• APAC stocks traded mixed after the 100bps Fed rate hike bets unwound; Chinese Q2 GDP missed forecasts but June Retail Sales beat estimates
• DXY was rangebound, EUR/USD was slightly firmer, USD/JPY took a breather from yesterday’s rally, and AUD/USD was softer after the Chinese growth data
• 10yr USTs eked modest gains, Bunds remained elevated, and 10yr JGBs traded flat
• Crude futures were choppy, Spot gold lacked firm direction, and copper declined after the Chinese GDP
• Fed's Waller (voter) said markets got “ahead of themselves” with a 100bps pricing; Bullard (2022 voter) said he still supports a 75bps July move
• Looking ahead, highlights include US NY Fed Manufacturing, Retail Sales, IP & Uni. of Michigan (Prelim.), Speech from Fed's Bostic & ECB's Rehn, Earnings from UNH, Blackrock, Citi & Wells Fargo
• Click here for the Week Ahead preview

US TRADE

• US stocks finished mostly lower with the risk appetite soured, although stocks bounced off their lows after comments from Fed hawks Waller and Bullard unwound market pricing of a 100bps hike to 30% from 70% earlier.
• SPX -0.30% at 3,790, NDX +0.34% at 11,768, DJIA -0.46% at 30,630, RUT -1.07% at 1,708.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Waller (voter) said markets got "ahead of themselves" with a 100bps rate hike view and that CPI was not a big surprise, while he added that to go above 75bps at the next meeting, they would need to assess data over the next couple of weeks.
• Fed's Bullard (2022 voter) said he still supports a 75bps rate hike in July after the CPI data and does not support 100bps, for now, according to a Nikkei interview dated Wednesday.
• Fed's Collins (2022 voter) said inflation is too high and addressing it is her priority.
• US Commerce Secretary Raimondo said a pared-down China competition bill could be acceptable to the administration and said Congress needs to act next week, according to Reuters.
• US Senate Majority Leader Schumer reportedly told Senators to prepare for a floor vote as early as Tuesday to start moving CHIPS, according to CNBC's Mui. However, Punchbowl's Sherman later reported that Republican Senator Cornyn said he and other Republicans will not vote to proceed to the CHIPS bill next week and wants to wait until later in August when reconciliation plans are clearer, while Republican Senator Thune also cast doubt on Schumer's plan to move USD 52bln CHIPS bill and warned that the 10 GOP votes needed might not be there next week, according to CNN's Raju.

GEOPOLITICS

RUSSIA-UKRAINE

• US Treasury Secretary Yellen condemned Russia's 'brutal and unjust war' at the G20 meeting and said Russia is solely responsible for the negative spillover of the Ukraine war to the global economy, according to Reuters.

OTHER

• Saudi Arabia opened its airspace to all civilian planes that meet requirements which is seen as a gesture of openness toward Israel amid US President Biden's visit to the region, according to AFP.

APAC TRADE

EQUITIES

• APAC stocks traded mixed after the 100bps Fed rate hike bets unwound and with headwinds from China's GDP miss.
• ASX 200 was dragged lower by the mining sector amid losses in Rio Tinto shares despite an increase in its quarterly output and shipments, as it also warned of headwinds to its business and higher costs.
• Nikkei 225 swung between gains and losses but was ultimately higher intraday amid recent currency weakness and with index heavyweight Fast Retailing boosted by strong 9-month results.
• Hang Seng and Shanghai Comp. were indecisive after disappointing Chinese growth data which showed weaker than expected GDP and Industrial Production, although Retail Sales surprisingly expanded and the Unemployment Rate declined.
• US equity futures were kept afloat overnight but with upside capped by the flimsy risk tone in Asia.
• European equity futures are indicative of a higher open with Eurostoxx 50 +0.9% after the cash market closed with losses of 1.7% yesterday.

FX

• DXY was rangebound after pulling back from its highest level since 2002 with the turnaround spurred by Fed rhetoric as both Bullard and Waller reiterated support for a 75bps move which saw an unwinding of the market pricing for a 100bps hike.
• EUR/USD was slightly firmer after bouncing back from beneath parity again yesterday but with upside limited amid political uncertainty in Italy where PM Draghi offered to resign after coalition partner 5-Star withdrew its support, but his resignation was rejected by President Mattarella.
• GBP/USD was uneventful overnight after the second round of the Tory leadership voting results provided no surprises with Sunak, Mordaunt and Truss the front-runners to succeed UK PM Johnson.
• USD/JPY took a breather from its recent rally although remained around the 139.00 level.
• Antipodeans were kept afloat with only a brief tremor seen in AUD/USD following the miss on Chinese GDP.

FIXED INCOME

• 10yr USTs eked modest gains amid the indecisive mood and after the recent unwinding of hawkish Fed pricing.
• Bunds remained elevated amid the ongoing growth concerns in Europe and political uncertainty in Italy
• 10yr JGBs traded flat with the BoJ only in the market today for its fixed-rate operations which haven’t seen any take up so far this month.

COMMODITIES

• Crude futures were choppy but eventually edged marginal gains with Brent crude futures at around USD 100/bbl.
• Russia reportedly aims to get control of oil pricing by creating a national oil benchmark next year, according to Bloomberg.
• Libya’s new NOC chief Farhat Bengdara promised to lift blockades and raise output, according to FT.
• Spot gold lacked firm direction alongside the muted overnight trade in the greenback.
• Copper declined in the aftermath of the disappointing Chinese GDP and Industrial Output data.

CRYPTO

• Bitcoin was rangebound overnight with prices oscillating around the 20,500 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 100bln via 1-year MLF vs CNY 100bln maturing with the rate kept at 2.85%.
• China's Foreign Minister Wang Yi said China-US ties are at a "critical" moment, according to Xinhua. Wang also commented that China-Australia relations currently face challenges and opportunities, while he added that China is willing to recalibrate relations in the spirit of mutual respect, according to Reuters.
• China NBS official said downward pressure on the domestic economy increased substantially during Q2 and that the foundation for a sustained economic recovery is not solid, while the economy is facing shrinking demand and supply shock, according to Reuters.

DATA RECAP

• Chinese GDP QQ(Q2) -2.6% vs. Exp. -1.5% (Prev. 1.3%, Rev. 1.4%)
• Chinese GDP YY (Q2) 0.4% vs. Exp. 1.0% (Prev. 4.8%)
• Chinese Industrial Output YY (Jun) 3.9% vs. Exp. 4.1% (Prev. 0.7%)
• Chinese Retail Sales YY (Jun) 3.1% vs. Exp. 0.0% (Prev. -6.7%)
• Chinese Unemployment Rate (Jun) 5.5% (Prev. 5.9%)
• Chinese China House Prices YY* (Jun) -0.5% (Prev. -0.1%)

EU/UK

NOTABLE HEADLINES

• Italian PM Draghi said he will resign and that the 5-star's non-participation in the confidence vote was very significant from a political point of view, although Italian President Mattarella rejected PM Draghi's resignation and asked Draghi to address parliament in order to gauge the political situation, while Draghi will address the Italian parliament early next week, according to Reuters.