• European bourses are pressured across the board, Euro Stoxx 50 -0.8%, but off worst levels while the FTSE MIB -1.9% languishes on domestic turmoil
• Stateside, futures are off lows but in-fitting European benchmarks awaiting guidance from the key banking names due to report imminently
• TSMC beat on top-line metrics, some cautious commentary; INTC reportedly to increase prices, via Nikkei
• DXY continues to climb with peers impaired and USD/JPY above 139.00 while EUR/USD resists parity
• Core debt is hampered but BTPs lag on political instability with a confidence vote looming; BTP-Bund over 220bp
• Commodities under broad risk- and USD-induced pressure
• Looking ahead, highlights include US IJC, Speech from Fed's Waller, Earnings from JPMorgan, Morgan Stanley & Charles Schwab

As of 11:20BST/06:20ET

LOOKING AHEAD

• US IJC, Speech from Fed's Waller, Earnings from JPMorgan, Morgan Stanley & Charles Schwab
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Foreign Ministry says contacts between Russia, Turkey, Ukraine and the UN re. grain will continue, via Tass.

OTHER

• US President Biden said he will use force to stop Iran from getting a nuclear weapon, according to The Telegraph.
• US intelligence report warned that Iran may attempt to assassinate Donald Trump, Mike Pompeo or other former senior officials in revenge for the death of General Soleimani in 2020, according to Daily Mail.
• Senior European source says that while there is near-daily contact with Tehran, no round of Iran discussion negotiations is expected, via WSJ's Norman.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -0.8%, but off worst levels while the FTSE MIB -1.9% languishes on domestic turmoil.
• Sectors are essentially all in the red with Tech giving up its initial TSMC-driven strength and succumbing to risk/yield moves.
• Stateside, futures are off lows but in-fitting European benchmarks awaiting guidance from the key banking names due to report imminently.
• TSMC (2330 TT) Q2 (TWD): Net Profit 237bln (exp. 219bln), Revenue 534bln (prev. 372bln YY), Operating Income 262bln (prev. 145bln YY); excess inventory in chip supply will take a few quarters to rebalance; expect capacity to remain tight this year; expects some capex this year to be pushed into next year due to tool supply issues. 2022 Capex closer to the lower end of prior guidance of USD 40-44bln. 2023 will see more of a typical downcycle in chip demand, unlike the large downcycle in 2008.
• Intel (INTC) has reportedly informed customers it will increase prices on a majority of its microprocessors and peripheral chip products later this year, citing rising costs, via Nikkei; Increases have not been finalized, likely to range from a minimal single-digit increase to over 10% or 20% in some cases, according to sources.
• Click here for more detail.

FX

• Yen yields to inevitable further widening in BoJ/Fed policy rates as markets place 2/3 probability on 100bp July FOMC hike; USD/JPY jumps through 139.00 towards October 1998 peak at 139.50, but pares back below 1.48bln option expiry interest at the round number.
• DXY rebounds firmly after post-US CPI retreat to set new YTD peak before fading, index tops out at 108.650 vs 108.190 bottom and 107.470 midweek low.
• Loonie loses all and more BoC boost as oil tanks, USD/CAD close to 1.3100 compared to Wednesday's sub-1.2950 trough.
• Euro is still defiant above parity vs the Buck but facing Italian political risk via a vote of no confidence.
• Aussie underpinned by upbeat labour market report and more speculation that China may lift embargo on coal, UAD/USD holds around 0.6750.
• Kiwi flanked by decent option expiry interest either side of 0.6100.
• Yuan unable to avoid broad Dollar revival, as CNH slips under 200 WMA circa 6.7330.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/JPY: 137.50 (340M), 137.75 (350M), 138.00 (365M), 139.00 (1.48BN)
• NZD/USD: 0.6090-00 (1.03BN), 0.6120 (1.33BN)
• Click here for more detail.

FIXED INCOME

• Debt under renewed pressure post-US CPI as 100bp hike odds continue to shorten and keep curves in bear-flattening mode
• Bunds down to 151.21 from 153.01 at best, Gilts reverse from 116.05-115.14 and 10-year T-note retreats to 118-10+ from 118-30
• Italian bonds underperform awaiting no-confidence vote in PM Draghi's coalition Government
• Click here for more detail.

COMMODITIES

• The complex is broadly pressured amid the general risk tone and ongoing USD strength, crude benchmarks lower by over USD 2.00/bbl.
• China is said to be mulling ending the Australian coal ban on Russian supply fears, according to Bloomberg.
• White House Economic Adviser Rouse said President Biden is focused on getting more oil into the market and his Saudi visit will help get more oil into the market.
• Spot gold is dented on the USD move which is far outweighing any possible haven allure thus far; base metals broadly lower.
• Click here for more detail.

NOTABLE HEADLINES

• The first round of the Conservative leadership ballot saw Sunak, Mordaunt, Truss, Tugendhat, Badenoch, and Braverman make it to the next round, while Hunt and Zahawi were eliminated.
• Italy's 5-Star leader Conte said the party will not participate in the confidence vote on Thursday, according to Reuters.
• EU draft report cut 2022 EU GDP forecast to 2.6% from 2.8% and for 2023 to 1.4% from 2.3%.

NOTABLE DATA

• UK RICS Housing Survey (Jun) 65 vs. Exp. 70 (Prev. 73, Rev. 72)
• Swedish CPIF YY (Jun) 8.5% vs. Exp. 8.1% (Prev. 7.2%)

NOTABLE US HEADLINES

• Fed's Mester (2022, 2024 voter) said that they don't need to make a decision on rates today but added inflation is too high and the CPI report was uniformly negative, while she has not seen any convincing evidence inflation has peaked and expects the Fed will need to go beyond the neutral rate. Mester also said they will discuss the policy path at the July meeting and that the risk of recession has increased but the Fed must lower inflation.
• Fed's Daly (2024 voter) said her most likely posture is a 75bps increase for July but added that 100bps is within the range of possibilities, according to NYT.
• US Treasury Secretary Yellen says US inflation remains unacceptably high, bringing it down is the administration's top priority; a key objective of the G20 trip is to push creditors, incl. China, to finalize debt restructuring plans for developing nations in distress.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin is bid but has reverted below the USD 20k mark once more, despite a brief foray to USD 20.4k initial highs.

APAC TRADE

EQUITIES

• APAC stocks mostly traded with cautious gains after the recent hotter-than-expected US inflation data which printed at a fresh 40-year high and spurred hawkish market pricing with Fed Fund Rate futures leaning towards a 100bps Fed rate hike this month.
• ASX 200 was kept afloat amid strength in the commodity-related sectors although gains were capped as blockbuster jobs data raised the odds for the RBA to deliver a more aggressive 75bps hike at its next meeting.
• Nikkei 225 outperformed its major counterparts on the back of further currency depreciation.
• Hang Seng and Shanghai Comp. were initially pressured by weakness in the property sector although the downside in the broader market was cushioned and eventually reversed after recent policy support pledges in which the PBoC said it will step up support for the real economy and deepen interest rate reforms.
• STI and PSEi were the laggards and traded in the red after both the Monetary Authority of Singapore and the Philippines Central Bank tightened their monetary policies in unscheduled announcements.

NOTABLE APAC HEADLINES

• Tokyo is expected to raise the COVID warning to its highest level, according to FNN.
• Monetary Authority of Singapore announced to re-centre the mid-point of the SGD NEER policy band up to the prevailing level in an unscheduled meeting, while there was no change to the slope and width of the band. MAS said the move is to help slow the momentum of inflation and that inflation pressures are to remain elevated in months ahead, while it is appropriate to further tighten monetary policy further.
• Philippines Central Bank raised its key rates by 75bps to 3.25% in an unscheduled policy decision. Philippines Central Bank Governor said they recognised that a significant further tightening of monetary policy was warranted by sustained broadening price pressures, while they are ready to take further action and said the economy can accommodate further tightening.
• Chinese authorities reportedly met with banks regarding the mortgage payment boycott, according to Bloomberg sources.

DATA RECAP

• Australian Employment (Jun) 88.4k vs. Exp. 30.0k (Prev. 60.6k); Unemployment Rate (Jun) 3.5% vs. Exp. 3.8% (Prev. 3.9%)
• Australian Participation Rate (Jun) 66.8% vs. Exp. 66.7% (Prev. 66.7%)
• Singapore GDP Q/Q (Q2) 0.0% vs Exp. 1.0% (Prev. 1.4%); YY (Q2) 4.8% vs Exp. 5.4% (Prev. 3.7%)