Aussie

“The bubble may already have burst” for the most expensive homes, Barber said. Now, "36 percent of all properties currently on the market across prime central London are being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5 percent."

China must be fixed because 'seasonally-adjusted' Aussie full-time employment just surged 58,600 MoM (almost quadruple expectations of a 15k rise). This is the best monthly gain in jobs since September 2012 and best October since 2007 - which all makes perfect sense. The resultant bloodbath in Aussie bonds (3Y +13bps to 6 month highs is worst day since Jan 2014) is all too real however. The question is - will this "good news" be jawboned down by RBA in order to give them some easing room?

For the third day in a row, China dominated the overnight newsflow with the latest industrial output data, which printed at 5.6% missing expectations of a 5.8% increase, and was tied with March for the lowest print since late 2008.

As DB so well-puts it, "Welcome to random number generator day also known as US payrolls." Consensus expects 185k jobs to have been added in October but it’s fair to say that the whisper number has edged up this week with slightly firmer US data. It is also fair to say that even if one knew the number beforehand, it would be impossible to know how the market will react.

Well this is awkward. Just a month after former Aussie PM Tony Abbott openly questioned global warming data (and was 'replaced'), a new NASA study finds another inconvenient truth - Antarctica has been adding more ice than it's been losing, challenging other research, including that of the UN's Intergovernmental Panel on Climate Change, that concludes that Earth’s southern continent is losing land ice overall. Perhaps it is time to burn just a little more fossil fuel? And maybe VW was doing a global good with its defeat device? Paging Al Gore.

• S&P 500 Futures Slip as Aussie Gains on Rate Outlook; Oil Rises (BBG)
• Xi Says China Needs at Least 6.5% Growth in Next Five Years (BBG)
• Ben Carson Vaults to Lead in Latest Journal/NBC Poll (WSJ)
• World's Biggest Banks Still Not `Truly Resolvable,' FSB Says (BBG)
• Keystone XL's builder faced darkening prospects (Reuters)
• Merkel Says Germany Must Step Up World Role in Refugee Crisis (BBG)

So far today's trading session has been a repeat of what happened overnight on Monday, when following a weak start on even more weak Chinese data, US equities soared on the first trading day of the month continuing their blistering surge since that dreadful September payrolls report, which as we showed was mostly catalyzed by a near record bout of short's being squeezed and covering, which accelerated just as the S&P broke the 2100 level.

It's a busy night in AsiaPac. The ubiquitous Japanese stock buying-panic at the open quickly faded. China weakened the Yuan fix quite notably and injected another CNY10bn of liquidity but news of the arrest of the President of China's 3rd largest bank and a graft investigation into Dongfeng Motor's general manager sparked greater uncertainty and Chinese stocks extended the losses from yesterday. Commodities had started to creep lower, with Dalian Iron Ore pushing 2-month lows with its biggest daily drop in 3 months, were extended when the Aussie central bank kept rates steady (as expected) but sparked turmoil in FX markets with forward guidance of th epotential for more easing.

The surge in the USDollar today after The FOMC's 'hawkish' statement has prompted strength in the Offshore Yuan, narrowing once again the spread to Onshore Yuan. Another CNY10 billion cash injection hasn't done much for Chinese stocks or liquidity markets however. After better than expected Japanese industrial production however USDJPY plunged (i.e. no imminent BoJ easing) and that dragged Nikkei 225 over 200 points lower (erasing all the FOMC gains).

We would say today's main event is the culmination of the Fed's two-day meeting and the announcement slated for 2 pm this afternoon, however with the 90 economists polled by Bloomberg all expecting no rate hike, today's Fed decision also happens to be the least anticipated in years (which may be just the time for the Fed to prove it is not driven by market considerations and shock everybody, alas that will not happen). And considering how bad the economic data has gone in recent months, not to mention the recent easing, hints of easing, and outright return to currency war by other banks, the Fed is once again trapped and may not be able to hike in December or perhaps ever, now that the USD is again surging not due to its actions but due to what other central banks are doing.

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UPDATE: He's back - GEITHNER: YUAN CAN BE SIGNIFICANT RESERVE CURRENCY IN LONG TERM

As everyone opined on China's 'goldilocks' GDP data all day long, perhaps the biggest news this evening was US Treasury's softer stance towards China's currency 'manipulation', as we noted earlier, saying Yuan is merely "below appropriate medium-term valuation," and sure enough offshore Yuan has strengthened since the report. China's 'official' mouthpiece Xinhua told the people it is "unnecessary to be anxious about China's economic growth." And finally, for the 8th straight day, Chinese margin debt rose today to its highest in over a month. This is the longest stretch of releveraging in 4 months - since the peak of the bubble. "Will they never learn?"

After two days of relative USD carnage in and across the emerging and asian FX markets, early AsiaPac trading this evening is seeing that trend revert with the Ringgit, Rupee, and Lira sliding. After-hours gains in US equity futures have been erased, despite USDJPY's continued BoJ-aided push higher (though it seems 119.00 is the new ceiling for now). China's government bonds remain extraordinarily bid (outperforming TSYs by almost 60bps in the last few weeks) with yields dropping to 6-year-lows, as corporate bond bubble fears rotate modestly back to govvies. Aussie miners are under pressure with Iluka Resources getting hammered on "excess capacity" warnings.

For the past two weeks, the thinking probably went that if only the biggest short squeeze in history and the most "whiplashy" move since 2009 sends stocks high enough, the global economy will forget it is grinding toward recession with each passing day (and that the Fed are just looking for a 2-handle on the S&P and a 1-handle on the VIX before resuming with the rate hike rhetoric). Unfortunately, that's not how it worked out, and overnight we got abysmal economic data first from China, whose imports imploded, then the UK, which posted its first deflation CPI print since April, and finally from Germany, where the ZEW expectation surve tumbled from 12.1 to barely positive, printing at just 1.9 far below the 6.5 expected.