US stocks finished little changed amid pre-CPI indecision - Newsquawk Asia-Pac Market Open

• US stocks finished little changed after initial losses were faded into the US afternoon in choppy pre-CPI trade, while there was little tier-1 US data to dig into ahead of Tuesday's main event although the latest NY Fed consumer inflation expectations showed a slight decline in 1yr and 5yr expectations.
• USD gave back earlier gains after the DXY hit resistance just shy of the 106.00 status as risk sentiment improved and with the latest NY Fed Survey of Consumer Expectations showing a decline in the median 1yr ahead inflation expectation to 3.6% from 3.7%, while the attention shifts to the incoming US CPI data.
• Looking ahead, highlights include Australian Westpac Consumer Sentiment & NAB Business Confidence, South Korean Money Supply, Supply from Australia and Japan, Holiday Closure in India.

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LOOKING AHEAD

• Highlights include Australian Westpac Consumer Sentiment & NAB Business Confidence, South Korean Money Supply, Supply from Australia and Japan, Holiday Closure in India.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks finished little changed after initial losses were faded into the US afternoon in choppy pre-CPI trade, while there was little tier-1 US data to dig into ahead of Tuesday's main event although the latest NY Fed consumer inflation expectations showed a slight decline in 1yr and 5yr expectations.
• SPX -0.08% at 4,412, NDX -0.30% at 15,483, DJIA +0.16% at 34,338, RUT +0.01% at 1,706.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden said he has made no judgement yet on whether he would veto the stop-gap spending bill and said let’s see what negotiators come up with.
• US Senate Majority Leader Schumer signalled an openness to House Speaker Johnson’s "far from perfect" spending bill, according to The Hill.
• Fed Vice Chair of Supervision Barr said bank supervision must intensify at the right pace and that March's "acute stress" in the banking system has receded, while he added that the banking system is well positioned on liquidity levels.
• NY Fed's October Survey of Consumer Expectations showed median 1yr ahead inflation expectations fell to 3.6% from 3.7%, while 3yr inflation expectations were unchanged at 3.0% and 5yr inflation expectations fell to 2.7% from 2.8%.
• Philadelphia Fed Survey of Professional Forecasters for Q4 showed the outlook for the US economy looks somewhat better now than it did three months ago with the economy to expand at an annual rate of 1.3% (prev. view 1.2%).

FX

• USD gave back earlier gains after the DXY hit resistance just shy of the 106.00 status as risk sentiment improved and with the latest NY Fed Survey of Consumer Expectations showing a decline in the median 1yr ahead inflation expectation to 3.6% from 3.7%, while the attention shifts to the incoming US CPI data.
• EUR marginally strengthened on the day and briefly reclaimed the 1.0700 handle against the dollar with some encouragement from an improved German Ifo survey, while there were also comments from ECB's de Guindos who noted that he expects a temporary rebound in inflation in the coming months.
• GBP was underpinned in the aftermath of the UK cabinet reshuffle that saw Suella Braverman replaced by James Cleverly as Home Secretary and the return of former PM David Cameron as Foreign Secretary.
• JPY was slightly softer against the dollar by the end of the US session although USD/JPY did see a brief sharp move lower earlier on despite the lack of any clear catalyst which spurred suspicions of intervention.

FIXED INCOME

• Treasuries were choppy amid corporate supply and dovish consumer survey data in the backdrop of pre-CPI positioning.

COMMODITIES

• Oil prices were ultimately firmer after initial losses were unwound in the absence of an obvious catalyst, while the latest OPEC MOMR showed global oil demand growth was raised by 200k bpd to 2.5mln bpd.
• OPEC MOMR for November stated 2023 world oil demand growth was upgraded by 100k BPD to 2.5mln BPD, while 2024 world oil demand was unchanged M/M which is expected to rise by 2.2mln BPD.
• EIA sees US total shale regions oil production for December down about 1.2k BPD at 9.865mln BPD (vs 4.1k BPD fall in November), while Permian production is seen at the highest on record.
• US requested information on 30 ship managers suspected of moving Russian oil in violation of the oil price cap, according to Reuters.
• First Quantum (FM) reduced Panama mine ore processing operations, while it was later reported that First Quantum said workers at the Panama copper mine were down by 25% on Monday to about 3k due to protestors' blockades at the port.

GEOPOLITICS

• Israeli PM Netanyahu said Hezbollah is playing with fire and warned that its attacks will be met with much stronger fire.
• IRGC Air Force Commander said Israel's war on Gaza has expanded and Lebanon’s Hezbollah is involved in it, while he added there is a possibility of Israel's war on Gaza further expanding and that they are ready for all eventualities.
• Iranian proxies attacked US troops after US strikes in Syria with US troops targeted at least four times after the air strikes, according to CNN.
• Hamas armed wing spokesperson said they told mediators the group is ready to release up to 70 children and women held in Gaza in a five-day truce, while the truce should include a ceasefire and allow aid relief everywhere in the Gaza Strip.
• US President Biden said there is an effort to use the pause to deal with the release of prisoners which is being negotiated with Qatar.
• Egyptian and Qatari communications are pushing efforts to reach a ceasefire agreement and release detainees, according to Sky News Arabia citing Egyptian sources.
• NATO official van Weel said NATO has no ambitions to become a regional military alliance in the Indo-Pacific region but will "strongly discourage China from taking any actions that will change the status quo of Taiwan as it is right now", according to Nikkei.
• Russia's Kremlin said Poland’s plans to deploy tanks closer to the Belarus border would escalate tensions.

ASIA-PAC

NOTABLE HEADLINES

• PBoC will step up monitoring and analysis of systemic risks, shadow banks and financial technological innovation, while it will handle risks of small and medium-sized financial institutions in a timely manner, according to Reuters citing sources.
• White House National Security Adviser Sullivan said US President Biden and Chinese President Xi are to focus on strengthening open lines of communication and noted that the administration is looking for specific outcomes from the Biden-Xi meeting on November 15th. President Biden is to announce outcomes on pillars of the Indo-Pacific economic framework and will make a point to Xi that Iran acting in a destabilising way is not in China's interest, while Biden will set out the vision for peace and stability across Taiwan Strait. Furthermore, Sullivan said the US-China relationship could easily veer into conflict or confrontation if it's not well managed.
• US Treasury Secretary Yellen spoke with China's Finance Minister and conveyed the importance of maintaining communication channels.
• US Senator Manchin (D) urged the “strictest possible standards" for US Treasury guidance on EV tax credits to prevent Chinese minerals from winning subsidies.
• Chinese imports of semiconductor manufacturing equipment rose 93% Y/Y during the last quarter to CNY 63.4bln (USD 8.7bln), according to Chinese customs data cited by Nikkei.
• Japanese Finance Minister Suzuki reiterated sudden FX moves are undesirable, while he also repeated that they will monitor markets and respond with a sense of urgency.

DATA RECAP

• Chinese New Yuan Loans (CNY)(Oct) 738.4B vs Exp. 665.0B (Prev. 2310.0B)
• Chinese Aggregate Financing (CNY)(Oct) 1850.0B vs Exp. 1900.0B (Prev. 4120.0B)
• Chinese M2 Money Supply YY (Oct) 10.3% vs Exp. 10.3% (Prev. 10.3%)
• Indian CPI Inflation YY (Oct) 4.87% vs. Exp. 4.80% (Prev. 5.02%)

EU/UK

NOTABLE HEADLINES

• BoE's Mann (hawk) said research points to increased inflation, increased inflation persistence and increased inflation volatility associated with climate shocks, policies, and spillovers. Furthermore, Mann stated that carbon price shocks lead to more inflation persistence than oil price shocks.
• UK Secretary of State for the Home Department Braverman was sacked and James Cleverly was named as the new Home Secretary, while former PM David Cameron was appointed as Foreign Secretary in the cabinet reshuffle.
• ECB's de Guindos said to expect a temporary rebound in inflation in the coming months as the base effects from the sharp increase in energy and food prices in autumn 2022 drop out of the year-on-year calculation. De Guindos also said he would not prejudge further rate movements and noted that there is uncertainty on policy transmission to the economy.
• ECB's Kazaks said it is currently still premature to say the ECB is at the terminal and they will only be sure that they reached the rate in retrospect. Kazaks added there is nothing automatic about the next rate move and he could with caveats, share the view that further tightening has become less necessary.
• EU countries and lawmakers were reportedly set to reach a deal on rules to secure the supply of critical raw materials, according to Reuters citing an EU official.