• European bourses are resilient despite Flash PMIs for June contracting, while US futures are subdued but rangebound
• DXY climbs amid EUR pressure post-PMIs, with the USD weighing on peers in turn though JPY & CHF benefit from yield action
• Core debt extends on post-ECB recovery rallies amidst this and curves steepen amid a paring of tightening expectations
• Crude benchmarks surrender APAC upside on contraction concerns and remain focused on Nord Stream developments
• Looking ahead, highlights include US Flash PMIs, CBR Policy Announcement, Earnings from American Express, Verizon

As of 11:15BST/06:15ET

LOOKING AHEAD

• US Flash PMIs, CBR Policy Announcement, Earnings from American Express, Verizon.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Foreign Ministry said the latest round of EU sanctions will have disastrous consequences for parts of the world economy, while it hopes the EU move to expand sanction relief will create conditions for unhindered export of grains and fertilisers, according to Reuters.
• Turkish President Erdogan's office said the signing ceremony for a grain export deal will be on Friday with Russia, Ukraine and UN's Guterres.
• Russian Kremlin denies reports on the Nord Stream 1 turbine being stuck in transit, labelling it "nonsense".

OTHER

• South Korean President Yoon said North Korea is ready to conduct a nuclear test at any time, according to Yonhap. It was separately reported that South Korea and the US will resume live field training during their military drills which begin next month, according to Reuters citing the Defence Ministry.
• Explosions were reported in Damascus with Syrian air defences intercepting Israeli missiles over the city, according to state media.

EUROPEAN TRADE

EQUITIES

• European bourses are resilient despite Flash PMIs for June moving into contractionary territory, with the regions upside perhaps derived from potential less-hawkish ECB implications.
• Stateside, futures are subdued but have been fairly contained after late Wall St. action and ahead of further key earnings.
• Sectors are mostly in the green and feature upside in Real Estate and Travel while Banks, Resources and Autos lag.
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FX

• Euro reverses further from post-ECB hike peaks after dire EZ PMIs, including sub-50 manufacturing headlines - EUR/USD down to circa 1.0130 and only finding support ahead of 10 DMA.
• Pound down in sympathy, but holding up better around 1.1950 vs Greenback as UK retail sales come in above forecast along with preliminary PMIs.
• Aussie hampered by slowdown in PMIs and hefty option expiries at the 0.6900 strike.
• Yen and Franc cushioned by soft yields to an extent and DXY fading into 107.500, USD/JPY middle of 137.95-02 range and USD/CHF nearer base of 0.9706-0.9658 band.
• Loonie retains 1.2800 handle as oil settles down somewhat in the run up to Canadian consumption data.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Bonds extend already extensive recovery rallies from post-ECB hike lows.
• Bunds up to 154.32 from 149.69 at worst yesterday, Gilts to 117.43 from 114.20 and 10 year T-note at 119-24 compared to 117-14+.
• Curves bull steepen as poor EZ PMIs prompt further rollback of tightening expectations.
• BTPs latch on to the bid after early Italian political wobble as 10 year benchmark rebounds from 120.85 to 123.241, at best.
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COMMODITIES

• Crude benchmarks have given up initial gains following the release of Flash PMIs which point to a Q3 QQ EZ GDP contraction; prior to this, contracts were firmer.
• TotalEnergies (TTE FP) commits to a large-scale fuel price reduction programme until end-2022 for all service stations in France. September 1st - November 1st: EUR 0.20/litre reduction vs global market quotation prices; November 1st - December 1st: EUR 0.10/litre reduction vs global market quotation prices.
• UN spokesperson expects the signature of the grains agreement between Russia and Ukraine to take place today at 14:30BST/09:30EDT.
• Spot gold continues to inch higher above the USD 1700/oz mark and has risen as high as USD 1725/oz thus far.
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ECB

• ECB SPF (Q3). HICP Inflation: 2022 7.3% (prev. 6.0%; ECB June 6.8%,) 2023 3.6% (prev. 2.4%; ECB June 2.1%), 2024 2.1% (prev. 1.9%; ECB June 2.1%), Longer-term/2027 2.2% (prev. 2026 2.1%). Click here for more detail.
• ECB's de Cos says the most important aspect of the anti-fragmentation tool is its creation.
• ECB's Kazimir says the September rate hike could be 25bps or 50bps, via Bloomberg; it will take a while to get inflation to desired levels, wishes to never use TPI but "we will see".
• ECB's Villeroy says, if necessary, we will be as determined in activating TPI as we have been in creating it, no pre-defined limits to purchases.
• Bundesbank says Germany faces slower growth and new spike in inflation; expects inflation to remain high in the coming months and spike in September once govt subsidies on fuel and rail tickets expire on Aug 31st.

DATA RECAP

• UK Retail Sales MM (Jun) -0.1% vs. Exp. -0.3% (Prev. -0.5%, Rev. -0.8%); YY (Jun) -5.8% vs. Exp. -5.3% (Prev. -4.7%)
• Ex-Fuel MM (Jun) 0.4% vs. Exp. -0.4% (Prev. -0.7%, Rev. -1.0%); YY (Jun) -5.9% vs. Exp. -6.3% (Prev. -5.7%, Rev. -5.5%)
• EU S&P Global Composite Flash PMI (Jul) 49.4 vs. Exp. 51.0 (Prev. 52.0); Manufacturing Flash PMI (Jul) 49.6 vs. Exp. 51.0 (Prev. 52.1); Services Flash PMI (Jul) 50.6 vs. Exp. 52.0 (Prev. 53.0)
• UK Flash Services PMI (Jul) 53.3 vs. Exp. 53.0 (Prev. 54.3); Composite PMI (Jul) 52.8 vs. Exp. 52.5 (Prev. 53.7); Manufacturing PMI (Jul) 52.2 vs. Exp. 52.0 (Prev. 52.8)
• UK GfK Consumer Confidence (Jul) -41 vs. Exp. -42.0 (Prev. -41.0)

CRYPTO

• Bitcoin remains bid and has eclipsed the USD 23.5k mark at best, though this was brief and it has since waned marginally.

APAC TRADE

• APAC stocks were mostly higher after the gains in the US but with upside capped by lingering growth concerns.
• ASX 200 was rangebound near the 6,800 level after PMI data slowed but remained in expansion territory.
• Nikkei 225 was kept afloat after the recent dovish affirmations from the BoJ and Governor Kuroda but with gains limited amid the COVID situation and with Core Inflation rising by its fastest pace in 7 years.
• Hang Seng and Shanghai Comp. were mixed amid earnings releases and with suggestions that President Biden could temporarily reduce China tariffs in response to supply chain disruptions and rising inflation.

NOTABLE APAC HEADLINES

• US Democrat Rep. Ami Bera said President Biden could opt for a "temporary reduction" of Trump-era tariffs on China in response to supply chain disruptions and rising inflation, according to Nikkei.

DATA RECAP

• Japanese National CPI YY (Jul) 2.4% vs. Exp. 2.4% (Prev. 2.5%)
• Japanese National CPI Ex. Fresh Food YY (Jul) 2.2% vs. Exp. 2.2% (Prev. 2.1%); Ex. Fresh Food & Energy YY (Jul) 1.0% vs. Exp. 0.9% (Prev. 0.8%)
• Japanese Manufacturing PMI (Jun P) 52.2 (Prev. 52.7); Services PMI (Jun P) 51.2 (Prev. 54.0)
• Australian Manufacturing PMI (Jul P) 55.7 (Prev. 56.2); Services PMI (Jul P) 50.4 (Prev. 52.6)