• European bourses are under modest pressure continuing with the downbeat APAC handover, with pressure from AAPL, ECB sources and IBM impacting.
• US futures are modestly firmer, with key earnings including NFLX ahead; IBM -5% in pre-market
• EUR bid and EGBs dented on Reuters/BBG sources that a 25bp or 50bp rate hike will be discussed at Thursday's ECB
• DXY pressured as such and peers taking advantage, antipodeans lead the way
• Crude benchmarks are pressured and continuing to consolidate, spot gold lifted amid the USD pullback with base metals somewhat mixed
• Punchy rhetoric from China re. US House Speaker Pelosi's visit to Taiwan in August
• Looking ahead, highlights include a Speech from BoE's Bailey. Earnings from JNJ, Lockheed & Netflix.

As of 11:10BST/06:10ET

LOOKING AHEAD

• Speech from BoE's Bailey. Earnings from JNJ, Lockheed & Netflix.

GEOPOLITICS

• US Treasury Secretary Yellen said economic integration has been weaponised by Russia to great effect and that all responsible countries must unite in opposition to Russia's war in Ukraine. Yellen also stated that the US will impose harsh consequences on countries that abuse or break the international economic order, while she is heartened by conversations with Korean counterparts on a proposed cap on Russian oil prices, according to Reuters.
• Ukrainian state gas system said there is no immediate evidence of any disruption to Russia's gas transit to Europe, according to Reuters.

CENTRAL BANKS

• ECB policymakers are to discuss a rate hike worth 25bp or 50bp at Thursday's meeting, according to Reuters sources; hone in on a deal to make new bond purchases conditional on next-gen EU targets and fiscal rules. Some wanted the ESM involved, but this option has now likely been discarded.
• ECB may consider increasing rates on Thursday by 50bp, via Bloomberg citing sources; due to the worsening inflation situation. Source stressed that it is unclear if there will be sufficient support for a 50bp hike.
• RBA July Meeting Minutes stated that the Board remains committed to doing what is necessary to ensure inflation returns to the target over time and members agreed further steps would need to be taken to normalise monetary conditions in the months ahead, while it noted that two options for the size of the Cash Rate increase were considered which were raising the cash rate target by 25bps or by 50bps.
  • RBA Deputy Governor Bullock said wages are starting to rise a little more, while she added that they need to get rates up to some sort of neutral and that neutral is a fair bit higher than where they currently are.
  • HKMA intervenes; buys HKD 6.28bln from market as the HKD hits weak end of trading range.

EUROPEAN TRADE

EQUITIES

• European bourses are under modest pressure continuing with the downbeat APAC handover, with pressure from AAPL, ECB sources and IBM impacting.
• US futures are modestly firmer having already reacted to the AAPL developments, though IBM (-5.0% in pre-market) is impacting.
• International Business Machines Corp (IBM) Q2 2022 (USD): Adj. EPS 2.31 (exp. 2.27), Revenue 15.5bln (exp. 15.19bln)
• Within Europe, sectors are predominently in the red though Healthcare and Banking names are proving more resilient.
• French gov't intends to buy the 15.9% remaining EDF (EDF FP) shares and bonds, offering EUR 12.0/shr (12th July close EUR 10.23/shr); represents an overall value of circa. EUR 9.7bln. Buyout will be followed by a delisting.
• Truist Financial Corp (TFC) Q2 2022 (USD): Adj EPS 1.20 (exp. 1.16), Revenue 5.7bln (exp. 5.65bln), PR Newswire.
• Click here for more detail.

FX

• Antipodean Dollars take advantage of their US rival’s deeper reversal with the Aussie also acknowledging RBA minutes and rhetoric flagging further hikes, NZD/USD breaches 0.6200 and AUD/USD extends above 0.6850 to within a whisker of 0.6900.
• Euro boosted by sources suggesting ECB might raise rates by 50bp rather than the 25bp signalled for this week, EUR/USD through 1.0200 again and probes 1.0250.
• Franc rebounds amidst broad Buck retreat and in wake of Swiss trade data showing wider surplus, USD/CHF tests 0.9700 vs high close to 0.9800.
• Pound peers over 1.2000 vs Greenback again, but labours after mixed UK jobs and wage metrics.
• Yen firmer through 138.00, but could be hampered by option expiries at the round number (2.72 bn) and key Fib resistance (at 137.52).
• Loonie lags as WTI sags, USD/CAD straddles 1.2950 after dip below 1.2900 on Monday.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0100 (562M), 1.0150-55 (1.31BN), 1.0200-05 (892M)
• USD/JPY: 136.00 (1.3BN), 138.00 (2.72BN), 138.50-55 (939M), 138.75 (555M), 139.25 (537M), 140.00 (1.53BN)
• Click here for more detail.

FIXED INCOME

• EZ debt rattled by hawkish ECB source report with spill-over to German Bobl auction.
• Bunds recoil from 152.60 to 151.00 before paring some declines.
• Gilts hold in after mixed UK labour data and decent DMO 2039 sale with the 10 year benchmark between 115.76-03 parameters vs 115.01 prior Liffe close.
• 10 year T-note towards bottom of 118-05/118-15+ range ahead of US housing starts and building permits.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are pressured and continuing to consolidate with fresh developments relatively light for the complex explicitly.
• White House Adviser Deese expects gasoline prices will continue to fall this month, according to MSNBC.
• TC Energy issued a force majeure for oil deliveries on Keystone Pipeline after a third-party power outage in South Dakota, while TC Energy said the Keystone Pipeline is operating at reduced rates with no timeline available for the restoration of full-service, according to Reuters.
• Saudi Foreign Minister says does not see a lack of oil in the market, there is a lack of refining capacity; adds, Russia is a integral part of OPEC+, via Reuters.
• EU is set to backlist CEO of Russia's zinc and copper giant UMMC, according to a draft document via Reuters.
• Spot gold is marginally firmer and comfortably above USD 1700/oz as the USD pulls-back while base metals are more mixed after recent upside in copper, for instance.
• Click here for more detail.

NOTABLE HEADLINES

• UK government won a vote of confidence in the House of Commons (as expected) after five hours of debate with the vote count at 349 vs. 238, according to Sky News
• UK Chancellor Zahawi said they can and will get inflation back under control, while he added that they must deliver sound public finances and help households with inflation, not push up demand further. Zahawi stated that he will reform Solvency II rules to give insurers more flexibility to invest in infrastructure and aims to repeal hundreds of EU financial regulations and replace them with a UK version, according to Reuters.

NOTABLE EUROPEAN DATA:

• UK ILO Unemployment Rate (May) 3.8% vs. Exp. 3.9% (Prev. 3.8%); Claimant Count Unemployment Change (Jun) -20k (Prev. -19.7k, Rev. -34.7k); Employment Change (May) 296k vs. Exp. 170k (Prev. 177k)
• UK Average Week Earnings 3M YY (May) 6.2% vs. Exp. 6.7% (Prev. 6.8%); Ex-Bonus (May) 4.3% vs. Exp. 4.3% (Prev. 4.2%)
• EU HICP Final YY (Jun) 8.6% vs. Exp. 8.6% (Prev. 8.6%).

NOTABLE US HEADLINES

• US President Biden could declare a climate emergency as soon as this week as he seeks to salvage his environmental agenda, according to the Washington Post.
• China's Foreign Minster, re. reports that China invited European leaders to meet President Xi in November, says this report is fake news, via Reuters.
• US House Speaker Pelosi is to visit Taiwan with a delegation next month, according to FT.
• China's Foreign Ministry, on the scheduled visit of US House Speaker Pelosi to Taiwan in August, says this would seriously undermine China's sovereignty and territorial integrity; if the US insists on the visit then China will take strong measures to safeguard sovereignty and territorial integrity.
• "Pelosi’s Taiwan visit is a blatant provocation which will surely be met with a forceful response from China, including unprecedented military pressure. She is creating a dangerous moment, placing us on the brink of war. Nobody can guarantee there will be no mishaps.", via Global Times

CRYPTO

• Bitcoin remains firmer on the session and have marginall eclipsed Monday's USD 22.75k best to a USD 22.95k high thus far.

APAC TRADE

EQUITIES

• APAC stocks mostly fell after reports of Apple slowing its hiring and European energy woes stoked growth fears.
• ASX 200 was lacklustre amid weakness in tech and with miners choppy after a mixed quarterly update from BHP.
• Nikkei 225 outperformed as it played catch up to the prior day's gains on return from the extended weekend.
• Hang Seng and Shanghai Comp. were pressured amid earnings updates and the COVID situation in China, but with the losses in the mainland stemmed after reports that China is considering a mortgage grace period.
• KKR does not plan to lead a bid for Toshiba (6502 JT); could still partake as an equity partner in a deal; waiting for more clarity for Japanese government and Co. management, according to Reuters sources.