Source: MNI - Market News/Bloomberg
UK
FISCAL (BBG): “Rachel Reeves will pledge to “rebuild Britain” with her first budget, an historic moment that will include a major package of tax hikes and extra borrowing likely to define British politics for the rest of the decade.”
WAGES (BBC): “Minimum wages will rise in April, with hourly rates for over-21s set to go up to £12.21 an hour, the chancellor has confirmed ahead of Wednesday's Budget.”
EU
EU/CHINA (MNI BRIEF): The European Commission has agreed to impose definitive countervailing duties on China-made electric vehicle imports for five years, it said Tuesday.
EU (ECONOMIST): “On Wednesday the European Union will publish its annual update on negotiations with would-be members. Many eyes will be on Georgia; it is the first year that it features as a candidate country. But its westward aspirations were shaken by a rancorous election on Saturday, in which the Russia-friendly ruling party, Georgian Dream, claimed victory.”
GEORGIA (BBC): “US President Joe Biden has called on the Georgian government to respond to international concern at the scale of violations in Saturday's election and repeal recent Russian-style laws. The Georgian Dream government in the South Caucasus state, which borders Russia, claimed a fourth term in power.”
UKRAINE (POLTICO): “The U.S. wants to charge a premium on its share of a G7-wide €45 billion loan to Ukraine to compensate for the deal’s unique sanctions-related risks.”
BUSINESS (POLITICO): “German carmaker Audi will close its Brussels plant on Feb. 28 next year, the company’s management announced at a special works council meeting Tuesday.”
US
POLITICS (RTRS): “Kamala Harris' lead over Donald Trump dwindled in the final stretch of the U.S. presidential contest, with the Democrat ahead by a single percentage point over the Republican, 44% to 43%, according to a Reuters/Ipsos poll published on Tuesday.”
CORP (BBG): “Google parent Alphabet Inc. showed on Tuesday that an expensive foray into artificial intelligence is starting to pay off, delivering better-than-expected traction for its cloud computing business and driving more usage for its flagship search engine.”
OTHER
AUSTRALIA (MNI BRIEF): Trimmed mean annual inflation rose 3.5% over the September quarter as expected, while headline inflation printed at 2.8% y/y, 10 basis points lower than anticipated, data from the Australian Bureau of Statistics showed Wednesday.
CANADA (MNI BRIEF): Justin Trudeau's minority Liberal government lost the support of Bloc Quebecois leader Jean-Yves Blanchet on Tuesday after failing meet a deadline for passing legislation on seniors' benefits and farmer protections, boosting the potential for Canada's government to be forced into a snap election.
COLOMBIA (BBG): “The Colombian senate approved a constitutional reform that seeks to increase government transfers to regional authorities, according to a webcast of the debate.”
CHINA
POLICY RATES (21ST CENTURY BUSINESS HERALD): “The People’s Bank of China should address low domestic demand by accelerating the downward adjustment of policy interest rates to lower real interest rates significantly, said Zhang Bin, deputy director at the Institute of World Economics and Politics, Chinese Academy of Social Sciences.”
ECONOMY (XINHUA): “Chinese President Xi Jinping urges all regions and departments to implement well existing and incremental policies and make efforts to carry out various tasks in the next two months, state-run Xinhua News Agency reports, citing Xi’s remarks in a study session with senior officials.”
PROPERTY (CSJ): “- There is room for China to roll out additional measures to stabilize its property market, China Securities Journal reported, citing analysts.”
STOCK BUYBACK (SHANGHAI SECURITIES NEWS): “China should ensure bank loans issued to listed companies for share repurchase or stake increase will be under sufficient supervision to avoid being misused, Shanghai Securities News reported, citing researcher.”
CHINA MARKETS
MNI: PBOC Net Drains CNY361.7 Bln via OMO Wednesday
The People's Bank of China (PBOC) conducted CNY431.0 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY361.7 billion after offsetting the maturity of CNY792.7 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6288% at 09:23 am local time from the close of 1.8064% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 46 on Tuesday, compared with the close of 45 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1390 Weds; +2.45% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1390 on Wednesday, compared with 7.1283 set on Tuesday. The fixing was estimated at 7.1407 by Bloomberg survey today.
MARKET DATA
AUSTRALIA CPI Q3 +0.3% Q/Q & 2.8% Y/Y; EST. 0.3% & 2.9%; PRIOR 1.0% & 3.8%
AUSTRALIA TRIMMED MEAN CPI Q3 +0.8% Q/Q & 3.5% Y/Y; EST. 0.8% & 3.5%; PRIOR +0.9% & 4.0%
AUSTRALIA CPI SEPT 2.1% Y/Y; EST. 2.3%; PRIOR 2.7%
AUSTRALIA TRIMMED MEAN CPI SEPT 3.2% Y/Y; PRIOR 3.4%
MARKETS
US TSYS: Tsys Futures Slightly Higher, Ranges Narrow Ahead Of Data
- Tsys futures are slightly off session highs, however ranges have been narrow. TU +01⅜ at 103-04⅞, while TY is +06+ at 110-30+ with initial resistance at 111-14 (Oct 25 high)
- There was an earlier block buy of UXY, DV01 $405k, and a large TY 113 call, x30,000, delta 21%
- Overall, Investors remain bearish ahead of the US presidential election, betting on further bond losses and increased volatility. Yields have already surged, with options traders targeting a potential 4.5% yield on the 10-year note. Elevated open interest in 10yr December 109.5 put options reflects hedging against a deeper bond selloff.
- Overnight In tsys options there was demand during US morning for volatility hedging, with stand-out flows including a $5m premium strangle position via TY Week 1 options. The BofA move Index has now reached it's highest in 12 month, as traders expected volatility to increase heading into the election.
- Cash tsys yields are flat to 1bps lower today, with the curve slightly flatter. The 2yr is -0.4bps at 4.092%, while the 10yr is -0.8bps at 4.246%.
- Focus turns to ADP employment data, GDP and Pending Home Sales.
JGBS: Mixed Ahead Of US ADP Data, Heavy Calendar Tomorrow Incl BoJ Decision
JGB futures are stronger and at session highs, +11 compared to settlement levels.
- Today, the local calendar has been light.
- Tomorrow, the BoJ will hand down its policy decision after its two-day MPM. All, but one of the 53 analysts surveyed by Bloomberg expect the current policy rate of 0.25% to be maintained, with market pricing aligning with this expectation.
- Since April, the BoJ’s guidance has indicated a gradual rate increase if economic activity and inflation trends align with the central bank’s projections.
- However, an additional precondition for future rate hikes has emerged, emphasising stability in overseas economies and financial markets. Given these factors, the BoJ appears inclined to monitor US economic stability and market volatility a bit longer before making further policy adjustments. (See MNI BoJ Preview here)
- Cash US tsys are little changed in today’s Asia-Pac session. The focus is now on today's ADP employment and GDP data.
- Cash JGBs are slightly mixed across benchmarks, with yields 1-2bps richer apart from the 1-year and 20-year+, which are 1-2bps cheaper. The benchmark 10-year yield is 1.5bps lower at 0.966%.
- Swap rates are 1-3bps lower, with the belly of the curve leading.
- Tomorrow, the local calendar will also see Retail Sales, International Investment Flow, IP and Housing Starts data.
AUSSIE BONDS: Slightly Cheaper, Limited Reaction To Q3 CPI, Focus On US Data
ACGBs (YM -1.0 & XM -1.5) are weaker and little changed after today’s Q3/September CPI release.
- Q3 trimmed mean CPI printed in line with expectations at 0.8% q/q and 3.5% y/y after an upwardly revised Q2 at 0.9% and 4.0%. This is consistent with the RBA’s Q4 forecast but the tick-up in services inflation is likely to mean the Board remains cautious and stays on hold over the rest of 2024.
- Problematically, services rose 1.1% q/q and 4.6% y/y up from Q2’s 1.0% and 4.5%, in line with Q4 2023, driven by rents, insurance and child care. Core services were also strong rising 1.3% q/q and 4.1% y/y after 1.0% and 4.1% y/y.
- Cash US tsys are little changed in today’s Asia-Pac session. The focus is now on today's ADP employment data, GDP and Pending Home Sales.
- Cash ACGBs are 1bp cheaper on the day. The AU-US 10-year yield differential is at +21bps.
- Swap rates are 1bp lower on the day.
- The bills strip is weaker, with pricing -1 to -3.
- RBA-dated OIS pricing is 1-3bps firmer on the day. A cumulative 3bps of easing is priced by year-end.
- Tomorrow, the local calendar will see Retail Sales, Terms of Trade, Building Approvals and Private Sector Credit data.
NZGBS: Slightly Cheaper, Awaiting US ADP Data
NZGBs closed slightly cheaper but in the middle of today’s range, with benchmark yields flat to 1bp higher. With the local calendar domestic today, local participants sought directional from US tsys. However, that was not forthcoming, with US tsys little changed in today’s Asia-Pac session, ahead of today’s ADP employment data, GDP and Pending Home Sales data.
- On a relative basis, the NZGB 10-year underperformed its US counterpart with the NZ-US yield differential 4bps wider at +20bps. Yesterday, the differential tightened to +16bps, just above July's low of +13bps, the narrowest level since mid-2021.
- Swap rates closed 2bps lower, with implied swap spreads ~3bps narrower.
- RBNZ dated OIS pricing closed 1-2bps softer for 2025 meetings. A cumulative 100bps of easing is priced by February, with 54bps by year-end.
- The local calendar will see ANZ Business Confidence tomorrow.
- Tomorrow, the NZ Treasury plans to sell NZ$175mn of the 3.0% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: A$ & NZD TO Multi Month Lows Amid Lower HK/China Equities
Early modest USD softness has given away to dollar gains as the Asia PAC Wednesday session unfolds. Weakness is being led by AUD and NZD, both off around 0.25% at this stage, slightly up from session lows. The USD BDXY index is little changed, last near 1263. Earlier we were at lows of 1261.37, as US yields softened.
- The weaker backdrop for HK and China equities is likely not helping AUD and NZD. The HSI off 1.86% at the lunchtime break. Lack of any positive follow through from fresh stimulus rumours from late yesterday, is notable today.
- Earlier we had Q3 CPI print in Australia, the main release today. We saw further improvement in headline y/y momentum, but service inflation remains stick. This suggests no reason for the RBA to cut rates in the near term, but this has provided only fleeting AUD support.
- The currency got to highs of 0.6571, before turning lower to hit fresh multi month lows of 0.6537. Metal prices are also down modestly for copper and iron ore.
- NZD/USD is down by a similar amount, last near 0.5955/60. Earlier lows were at 0.5951.
- USD/JPY was lower earlier, but sits back at 153.30/35 now, unchanged. US equity futures are off earlier highs, while US yields have largely reversed earlier weakness, another USD support point.
- Looking ahead, the October European commission survey, preliminary Q3 German/French GDP, October German unemployment and October German/Spain CPIs print. The ECB’s Schnabel and BoC’s Macklem speak, and the UK budget is announced. In the US, focus turns to ADP employment data, GDP and Pending Home Sales.
ASIA STOCKS: China & Hong Kong Equities Drop On Stimulus Concerns
- Chinese stocks are lower today, with the CSI 300 falling as much as 1.1% and the HS China Enterprises Index down 1.95%, led by tech giants like Meituan, Alibaba, and JD.com. Investor sentiment was weighed down by concerns that China’s recent stimulus announcements may not be enough to sustain a lasting recovery. While China is reportedly considering a 10t yuan fiscal package, market participants remain cautious due to a series of underwhelming follow-ups to earlier announcements and concerns over broader structural issues like debt and demographics.
- Earnings reports also contributed to the negative market sentiment, with China Merchants Bank and Haier Smart Home reporting weaker-than-expected results. Investors are now focusing on the upcoming National People's Congress Standing Committee meeting, where additional fiscal stimulus could be confirmed.
- Equities in Hong Kong are performing worse than their mainland peers, tech stocks are the worst preforming with HSTech Index down 2.60% followed by HS Mainland Banking Index which is down 1.85%, while the benchmark HSI is 1.80% lower.
EQUITIES: Asian Equities Mixed, Japanese Equities Outperform
Asian markets are mixed today as investors exercised caution ahead of key US events, including next week’s presidential election and the Federal Reserve’s rate decision. Japan’s Topix Index gained around 1%, led by tech stocks following a strong performance from the Nasdaq. Mainland China, Hong Kong, and Australia saw declines. Chinese stocks faced pressure amid economic concerns, though property developers gained on reports of potential government stimulus.
- Japanese stocks are higher with the Topix Index rising about 1%, supported by gains in the tech sector after a strong performance from the Nasdaq in the U.S. Investors were also optimistic ahead of earnings from Hitachi, the 2nd largest component of the TOPIX. Financial stocks contributed to the gains, marking a third consecutive day of advances for the sector. Looking at index options, traders are positioned for further upside in both the Nikkei & Topix but see more upside in the TOPIX with the $2,900 strike calls having the most open interest for the Nov. 8 maturity, a 7% upside from current levels.
- Taiwan's TAIEX is slightly higher today, with TSMC up 0.50% contributing to the majority of the index's gains today, this follows an almost 4% drop in their shares after reports surfaced that the company may have violated US trade restrictions with China. TSMC reportedly suspended shipments to China's chip designer Sophgo after a chip it made was found in a Huawei AI processor, which is subject to U.S. export controls. South Korea's KOSPI is 0.70% lower today, the largest weighting in hte KOSPI is Samsung, the company has struggled since June, dropping over 30% from highs vs Apple which is trading little changed.
- Australian equities are lower, with the ASX 200 falling 0.70%, despite a decline in inflation to 2.8%, which brought headline inflation back within the RBA's target range. Investors were not impressed by the inflation drop as core inflation remained elevated at 3.5%, suggesting continued price pressures in areas like recreation, food, and insurance. Mining stocks saw gains supported by a climb in iron ore prices. However, financials and retail sectors were weaker. Supermarket giant Woolworths fell sharply by 5.8% after issuing a profit warning for FY25. Star Entertainment shares plunged 11.3% following a reported $1.6 billion loss for FY24 due to challenging trading conditions and regulatory issues. New Zealand's NZX50 is 0.40% lower, with the three largest weighting (WBC, ANZ, Fisher & Paykel) dropping roughly 1% each.
OIL: Crude Higher Today, December OPEC Meeting In Focus, EIA Data Later
Oil has posted modest gains during APAC trading today. Brent is 0.4% higher at $71.40/bbl, close to the intraday high, and WTI is up 0.6% to $67.60/bbl after a low of around $67.30. The USD has recovered to be down only slightly now.
- OPEC is due to meet on December 1 which will be monitored closely to see if the group delays its current plans to begin a gradual increase in output from December, which would push prices lower. Bloomberg says that traders are divided as to whether the current plan will go ahead.
- Westpac believes that Brent will trade in the high $60s in the not-too-distant future now that most of the geopolitical risk premium has unwound.
- Bloomberg reported that US oil inventories fell 600k barrels last week, according to people familiar with the API data. Gasoline stocks fell -300k and distillate 1.5mn. The official EIA data is out later today.
- Later the advanced release of US Q3 GDP and October ADP employment are out. GDP is forecast to rise 2.9% q/q saar, in line with Q2.
- The October European commission survey, preliminary Q3 German/French GDP, October German unemployment and October German/Spain CPIs print. The ECB’s Schnabel and BoC’s Macklem speak, and the UK budget is announced.
Gold Hits New Record High On US Election Uncertainty & Expected Rate Cuts
Spot gold rose to a fresh record high of $2,782/oz today amid on-going safe haven demand ahead of the US election, with polls continuing to point to a close outcome and betting putting Trump well ahead. Upcoming key US data is also driving bullion higher. The USD index is flat.
- The yellow metal is currently up by 0.1% on the day to $2777.50, just below the intraday high and above resistance at $2,767.1, a Fibonacci projection point. Above here, sights are on the $2,800.0 handle next.
- Analysts at Saxo Bank note that gold trades are up given prospects of Trump 2.0, which may bring greater policy disruption, trade tariffs and increased geopolitical risk.
- Later the advanced release of US Q3 GDP and October ADP employment are out. GDP is forecast to rise 2.9% q/q saar, in line with Q2. Payrolls on Friday are a focus but are likely to be impacted by recent hurricanes. The Fed is expected to cut rates 25bp on November 7 and gold has rallied on expectations of further easing.
- The October European commission survey, preliminary Q3 German/French GDP and October German/Spain CPIs print. The ECB’s Schnabel and BoC’s Macklem speak, and the UK budget is announced.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 30/10/2024 | 0600/1400 | ** |  CN | MNI China Money Market Index (MMI) |
| 30/10/2024 | 0630/0730 | ** |  FR | Consumer Spending |
| 30/10/2024 | 0630/0730 | *** | FR | GDP (p) |
| 30/10/2024 | 0700/0800 | *** |  DE | GDP (p) |
| 30/10/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 30/10/2024 | 0800/0900 | *** | ES | GDP (p) |
| 30/10/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 30/10/2024 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 30/10/2024 | 0855/0955 | ** | DE | Unemployment |
| 30/10/2024 | 0900/1000 | *** |  IT | GDP (p) |
| 30/10/2024 | 0900/1000 | ** | IT | PPI |
| 30/10/2024 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 30/10/2024 | 0900/1000 | *** | DE | Bavaria CPI |
| 30/10/2024 | 1000/1100 | *** |  EU | EMU Preliminary Flash GDP Q/Q |
| 30/10/2024 | 1000/1100 | *** | EU | EMU Preliminary Flash GDP Y/Y |
| 30/10/2024 | 1000/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 30/10/2024 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 30/10/2024 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 30/10/2024 | - |  GB | UK Budget | |
| 30/10/2024 | 1215/0815 | *** | US | ADP Employment Report |
| 30/10/2024 | 1230/0830 | *** | US | GDP |
| 30/10/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 30/10/2024 | 1230/0830 | *** | US | Treasury Quarterly Refunding |
| 30/10/2024 | 1300/1400 | *** | DE | HICP (p) |
| 30/10/2024 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 30/10/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 30/10/2024 | 1500/1600 | EU | ECB's Schnabel speech at SAFE-CEPR conference | |
| 30/10/2024 | 1800/1400 | US | Fed Beige Book | |
| 30/10/2024 | 2015/1615 |  CA | BOC Governor Macklem at Senate banking committee | |
| 31/10/2024 | 2350/0850 | * |  JP | Retail Sales (p) |
| 31/10/2024 | 2350/0850 | ** | JP | Industrial Production |
| 31/10/2024 | 0030/1130 | *** |  AU | Retail trade quarterly |
| 31/10/2024 | 0030/1130 | ** | AU | Retail Trade |
| 31/10/2024 | 0030/1130 | ** | AU | Trade price indexes |
| 31/10/2024 | 0030/1130 | * | AU | Building Approvals |
| 31/10/2024 | 0130/0930 | *** | CN | CFLP Manufacturing PMI |
| 31/10/2024 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
| 31/10/2024 | 0300/1200 | *** | JP | BOJ Policy Rate Announcement |
| 31/10/2024 | 0700/0800 | ** | DE | Retail Sales |
| 31/10/2024 | 0700/0800 | ** | DE | Import/Export Prices |
| 31/10/2024 | 0745/0845 | *** | FR | HICP (p) |
| 31/10/2024 | 0745/0845 | ** | FR | PPI |
| 31/10/2024 | 1000/1100 | *** | EU | HICP (p) |
| 31/10/2024 | 1000/1100 | ** | EU | Unemployment |
| 31/10/2024 | 1000/1100 | *** | IT | HICP (p) |
| 31/10/2024 | 1000/1000 | GB | BOE's Breeden speech on emerging technologies | |
| 31/10/2024 | 1230/0830 | *** | US | Jobless Claims |
| 31/10/2024 | 1230/0830 | *** | US | Personal Income and Consumption |
| 31/10/2024 | 1230/0830 | *** | US | Employment Cost Index |
| 31/10/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 31/10/2024 | 1230/0830 | * | CA | Payroll employment |
| 31/10/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 31/10/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 31/10/2024 | 1345/0945 | *** | US | MNI Chicago PMI |