• European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%.
• Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%.
• DXY lifts as activity currencies wane on the above risk tone alongside JPY extending its winning streak; AUD slips post 50bp hike
• Core fixed income is underpinned pre-Pelosi and Fed speak while UK issuance was twice over-subscribed
• Going into JTC, FBN source says Saudi will push OPEC+ to increase oil production at Wednesday's gathering
• Looking ahead, highlights include Canadian Manufacturing PMI, New Zealand Unemployment, US NY Fed Household Debt & Credit Report, Speeches from Fed's Bullard, Evans & Mester. Earnings from Uniper, PayPal, Gilead, Uber & Starbucks.

As of 11:05BST/06:05ET

LOOKING AHEAD

• Canadian Manufacturing PMI, New Zealand Unemployment, US NY Fed Household Debt & Credit Report, Speeches from Fed's Bullard, Evans & Mester. Earnings from Uniper, PayPal, Gilead, Uber & Starbucks.
• Click here for the Week Ahead preview

TAIWAN/PELOSI

• Click here for newsquawk analysis on the subject.
• Several Chinese warplanes flew close to the median line of the Taiwan Strait on Tuesday morning and several Chinese warships have stayed close to the median line of the Taiwan Strait since Monday, according to a source briefed on the matter cited by Reuters. It was also reported that Taiwan's Defence Ministry reinforced its combat alertness level from Tuesday morning to Thursday noon, according to the official Central News Agency citing sources.
• Global Times' Hu Xijin says "Based on what I know, in response to Pelosi's possible visit to Taiwan, Beijing has formulated a series of countermeasures, including military actions."
• China's Foreign Ministry says their position on US House Speaker Pelosi's potential Taiwan visit is clear, will take all necessary measures to preserve interests.
• The plane (SPAR19) likely carrying the delegation of US House Speaker Pelosi is in the air, having departed Kuala Lumpur. It is taking a route around the Philippines to Taiwan. Sources suggest this is designed to minimize the security risks, according to CNN's Rogin. Follows FlightRadar24 showing the craft in-flight earlier, no confirmation that Pelosi is onboard or as to its destination/flight path.
• SET News expects US House Speaker Pelosi in Taipei at 21:30 local time (14:30BST/09:30EDT).
• "Both of aircraft carriers of the PLA Navy have reportedly moved out from their homeports respectively amid Pelosi's possible visit to the island of Taiwan, which media reported could happen Tuesday evening.", according to Global Times.
• Xiamen Air in East China's Fujian Province announced on Tuesday the adjustment of some of its flights due to flow control, via Global Times. Geographically, the Fujian province is in close proximity to Taiwan
• PLA's Eastern Theater Command conducts live-fire drills in East China Sea, practicing subjects such as air defense, anti-reconnaissance, missile defense, and long-range sea strikes, via CCTV.

GEOPOLITICS

• US President Biden held a briefing where he confirmed Al Qaeda leader Zawahiri was killed during a US operation on Saturday, while a senior US official said that Zawahiri's death deals a significant blow to Al Qaeda and that there was a legal basis for the operation against Zawahiri. Furthermore, US Secretary of State Blinken commented that by hosting and sheltering the Al Qaeda leader in Kabul, the Taliban grossly violated the Doha agreement, according to Reuters.
• Iranian Foreign Minister says that "Washington cannot get concessions from us at the negotiating table by continuing to impose sanctions", according to Al Jazeera.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%.
• As such, the Energy sector bucks the trend which has the majority in the red and a defensive bias in-play.
• Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%.
• Apple (AAPL) files final pricing term sheet for four-part notes offering of up to USD 5.5bln, according to a filing.
• Click here for more detail.

FX

• Yen extends winning streak through yet more key levels vs Buck and irrespective of general Greenback recovery on heightened US-China tensions over Taiwan
• USD/JPY breaches support around 131.35 and probes 130.50 before stalling, but remains sub-131.00 even though the DXY hovers above 105.500 within a 105.030-710 range.
• Aussie undermined by risk aversion and no hawkish shift by RBA after latest 50bp hike; AUD/USD nearer 0.6900 having climbed to within a few pips of 0.7050 on Monday.
• Kiwi holds up better with AUD/NZD tailwind awaiting NZ jobs data, NZD/USD hovering just under 0.6300 and cross closer to 1.1000 than 1.1100.
• Euro and Pound wane after falling fractionally short of round number levels vs Dollar, EUR/USD back under 1.0250 vs 1.0294 at best, Cable pivoting 1.2200 from 1.2293 yesterday.
• Loonie and Franc rangy after return from Canadian and Swiss market holidays, USD/CAD straddling 1.2850 and USD/CHF rotating around 0.9500.
• Yuan off lows after slightly firmer PBoC midpoint fix, but awaiting repercussions of Pelosi trip given Chinese warnings about strong reprisals, USD/CNH circa 6.7700 and USD/CNY just below 6.7600 vs 6.7950+ and 6.7800+ respectively.
• South Africa's Eskom says due to a shortage of generation capacity, Stage Two loadshedding could be implemented at short notice between 16:00-00:00 over the next three days.
• Click here for more detail.

Notable FX Expiries, NY Cut:

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FIXED INCOME

• Taiwan-related risk aversion keeps bonds afloat ahead of relatively light pm agenda before a trio of Fed speakers.
• Bunds hold above 159.00 within 159.70-158.57 range, Gilts around 119.50 between 119.70-20 parameters and T-note nearer 122-02 peak than 121-17+ trough.
• UK 2032 supply comfortably twice oversubscribed irrespective of little concession.
• Click here for more detail.

COMMODITIES

• WTI Sept and Brent Oct futures trade with both contracts under the USD 100/bbl mark as the participants juggle a myriad of major factors, incl. the JTC commencing shortly.
• Spot gold is stable and just below the 50-DMA at USD 1793/oz while base metals succumb to the broader tone.
• A source with knowledge of last month's meeting between President Biden and Saudi King Salman said the Saudis will push OPEC+ to increase oil production at their meeting on Wednesday and that the Saudi King made the assurance to President Biden during their face-to-face meeting July 16th, according to Fox Business's Lawrence.
• US Senator Manchin "secured a commitment" from President Biden, Senate Majority Leader Schumer and House Speaker Pelosi for completion of the Mountain Valley Pipeline, according to 13NEWS.
• Click here for more detail.

NOTABLE HEADLINES

• UK Foreign Secretary Truss suggested she would 'ignore' Scottish First Minister Sturgeon and answered "no, no, no" when questioned regarding the prospect of another independence referendum if she were to become the next PM, according to Sky News.
• France, Italy and Spain asked the European Commission for legislation to ensure big tech companies pay some network costs, according to a document cited by Reuters.

DATA RECAP

• Swiss Manufacturing PMI (Jul) 58.0 (Prev. 59.1)

NOTABLE US HEADLINES

• White House and retailers reportedly discussed price cuts after tariff relief, according to CNBC citing sources.
• California Governor declares a monkeypox emergency to bolster vaccination efforts, according to Reuters.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin remains under modest pressure and has incrementally lost the USD 23k mark, but remains comfortably above last-week's USD 20.6k trough.

APAC TRADE

• APAC stocks followed suit to the weak performance across global counterparts as tensions simmered amid Pelosi's potential visit to Taiwan.
• ASX 200 was initially pressured ahead of the RBA rate decision where the central bank hiked by 50bp, as expected, although most of the losses in the index were pared amid a lack of any hawkish surprises in the statement and after the central bank noted it was not on a pre-set path.
• Nikkei 225 declined amid a slew of earnings and continued unwinding of the JPY depreciation.
• Hang Seng and Shanghai Comp underperformed due to the ongoing US-China tensions after reports that House Speaker Pelosi will arrive in Taiwan late on Tuesday despite the military threats by China, while losses in Hong Kong were exacerbated by weakness in tech and it was also reported that Chinese leaders said the GDP goal is guidance and not a hard target which doesn't provide much confidence in China's economy.

NOTABLE APAC HEADLINES

• Chinese leaders said the GDP goal is guidance and not a hard target, according to Bloomberg.
• RBA hiked the Cash Rate Target by 50bps to 1.85%, as expected, while it reiterated that the Board expects to take further steps in the process of normalising monetary conditions and is committed to doing what is necessary to ensure that inflation in Australia returns to target over time but noted that it is not on a pre-set path. Furthermore, it reaffirmed its view that inflation is expected to peak later this year and then decline back towards the 2–3% range and noted that a key source of uncertainty continues to be the behaviour of household spending.

DATA RECAP

• Australian Building Approvals MM (Jun) -0.7% vs. Exp. -5.0% (Prev. 9.9%, Rev. 11.2%)
• Australian Home Loans MM (Jun) -4.4% vs Exp. -3.0% (Prev. 1.7%)