• European bourses are lower across the board, Euro Stoxx 50 -0.8%, as a broader risk-off move takes hold
• Stateside, futures are in-fitting with this bit lifting incrementally off worst levels going into the US session
• DXY climbs to a fresh YTD peak at 106.24, to the detriment of peers across the board though safe-havens are, relatively speaking, outperforming
• Associated upside in fixed income has waned from initial highs, though associated yield action adds to the EUR pressure
• Crude benchmarks have succumbed to the move, despite remaining relatively resilient at first; reminder, lack of settlement owing to the US holiday
• Looking ahead highlights include a speech from BoE’s Tenreyro.

As of 11:15BST/06:15ET

LOOKING AHEAD

• A speech from BoE’s Tenreyro.
• Click here for the Week Ahead preview.

INDEPENDENCE DAY NOTABLE UPDATES

• US President Biden is expected to roll back some tariffs on Chinese imports soon, according to WSJ sources; decision could come this week. Reminder, FT over the weekend reported that the Biden admin is split on whether to remove China tariffs.
• "There is a push in the EU to agree on a 7th sanctions package on Russia before the summer holidays start at the end of July. Might not include gas & nuclear but rather more listings, closing loopholes in previous packages & gold", according to journalist.
• ECB's Nagel warns the ECB against lowering borrowing costs for the Eurozone's southern members; says focus should be on fighting off inflation, which may require more rate hikes than now projected; believes the anti-fragmentation tool should only be activated in case of exceptional circumstances with narrowly defined conditions and duration. Updates which followed Reuters source reports on the subject re. Nagel
• ECB takes further steps to incorporate climate change into its monetary policy operations; to tilt corporate bond reinvestments towards firms with better climate performance from October 2022.
• Gazprom has not booked transit capacity for exports via the Yamal-Europe pipeline for 12-months from October 1st 2022.

GEOPOLITICS

• Russian President Putin ordered troops to press deeper into the Donbas region of Ukraine after recently seizing Lysychansk, according to AFP News Agency.
• Russian Parliamentary Speaker says Ukraine is doing everything so that our troops will not stop at the borders of Luhansk and Donetsk regions, via Ria.
• Head of Russian-imposed administrations of Ukraine's Zaporizhzia region says an agreement has been reached to sell grain overseas, mainly to nations in the Middle East, according to Tass

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -0.8%, as a broader risk-off move takes hold despite a relatively constructive APAC handover and limited newsflow in European hours.
• A move that has impaired US futures, ES -0.4%, as we await the lead from stateside participants re-joining after the long-weekend with a quiet schedule ahead.
• European sectors are predominantly in the red, though the clear defensive bias is keeping the likes of Food and Healthcare afloat.
• Click here for more detail.

FX

• DXY sets new 2022 best above 106.000 after taking time out to mark US Independence Day, reaches 106.24 before waning marginally.
• Euro slumps to fresh multi-year lows as EGBs rebound strongly and risk appetite evaporates; EUR/USD probes 1.0300, EUR/CHF sub-0.9950 and EUR/JPY below 140.00.
• Aussie underperforms irrespective of 50bp RBA rate hike as accompanying statement sounds less hawkish on inflation; AUD/USD under 0.6800 from close to 0.6900 overnight and AUD/NZD cross retreats through 1.1050.
• Pound down regardless of upgrades to final UK services and composite PMIs as Buck rallies broadly and BoE’s FSR flags material deterioration in global economic outlook, Cable beneath 1.2050 from circa 1.2125 peak.
• Yen holds up better than others amidst Greenback strength on risk and rate grounds; USD/JPY eyes support into 135.50 vs 136.00+ at the other extreme.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/JPY: 134.95-00 (1.44BLN), 135.40-45 (338M), 136.05 (265M), 136.40 (235M), 136.75 (240M), 137.00 (1.68BN)
• Click here for more detail.

FIXED INCOME

• Bonds on course for a turnaround Tuesday after marked retreat from pre-weekend peaks on Independence Day.
• Bunds back above 150.00 from 148.72 low and Friday's 151.65 high, Gilts reclaim 115.00+ status within 116.58-114.60 range and 10 year T-note above 119-00 between 119-20+/118-23 parameters.
• UK 2051 and German 2033 linker supply reasonably well received, but yields considerably higher.
• Click here for more detail.

COMMODITIES

• Crude benchmarks were fairly resilient to the broader risk tone, but have most recently succumbed to the pressure and are at the lower-end of a USD 3-4/bbl range.
• Reminder, the lack of settlement due to the US market holiday is causing some discrepancy between WTI and Brent, though they are directionally moving in tandem.
• UAE’s ADNOC set Murban crude OSP for August at USD 117.53/bbl vs prev. USD 109.68/bbl in July, according to Reuters.
• Norway's Lederne union said the strike in the Norwegian oil sector had begun, according to Reuters.
• Saudi Aramco has increased all oil prices for customers in August; sets Aug light crude OSP to Asia at +9.30/bbl vs Oman/Dubai average, according to Reuters sources; NW Europe set at +USD 5.30 vs. ICE Brent; US set at +USD 5.65 vs. ASCI.
• Russian Deputy Chair of the Security Council Medvedev says the Japanese proposal to cap Russian oil prices would lead to higher global prices, oil prices could increase to over USD 300-400/bbl, via Reuters.
• Chile’s Codelco copper output fell 6.3% Y/Y in May to 142.9k tonnes, while Chile’s Collahuasi mine copper output fell 15.4% to 49k tonnes and Chile’s Escondida copper output rose 26% to 106.9k tonnes, according to Cochilco cited by Reuters.
• Russian billionaire Potanin says he is ready to discuss a possible merger of Nornickel with Rusal, via Reuters citing RBC TV; UK sanctions on him do not target Nornickel, Co. is still working under pressure.
• Spot gold is impaired by the rampant USD action, pressure seen in base metals as well on such dynamics and LME copper now below 8k/T.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK faces its first national train drivers' strike in 25 years with the head of the UK train drivers' union warning of 'massive' disruption as members vote on their first strike since 1995, according to FT.
• BoE Financial Stability Report (July): will raise the counter-cyclical capital buffer rate to 2% in July 2023. Click here for more detail.

NOTABLE EUROPEAN DATA

• EU S&P Global Composite Final PMI (Jun) 52.0 vs. Exp. 51.9 (Prev. 51.9); Services Final PMI (Jun) 53.0 vs. Exp. 52.8 (Prev. 52.8)
• German S&P Global Composite Final PMI (Jun) 51.3 vs. Exp. 51.3 (Prev. 51.3); Services PMI (Jun) 52.4 vs. Exp. 52.4 (Prev. 52.4)
• UK S&P Global/CIPS Services PMI Final (Jun) 54.3 vs. Exp. 53.4 (Prev. 53.4); Composite PMI Final (Jun) 53.7 vs. Exp. 53.1 (Prev. 53.1)

NOTABLE US HEADLINES

• A rooftop shooter killed at least 6 people and wounded around two dozen at a July 4th parade in the Chicago suburb, while police later detained the person of interest in the shooting, according to Reuters.
• US President Biden said he was shocked by the parade shooting and vowed to keep fighting gun violence, while he also offered the full support of the federal government to help the Highland Park community following the shooting, according to Reuters.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin resides underneath the USD 20k mark and at session lows of 19.6k amid the broader risk tone.
• BoE Financial Stability report said falling crypto markets expose vulnerability, but not stability risk overall.

APAC TRADE

EQUITIES

• APAC stocks traded mostly positive amid a pick-up from the holiday lull although Chinese markets faltered.
• ASX 200 was led by the tech and commodity-related sectors with further support from a lack of hawkish surprise from the RBA.
• Nikkei 225 was propelled by a weaker currency but pulled back from early highs after hitting resistance around the 26,500 level and following softer-than-expected wages data.
• Hang Seng and Shanghai Comp. were both initially lifted following reports US President Biden could make a decision on rolling back some China tariffs as soon as this week and with Vice Premier Liu He said to have had a constructive exchange with US Treasury Secretary Yellen on the economy and supply chains. Furthermore, participants also welcomed the strong Caixin Services and Composite PMI data, although the advances in the mainland were then pared as the central bank continued to drain liquidity and amid lingering COVID concerns.

NOTABLE APAC HEADLINES

• PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 107bln net drain.
• China is to set up a CNY 500bln state infrastructure investment fund and will issue 2023 advance local government special bonds quota in Q4, according to Reuters sources.
• Chinese Premier Liu He spoke with US Treasury Secretary Yellen regarding the economy and supply chains, while the exchange was said to be constructive and both sides believed in the need to strengthen communication and coordination of macro policies between China and the US, according to Reuters.
• US Treasury Department confirmed Treasury Secretary Yellen held a virtual meeting with China's Vice Premier Liu He as part of efforts to maintain open lines of communication, while they discussed macroeconomic and financial developments in both China and US, as well as the global economic outlook and food security challenge. Furthermore, Yellen raised issues of concern including the impact of Russia's war against Ukraine on the global economy and "unfair, non-market PRC economic practices", according to Reuters.
• RBA hiked the Cash rate Target by 50bps to 1.35%, as expected, while it reiterated that the board expects to take further steps in the process of normalising monetary conditions with the size and timing of future interest rate increases will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market. Furthermore, the central bank noted that Australian inflation was high but was not as high as in other countries and it forecast inflation to peak this year before declining back towards the 2-3% range next year.

DATA RECAP

• Chinese Caixin Services PMI (Jun) 54.5 vs Exp. 49.7 (Prev. 41.4); Composite PMI (Jun) 55.3 (Prev. 42.2)
• Japanese Average Cash Earnings YY (May) 1.0% vs Exp. 1.5% (Prev. 1.7%, Rev. 1.3%)
• South Korean CPI YY (Jun) 6.0% vs. Exp. 5.9% (Prev. 5.4%)