• European bourses and US futures are subdued with Evergrande updates sparse and participants looking to Fed speak, ES -0.3%
• Silence from Evergrande and lack of coupon payments for its offshore bonds, stirred uncertainty for the company & APAC sentiment
• The DXY holds on to 93.00 but peers are generally contained aside from antipodeans while core debt remains depressed as the Gilt yield inches to 1.00%
• Chinese State Planner has issued a notice on the crackdown of cryptocurrency mining; PBoC described crypto activities as illegal; BTC -5.0%
• White House Budget Office will reportedly tell federal agencies to begin preparations for a government shutdown
• Looking ahead, highlights include US New Home Sales, Fed's Williams, Mester, Clarida, Powell, George, ECB's Elderson, BoE's Tenreyro

CORONAVIRUS UPDATE

US CDC advisory group unanimously voted to recommend distributing Pfizer (PFE) and BioNTech’s (BNTX) COVID-19 booster shots to older Americans and nursing home residents, clearing the way for the agency to give the final approval. It also voted (13 Yes vs 2 No) to recommend the Pfizer vaccine booster for people aged 50-64 with underlying medical conditions and voted (9 Yes vs 6 No) to recommend booster for those aged 18-49 with underlying medical questions, although it voted (5 Yes vs 10 No) against recommending booster for 18-64 year olds that work or are in institutions where risk of infection is high, based on individual benefit/risk. (Newswires/CNBC)

Japan is reportedly mulling easing COVID-19 restrictions in 13 prefectures on a trial basis. (Kyodo)

ASIA

Asian equity markets traded mixed with the region failing to fully sustain the impetus from the positive performance across global counterparts after the silence from Evergrande and lack of coupon payments for its offshore bonds, stirred uncertainty for the company. ASX 200 (-0.4%) was negative as underperformance in mining names and real estate overshadowed the advances in tech and resilience in financials from the higher yield environment. Nikkei 225 (+2.1%) was the biggest gainer overnight as it played catch up to the prior day’s recovery on return from the Autumnal Equinox holiday in Japan and with exporters cheering the recent risk-conducive currency flows, while KOSPI (-0.1%) was lacklustre amid the record daily COVID-19 infections and after North Korea deemed that it was premature to declare that the Korean War was over. Hang Seng (-1.2%) and Shanghai Comp. (-0.8%) were indecisive after further liquidity efforts by the PBoC were offset by concerns surrounding Evergrande after the Co. failed to make coupon payments due yesterday for offshore bonds but has a 30-day grace period with the Co. remaining quiet on the issue. Finally, 10yr JGBs were lower on spillover selling from global counterparts including the declines in T-notes as the US 10yr yield breached 1.40% for the first time since early-July with the pressure in bonds also stemming from across the Atlantic following a more hawkish BoE, while the presence of the BoJ in the market today for over JPY 1.3tln of government bonds with 1yr-10yr maturities did very little to spur prices.

China's Housing Regulator has increased oversight of Evergrande bank accounts, to ensure funds are used to complete housing projects and not diverted to pay creditors. (Newswires)

PBoC injected CNY 120bln via 14-day reverse repos with the rate at 2.20% for a CNY 70bln net injection. (Newswires) PBoC set USD/CNY mid-point at 6.4599 vs exp. 6.4595 (prev. 6.4749)

US Commerce Secretary Raimondo said the Biden administration will conduct further action against Huawei if necessary and Democratic Senator Ossoff said US needs to cut dependence on Chinese solar panels, while China's Commerce Ministry has terminated the anti-dumping investigation on PVC (polyvinyl chloride) imports from the US. (Newswires)

Japanese Economic Minister Nishimura said the first meeting for UK's inclusion to the CPTPP will be held on September 28th and said that Taiwan's application to join CPTPP is welcomed. In relevant news, China Global Times tweeted that Vietnam is ready to share information and experience with China in joining the CPTPP, whereas it will closely consult other signatories on membership requirements regarding Taiwan’s application, citing Vietnam's Foreign Minister. (Newswires/Twitter)

• Japanese National CPI YY (Aug) -0.4% vs. Exp. -0.3% (Prev. -0.3%)
• Japanese National CPI Ex. Fresh Food YY (Aug) 0.0% vs. Exp. 0.0% (Prev. -0.2%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Aug) -0.5% vs. Exp. -0.4% (Prev. -0.6%)

China is to create two rare-earth giants in order to strengthen its pricing power. (Newswires)

CRYPTO

Chinese State Planner has issued a notice on the crackdown of cryptocurrency mining, will strictly prohibit financing for new crypto mining projects and strengthen energy consumption controls of new crypto mining projects. Subsequently, the PBoC has issued a notice on to further prevent and dispose of the risks from speculating on cryptocurrencies, to strengthen monitoring of risks from crypto trading and such activities are illegal. (Newswires) BTC fell from the U/C mark on the day to -5.5% in lieu of these updates; COIN -3.5% in pre-market trade

US

US Commerce Secretary Raimondo said it is time to get more aggressive on semiconductors chips shortage and she is optimistic the US could make incremental progress in the next few months on the chip shortage, while other reports noted that the White House is mulling using the Defense Production Act to force semiconductor related companies to provide data such as inventory and sales. (Newswires)

US Commerce Secretary Raimondo says she aims to strengthen business relations with China, WSJ; intends to lead a delegation of US CEOs overseas, including to China. No date has been set. (Newswires)

UK/EU

UK Chancellor Sunak is on course to tighten financial regulations following the Greensill scandal. (FT)

US Secretary of State Blinken said he intends to work closely with French Foreign Minister Le Drian on bilateral relations and noted that rebuilding ties with France will take time and hard work. In separate news, EU Commission said its officials will attend a trade and technology council meeting in the US next week. (Newswires)

German Chancellor Merkel's Conservative bloc +1% to 23% and SPD were unchanged at 25% in the latest FGW opinion poll for ZDF. (Newswires)

German Ifo Business Climate New (Sep) 98.8 vs. Exp. 98.9 (Prev. 99.4, Rev. 99.6)

• Expectations New (Sep) 97.3 vs. Exp. 96.5 (Prev. 97.5, Rev. 97.8)
• Current Conditions New (Sep) 100.4 vs. Exp. 101.8 (Prev. 101.4)

GEOPOLITICAL

North Korea said declaring the Korean War over is premature. North Korea later stated that hostile policy and double standards should be scrapped before discussing ending the Korean War, although it added that it has a willingness to improve inter-Korean ties. (KCNA)

Russian Kremlin says they are ready to provide consular assistance to the Novatek Deputy Head who was arrested in the US, saying they cannot interfere in the case though. Possible new US sanctions would undermine hopes for a resumption of dialogue. (Newswires)

EQUITIES

European equities (Stoxx 600 -0.9%) are trading on the back foot in the final trading session of the week amid further advances in global bond yields and a mixed APAC handover. Overnight, saw gains for the Nikkei 225 of 2.1% with the index aided by favourable currency flows, whilst Chinese markets lagged (Shanghai Comp. -0.8%, Hang Seng -1.6%) with further liquidity efforts by the PBoC offset by concerns surrounding Evergrande after the Co. failed to make coupon payments due yesterday for offshore bonds. As context, despite the losses in Europe today, the Stoxx 600 is still higher by some 1.2% on the week. Stateside, futures are also on a softer footing with the ES down by 0.4% ahead of a busy Fed speaker schedule. Back to Europe, sectors are lower across the board with Retail and Personal & Household Goods lagging peers. The former has been hampered by losses in Adidas (-3.0%) following after hours earnings from Nike (-4.2% pre-market) which saw the Co. cut its revenue guidance amid supply chain woes. AstraZeneca (+2.1%) sits at the top of the FTSE 100 after announcing that the Lynparza PROpel trial met its primary endpoint. Daimler’s (+0.1%) Mercedes-Benz has announced that it will take a 33% stake in a battery cell manufacturing JV with Total and Stellantis. EQT (-6.5%) sits at the foot of the Stoxx 600 after the Swedish FSA announced it will open an investigation into the Co.

FX

DXY/EUR - The rot seems to have stopped for the Buck in terms of its sharp and marked fall from grace amidst post-FOMC reflection and re-positioning in the financial markets on Thursday. Indeed, the Dollar index has regained some poise to hover above the 93.000 level having recoiled from 93.526 to 92.977 over the course of yesterday’s hectic session that saw the DXY register a marginal new w-t-d high and low at either end of the spectrum. Pre-weekend short covering and consolidation may be giving the Greenback a lift, while the risk backdrop is also less upbeat ahead of a raft of Fed speakers flanking US new home sales data. Elsewhere, the Euro remains relatively sidelined and contained against the Buck with little independent inspiration from the latest German Ifo survey as the business climate deteriorated broadly in line with consensus and current conditions were worse than forecast, but business expectations were better than anticipated. Hence, Eur/Usd is still stuck in a rut and only briefly/fractionally outside 1.1750-00 parameters for the entire week, thus far, as hefty option expiry interest continues to keep the headline pair in check. However, there is significantly less support or gravitational pull at the round number today compared to Thursday as ‘only’ 1.3 bn rolls off vs 4.1 bn, and any upside breach could be capped by 1.1 bn between 1.1765-85.

CAD/NZD/AUD - Some payback for the non-US Dollars following their revival, with the Loonie waning from 1.2650+ peaks ahead of Canadian budget balances, though still underpinned by crude as WTI hovers around Usd 73.50/brl and not far from decent option expiries (from 1.2655-50 and 1.2625-30 in 1.4 bn each). Similarly, the Kiwi has faded after climbing to within single digits of 0.7100 in wake of NZ trade data overnight revealing a much wider deficit as exports slowed and imports rose, while the Aussie loses grip of the 0.7300 handle and skirts 1.1 bn option expiries at 0.7275.

CHF/GBP/JPY - The Franc is fairly flat and restrained following a dovish SNB policy review that left in lagging somewhat yesterday, with Usd/Chf and Eur/Chf straddling 0.9250 and 1.0850 respectively, in contrast to Sterling that is paring some hawkish BoE momentum, as Cable retreats to retest bids circa 1.3700 and Eur/Gbp bounces from sub-0.8550. Elsewhere, the Yen has not been able to fend off further downside through 110.00 even though Japanese participants have returned to the fray after the Autumn Equinox holiday and reports suggest some COVID-19 restrictions may be lifted in 13 prefectures on a trial basis.

SCANDI/EM/PM/CRYPTO - A slight change in the pecking order in Scandi-land as the Nok loses some post-Norges Bank hike impetus and the Sek unwinds a bit of its underperformance, but EM currencies are bearing the brunt of the aforementioned downturn in risk sentiment and firmer Usd, with the Zar hit harder than other as Gold is clings to Usd 1750/oz and Try down to deeper post-CBRT rate cut lows after mixed manufacturing sentiment and cap u readings. Meanwhile, Bitcoin is being shackled by the latest Chinese crackdown on mining and efforts to limit risks from what it describes as unlawful speculative crypto currency trading.

• New Zealand Trade Balance (Aug) -2144M (Prev. -402.0M, Rev. -397M)
• New Zealand Exports (Aug) 4.35B (Prev. 5.75B, Rev. 5.77B)
• New Zealand Imports (Aug) 6.49B (Prev. 6.16B, Rev. 6.17B)

Major FX Expiries, NY Cut:

• EUR/USD: 1.1700 (1.3BLN), 1.1725-30 (754M), 1.1765-85 (1.1BLN)
• AUD/USD: 0.7250-55 (564M), 0.7275 (1.1BLN), 0.7350 (515M)
• USD/CAD: 1.2625-30 (1.4BLN), 1.2650-55 (1.4BLN), 1.2680 (760M), 1.2700 (622M), 1.2800 (1.6BLN)

FIXED

The latest recovery rally in debt futures may have a bit more potential and conviction behind it as Gilts carve out a fresh Liffe intraday high at 126.39 (-6 ticks on the day vs -62 ticks at one stage) along with the 10 year T-note (up to 132-14 from 132-03 at worst). However, Bunds are still some way down from the early (overnight) Eurex peak and their Eurozone peers are even further below parity, so it would be far too premature to call the rebound sustainable or meaningful at this stage. Nevertheless, there is likely to be a tendency to take profits on short positions ahead of the weekend, especially given the sheer scale and pace of selling amidst bear-steepening that was particularly pronounced yesterday. Thus, the bond revival may have legs to run.

COMMODITIES

WTI and Brent are set the conclude the week in the green with gains in excess of 2% for WTI at the time of writing; in-spite of the pressure seen in the complex on Monday and the first-half of Tuesday, where a sub USD 69.50/bbl low was printed. Fresh newsflow has, once again, been limited for the complex and continues to focus on the gas situation. More broadly, no update as of yet on the Evergrande interest payment and by all accounts we appear to have entered the 30-day grace period for this and, assuming catalysts remain slim, updates on this will may well dictate the state-of-play. Schedule wise, the session ahead eyes significant amounts of central bank commentary but from a crude perspective the weekly Baker Hughes rig count will draw attention. On the weather front, Storm Sam has been upgraded to a Hurricane and is expected to rapidly intensify but currently remains someway into the mid-Atlantic. Moving to metals, LME copper is pivoting the unchanged mark after a mixed APAC lead while attention is on Glencore’s CSA copper mine, which it has received an offer for; the site in 2020 produced circa. 46k/T of copper which is typically exported to Asia smelters. Elsewhere, spot gold and silver are firmer but have been very contained and remain well-within overnight ranges thus far. Which sees the yellow metal holding just above the USD 1750/oz mark after a brief foray below the level after the US-close.

Qatar marine crude cargo of 951k bbls was bid at USD 65/bbl and Forties crude cargo of 1.1mln bbls was also bid at USD 65/bbl in the first China reserve auction, while China failed to auction 2.95mln bbls of Murban crude as there were no bids, according to sources. (Newswires)