I. Yesterday's News
International News
1. The United States and Japan made tentative progress on some long-standing trade irritants on Monday, during economic talks at which leaders emphasized cooperation at a time when North Korea is building up its nuclear capabilities. The talks are shaping up to be a test of whether the close U.S.-Japan relationship can withstand Trump's "America First" trade policies. Japan agreed to streamline noise and emissions testing procedures for U.S. auto exports as part of the Preferential Handling Procedure (PHP) program, Pence and Aso said in a joint statement. Japan also agreed to lift trade restrictions on U.S. potatoes from Idaho, while the United States agreed to lift restrictions on Japanese persimmons.

2. U.S. President Donald Trump will meet with Federal Reserve Chair Janet Yellen on Thursday as part of his search for a new candidate for her position, a source familiar with the planned meeting said. On Thursday, a White House official said Trump had met with Stanford University economist John Taylor to discuss the job. Trump is working from a short list that also includes Jerome Powell, a Fed governor; Kevin Warsh, a former Fed governor; Trump's top economic adviser Gary Cohn; and Yellen, whose term expires in February, sources have said. White House chief of staff John Kelly said on Thursday Trump is "some time away" from a decision on who should chair the Federal Reserve.

3. Confidence among Japanese manufacturers rebounded in October to match a peak last seen in mid-2007, a Reuters poll found, further evidence that the economic recovery is gathering momentum helped by a weak yen and strong overseas demand. The sentiment index for manufacturers rose six points in October to 31 from 25 in September. Service-sector sentiment fell to 30 from last month's 34. The manufacturers' and service-sector indexes were expected to fall to 24 and 28 respectively in January, reflecting concerns about North Korea, the outlook for the Chinese and U.S. economies, and Japan's domestic politics.

4. British Prime Minister Theresa May and European Commission chief Jean-Claude Juncker agreed on Monday that the pace of negotiations over Britain's departure from the European Union should be stepped up. The joint statement gave little else away, making no reference to the mutual blame game in which London and Brussels accuse each other of creating deadlock: May by failing to detail how much she is willing to pay to settle divorce obligations, the EU by sticking rigidly to a refusal to so much as talk about a future trade deal and transition to that until she does so.

Domestic News
5. China's economic growth is gathering momentum since the beginning of this year, likely to post growth of 6.9 percent in the first half of the year, and to achieve 7 percent in the second half, thanks to rapid household spending, said Zhou Xiaochuan, the governor of the People's Bank of China. In the meanwhile, overall leverage started to losing steam despite at a slow pace, he added.

6. China's consumer price inflation eased to 1.6 percent in September on high base and falling food prices, while producer prices climbed at the fastest pace in six months to 6.9 percent, which topped expectations, on higher commodities prices. CPI is expected to remain moderate growth, while PPI growth would bounce off highs on higher base and slower domestic investment.

7. China's general public budget revenue grew 9.7 percent year-on-year to 13.4129 trillion yuan in the first three quarters, official data showed on Monday. In the same period, fiscal expenditure rose 11.4 percent to 15.1873 trillion yuan. The steady economic growth with sound momentum laid a solid foundation for strong fiscal revenue and expenditure growth.

8. China Banking Regulatory Commission (CSRC) said on Saturday the banking asset quality remained stable, with non-performing loan falling 0.04 percent over the beginning of this year, and special-mentioned loan ratio decreasing by 0.47 percent. Interbank assets and liabilities both shrank, decreasing by 2.6 trillion yuan and 2 trillion yuan respectively compared with the beginning of the year.

II. Market Overview
FX
1. Global Market
The U.S. dollar gained slightly on Monday as investors repositioned after disappointing inflation data on Friday sent the greenback to its lowest levels in more than two weeks, and with no major U.S. releases on Monday to sway direction. The dollar alo gained after Bloomberg on Monday reported that U.S. President Donald Trump was impressed with Stanford University economist John Taylor during an interview for Fed Chair. The dollar index against a basket of six major currencies rose 0.22 percent to 93.287. The euro was also weaker after an election in Austria put conservative Sebastian Kurz on track to become the country's next leader.

2. Home Market
China's yuan rose against the dollar in a narrower range in the morning session on Monday, following the higher official yuan midpoint. Investors' demand dominated the market as global market steadied and institutional investors were staying on the sidelines ahead of the incoming 19th National Congress, trader said. Yuan is expected to keep trading within a wide range between 6.57 to 6.59.

Precious Metals
Gold turned lower on Monday, pressured by profit-taking after extending gains above the $1,300 mark to a three-week high amid ongoing tensions over Iran and North Korea as well as recent weak U.S. economic data. Spot gold was down at $1,294 an ounce. U.S. gold futures for December delivery settled down 0.1 percent at $1,303. Palladium was down at $972.50 an ounce after making another break above $1,000 an ounce to reach its highest since February 2001 at $1,010.50 on the back of strong Chinese auto sales. Silver fell to $17.185 an ounce after hitting $17.46, its highest since mid-September.

Commodities
1.Crude Oil
Crude prices rose 1 percent on Monday as Iraqi forces entered the oil-rich city of Kirkuk, seizing territory from Kurdish fighters and briefly cutting some crude output from OPEC's second-largest producer. Brent crude futures settled up 65 cents, or 1.1 percent, to $57.82 per barrel while U.S. crude ended 42 cents, or 0.8 percent, higher at $51.87 per barrel.

2.Base Metals
Copper prices broke through the $7,000 a tonne mark for the first time in three years on Monday as a number of pieces of economic data, including from top consumer China, fuelled optimism about demand. Copper jumped 3.7 percent to $7,134 per tonne on the London Metal Exchange, after touching a July 2014 high of $7,177 a tonne. Prices are up about 29 percent year to date, on track for the biggest annual gain since 2010.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Monday after a report that President Donald Trump was favoring Stanford economist John Taylor to head the Federal Reserve, and Fed Chair Janet Yellen's weekend comments that the economy remained strong. Yields for the two-year note rose to 1.546 percent, the highest since November 2008. Most U.S. Treasury yields rose to session highs. Benchmark 10-year Treasury notes dropped 5/32 in price to yield 2.300 percent.

2. Chinese bonds
Liquidity in China's interbank bond market was ample in the morning session, but the 10-year Treasury bonds and CDB bond yields hit intra-year high once again, after the governor of China's central bank said China's economic growth might achieve 7 percent. IRS also joined the across-the-board rally, while the benchmark T-bond futures lowered.

Stock Market
1. U.S. Equities
All three major U.S. stock index rose to record closing highs on Monday, with the Dow Jones Industrial Average less than 50 points below 23,000, ahead of a long list of earnings this week and as financial shares recovered from last week's losses. The Dow Jones Industrial Average rose 85.24 points, or 0.37 percent, to close at 22,956.96, the S&P 500 gained 4.47 points, or 0.175 percent, to 2,557.64 and the Nasdaq Composite added 18.204 points, or 0.28 percent, to 6,624.01.

2. Hong Kong Equities
Hong Kong stocks rose to near 10-year highs on Monday, joining a rally in Asian markets and boosted by a surprisingly rosy growth forecast for the world's second-biggest economy. The Hang Seng index rose 0.8 percent, to 28,692.80, while the China Enterprises Index gained 0.7 percent, to 11,602.92 points.

3. China Equities
The Shanghai Composite Index settled at 3,378.47, down 12.05 points or 0.36 percent. The trading volume surged over 20 percent to 221.4 billion from 180.9 billion. The CSI 300 index ended down 0.19 percent to 3,913.45, while the October CSI 300 index futures fell 0.28 percent to 3,918.0.