US stocks gained as geopolitical hedges unwound - Newsquawk Asia-Pac Market Open

• US stocks rallied and yields climbed amid a recovery in risk appetite as weekend geopolitical hedges were unwound despite not much change fundamentally and as risks of a widening of the conflict in the Middle East linger.
• USD weakened and reversed Friday's haven bid amid the improved risk mood and despite the upside in yields, while the NY Manufacturing survey topped forecasts but remained in contractionary territory.
• Looking ahead, highlights include New Zealand CPI, South Korean Trade Data, Singapore Non-Oil Exports, RBA Meeting Minutes, Supply from Australia & Japan.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include New Zealand CPI, South Korean Trade Data, Singapore Non-Oil Exports, RBA Meeting Minutes, Supply from Australia & Japan.

US TRADE

• US stocks rallied and yields climbed amid a recovery in risk appetite as weekend geopolitical hedges were unwound despite not much change fundamentally and as risks of a widening of the conflict in the Middle East linger.
• SPX +1.06% at 4,374, NDX +1.18% at 15,173, DJI +0.93% at 33,985, RUT +1.59% at 1,747.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Goolsbee (voter) said progress was not stalling on getting inflation back to the 2% target and cautioned on tying upcoming decisions to a narrow set of data, according to an FT interview.
• Fed's Harker (voter) reiterated the Fed is "very likely done" with rate hikes and that the current rate environment is draining the housing market of new buyers.
• CNN's Manu reported that Jim Jordan said he would go to the floor and force a vote at noon on Tuesday even if he doesn’t have 217 votes initially, while he had previously said he would go to the floor once he had 217 votes locked down.

DATA RECAP

• US NY Fed Manufacturing (Oct) -4.6 vs. Exp. -7.0 (Prev. 1.9)

FIXED INCOME

• US Treasuries bear-steepened as weekend geopolitical hedges were unwound ahead of a busy week of Fed speak.

FX

• USD weakened and reversed Friday's haven bid amid the improved risk mood and despite the upside in yields, while the NY Manufacturing survey topped forecasts but remained in contractionary territory.
• EUR benefitted from the softer dollar, while there were also hawkish comments from ECB's Lane.
• GBP reclaimed the 1.2200 status in tandem with the outperformance seen in its cyclical peers.
• JPY was choppy and ultimately flat against the dollar as it withstood the higher US yield environment.

COMMODITIES

• Crude was lower in choppy trade amid ongoing geopolitical risks and against the backdrop of touted unwinding of US sanctions on Venezuela.
• US reached understandings with Venezuela for an easing of sanctions dependent on Maduro following through on election announcement commitments, while US action is expected to involve the issuing of a revised US Treasury license on Venezuela’s oil sector, according to Reuters citing sources. It was also reported that Venezuela’s government and opposition are to restart talks in Barbados on Tuesday.
• Russian Deputy PM Novak said Russia and Venezuela agreed to seek ways of boosting cooperation in oil and increasing oil output.
• US total shale regions oil production for November is seen down by around 51k BPD at 9.553mln BPD (vs -45k BPD in October), according to EIA.

GEOPOLITICAL

• Israeli PM Netanyahu said the conflict was imposed on Israel and their goal is a crushing victory over Hamas, while he added that victory in Gaza will take time. Furthermore, Netanyahu warned Iran and Hezbollah not to test Israel on the northern border and said they will continue the war in the south and are ready for war on the northern front.
• Israeli PM Netanyahu's office said there is currently no truce and humanitarian aid in Gaza in exchange for getting foreigners out, according to Reuters.
• The delay in the Israeli ground attack on Gaza is reportedly due to a growing concern that Hezbollah is waiting for the moment that most IDF forces are committed to Gaza to open a full front with the IDF in the north, according to Jerusalem Post sources.
• Israeli military said Iran instructed Lebanon's Hezbollah to carry out Sunday's attacks at the Lebanon-Israel border, while it was separately reported that Lebanon's Hezbollah said it targeted five Israeli positions.
• US Defense Secretary Austin has put in "be ready to deploy" orders for a select number of American troops should Israel need them, according to Fox News citing an official.
• Hamas military wing spokesperson said they have captives of other nationalities, who are guests and will release them when circumstances allow them, while they warned of participation of any foreigners in the battle alongside Israeli troops.
• Hamas-affiliated radio station said Israel is shelling the Rafah border crossing, south of Gaza.
• Head of Hamas' Diaspora office said there are 6k prisoners in Israeli prisons that they want freed in exchange for Israeli captives and said Lebanon's Hezbollah thankfully takes steps, but the battle needs more.
• Iran's Foreign Minister said pre-emptive actions by the resistance front could be expected in the coming hours, according to state TV.
• Iran said a possible expansion of the war on other fronts is approaching the inevitable stage and the "time for political solutions is running out", while Iran's Foreign Ministry spokesperson said that Tehran considers the US to already be militarily involved within the Israeli-Palestinian conflict.
• Iran’s Foreign Ministry said Hamas is potentially ready to release the nearly 200 hostages if Israel stops its airstrikes on the Gaza Strip although Hamas has not yet acknowledged the Iranian claims, according to i24 News reporter.
• Preparations are reportedly being made for a visit to Israel by US President Biden on Wednesday or Thursday, according to Israeli Channel 12 cited by a geopolitical security analyst.
• US Treasury Secretary Yellen said they support using windfall proceeds from Russian sovereign assets to support Ukraine and the G7 is exploring options.

ASIA-PAC

NOTABLE HEADLINES

• Russian President Putin and Chinese President Xi are to meet on October 18th with no oil or gas deals expected to be signed during Putin’s visit to China, according to Reuters citing media.
• BoJ reportedly conducted discussions with the FSA to exchange views on the current situation of the financial system and market, according to Reuters.
• Japanese top currency diplomat Kanda said the interest rate is merely one factor in FX and intervention is one option when excessive FX moves are seen.

EU/UK

NOTABLE HEADLINES

• BoE's Pill said we must not declare premature victory after a mechanical fall in headline inflation and said if we look at market inflation expectations, we cannot be complacent.
• BoE's (non-MPC) Woods said the Bank is considering changes to how it supervises branches of foreign banks and rules out fundamental reform.
• UK government has withdrawn draft regulations following consultations with firms which raised concerns regarding the imposition of additional reporting requirements.
• ECB President Lagarde said she is watching oil for inflation risks.
• ECB Chief Economist Lane said the current interest rate of 4% will also do a great deal to bring inflation back down, especially as there’s still more tightening in the pipeline. Lane said the most effective way to tighten policy further, if necessary, is to further increase the interest rate and if they have inflation shocks that are sufficiently large or sufficiently persistent, they have to be open to doing more. Furthermore, he said only when they are sufficiently confident of reaching the target, they can normalise policy, but this is quite some distance from where they are now.