• European bourses are firmer across the board in a continuation of and extension on the overnight risk tone, Euro Stoxx 50 +1.4%.
• US futures are similarly bid, as we await further earnings with key names including Goldman Sachs on the docket.
• DXY is under pressure to the benefit of peers across the board with iron ore and crude assisting AUD and petro-FX respectively
• Crude is lifted alongside the broader risk tone, after the weekend Biden-Saudi meeting
• Core debt is pulling-back given the pick-up in sentiment while BTP-Bund is wide, but steady, at 225bp
• Looking ahead, highlights include earnings from Bank of America, IBM, Goldman Sachs & Charles Schwab.

As of 11:20BST/06:20ET

LOOKING AHEAD

• Earnings from Bank of America, IBM, Goldman Sachs & Charles Schwab.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Minister said they ordered units in all areas to step up Ukraine operations to prevent strikes on eastern Ukraine and other Russian-controlled territories, according to Reuters.
• Ukrainian President Zelensky fired the head of the state security service and the prosecutor general, while he stated that more than 60 officials from the prosecutor’s office and state security service were working against Ukraine in occupied territory, according to Reuters.
• UK MoD said Russia is reinforcing its defensive positions across occupied areas in southern Ukraine which includes the movement of manpower, equipment and defensive stores between Mariupol and Zaporizhia, as well as in Kherson.
• Russia's Gazprom has not booked gas transit capacity for exports via the Yamal-Europe pipeline for August, did not book additional transit capacity for Sudzha for August.

OTHER

• US President Biden said the US is not going anywhere and will remain an engaged partner in the Middle East and also said he looks forward to seeing what is coming on oil production in the months ahead, according to Reuters.
• Iranian Supreme Leader's top adviser said Tehran will never negotiate its missile programme and regional policy, while he added that Tehran is technically capable of producing a nuclear bomb and warned Tehran will directly respond against Israel if its security is targeted, according to Al Jazeera.
• Tehran accused the US of using ‘Iranophobia’ to create tension during US President Biden’s visit to the Middle East, according to Reuters citing Iranian state media.
• Saudi Arabia’s Foreign Minister said they are not aware of any discussions on a Gulf-Israeli defence alliance and that the kingdom is not involved in any such talks, while he added that the recent overflight decision has nothing to do with establishing diplomatic ties with Israel and is not a precursor to further steps, according to Reuters.
• Russia hopes to sign a strategic partnership pact with Iran, according to Interfax; to reduce the repercussions of sanctions.

CENTRAL BANKS

• Fed officials signalled they are likely to increase rates by 75bps at the July meeting and noted that although policymakers left the door open for a 100bps increase, some have simultaneously poured cold water on the idea in recent interviews and comments, according to WSJ.
• RBNZ announced a new standing repurchase facility which will permit eligible counterparties to lend NZD through the standing repurchase facility from July 20th and will be remunerated at the OCR -15bps, while the RBNZ will deliver to counterparty nominal New Zealand government bonds as collateral in exchange for depositing NZD, according to Reuters.
• PBoC Governor Yi said China’s economy faces downward pressure due to COVID and external shocks, while he added that the central bank will increase the implementation of prudent monetary policy to provide stronger support for the real economy, according to a PBoC statement cited by Reuters.
• HKMA said they need to regulate decentralised finance platforms sooner rather than later, while RBA Governor Lowe commented that it is likely better for retail digital currency tokens to be issued by regulated private sector companies than central banks, according to Reuters.
• SNB intends to increase rates by at least 50bp (from the current -0.25%) at the September gathering, in the scenaro of further inflation upside a 75bp move could occur, according to sources via Schweiz am Wochenende.
• BoE's Saunders says he will not announce today how he will vote at the August meeting; believes that the tightening cycle has "some way to go", the cost of not tightening promptly enough would be relatively high at present.
• Czech central bank’s Dedek said it is appropriate today to use FX intervention to prevent the crown from weakening and the aim is not to strengthen the currency, while he added that they are far from the point they would start to feel reserves are getting dangerously low, according to Lidove Noviny.
• Hong Kong purchases HKD 5.495bln to defend its currency peg.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board in a continuation of and extension on the overnight risk tone, Euro Stoxx 50 +1.4%.
• Sectors are firmer across the board with the upside spearheaded by Basic Resources, Energy, and Banks – due to price action in underlying commodity prices, alongside yields.
• US futures are similarly bid, as we await further earnings with key names including Goldman Sachs on the docket.
• Delta (DAL) to buy 100 737 Max 10 Boeing (BA) craft, option for 30 additional craft.
• US chip firms are said to be mulling whether to oppose the CHIPS Act as it may disproportionately benefit Intel (INTC), according to Reuters sources
• Click here for more detail.

FX

• Sterling takes advantage of Buck’s demise even before hawkish commentary from BoE’s Saunders, Cable closer to 1.2000 than 1.1850, DXY nearer 107.000 than 108.00.
• Aussie underpinned by rebound in iron ore ahead of RBA minutes, AUD/USD approaching 0.6850 from sub-0.6800 overnight low.
• Euro probes 1.0150 vs Greenback ahead of Thursday’s ECB meeting and expected 25 bp hike.
• Loonie supported by recovery in WTI and BoC Governor Macklem flagging Canadian CPI on 8% handle next week, USD/CAD below 1.3000.
• Kiwi capped after stronger than forecast NZ inflation data as RBNZ announces standing repo for loans 15 bp below OCR to start on July 20th, NZD/USD hovering under 0.6200 and AUD/NZD cross above 1.1050.
• Franc lags irrespective of reporting suggesting SNB to hike at least half point again in September as weekly Swiss sight deposits at domestic bank increase, USD/CHF pivots 0.9750.
• Lira lurches further in wake of Turkish budget balance turning from surplus to deficit, USD/TRY testing 17.5000 offers and semi-psychological resistance.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 0.9975 (452M), 1.0000 (1.12BN), 1.0100 (583M), 1.0175 (753M)
• Click here for more detail.

FIXED INCOME

• Bonds back-peddle as stocks climb and crude prices bounce.
• Bunds lose 153.00 and 152.00 handles before testing support between 151.66-60, Italian BTPs hold just pips away from 122.00 vs 123.31 peak awaiting speech from PM Draghi that is expected to confirm his determination to stand down.
• Gilts reverse from 115.73 to 115.10 amidst hawkish remarks from BoE's Saunders and 10 year T-note dragged down to 118-12+ from 118-29+.
• Click here for more detail.

COMMODITIES

• WTI and Brent have been moving higher with the broader risk tone and after the Biden-Saudi meeting with attention, for the complex, looking to the next OPEC+ gathering.
• Saudi Arabia’s Crown Prince MBS said adopting unrealistic policies toward energy sources will lead to inflation and he called on Iran to cooperate with the region, according to Reuters. Saudi's Crown Prince also said that they have an immediate capacity to increase production to 12mln bpd and with investments, production can go to 13mln bpd after which the kingdom will not have any additional capacity to increase production.
• Saudi Foreign Minister said that they listen to their partners and friends across the world especially consumer countries but added that at the end of the day, OPEC+ follows the market situation and will supply energy as needed, according to Bloomberg.
• US senior envoy for energy security Hochstein said he expects gas prices to decline further towards USD 4/gallon and is confident there will be a few more steps in the coming weeks from OPEC in terms of oil supply, according to Reuters.
• Energy Intel’s Bakr stated that we are in a situation where capacity is limited which is why the UAE and Saudi Arabia want to remain cautious about how and when it is used.
• Top German energy regulator said natgas inventories are nearly 65% full but not enough to get through the winter without Russian gas, according to Bild am Sonntag.
• Libya’s Oil Minister said Libya has resumed oil exports, according to Al Jazeera. It was also reported that the NOC said its board will not cooperate with any illegal dismissal decisions made by an outgoing administration.
• South Africa’s largest fuel producer Sasol declared a force majeure on the supply of petroleum products due to delays in deliveries of crude to the Natref refinery, while the outage means all refineries in the country are shut, according to Bloomberg.
• Iran set August Iranian light crude price to Asia at Oman/Dubai + USD 8.90/bbl, according to Reuters sources.
• Spot gold is bid as the USD pulls-bacl but is yet to breach USD 1725/oz in relatively limited European newsflow. Base metals bid after strong overnight performance.
• Click here for more detail.

NOTABLE HEADLINES

• UK PM Johnson’s allies are stepping up their attacks against former Chancellor Sunak and accused him of going soft on Northern Ireland’s post-Brexit trade regime, according to FT.
• UK Foreign Secretary Truss signalled she would tighten ministerial scrutiny of the BoE if she becomes the next PM and accused the Bank of failing to tackle inflation, according to FT.
• A poll by JL Partners of more than 4,400 people found that 48% that backed the Tories in 2019 considered former Chancellor Sunak would be a good PM, while 39% thought the same of Foreign Secretary Truss and 33% thought the same of Trade Secretary Mordaunt, according to The Telegraph.
• ConservativeHome survey suggested Trade Secretary Mordaunt would lose in a head-to-head against former Chancellor Sunak (41% vs 43%) and against Foreign Secretary Truss (41% vs 48%), according to The Telegraph.
• UK Foreign Secretary Truss confirms she will not be attending Tuesday's (July 19th) Sky News leadership debate, via Huffington Post's Schofield; additionally, reports that former-Chancellor Sunak is pulling out of the debate.
• Italy’s League and Forza Italia parties said they can no longer govern with the 5-Star Movement which brings the government closer to collapsing ahead of a potential confidence vote on Wednesday, according to Politico.
• European Investment Bank said it will reduce road and infrastructure funding in line with its climate objectives, according to FT.
• UK Rightmove House Price Index YY (Jul) 9.3% (Prev. 9.7%).

NOTABLE US HEADLINES

• US Treasury Secretary Yellen said she sees huge momentum for moving ahead with a global minimum corporate tax and that the White House is committed to moving forward on it despite opposition from Senator Manchin, according to Reuters. It was also reported that Yellen sees strong consensus among G20 members regarding many issues despite a failure to issue a communique due to differences regarding Russia’s war in Ukraine. Adds, the US wants to eliminate undue dependence on China for rare earth earths and certain goods; China is listening to US concerns in other areas, says relationship is not totally negative, via Reuters. Talks with India on the proposed cap on Russian oil have been "encouraging"
• UK Trade Minister Trevelyan says the US, for now, does not want to restart formal trade negotiations, adding they could restart after the US' mid-term elections, via LBC's Usherwood

CRYPTO

• Bitcoin is bid and lifting further from the USD 20k mark that it has been pivoting, generally speaking, recently; climbing as high as USD 22.5k thus far.

APAC TRADE

EQUITIES

• APAC stocks gained with risk appetite spurred after last Friday's firm gains on Wall St. and renewed China support pledges helped markets shrug off China's COVID woes.
• ASX 200 was underpinned amid M&A activity and with Australia reinstating quarantined-support payments.
• Nikkei 225 was closed as Japan observed the Marine Day holiday.
• Hang Seng and Shanghai Comp. outperformed regional counterparts after PBoC Governor Yi pledged to increase the implementation of prudent monetary policy to provide stronger support for the real economy and with the property sector underpinned after the CBIRC asked lenders to provide credit to eligible developers so they can complete unfinished residential properties.

NOTABLE APAC HEADLINES

• China reported 580 local cases on Saturday which was the highest since May 23rd. It was also reported that Shanghai said that the situation in the city remained severe. It was also reported that Shanghai is planning to conduct district-wide testing in 9 COVID-impacted districts and other smaller scope areas from Wednesday-Friday, while China's Tianjin is also planning massive COVID tests, according to Bloomberg and Reuters.
• China is considering a mortgage grace period for home projects that have stalled, according to Bloomberg sources.
• Macau will extend its lockdown of businesses and casino closures to July 22nd, according to Reuters; subsequently, a health officials said some social activites could resume in the next week if cases drop.
• Beijing government official says no cases have been found so far in COVID tests of nearby neighborhoods, according to a media briefing.
• Chinese cyberspace regulator is to launch a two-month clean-up campaign which will focus on minors use of livestreaming, games and e-commerce platforms, according to State meida.
• US State Department approved a possible USD 108mln military sale to Taiwan, according to Reuters.
• Japanese daily COVID infection cases surpassed 110k on Saturday which was a record high, according to Jiji news agency.
• Japanese Finance Minister Suzuki reiterated sharp volatility is seen in the FX market and that they must watch moves with a strong sense of urgency, while he also noted that G20 affirmed their agreement on FX and that many countries including Japan, strongly condemned Russia’s invasion of Ukraine, according to Reuters.
• South Korean Finance Minister Choo said they are to exempt taxes on income from Korean treasury bonds to attract foreign investment, according to Reuters.

DATA RECAP

• New Zealand CPI QQ (Q2) 1.7% vs. Exp. 1.5% (Prev. 1.8%); YY (Q2) 7.3% vs. Exp. 7.1% (Prev. 6.9%)
• RBNZ Sectoral Factor Model Inflation Index (Q2) 4.8% (Prev. 4.2%, Rev. 4.6%)