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Opening Call:

A surprise interest payment by China Evergrande helped spur gains in Asia and should support European stocks early Friday. Elsewhere, the dollar and oil were lower, gold gained and Treasury yields were unchanged.


European stock markets will likely track Asian gains Friday, with sentiment lifted by news that China Evergrande has made an overdue interest payment to international bondholders.

The Chinese real-estate developer on Thursday sent $83.5 million to the trustee for the dollar bonds, and that financial institution will in turn pay bondholders, the Securities Times reported. The financial paper is run by the Communist Party's flagship People's Daily newspaper. It was an unexpected move that allows Evergrande to stave off a default.

Gains for tech and property developers in Asia helped lift most of the region's major stock benchmarks, with the mood also buoyed by a late wave of buying on Wall Street that pushed the S&P 500 to a new record high on Thursday.


The dollar was slightly softer in Asia, along with the yen, as gains in regional equity markets spurred a risk-on mood.

However, some concerns over higher consumer prices may begin to re-emerge, as the five-year U.S. break-even inflation rate surged Thursday, suggesting inflation could be more persistent than expected, said IG, adding that this may drive some volatility going into the Fed's next meeting on Nov. 2-3.

The Turkish lira could slump even further over the next year as President Erdogan continues to pressure the central bank for further monetary policy easing, said Capital Economics. It expects USD/TRY to hit 10.5 by the end of next year from 9.4180 at present.

"The risks are clearly skewed to more disorderly falls," said emerging markets economist Liam Peach, adding that this could force policymakers to introduce capital controls and increases the threat of another balance of payments crisis like that seen in 2018.


Treasury yields were little changed in Asia, having moved higher Thursday as U.S. weekly jobless benefit claims fell to a pandemic low of 290,000 and traders began factoring in a higher annual pace of consumer-price gains for the rest of the year, just ahead of the Federal Reserve's blackout period next week.

The rise in yields included the 5-year rate, which climbed above 1.2% and reflects expectations for a forthcoming cycle of rate hikes from the Fed that may start next year. The two-year yield hit another 52-week high, while the 10-year rate climbed to a level not seen since May.

"The market is trying to figure out where we shake out on inflation," said Rob Daly, director of fixed-income at Glenmede Investment Management. "There are a lot more questions than answers on what inflation is going to do for the rest of the year into 2022, and how it can affect risk assets. I think we can have more durable inflation, but I'm not sure it's going to be punitive."

Capital Economics expects Treasury yields will likely rise to 2.5% by late 2023 despite China's slowdown.

Among other things, it said that Chinese troubles are unlikely to "hold back the U.S. economy enough to move the needle on U.S. monetary policy, " as they are concentrated in the property sector, "to which the U.S. economy is not particularly exposed." Beijing is expected to shield the financial system and avoid a hard landing.

The firm expects the renminbi to weaken, likely keeping China's central bank from accumulating reserves, "which would probably mean purchasing Treasuries," and instead sell them, said Capital Economics.


Oil prices edged lower in Asia, extending Thursday's losses, with analysts citing profit-taking for the pullback from multiyear highs.

"While some projections are as bullish as $100, current price levels already start feeling high for traders, who always have an itch to reap profits from the rising prices," said Louise Dickson, senior oil markets analyst at Rystad Energy, in a note.

Oanda said that until energy traders know how cold this winter will be, most dips will likely be bought into. Despite all of the moving parts of the demand outlook, underinvestment in the oil industry means the market could be stuck in deficit for at least the next few quarters, it added.


Gold futures were higher again after Thursday's modest retreat, helped by a slightly softer dollar.

Phillip Securities Research said the precious metal was holding near the higher end of this week's range of $1,759-$1,788. Recent buying has been supported by concerns over a rise in inflation.

"The inflation bug has been spreading with the growing problems with shortages and some big moves in commodities and energy prices," Peter Spina, president and chief executive officer at, told MarketWatch. "The cost of free money is inflation and the market is now growingly fearful of inflation and less so of a taper."

Aluminum was also higher, snapping a four-day losing streak, as China's electricity crunch hampers production, said ING. It said falling coal prices in China earlier spilled over into metal markets, leading to some speculative liquidation, but added that the selloff now seems to be over.

"While speculative activity fuelled by the power crunch may cool down for a bit now, there are little signs of easing restrictions for Chinese metals output." ING noted that fresh power-rationing measures are in place in China's Jiangxi province.



China Evergrande Makes Overdue Interest Payment on Dollar Bonds, State Media Says

China Evergrande Group made an overdue interest payment to international bondholders, the state-owned Securities Times reported Friday, an unexpected move that allows the property company to stave off a default.

The Chinese real-estate developer on Thursday sent $83.5 million to the trustee for the dollar bonds, and that financial institution will in turn pay bondholders, the Securities Times reported. The financial paper is run by the Communist Party's flagship People's Daily newspaper.


Biden Could Use National Guard to Help With Supply Chain Bottlenecks

WASHINGTON-President Biden said he would consider deploying the National Guard to assist with supply-chain bottlenecks that have led to shortages and higher consumer costs, if his administration is unable to ease the problem.

"The answer is yes, if we can't move-increase the number of truckers, which we're in the process of doing," Mr. Biden said during a CNN town hall on Thursday when asked about deploying the National Guard.


U.S. Issues $100 Billion in Export Licenses to Suppliers of Huawei, SMIC

The U.S. Commerce Department issued more than $100 billion worth of export licenses for semiconductors and other products to suppliers of Huawei Technologies Co. and another blacklisted Chinese tech company, as a global chip shortage started to bite.

The Commerce data, released Thursday by a Republican member of Congress, shows the department granted 113 export licenses worth about $61 billion for suppliers of telecom giant Huawei and 188 licenses valued at $42 billion for suppliers of Semiconductor Manufacturing International Corp., China's largest chip maker, from Nov. 9, 2020, through April 20 this year.


Democrats Weigh Tax Alternatives to Fund $2 Trillion Package

WASHINGTON-Democrats worked to quickly find new sources of revenue to pay for their roughly $2 trillion social-policy and climate package, seeking to target businesses and wealthy individuals in novel ways after proposed rate increases ran aground in talks.

The continued opposition by Sen. Kyrsten Sinema (D., Ariz.) to any increases in top marginal rates on corporations, individuals or capital gains has emerged as a major hurdle in the party's quest to reach a new framework on the legislation. A person familiar with Ms. Sinema's thinking said she has agreed to enough alternative revenue provisions with the White House to cover the full cost of the spending, creating a potential new path for Democrats to try to finance the cost of the package.


Fed Imposes New Restrictions on Officials' Investment Activities

Federal Reserve Chairman Jerome Powell imposed sweeping personal-investing restrictions on senior officials in a bid to address a stock-trading controversy that prompted the resignation of two reserve bank presidents and hurt his prospects of being reappointed to lead the central bank next year.

The Fed on Thursday said the new rules will restrict senior officials' trading to broad-based investment vehicles such as mutual funds. They also will require any trades to be preapproved and pre-scheduled, removing the potential for any appearance that officials were benefiting from inside information to bolster their personal investments.


Global Finance Watchdog Censures Turkey Over Money Laundering, Terrorist Financing

WASHINGTON-A global watchdog on Thursday added Turkey to its list of countries requiring special regulatory oversight for failing to stop money laundering and terrorist financing, a designation analysts say will rattle Ankara's already shaky economy.

The action means Turkey joins a group of 23 countries-including Zimbabwe, Haiti and Syria-that the Financial Action Task Force determined "have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing."


Deutsche Bank Whistleblower Gets $200 Million Bounty for Tip on Libor Misconduct

A whistleblower whose information helped U.S. and U.K. regulators investigate manipulation of global interest-rate benchmarks by Deutsche Bank AG was awarded nearly $200 million for assisting the probe, according to people familiar with the matter.

The payout is the largest ever by the Commodity Futures Trading Commission, which along with the Justice Department and U.K. Financial Conduct Authority settled enforcement actions against Deutsche Bank in 2015.


U.K. Consumer Confidence Fell in October to Eight-Month Low on Worsening Economic Outlook

Consumer confidence in the U.K. declined in October for the third straight month as expectations for the economy over the coming year deteriorated sharply.

GfK's consumer-confidence barometer decreased to minus 17 in October from minus 13 in September, missing economists' expectations and falling to the lowest level since February. Economists had expected the barometer to fall to minus 15.


European Leaders Urge Caution in EU Clash With Poland

European Union leaders urged Brussels to act cautiously in an escalating fight with Poland's nationalist government over its judiciary as the bloc's heads of government gathered Thursday for a summit.

The latest fight centers on a ruling by Poland's constitutional tribunal two weeks ago that EU treaty law has become incompatible with Polish law-an unprecedented ruling from a national court. The ruling was delivered in response to a legal question posed by Polish Prime Minister Mateusz Morawiecki.


Moderna and J&J Covid-19 Boosters, Mixing and Matching Backed by CDC

Centers for Disease Control and Prevention Director Rochelle Walensky recommended Covid-19 booster shots from Moderna Inc. and Johnson & Johnson and backed mixing vaccines with a different booster dose.

With Dr. Walensky's greenlight Thursday, the vaccine doses can now become available at doctor's offices, pharmacies and vaccination sites on Friday, a CDC spokeswoman said. It follows unanimous recommendations from a panel of experts advising the CDC.


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Expected Major Events for Friday

06:00/NOR: 3Q Business tendency survey

06:00/UK: Sep UK monthly retail sales figures

06:00/EU: 3Q New passenger car registrations in Europe by fuel type

07:15/FRA: Oct France Flash PMI

07:30/GER: Oct Germany Flash PMI

08:00/EU: Oct Eurozone Flash PMI

08:30/UK: Oct Flash UK PMI

10:00/IRL: Sep WPI

12:00/POL: Sep Broad money M3

14:00/DEN: Sep Central Government Finance & Debt

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(END) Dow Jones Newswires

October 22, 2021 00:30 ET (04:30 GMT)

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