Source: MNI - Market News/Bloomberg
UK
POLITICS (BBC): “Speaking to the BBC's Laura Kuenssberg on her first day in the job, Badenoch gave a first glimpse of her policy priorities, including on reversing the VAT hike for private schools.” “Conservative leader Kemi Badenoch said her approach to the economy would be "completely the opposite" to that of Chancellor Rachel Reeves.”
EU
POLITICS (ECONOMIST): “The next stage in selecting members of the European Commission begins on Monday. All of the EU’s 27 member states except Germany nominated candidates. Ursula von der Leyen, the freshly re-appointed president for the commission’s new five-year term, then negotiated with member states over their portfolio. Now the European Parliament will grill the candidates for a week.”
TRADE (POLITICO): “The Chinese government on Sunday complained about European Union duties on Chinese electric vehicles and asked the Czech Republic for help in talks between Beijing and Brussels.”
RUSSIA (POLITICO): “Sergey Lavrov to visit Malta next month: Russian media. It would be the Russian foreign minister first trip to an EU country since Moscow launched its full-scale invasion of Ukraine in 2022.”
MOLDOVA (BBG): “Moldovan President Maia Sandu declared victory in a crucial election on Sunday, a win that would bolster her ambition to steer the former Soviet republic into the European Union by the end of the decade.”
US
POLITICS (RTRS): “Democratic candidate Kamala Harris and Republican Donald Trump remain in a tight race in the country's seven battleground states two days before the U.S. presidential election, according to the final New York Times/Siena College poll.”
POLITICS (BBG): “A flurry of polls released Sunday show Vice President Kamala Harris and former President Donald Trump remain poised for a photo finish in this week’s presidential election, with voters narrowly split both nationally and across the pivotal swing states that will decide the election.”
POLITICS (POLITICO): “British ‘mega poll’ leans toward Harris victory. Election pollsters may be ‘herding’ and giving the impression Trump is stronger than he really is, Focaldata research suggests.”
FED (MNI INTERVIEW): The Federal Reserve will cut interest rates next week but should strongly consider pausing so long as the economy stays strong and employment conditions remain stable, a former Fed Board of Governors economist Andrew Levin told MNI.
MANUFACTURING (MNI INTERVIEW): The ISM manufacturing index fell for a seventh month to a 15-month low in October on lackluster demand while hurricane-related disruptions to transportation temporarily boosted the prices index into inflationary territory, survey chief Tim Fiore told MNI Friday.
JOBS (MNI BRIEF): The U.S. economy created just 12,000 jobs in October, a number skewed by extreme weather and strikes and lower than analyst estimates, according to the Bureau of Labor Statistics report Friday. The unemployment rate, measured by a survey of households rather than businesses and unaffected by Hurricanes Helene and Milton in the southeast U.S., was steady at 4.1%, the BLS said.
OTHER
MIDDLE EAST (WSJ/BBG): “Iran is planning a counterattack on Israel involving more powerful warheads and other weapons, the Wall Street Journal reported, citing Iranian and Arab officials briefed on the plans.”
OIL (BBG): “OPEC+ agreed to push back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook.”
MEXICO (MNI EM POLICY): Mexico would only intervene in foreign exchange markets if the peso’s depreciation became disorderly, MNI understands. Any intervention would not aim to prevent depreciation but would be triggered only if there were significant disruptions to market functioning, as there is no specific exchange rate target.
AUSTRALIA (MNI): RBA's Underlying Forecasts Rest On Q/Q Results
CHINA
BONDS (ECONOMIC INFORMATION DAILY): “The People’s Bank of China will likely maintain a relatively high net purchase of government bonds in the short term, and use the outright reverse repo to keep liquidity conditions relatively loose, Economic Information Daily reported, citing analysts.”
INVESTMENT (SECURITIES TIMES): “Chinese authorities have lowered the equity investment threshold for foreign investors in a bid to encourage long-term and value investment, Securities Times reported. The revised rules shorten the lockup period for overseas investors to 12 months from three years and lower asset requirements for non-controlling shareholders.”
CHINA MARKETS
MNI: PBOC Net Drains CNY224.3 Bln via OMO Monday
The People's Bank of China (PBOC) conducted CNY17.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY224.3 billion after offsetting the maturity of CNY241.6 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4763% at 09:42 am local time from the close of 1.5508% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on Friday, the same as the close on the previous day. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1203 Mon; +2.72% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1203 on Monday, compared with 7.1135 set on Friday. The fixing was estimated at 7.1194 by Bloomberg survey today.
MARKET DATA
AUSTRALIA MI INFLATION GAUGE OCT. +0.3% M/M & 3.0% Y/Y; PRIOR +0.1% & 2.6%
AUSTRALIA ANZ-INDEED JOB ADS OCT. +0.3% M/M; PRIOR +2.3%
MARKETS
- With Japan out for Culture Day, there was no cash trading in the Asian time zone though futures were open.
- Futures had opened up stronger this morning with the Dec24 10yr note up +14 at the Tokyo open reacting to the volatility in election opinion polls in the US, before settling to be +10 by mid-afternoon.
- Tonight, the markets will have the dual challenges of the pulsating news on the election and a raft of data including Factory Orders and Durable Goods.
AUSSIE BONDS: Flat Ahead Of Busy Week: RBA & FOMC Decisions & US Election
ACGBs (YM flat & XM flat) sit unchanged after dealing in narrow ranges in today’s session. There were no cash US tsy dealings in today’s Asia-Pac session with Japan out for a public holiday. US tsy futures are however stronger, with TYZ4 at 110-12+, +0-11 compared to NY closing levels.
- Looking ahead, the US Presidential Election takes place on Tuesday, followed by an unusual Thursday FOMC decision amid an otherwise light US economic calendar.
- Today’s domestic data drop of MI Inflation and ANZ-Indeed Job Advertisements failed to be market-moving, as expected.
- Tomorrow, the RBA will announce its policy decision. While the cash rate is unanimously expected to remain at 4.35%, the meeting statement will be closely analysed for any shifts in tone.
- Cash ACGBs are flat to 2bps cheaper.
- Swap rates are -1bp lower to 2bps higher, with the 3s10s curve steeper.
- The bills strip has bull-flattened, with pricing flat to +3.
- RBA-dated OIS pricing has softened by 2-3bps across the 2025 meetings today. These adjustments bring the pricing for 2025 meetings to just 1-5bps above pre-CPI levels from last Wednesday. Despite this, the market continues to price in a cumulative 3bps of easing by year-end, with a 7% probability assigned to a 25bp rate cut at tomorrow’s meeting.
NZGBS: Little Changed, Subdued Start To A Busy Week In The US
NZGBs closed little changed after dealing in narrow ranges in today’s session. There were no cash US tsy dealings in today’s Asia-Pac session with Japan out for a public holiday. US tsy futures are however stronger, with TYZ4 at 110-13, +0-12 compared to NY closing levels.
- Swap rates closed 1-3bps lower, with the 2s10s curve steeper and implied swap spreads tighter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps by year-end.
- The local calendar was quiet today, with attention turning to tomorrow’s release of the RBNZ Financial Stability Report.
- Also tomorrow, the RBA will announce its policy decision. While the cash rate is unanimously expected to remain at 4.35%, the meeting statement will be closely analysed for any shifts in tone. A dovish interpretation may arise if the forecasts suggest that underlying inflation could hit the target sooner than the current expectation of Q4 2025.
- Looking further ahead, the U.S. Presidential Election takes place on Tuesday, followed by an unusual Thursday FOMC decision amid an otherwise light U.S. economic calendar.
FOREX: USD Softens With Lower Trump Election Odds
The USD BBDXY and DXY indices are both off around 0.60% in the first part of Monday dealings. The BBDXY index is around 1256, still above the 20-day EMA support zone (near 1253.4). We haven't been sub this support point since the start of October.
- Weekend polling showing the tightness of the US Presidential race, particularly in the swing states, has trimmed Trump's election odds. In turn this has reduced reflation theme appeal and weighed on USD appetite.
- Yen was the strongest performer at one stage. but AUD, NZD, NOK and SEK have all largely caught up now. USD/JPY got to lows of 151.60, but now sits slightly higher, last 151.80/85. oct 25 lows at 151.46 remain intact for now.
- US Tsy futures rallied at the open (there has been no cash Tsy trading today due to a Japan holiday), but follow through hasn't transpired. We were last comfortably within Friday ranges.
- US equity futures were weaker at the open but sit back in positive territory now. Bitcoin has also been supported on dips, despite being another favoured Trump related trade, although Bitcoin is comfortably off recent highs.
- AUD/USD has rallied b around 0.75%, last in the 0.6605/10 region, while NZD/USD is up by close to same amount, last near 0.6010.
- For the A$ the Sep 11 low at 0.6622 is a near term upside resistance point.
- Oil prices are up, supported by OPEC’s decision to delay its unwinding of output reductions by a month to the end of December as well as threatening comments from Iran.
- Later US September orders and European October manufacturing PMIs print. ECB’s Elderson, McCaul and Buch make appearances and the eurogroup meeting also takes place. Key events for crude though are Tuesday’s US election and this week’s meeting of China’s legislature standing committee, which may result in further stimulus.
ASIA STOCKS: Markets Positive Despite US Uncertainty.
- Asian equity markets were generally stronger today, despite the uncertainty emanating from the US election.
- China markets were positive across the board with the CSI 300 up +0.70%, Shanghai Comp +0.50% and Shenzhen Comp +1.40%. Over the weekend Chinese authorities issued changes to their foreign investment rules, allowing lower threshold for investors. This is view largely as a positive for the market at a time when Goldman Sach’s Prime Broker data shows hedge funds reducing their allocations to China.
- In Korea, news that the Opposition Party will support the proposed drop in CGT for retail equity investors was greeted positively. The KOSPI was strong throughout the day up +1.45%.
- Indonesia was the underperformer as the volatility in the currency and bond markets weigh heavy on the Jakarta Comp, down -0.90%.
- In Malaysia the FTSE Malay has put in a strong start to the week up +0.50% ahead of this week’s Central Bank’s meeting. Market expects the BNM to be on hold as the country’s data has been strong and the economic outlook remains robust.
- The Philippines market was weaker today following weaker than expected data. The S&P PMI Manufacturing moderated to 52.9 for October, down from 53.7 in September.
Oil Higher, OPEC Delays Extra Output, US$ Falls & Middle East Tensions Rise
Oil prices are around 1.5% higher today supported by OPEC’s decision to delay its unwinding of output reductions by a month to the end of December as well as threatening comments from Iran. Brent is up 1.5% to $74.20/bbl after an intraday high of around $74.45. WTI is 1.8% higher at $70.70/bbl. The softer US dollar is also supportive of crude (BBDXY -0.7%). The decline is being driven by an unwinding of the Trump trade following a narrowing of the polls.
- OPEC+ had planned to normalise output after cutting output 2.2mbd starting with a 180kbd increase in December. Its decision to delay a month was driven by concern over downward price pressure from soft China demand and additional non-OPEC supply, according to Reuters.
- Iran is again ramping up tensions with the Wall Street Journal reporting remarks that it is planning a “strong and complex” strike on Israel. It apparently told allies that the attack would be after the US election but before the January presidential inauguration. The US has said that it won’t restrain Israel if Iran attacks it again. A re-escalation of the conflict risks Iran’s oil facilities thus increasing the chance of crude’s geopolitical risk premium rebuilding.
- Saudi Aramco is expected to publish its prices this week and a Bloomberg survey shows expectations of a price cut for shipments to Asia.
- Later US September orders and European October manufacturing PMIs print. ECB’s Elderson, McCaul and Buch make appearances and the eurogroup meeting also takes place. Key events for crude though are Tuesday’s US election and this week’s meeting of China’s legislature standing committee, which may result in further stimulus.
GOLD: Weaker On Friday Despite Weak US Payrolls, Higher Yields Weigh
Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.3% lower at $2736.53 on Friday.
- On Friday, US Nonfarm payrolls increased 12K in October, well below the consensus expectation for a 101k gain, with hurricanes, strikes along with a shortened survey period contributing factors. In addition, there were downward revisions totalling 112k for the previous two months.
- US Treasuries and the USD Dollar saw a large intra-day swing in Friday’s NY session. Yields dropped immediately after the payrolls data, with the 2-year traded from 4.21% to a low of 4.06% before reversing course to end the session at 4.21%. The US 10-year yield closed 10bp higher at 4.38%, a new high for the move that began in September.
- The bounce off yield lows was aided by higher than expected S&P Global US Manufacturing PMI, Construction Spending and ISM prices paid data.
- Looking ahead, the US Presidential Election on Tuesday and the FOMC decision unusually on a Thursday are two major risk events in an otherwise light US calendar.
- The presidential race appears close with seven swings states likely to determine who wins the White House. Over the weekend, the national average polls tightened, and those states remain on a knife edge.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 04/11/2024 | 0700/0200 | * |  TR | Turkey CPI |
| 04/11/2024 | 0815/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 04/11/2024 | 0845/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 04/11/2024 | 0850/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 04/11/2024 | 0855/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 04/11/2024 | 0900/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 04/11/2024 | - | EU | ECB's Lagarde and Cipollone in Eurogroup meeting | |
| 04/11/2024 | 1330/1430 | EU | ECB's Elderson speech at '10 years of SSM' conference | |
| 04/11/2024 | 1400/1500 | EU | ECB's Elderson in panel 'Achievement...and the outlook' | |
| 04/11/2024 | 1500/1000 | ** |  US | Factory New Orders |
| 04/11/2024 | 1530/1030 |  CA | BOC market participants survey | |
| 04/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 04/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 04/11/2024 | 1800/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 05/11/2024 | 0330/1430 | *** |  AU | RBA Rate Decision |
| 05/11/2024 | 0645/0745 | ** |  CH | Unemployment |
| 05/11/2024 | 0745/0845 | * | FR | Industrial Production |
| 05/11/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 05/11/2024 | - | EU | ECB's De Guindos participate in ECOFIN Meeting | |
| 05/11/2024 | - | US | US Presidential Election | |
| 05/11/2024 | 1330/0830 | ** | US | Trade Balance |
| 05/11/2024 | 1330/0830 | ** | CA | International Merchandise Trade (Trade Balance) |
| 05/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |