• European bourses gave up initial upside as Draghi resigns; however, current performance is more mixed with Nord Stream 1 flowing and earnings factoring
• Stateside, futures are directionally in-fitting but with magnitudes more contained thus far awaiting earnings developments.
• DXY has benefitted from JPY downside amid the BoJ while the EUR slipped on Draghi and awaits the ECB.
• Core debt is off lows and somewhat choppy while BTPs slump over 200 ticks
• Commodities are dented with Nord Stream 1 flowing, USD strength and Libya output increasing; spot gold falls further from USD 1.7k/oz
• Looking ahead, highlights include US IJC, Policy Announcements from the ECB, CBRT & SARB, Speech from ECB's Lagarde, Earnings from AT&T

As of 11:10BST/06:10ET

LOOKING AHEAD

• US IJC, Policy Announcement from ECB, CBRT & SARB, Speech from ECB's Lagarde, Supply from Spain, France & UK, Earnings from AT&T, Phillip Morris, Roche & Nokia.

GEOPOLITICS

NORD STREAM 1

• Nord Stream said gas delivery has resumed on Thursday morning, according to DPA. It was also reported that Nord Stream 1 gas pipeline nominations were at 29.3mln kWh/h from 06:00CET, according to the operator. Deliveries are reportedly around pre-maintenance levels of circa 40%
• Nord Stream data shows that gas flows are back to 40% capacity (pre-maintenance amount), according to Bloomberg.
• NEL and OPAL gas grids, connected to Nord Stream 1, show prelim. physical flows into Germany of 9.9mln KWH/H and 12.5mln KWH/H for 05:00-06:00BST.
• Head of German network regulator said gas nominations for Nord Stream 1 for today are still at 30% capacity and this is binding for the next 2 hours, while more changes over the day would be unusual, according to Reuters; German grid has signalled that Nord Stream gas flows have increased in the second hour.
• German Energy Regulator Bundesnetzagentur says real gas flows are above nominations re. Nord Stream 1, pre-maintenance level of 40% capacity could be surpassed today.
• Nord Stream 1 flows are at 29.3mln KWM/H at 07:00-08:00BST, according to the operator; at 29.3mln KWM/H at 08:00-09:00BST, according to the operator; at 29.3mln KWM/H at 09:00-10:00BST, according to the operator.

RUSSIA-UKRAINE

• US is to send further weapons to Ukraine with an announcement coming this week.
• US Deputy Treasury Secretary said the EU wants an insurance ban by December regarding Russian oil so the goal is to be in a position where a global price cap can be joined with the ban taking effect, according to Reuters.
• Russia is reportedly planning annexation votes in Ukrainian region by September 15th, according to Bloomberg.
• Russian Foreign Ministry spokeswoman says there has not been any contact with the US on peace with Ukraine, via Reuters.

CENTRAL BANKS

• BoJ kept its policy settings unchanged, as expected, with rates at -0.10% and QQE with yield curve control maintained to target 10yr JGB yields at around 0%. BoJ reiterated it will offer to buy 10yr JGBs at 0.25% every business day unless it is highly likely that no bids will be submitted and repeated its guidance on policy bias that it will take additional easing steps without hesitation as needed with an eye on the pandemic's impact on the economy, as well as kept forward guidance for short- and long-term rates to remain at present or lower levels. Furthermore, it stated that it must be vigilant to financial and currency market moves and their impact on Japan's economy and prices, while it lowered Real GDP growth forecast for the current fiscal year to 2.4% from 2.9%, but raised the Real GDP view for the two years after and increased CPI projections through to FY24.
• BoJ Governor Kuroda says rapid JPY weakening is a negative for the economy; inflation expectations substantial increasing over near-term, gradually mid/long-term; core unlikely to reach 2.0% currently. BoJ Governor Kuroda says no intention to raise interest rates under Yield Curve Control. Won't hesitate to ease monetary policy further if necessary; risks to the economy are skewed to the downside for the time being but will be balanced thereafter

EUROPEAN TRADE

EQUITIES

• European bourses gave up initial upside as Draghi resigns, Euro Stoxx 50 +0.1% however, current performance is more mixed with Nord Stream 1 flowing and earnings factoring.
• Stateside, futures are directionally in-fitting but with magnitudes more contained thus far awaiting earnings developments.
• Qatar Airways has ordered 25 Boeing (BA) 737 Max 10 jets.
• Click here for more detail.

FX

• Yen slides as BoJ and Governor Kuroda retain ultra easy policy and guidance, with latter adding no intention to tweak YCT range, USD/JPY back up near 139.00 from 138.00 low.
• Buck bounces broadly amidst renewed risk aversion with DXY back on 107.000 handle.
• Euro looking towards ECB for support after resignation of Italian PM nullifies partial return of Nord Stream gas flows, EUR/USD sub-1.0200.
• Kiwi reverses course in wake of NZ trade data revealing slowdown in exports and rise in imports to drag balance into deficit from surplus, NZD/USD loses 0.6200+ status.
• Aussie gleans some encouragement from NAB business conditions over confidence and rebound in AUD/NZD cross, AUD/USD off 0.6900+ peak, but holding above 0.6850.
• Loonie and Nokkie undermined by latest retreat in crude prices, USD/CAD over 1.2900 and EUR/NOK hovering around 10.1800.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0000 (1.21BN), 1.0200-10 (1.84BN), 1.0250 (228M), 1.0300 (405M)
• Click here for more detail.

FIXED INCOME

• Bonds off lows and braced for a busy pm agenda headlined by the ECB and the 25bp or 50bp hike verdict.
• Bunds back above 151.00 between 150.59-152.02 bounds, Gilts around 114.78 within a 115.11-114.59 range and 10 year T-note at 117-23+ vs 117-31+ peak and 117-18 trough.
• BTPs circa 200 ticks adrift awaiting Italian political developments after second resignation tender by PM Draghi.
• Click here for more detail.

COMMODITIES

• WTI and Brent are under pronounced pressure amid multiple potential drivers as Nord Stream 1 resumes and Libya's oil output continues to climb, currently posting losses in excess of USD 4.00/bbl.
• Libya's oil output has recovered to above 700k BPD.
• Spot gold continues to drift after surrendering the USD 1700/oz mark amid renewed USD upside while base metals are mostly tempered amid a sullied risk tone.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• Italian PM Draghi has tendered his resignation, according to a statement; President Mattarella has asked Draghi to carry on as a caretaker government.; subsequently, Italian President Mattarella will receive the upper and lower house parliamentary speakers this afternoon, according to a statement. Click here for detail on the possible next steps.

NOTABLE US HEADLINES

• US officials are reorganising the HHS to boost the pandemic response, according to Washington Post.
• Microsoft (MSFT) is to slow hiring in some groups and is eliminating open jobs, according to Bloomberg.

CRYPTO

• Bitcoin remains under pressure after yesterday's TSLA related update; though, it remains over USD 2k away from the USD 20k mark.

APAC TRADE

• APAC stocks traded cautiously following the mixed performance of global counterparts and amid risk events.
• ASX 200 lacked firm direction as outperformance in tech was offset by weakness in energy and the mining-related sectors despite an increase in quarterly production by several key oil and gold producers.
• Nikkei 225 eked marginal gains after the BoJ maintained its ultra-easy policy setting but with upside capped given the worsening COVID situation in Japan.
• Hang Seng and Shanghai Comp. were subdued amid increasing tensions related to a planned visit to Taiwan by US House Speaker Pelosi which spurred warnings from China’s mouthpiece that suggested the mainland's reaction to such a visit would be unprecedented and involve a shocking military response.

NOTABLE APAC HEADLINES

• US President Biden said the military does not think it is a good idea to travel to Taiwan now when questioned about a potential trip by House Speaker Pelosi, while he expects to speak with Chinese President Xi in the next 10 days, according to Reuters.
• US Commerce Secretary Raimondo warned of a deep recession if the US were to be cut off from Taiwan chip manufacturing, according to CNBC.
• China's ambassador to the US Qin said the China-Russia relationship is not an alliance and that the US is blurring the One China policy, while he added the US is bolstering links to Taiwan by sending officials.
• China Global Times' Hu Xijin tweeted earlier that it is certain the mainland's response to US House Speaker Pelosi's visit to Taiwan will be unprecedented and will involve a shocking military response.
• Asian Development Bank lowered Developing Asia growth forecast for 2022 to 4.6% from 5.2% and lowered 2023 growth forecast to 5.2% from 5.3%, while it cut its China 2022 growth forecast to 4.0% from 5.0%, according to Reuters.

DATA RECAP

• Australian NAB Business Confidence (Q2) 5 (Prev. 14, Rev. 15); Conditions (Q2) 20 (Prev. 9, Rev. 11)
• New Zealand Trade Balance (Jun) -701M (Prev. 263.0M, Rev. 195M)
• New Zealand Exports (Jun) 6.42B (Prev. 6.95B, Rev. 6.87B); Imports (Jun) 7.12B (Prev. 6.69B, Rev. 6.68B)
• Japanese Trade Balance Total Yen (Jun) -1383.8B vs. Exp. -1509.7B (Prev. -2385.8B)
• Japanese Exports YY (Jun) 19.4% vs. Exp. 17.5% (Prev. 15.8%); Imports YY (Jun) 46.1% vs. Exp. 45.7% (Prev. 48.9%)