• European bourses are under modest pressure in wake of China taking countermeasures against "Pelosi's invasion of Taiwan", Euro Stoxx 50 -0.4%.
• However, performance is fairly contained overall as we await the key US Labour Market print (newsquawk preview available) before next week's CPI.
• DXY is firmer on the China update with activity currencies pressured and havens deriving modest upside.
• Core debt is relatively steady with a modest flattening bias back in play; OATs in focus ahead of Fitch's review
• Crude benchmarks are under pressure amid the mentioned countermeasures taken by China and also as Taiwan reports no/limited ships/aircraft impact from China drills
• Looking ahead, highlights include US & Canadian Labour Market Reports; BoE's Pill & Fed's Barkin.

As of 11:25BST/06:25ET

LOOKING AHEAD

• US & Canadian Labour Market Reports; BoE's Pill & Fed's Barkin.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

• Ukraine is calling for the Black Sea grain deal to extend to other products, according to FT; subsequently, Russian Kremlin says a solution to the problems, in reference to Turkey's proposed extension of a grain deal to metals, can only be attained if it is linked to the removal of restrictions on Russian metal producers, via Reuters.

TAIWAN

• Chinese Foreign Ministry says it will sanction US House Speaker Pelosi over her visit to Taiwan; adding that, Pelosi's Taiwan visit seriously interfered with China's internal affairs and trampled on the One-China principle.
• Chinese Foreign Ministry says it will take more counter-measures over House Speaker Pelosi's trip to Taiwan. China announces eight measures, click here for details.
• Taiwanese Transportation Ministry says no ships altered plans to enter or leave ports on Thursday and there is little impact on airport traffic following Chinese military drills, via Reuters.
• US House Speaker Pelosi said they had positive meetings in Taiwan about security and governance and that they said from the start that representation is not about changing the status quo, while she added that China will not isolate Taiwan by preventing them from travelling there, according to Reuters.
• White House's Kirby said the US urges China not to overreact and to bring down tensions, while the US is watching China’s exercises near Japan ‘very, very closely’. Kirby also said the US condemns China launching missiles near Taiwan and expects China to continue to react in the coming days, while he added the US is prepared and that Beijing's actions are a significant escalation in its attempt to change the status quo.
• Taiwan's Premier said the "evil neighbour" next door is showing off her power at our door and that China is arbitrarily destroying the world's most frequently used waterway with military drills, while Taiwan's Premier added that China's actions are being condemned by the world.
• Taiwan's Defence Ministry said multiple Chinese navy ships and air force aircraft crossed the Taiwan Strait median line on Friday morning, while it added China's actions are provocative and that the military principle is 'no escalation, no triggering of incident', according to Reuters.
• Around 20 Chinese military aircraft briefly cross the Taiwan median line on Friday morning, according to a Taiwan source via Reuters.
• White House summoned the Chinese ambassador yesterday to condemn the nation for escalating actions against Taiwan following the visit by House Speaker Pelosi, according to the Washington Post,

OTHER

• North Korea tested explosive devices and began digging new tunnels at its Punggye-ri nuclear test site, which "paves the way for additional nuclear tests" according to Nikkei citing a UN draft report.
• "There has been no discussion in Vienna between IAEA and Iran this week. And that none planned at this point", according to WSJ's Norman citing sources.

EUROPEAN TRADE

EQUITIES

• European bourses are under modest pressure in wake of China taking countermeasures against "Pelosi's invasion of Taiwan", Euro Stoxx 50 -0.4%.
• However, performance is fairly contained overall as we await the key US Labour Market print (newsquawk preview available) before next week's CPI.
• Currently, US futures lower by circa. 0.1% in narrow ranges amid thin summer conditions and a limited European schedule.
• Click here for more detail.

FX

• DXY trades on a firmer footing and tested 106.00 as China announced sanctions against House Speaker Pelosi; CNH saw some weakness.
• EUR and GBP are posting mild losses vs the Buck, but the EUR sees slightly more of a downside bias vs the GBP.
• Activity currencies hold a mild downside against the Buck, with more pronounced losses seen as reports of Chinese sanctions against Pelosi dented sentiment.
• Haven FX have climbed up the G10 ranks following the deterioration in sentiment.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0100 (871M), 1.0200 (2.06B), 1.0300-05 (1.74B)
• USD/JPY: 132.25 (822M), 132.50 (505M), 133.25-30 (822M), 134.00 (2.08B), 135.00 (1.09B)
• Click here for more detail.

FIXED INCOME

• Pre-BoE core consolidation has dissipated and the flattening bias is back in play, albeit, only incrementally so with NFP ahead.
• Bunds are towards the mid point of a relatively contained 60 tick range which is capped by nearby support/resistance.
• OATs are in-fitting directionally but at the lower-end of ranges ahead of Fitch's review of France; currently, AA Negative.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are under pressure amid the mentioned countermeasures taken by China and also as Taiwan reports no/limited ships/aircraft impact from China drills
• WTI and Brent lower by circa. USD 0.20/bbl and towards the bottom-end of the session's parameters.
• China's market regulator recently carried out investigations in Shanxi, Inner Mongolia and Shaanxi, 3 major coal-producing provinces, to further supervise and regulate thermal coal prices. 18 coal companies were suspected of bidding up coal prices, accord.
• Spot gold is softer and incrementally losing its allure as the USD picks up while base metals remain mixed.
• Click here for more detail.

NOTABLE HEADLINES

• BoE Chief Economist Pill says the MPC is targeting the more persistent elements of inflation, BoE is aiming to be flexible and should not assume that September will be a 50bps hike. If inflation returns to 2%, nominal rates will be broadly at that level, via BBG TV.

NOTABLE US HEADLINES

• US Senator Sinema agreed to move forward on Senate tax and climate bill in which she agreed to remove the carried interest tax provision, protect manufacturing and boost the clean energy economy in the Senate's budget reconciliation legislation. Furthermore, Senate Majority Leader Schumer said the final version of the reconciliation bill will be published on Saturday and that the agreement preserves major components of the inflation reduction act.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin is firmer and once again back above the USD 23k mark in what has been a fairly choppy week within narrow ranges of less than USD 2k thus far.

APAC TRADE

• APAC stocks traded mostly positive but with gains capped amid geopolitical and growth slowdown concerns, while markets also await the upcoming US NFP jobs report.
• ASX 200 was lifted by strength in mining stocks after gains in underlying metal prices although the energy sector lagged due to the recent oil pressure.
• Nikkei 225 surpassed 28k after stronger-than-expected Household Spending and firmer wage growth.
• Hang Seng and Shanghai Comp lacked firm direction with Hong Kong stocks indecisive after Alibaba failed to replicate the strength in its ADRs post-earnings and with sentiment clouded by geopolitical risks.

NOTABLE APAC HEADLINES

• Chinese Premier Li said China can 'live with' slightly lower growth if inflation remains below 3.5%, according to SCMP
• ASEAN Foreign Ministers' communique stated that they underscored the importance of maintaining unity and centrality, while they reaffirmed shared commitment to maintaining and promoting peace, security and stability in the region. They also reiterated their commitment to keeping markets open for trade and investment, as well as refraining from imposing unnecessary non-tariff measures to ensure supply chain connectivity.
• RBA Statement on Monetary Policy stated that they are ready to do what is necessary to bring inflation back to the 2%-3% band and the board expects to take further steps to normalise policy but is not on a pre-set path. RBA added that inflation pressures are broadly based and that rate increases have been required to create a more sustainable balance of demand and supply. Furthermore, it sees GDP growth of 3.25% at end-2022, 1.75% at end-2023 and 1.75% at end-2024, while it forecasts CPI inflation of 7.75% at end-2022, 4.25% at end-2023 and 3.00% at end-2024.
• RBI hiked the Repurchase Rate by 50bps to 5.40% (exp. hike of 25bps-50bps) and Governor Das stated that a further calibrated withdrawal is warranted to keep inflation expectations anchored. Das also stated that domestic economic activity is showing signs of broadening and that India is expected to be among the fastest growing economies this year with strong and resilient fundamentals but also stated that the domestic economy has been impacted by the global economic situation and that financial markets are uneasy, while he added that CPI inflation has eased from its surge in April but remains uncomfortably high.

DATA RECAP

• Japanese All Household Spending MM (Jun) 1.5% vs. Exp. 0.2% (Prev. -1.9%); YY (Jun) 3.5% vs. Exp. 1.5% (Prev. -0.5%)
• Japanese Labour Cash Earnings YY (Jun) 2.2% (Prev. 1.0%)