I. Yesterday’s News
International News

1. Chancellor Angela Merkel said she would prefer a new election to ruling with a minority after talks on forming a three-way coalition failed overnight, but Germany's president told parties they owed it to voters to try to form a government. Steinmeier pressed all parties in parliament "to serve our country" and try to form a government. Steinmeier's intervention suggests he regards a new election - desired by half of Germany's voters according to a poll - as a last resort. Both the euro and European shares later recovered from early selling, while German bond yields steadied near 1-1/2 week lows, as confidence about the outlook for the euro zone economy helped investors brush off worries about the risk of Germany going to the polls again soon.

2. President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday, a designation that allows the United States to impose more sanctions and risks inflaming tensions over Pyongyang's nuclear weapons and missile programs. The Republican president said the Treasury Department will announce additional sanctions against North Korea on Tuesday. "This designation will impose further sanctions and penalties on North Korea and related persons and supports our maximum pressure campaign to isolate the murderous regime," Trump told reporters at the White House.

3. Federal Reserve Chair Janet Yellen said on Monday she will resign her seat on the Fed's Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the U.S. central bank.

4. The euro zone's recovery is firm but the European Central Bank needs to keep the money taps open to help boost salaries, the ECB's President Mario Draghi said on Monday. "The improvements in labour markets that we have observed still need time to translate into more dynamic wage growth," Draghi told the European Parliament. "The re-calibration of our policies for the period beyond the end of this year is meant to preserve the degree of monetary stimulus that is still necessary to secure a sustained return of inflation."

Domestic News

5. China's central bank said on late Friday that it will maintain a prudent and neutral monetary policy and keep yuan stable. The central bank will also closely watch liquidity condition and market expectations, strengthen precautions and market communications to create a favorable monetary and financial environment to boost growth, adjust structure, promote reform, improve life quality, step up deleveraging, curb asset bubbles, and prevent risks.

6. Thanks to market and government factors, the Chinese economy will maintain a sound momentum for the next several years, said Fan Hengshan, vice secretary general of the country’s National Development and Reform Commission. “If China’s 2017 economic growth could reach 6.8 or 6.9 percent, the growth rate for 2018 will not be lower than 6.5 percent.” he noted.

7. China's new home prices held steady in October, rising year-on-year for the 25th consecutive month. But growth softened for 11 months in a row, despite month-on-month growth recovered, of which most top-tier cities fell the previous month.

8. The Ministry of Industry and Information Technology (MIIT) released the “Guidance Opinions on Employing the Role of Private investment and Advancing the Realization of a Manufacturing Strong Nation Strategy” in collaboration with over a dozen other central government agencies, including the Ministry of Finance to provide equal treatment to private enterprises in participating in overseas projects, foreign financing, insurance.

II. Market Overview
FX
1. Global Market

The dollar touched its highest against a basket of major currencies in nearly a week on Monday as the euro weakened on political risks linked to German Chancellor Angela Merkel's failure to form a three-way coalition government. The euro fell to $1.1720 following news of the failure to form a coalition German government. It dipped sharply against the yen to 131.16 yen, its weakest since Sept. 15. The greenback also climbed against the Japanese yen, rising to a session high of 112.72 yen, climbing with U.S. stocks as traders took risk-on positions. The Swiss franc, also favored in times of market risk aversion, fell against the dollar. The U.S. currency was last up 0.45 percent at 0.9928 franc.

2. Home Market

China's yuan rose slightly against the U.S. dollar, tracking the official midpoints. Forex settlement was balanced as mid-month buying demand eased, lifting the interconnection between yuan and the dollar index. Yuan is expected to remain rangebound between 6.6-6.65 due to lack of direction and low interest among institutional investors.

Precious Metals

Gold fell more than 1 percent on Monday, giving up the prior session's gains on pressure from the rising dollar, expectations for U.S. interest rate hikes and as the market entered a holiday week. Spot gold was down at $1,276.63 an ounce, off Friday's peak of $1,297, its strongest since Oct. 16. U.S. gold futures settled down 1.6 percent at $1,275.30.

Commodities
1.Crude Oil

Oil prices fell 0.8 percent on Monday, extending recent weakness ahead of next week's OPEC meeting, while a rally in the dollar hurt commodities across the board. U.S. West Texas Intermediate (WTI) crude futures settled down 46 cents or 0.8 percent to $56.09, while Brent crude futures fell 50 cents or 0.8 percent to $62.22 a barrel. Oil has been under pressure for the last two weeks since peaking in early November; U.S. crude has lost 2.6 percent.

2.Base Metals

Copper edged higher on Monday, supported by falling inventories and a monthly upturn in China's property prices, with gains capped by a firmer dollar. Benchmark copper on the London Metal Exchange ended 0.8 percent up at $6,828 a tonne, having posted its second weekly decline on Friday. Nickel closed with a 0.7 percent gain at $11,655 a tonne. Aluminium finished 0.8 percent down at $2,086 a tonne, and zinc eased by 0.5 percent to $3,163.

U.S. Treasuries
1. U.S. Bonds

U.S. Treasury yields rose on Monday as investors awaited minutes on Wednesday from the Fed’s last meeting, with no major economic releases due this week and trading expected to be subdued before the Thanksgiving holiday on Thursday. Benchmark 10-year notes fell 5/32 in price to yield 2.37 percent, up from 2.35 percent on Friday. The yield curve between two-year and 10-year notes also continued to flatten to 61 basis points, the lowest level since late 2007.

2. Chinese bonds

Yields of cash bonds in China’s inter-bank market extended gains, while CFFEX Treasury bonds softened. News front, the central bank held a cautious tone in its newest monetary policy report, and the long-awaited capital regulation code finally unveiled. Cash bonds pared gains after a stronger opening, suggesting different interpretation in new policy. 

Stock Market
1. U.S. Equities

U.S. stocks rose on Monday, with Verizon boosting the telecoms sector after the stock got an upgrade, while a deal in semiconductors lifted high-performing tech shares. Overall trading volume was the lightest in a month. The Dow Jones Industrial Average rose 72.09 points, or 0.31 percent, to 23,430.33, the S&P 500 gained 3.29 points, or 0.13 percent, to 2,582.14 and the Nasdaq Composite added 7.92 points, or 0.12 percent, to 6,790.71.

2. Hong Kong Equities

Hong Kong stocks rose slightly on Monday, despite pressure from a retreat on Wall Street amid tax reform uncertainty. The Hang Seng index rose 0.2 percent, to 29,260.31 points, and the China Enterprises Index lost 0.6 percent, to 11,538.28 points. The sub-index of the Hang Seng index tracking energy shares dipped 0.4 percent while the IT sector rose 3.5 percent.

3. China Equities

China’s stocks reversed the course on Monday, snapping a four-day losing streak, after gaping down by 1 percent amid bearish sentiment due to new capital control regulations released last week. Investors remained cautious despite of the rebounding late in the session.