The Opening Belle

 European Opening Calls:#FTSE 5707 -0.38%#DAX 11943 -1.00%#CAC 4673 -1.21%#AEX 542 -0.70%#MIB 18472 -0.98%#IBEX 6598 -0.80%#OMX 1748 -0.93%#STOXX 3034 -1.21%#IGOpeningCall— IGSquawk (@IGSquawk) October 28, 2020 

“Even in the most worrisome forecasts we didn’t expect this acceleration and brutality,” Professor Gilles Pialoux, an infectious-disease specialist at Tenon Hospital in Paris, said on BFM TV. “We’re facing weeks ahead that will be more than difficult. I hope the decisions will be drastic, because we will not get away with half-measures.”

 🇩🇪 BILD cites a draft resolution >

[TRANSLATED] According to the will of the Chancellor, the measures will apply NATIONWIDE from November 4th and remain in force until the end of November. https://t.co/fVbsmUGNWE https://t.co/fVbsmUGNWE pic.twitter.com/JL9soGupTg— Shehan R (@ShehanR2) October 28, 2020 

Winter is coming...

Downing Street is privately working on the assumption that the second wave of coronavirus will be more deadly than the first, with the death toll remaining high throughout the winter.

An internal analysis of the projected course of the second wave is understood to show deaths peaking at a lower level than in the spring but remaining at that level for weeks or even months.

It is understood that the projection – provided by the Scientific Advisory Group for Emergencies (Sage) – has led to intense lobbying from Sir Patrick Vallance and other Government advisers for Boris Johnson to take more drastic action.

"It's going to be worse this time, more deaths," said one well-placed source. "That is the projection that has been put in front of the Prime Minister, and he is now being put under a lot of pressure to lock down again."

Separately, Sage has warned that all of England will need to be under Tier 3 Covid-19 restrictions by mid-December scuppering Boris Johnson's hopes for a normal Christmas.

The Government has come under intense pressure from many Tory MPs to abandon its three-tier system of lockdowns and prioritise the economy instead.

But Mr Johnson has refused to back down from his policy and made it clear that even tougher restrictions may be needed. He has said the country is treading a "narrow path" and that a "circuit-breaker" lockdown remains on the table.

Australian consumer prices surged last quarter as one-off rebates linked to the coronavirus reversed and petrol prices rebounded, yet annual inflation stayed stubbornly below target in a green light for further policy easing.

The headline consumer price index (CPI) rose a steep 1.6% in the September quarter, but that merely retraced the June quarter’s record 1.9% plunge.

The statistical noise was largely caused by government rebates for child care amid a coronavirus lockdown and a whipsaw in global oil prices, both of which proved temporary.

Annual inflation picked up to just 0.7%, having fallen 0.3% in the June quarter for the first negative reading since 1998.

Yet the bounce still left inflation well below the floor of the Reserve Bank of Australia’s (RBA) 2-3% target band and, with the economy only just emerging from recession, is set to stay sub-par for a long time to come.

“Inflation is expected to remain subdued for some years,” said analysts at NAB. “This is due to elevated unemployment and weak demand.”

Lockdowns for the coronavirus tipped the economy into its first recession since the early 1990s and left more than a million Australians out of a job.

That in turn is weighing heavily on wage growth and key measures of core inflation. Trimmed mean inflation, a gauge favoured by the RBA, rose by an annual 1.2% in the September quarter and the central bank itself sees it edging up to just 1.5% by the middle of 2022.

All of which is why the RBA is considered likely to cut interest rates to a fresh record low of 0.1% at its November policy meeting next week, down from an already wafer-thin 0.25%.

Analysts also assume the RBA will join many of its peers by embarking on quantitative easing, buying billions of dollars of government bonds in the five to 10-year bracket.

Chinese banks have suspended the use of a tool used to influence the value of the yuan, the country’s currency trading system said on Tuesday, in a move analysts took to mean it is willing to allow some weakness in its currency.

Some analysts said they were not surprised at the move as the use of this X-factor - an adjustment contributor banks make to the daily trade-weighted reference rate the PBOC uses to guide the yuan - was meant to dampen depreciation pressure, and its effect has diminished recently as the yuan rallied.

The China Foreign Exchange Trade System said in a statement it would change the price adjustment model of the central parity rate of the yuan versus the dollar to promote transparency and efficiency.

“Given that there is no longer any depreciation concerns, it makes sense to do away with the counter-cyclical factor (CCF), and reducing the reserve requirement ratio as they have done a couple of weeks back,” said Khoon Goh, head of Asia research at ANZ, which is not a fixing contributor.

“This does not necessarily mean that they are seeking to actively weaken the yuan – it is just that those tools are no longer needed.”

 PBOC Fixes Yuan Mid-Point Against The Dollar At 6.7195 (est 6.7198)— LiveSquawk (@LiveSquawk) October 28, 2020