indicated.
• (US) Weekly API Crude Oil Inventories: -2.5M v +3.6M prior.
• (US) Treasury Sec Yellen: Build Back Better plan is anti inflation medium term; Inflation to be watched carefully, the fed is taking care of that; reiterates recession could happen if we don't raise debt limit(US) Treasury Sec Yellen: Build Back Better plan is anti inflation medium term; Inflation to be watched carefully, the fed is taking care of that; reiterates recession could happen if we don't raise debt limit.

Europe

• (EU) ECB’s Schnabel (Germany): Central banks must pay more attention to house prices (US session).

Levels as of 00:15ET

• Hang Seng -1.2%; Shanghai Composite -1.3%; Kospi -1.0%; Nikkei225 -0.5%; ASX 200 -0.1%.
• Equity Futures: S&P500 -0.4%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.2%.
• EUR 1.1596-1.1581; JPY 112.96-112.78; AUD 0.7381-0.7362; NZD 0.7133-0.7103.
• Commodity Futures: Gold -0.1% at $1,828/oz; Crude Oil +0.0% at $84.17/brl; Copper -0.6% at $4.34/lb.

Daily Pivots: (S1) 1.5630; (P) 1.5680; (R1) 1.5762; More...

Intraday bias in EUR/AUD stays on the upside as rebound from 1.5354 extends. Sustained break of 55 day EMA (now at 1.5764) will argue that whole fall from 1.6434 has completed and bring stronger rally. On the downside, however, below 1.5585 minor support will turn bias back to the downside for 1.5354. Break there will target a test on 1.5250 low.

In the bigger picture, the down trend from 1.9799 (2020 high) is in progress. Firm break of 1.5250 low will confirm resumption and target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. Sustained break there could bring more downside acceleration to 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623. In any case, break of 1.6434 resistance is needed to signal medium term bottoming, or outlook will stay bearish.

Daily Pivots: (S1) 1.0545; (P) 1.0572; (R1) 1.0589; More....

Intraday bias in EUR/CHF stays neutral and further decline is expected with 1.0602 resistance intact. Break of 1.0532 will resume the down trend from 1.1149 and target 100% projection of 1.1149 to 1.0694 from 1.0936 at 1.0481. On the upside, however, break of 1.0602 will turn bias to the upside for stronger rebound back towards 1.0678 support turned resistance.

In the bigger picture, current downside momentum argues that fall from 1.1149 is probably resuming the down trend from 1.2004 (2018 high). Next focus is 1.0505 (2020 low). Decisive break there will confirm this bearish case and target 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223 next. Strong support from 1.0505 will bring rebound first. But outlook will stay bearish as long as 1.0936 resistance holds.

Daily Pivots: (S1) 0.7349; (P) 0.7391; (R1) 0.7420; More...

Intraday bias in AUD/USD is back on the downside as fall from 0.7555 resumes. Sustained trading below 55 day EMA (now at 0.7393) will argue that rebound from 0.7105 is complete with three waves up to 0.7555. That would also argue that fall from 0.8006 is ready to resume through 0.7105 low. On the upside, above 0.7431 minor resistance will turn bias back to the upside for 0.7555 resistance again.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 1.2416; (P) 1.2450; (R1) 1.2472; More...

USD/CAD is still extending consolidation from 1.2286 and intraday bias remains neutral for the moment. Upside should be limited by 1.2497 to complete the consolidation to bring fall resumption. On the downside, break of 1.2286 will resume the fall from 1.2947 to retest 1.2005 low. However, firm break of 1.2497 will turn bias back to the upside for stronger rebound.

In the bigger picture, the rejection by 38.2% retracement of 1.4667 to 1.2005 at 1.3022 argues that rebound from 1.2005 is merely a corrective rise, which is complete. More importantly, the down trend from 1.4667 (2020 high) is not over yet. Sustained break of 1.2005 will extend the down trend to next long term fibonacci level at 61.8% retracement of 0.9406 to 1.4689 at 1.1424. In any case, outlook will not turn bullish as long as 1.2947 resistance holds.

Daily Pivots: (S1) 1.1574; (P) 1.1591; (R1) 1.1612; More...

Range trading continues in EUR/USD and intraday bias remains neutral first. Further decline is in favor as long as 1.1615 minor resistance holds. Break of 1.1512 will extend the pattern from 1.2348 to 61.8% projection of 1.1908 to 1.1523 from 1.1691 at 1.1453. Break will pave the way to 100% projection at 1.1306. On the upside, though, above 1.1615 minor resistance will dampen the bearish case and turn bias back to the upside for 1.1691 resistance.

In the bigger picture, price actions from 1.2348 should at least be a correction to rise from 1.0635 (2020 low). As long as 1.1908 resistance holds, deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289. Nevertheless break of 1.1908 resistance will revive medium term bullishness and turn focus back to 1.2348 high.

Daily Pivots: (S1) 1.3521; (P) 1.3563; (R1) 1.3603; More...

Outlook in GBP/USD is unchanged and intraday bias stays neutral first. On the downside, firm break of 1.3410 low will confirm resumption of larger decline from 1.4248 and target 1.3164 fibonacci level next. However, on the upside, above 1.3604 minor resistance will turn bias back to the upside of 1.3833 resistance. Decisive break there will be a sign of near term bullish reversal.

In the bigger picture, the structure of the fall from 1.4248 suggests that it's a correction to the up trend from 1.1409 (2020 low) only. While deeper fall cannot be ruled out yet, downside should be contained by 38.2% retracement of 1.1409 to 1.4248 at 1.3164, at least on first attempt, to bring rebound. On the upside, firm break of 1.4376 key resistance (2018 high) will add to the case of long term bullish reversal. However, sustained trading below 1.3164 will revive some medium term bearishness and target 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9091; (P) 0.9122; (R1) 0.9143; More....

Intraday bias in USD/CHF remains neutral as consolidation from 0.9084 is extending. Further decline is expected as long as 0.9174 resistance holds. Break of 0.9084 will resume the fall from 0.9367 to 0.9017 support, and then 0.8925. On the upside, however, break of 0.9174 resistance will indicate short term bottoming and turn bias back to the upside for stronger rebound instead.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not complete yet. It could either be the second leg of pattern from 0.8756 (2021 low), or resuming larger down trend from 1.0237 (2018 high). We'd pay attention to the downside momentum and assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Daily Pivots: (S1) 112.64; (P) 112.97; (R1) 113.20; More...

USD/JPY's fall from 114.69 is still in progress and intraday bias stays on the downside. For now, we'd expect downside to be contained above 112.07 resistance turned support to bring rebound. On the upside, break of 113.65 minor resistance will turn bias back to the upside for retesting 114.69. However, sustained break of 112.07 will dampen our bullish view and bring deeper fall back towards 109.11 structural support.

In the bigger picture, corrective decline from 118.65 (2016 high) should have completed at 101.18 already. Rise from the 102.58 is seen as the third leg of the up trend from 101.18. Next target is 114.54 resistance and then 118.65 high. This will now be the preferred case as long as 109.11 support hold, even in case of deep pull back.