- Asian equities traded broadly higher after a positive lead from the US where Sept car sales data helped push indices to record highs
- In FX, the USD softened after Trump aides released a short list of Fed Chair nominees which included current Chair Yellen
- Looking ahead, highlights include Eurozone, UK and US service PMIs, ADP, ISM Non-Mfg, ECB’s Draghi and Fed’s Yellen
Asia stocks traded mostly higher after another record setting session in the US where all major indices printed fresh all-time highs for a consecutive day and automakers advanced on strong September car sales data. The positive momentum supported the Nikkei 225 (+0.2%) but with gains capped on a firmer JPY. Hang Seng (+0.8%) continued to lead the upside in the region as financials remained underpinned by lower reserve requirements for next year and ASX 200 (-0.8%)lagged with energy names reeling after oil briefly slipped below USD 50/bbl to a 2-week low. 10yr JGBs traded higher from the open as yields declined across the curve and with prices also supported by the BoJ’s presence for JPY 990bln in JGBs ranging from 1yr-10yr maturities.
World Bank raised 2017 China GDP growth forecast to 6.7% from 6.5% and raised 2018 forecast to 6.4% from 6.3%. (Newswires)
Spanish PM Rajoy is considering invoking Article 155 of the Spanish Constitution which will allow the Spanish government to step in and take control of an autonomous region if it “does not fulfil the obligations imposed upon it by the constitution or other laws, or acts in a way that is seriously prejudicial to the general interest of Spain”. (Newswires) King Felipe of Spain has also come out and accused Catalan authorities of threatening the ‘unity of Spain’ in a rare television appearance. (Guardian)
Catalonia President Puigemont said Catalonia will declare independence in a matter of days. (Newswires)
UK BRC Shop Price Index (Sep) Y/Y -0.1% (Prev. -0.3%). (Newswires)
UK and EU have struck an agreement on dividing up WTO quotas that govern the import of farm products, in a breakthrough in Brexit negotiations. (FT)
USD weakness was the main highlight which benefitted its major counterparts and EM currencies alike, with the pressure attributed by some to a further recovery in EUR/USD from 6-week lows and amid succession woes at the Fed after Trump aides released a short list of Fed Chair nominees which included current Chair Yellen, although she was said to have not been recommended by many aides. The weakness in the greenback saw USD/JPY decline further below the 113.00 handle, while EUR/USD, GBP/USD and AUD/USD were all higher by about 30pips as trade remained relatively light due to a lack of data releases and ongoing market closures.
BoC’s Leduc said the best contribution bank can make is to “promote economic stability” by keeping inflation at 2.0%. Leduc added Canada’s economic growth rate expected to decline over next few quarters but should still exceed potential output. (Newswires)
Commodities were mixed in which WTI crude futures were pressured and briefly slipped below USD 50/bbl after the latest API weekly inventory report. This was despite headline crude inventories at a wider than expected drawdown, as the components of the release showed large builds to Cushing and gasoline stockpiles. Conversely, copper was flat while gold and silver prices were mildly underpinned by a weaker greenback.
US API Crude Inventories (Sep 29) -4079k (Prev. -761k). (Newswires)
Russian Foreign Minister Lavrov said the US is staging ‘fatal provocations’ against Russian forces in Syria and is encouraging terrorists to attack Russian military and Syrian government forces. (Newswires)
US Treasuries closed with slight gains in a relatively quiet session. Initial selling was observed at the CME open as players rate-locked against the USD 10bln Abu Dhabi issuance, according to IFR. However, the selling was short lived amid a short covering bid from leveraged accounts and the bid remained amid a lack of a news and major data. Dec’17 10y T-note futures settled at 125.10+, up 2+ ticks.
US President Trump aides delivered a shortlist for Fed chair with Yellen under consideration but not recommended by many aides. Reports stated that the list includes Yellen, Cohn, Warsh and Powell, while Stanford’s Taylor is also said to be under consideration but only a small handful of advisors have seen the full list. (Newswires)
US House Speaker Ryan said the Ways and Means Committee plans to release tax bill in upcoming 2-3 weeks, while there were reports that US Rep. Jordan confirmed expectations for the House to pass the budget on Thursday. (Newswires)