US stocks gained and yields climbed into month-end and on the eve of the FOMC - Newsquawk Asia-Pac Market Open

• US stocks were firmer with a "real economy" bias in which the Russell 2k and equal-weighted S&P 500 outperformed the SPX and NDX, although all indices rose through the session into month-end after a choppy cash open. Nonetheless, the gains were capped on the eve of the FOMC and attention was also on data after better-than-expected Consumer Confidence while duration-sensitive names faced headwinds as yields climbed following the rise in Employment Costs.
• USD was firmer with support from data releases after Employment Cost Index topped forecasts and Consumer Confidence was also better than expected, while the bid was sustained into month-end and ahead of the FOMC.
• Looking ahead, highlights include New Zealand Jobs Data and Labour Cost Index, Australian PMIs & Building Approvals, South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI, Supply from Australia.

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LOOKING AHEAD

• Highlights include New Zealand Jobs Data and Labour Cost Index, Australian PMIs & Building Approvals, South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI, Supply from Australia.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks were firmer with a "real economy" bias in which the Russell 2k and equal-weighted S&P 500 outperformed the SPX and NDX, although all indices rose through the session into month-end after a choppy cash open. Nonetheless, the gains were capped on the eve of the FOMC and attention was also on data after better-than-expected Consumer Confidence while duration-sensitive names faced headwinds as yields climbed following the rise in Employment Costs.
• SPX +0.65% at 4,193, NDX +0.52% at 14,409, DJIA +0.38% at 33,052, RUT +0.91% at 1,662.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US left its 4-, 8-, and 17-week bill auction sizes unchanged at USD 95bln, 85bln, and 56bln, respectively, while the 4- and 8-week bills are to be sold on November 2nd and 17-week bills on November 1st with all to settle on November 7th.

DATA RECAP

• US Consumer Confidence (Oct) 102.6 vs. Exp. 100.0 (Prev. 103.0, Rev. 104.3)
• US Employment Costs (Q3) 1.1% vs. Exp. 1.0% (Prev. 1.0%)
• US CaseShiller 20 MM SA (Aug) 1.0% vs. Exp. 0.7% (Prev. 0.9%, Rev. 0.8%)
• US CaseShiller 20 YY NSA (Aug) 2.2% vs. Exp. 1.6% (Prev. 0.1%, Rev. 0.2%)

FX

• USD was firmer with support from data releases after Employment Cost Index topped forecasts and Consumer Confidence was also better than expected, while the bid was sustained into month-end and ahead of the FOMC.
• EUR wiped out initial gains and then some owing to the dollar strength and following softer-than-expected EU CPI.
• GBP whipsawed with early upward momentum reversed after hitting resistance at the 1.2200 handle.
• JPY continued to weaken in the aftermath of the BoJ meeting with USD/JPY at a firm footing above 151.00.

FIXED INCOME

• Treasuries flattened amid a dovish BoJ reaction and mixed EZ inflation data which were followed by hot-leaning US ECI and Consumer Confidence ahead of the FOMC.

COMMODITIES

• Oil prices traded lower after initial gains were faded amid the dollar's advance and as OPEC output notched up.
• US Private Energy Inventories (bbls): Crude +1.3mln (exp. +1.3mln), Gasoline -0.4mln (exp. -0.8mln), Distillates -2.5mln (exp. -1.5mln), Cushing +0.4mln.
• OPEC October oil output rose by 180k BPD from September to 27.90mln BPD, led by Nigeria, Angola, Iran and Iraq.
• Iraqi Oil Minister Hayyan Abdul Ghani said investment in gas needs years and the plan for Iraq is to be a gas exporter within 5 or 6 years from now, according to Iraqi channel Al-Sharqiya.
• US EPA said oil recovery operations and restoration of Mill Creek are complete following the Keystone pipeline spill near Washington, Kansas.

GEOPOLITICS

• Israeli forces stormed northern and central Gaza City, according to Sky News Arabia citing Palestinian media.
• Israeli Defence Minister said they have made achievements during the ground operation in Gaza but are paying a heavy price, according to Sky News Arabia.
• Israel said it will turn full attention to Hezbollah "after Hamas", according to Bloomberg. It was also reported that an Israeli official said there is no hostage deal in sight and that the focus in Gaza combat is on the north, while the south's turn will come later.
• Hamas armed wing spokesperson said it told mediators that the group will release some foreign captives in the coming days.
• Israel considers responding to Houthis after rocket fire towards Eilat, according to Al Jazeera. Yemen's Houthis said they launched a large number of missiles and drones towards Israel and that the operation is the 3rd targeting Israel with more to come.
• Israeli military spokesperson said the Houthis, backed by Iran, are trying to challenge Israel but the country will stay focused on Gaza. The spokesperson added that Israel is advancing in the ground operation in a way that serves its goals, including the elimination of Hamas.
• Rafah crossing is to be opened Wednesday for a number of people to complete their treatment in Egyptian hospitals, according to Palestinian and Egyptian sources cited by Reuters.
• White House's Kirby said now is not the time for a general ceasefire but can consider a pause in fighting.
• US Pentagon spokesperson said an additional 300 US troops will be heading to the Middle East but will not be going to Israel.
• US Defence Secretary Austin said they have been clear that they will respond if attacks against US personnel in the Middle East do not stop, according to Al Arabiya.
• US shot down two drones outside the Al-Asad base in Iraq, according to Fox News.
• NATO Secretary General Stoltenberg said China is not our enemy but is an increasing challenge to NATO security.

ASIA-PAC

NOTABLE HEADLINES

• PBoC is likely to add liquidity with China market rates seen falling from Wednesday, according to Bloomberg sources.
• China's National Financial Work Conference said China is to tighten financial regulation and that the current financial supervision is weak, while China is to set up a long-term mechanism to prevent and resolve local debt risks. Furthermore, China will enrich the monetary policy toolbox and set up a long-term mechanism to prevent and resolve local debt risks.
• White House said US President Biden is aiming to have a constructive conversation with Chinese President Xi in San Francisco in November.
• BoJ Governor Ueda said they will patiently continue monetary easing with the decided new measures and will not hesitate to take additional easing measures if necessary, while he added they are getting gradually closer to achieving the price target. Ueda also stated the BoJ decided to add flexibility to YCC and that its steps came partly as a result of rising US long-term rates with the decision aimed at making the YCC operation more flexible amid extremely high uncertainties around the economy and financial markets.
• Japan's MOF said currency intervention amounted to JPY 0 from September 28th to October 27th.
• RBNZ Financial Stability Report stated the full impact of rate hikes globally is still to be seen and that banks preparing for a deterioration in asset quality, while it noted that households and businesses continue to face higher debt servicing costs.

EU/UK

NOTABLE HEADLINES

• ECB's de Guindos said today's inflation number is good news and that deceleration in underlying inflation is an important element, while he added that ECB rates are at current levels to help bring prices to 2%.
• ECB's Kazaks said no need to discuss rate cuts now and that the risk of inflation persists, while the door should always be open to hikes if needed and a dramatic turnaround in the economy is needed for rate cuts.
• ECB's Muller said inflation is to continue slowing in the next two years.
• ECB's Nagel said inflation has now fallen significantly but it is still too high and the ECB must not let up too soon, while he added that rates must be sufficiently high for sufficiently long and it is not yet possible to say whether interest rates have already reached their peak.
• ECB's Stournaras said would consider an interest rate cut should inflation permanently and sustainably fall under the 3% threshold in mid-2024, according to Handelsblatt.
• ECB's Villeroy said the latest data shows France has clearly passed the inflation peak, while he added the economy fully justifies the end of interest rate hikes and future policy must be guided by patience.
• ECB's Visco said the ECB needs to be cautious in the coming months after hiking rates so much and so quickly. Visco added that EZ inflation is falling as expected and demand is seen further contained in the coming months due to a delayed impact of rate hikes.

DATA RECAP

• EU GDP Flash Prelim QQ (Q3) -0.1% vs Exp. 0.0% (Prev. 0.1%)
• EU GDP Flash Prelim YY (Q3) 0.1% vs. Exp. 0.2% (Prev. 0.5%)
• EU HICP Flash YY (Oct) 2.9% vs. Exp. 3.1% (Prev. 4.3%)
• EU HICP-X F&E Flash YY (Oct) 5.0% vs. Exp. 5.1% (Prev. 5.5%)