• European bourses are under modest pressure, Euro Stoxx 50 -0.5%, but remain relatively rangebound and lack conviction with catalysts thin.
• Stateside performance has been similar though NQ -0.4% has come under pressure amid a Q4 guidance update from Micron (MU), -5% pre-mkt
• DXY briefly lost 106.00 with modest upside seen in peers across the board
• GBP initially dented on BoE's Ramsden, with associated Gilt and broader debt upside relatively short-lived
• Crude oil futures have drifted off best levels; however, pronounced upside seen most recently on Russia reportedly suspending oil exports via southern-section of the Druzhba pipeline.
• Looking ahead, highlights include EIA STEO, Supply from the US, Earnings from Sysco, Coinbase, Warner Music.

As of 11:15BST/06:15ET

LOOKING AHEAD

• EIA STEO, Supply from the US, Earnings from Sysco, Coinbase, Warner Music.

GEOPOLITICS

TAIWAN

• Taiwan's Foreign Minister said China conducting military exercises around Taiwan is a gross violation of international law and has hindered one of the busiest shipping routes in the world, while he added Taiwan has the right to maintain relationships with other countries and has the right to participate in the international community which China has no right to interfere with. Furthermore, he stated that China's sea and military exercises continue, especially around the median line, and that China is trying to wreck the median line which has been there for decades, according to Reuters.
• Taiwan began a live-fire artillery drill simulating defence against an attack by China, according to AFP.
• China's military said it will continue drills around Taiwan on Tuesday, according to Reuters.
• Around 20 Chinese and Taiwanese warships stayed close to the Taiwan Strait median line on Tuesday morning and some Chinese ships briefly attempted to cross the line, while several Chinese ships continued to conduct missions off Taiwan's eastern coasts, according to a source briefed on the matter cited by Reuters.

RUSSIA-UKRAINE

• Russian forces heavily bombarded front-line towns in Ukraine on Tuesday and Ukrainian officials reported intense fighting near the eastern city of Donetsk, according to The Telegraph.
• US is readying an additional USD 1bln of military aid to Ukraine including long-range artillery munitions, anti-tank weapons and medical vehicles, according to Bloomberg.

CENTRAL BANKS

EUROPEAN TRADE

BoE's Ramsden says it is more likely than not that the BoE will need to hike further, but have not reached a firm decision on this; had to act forcefully at the August meeting to ensure inflation does not become embedded. Inflation expectations remain anchored. Not ruling out a need to begin lowering the bank rate quite quickly, at some point. Could be in a situation of cutting rates and selling assets at the same time.

EQUITIES

• European bourses are under modest pressure, Euro Stoxx 50 -0.5%, but remain relatively rangebound and lack conviction with catalysts thin.
• Stateside, futures are similarly rangebound though are posting incrementally more mixed/flat performance, ES -0.1%.
• Pressure has been seen following a downbeat Q4 guidance update from Micron (-5% pre-mkt), pressuring the NQ -0.4% and European tech performance.
• Micron (MU) sees Q4 revenue at or below the low end of June 30th guidance; expects challenging market environment in Q4 2022 and Q1 2023. Additionally, has announced USD 40bln investments in leading-edge US memory manufacturing; Micron expects to begin production in the second half of the decade, ramping overall supply in line with industry demand trends.
• Click here for more detail.

FX

• DXY briefly dipped under 106.00 from a 106.40 peak despite a lack of news flow.
• Sterling saw some downside on commentary from BoE Deputy Governor Ramsden, EUR/USD eyes several notable OpEx ahead of the NY cut.
• Non-US Dollars are firmer to varying degrees with the aid of the softer Dollar.
• USD/JPY found some resistance by its 50 DMA (135.14) early in the session and trades just under 135 awaiting the next catalyst
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0000 (1.06BLN), 1.0100 (799M), 1.0145-50 (926M), 1.0185-90 (1.69BLN), 1.0200-10 (1.69BLN).
• USD/JPY: 133.00 (570M), 133.40 (679M), 134.50 (210M), 135.00-05 (975M), 135.30-40 (1.43BLN)
• USD/CAD: 1.2750 (325M), 1.2875 (470M), 1.2900 (1.17BLN), 1.2920 (223M)
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FIXED INCOME

• Sonia/Gilts supported on BoE's Ramsden before reverting to a 'hawkish' bias amid broader EGB/UST pressure.
• Catalysts are thin with the initial upside fizzling out in short order though seemingly unaffected by strong/poor UK and German supply respectively.
• US yields are incrementally stepper though the broader inversion remains while BTP-Bund spread holds around 210bp.
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COMMODITIES

• Crude oil futures have drifted off best levels; however, pronounced upside seen most recently on Russia reportedly suspending oil exports via southern-section of the Druzhba pipeline.
• Spot gold eyes USD 1,800/oz to the upside amid the softer Dollar.
• Base metals are mixed with the breadth of the market also narrow, but LME copper reclaimed a footing above USD 8,000/t.
• Norway has drawn up plans to ration electricity exports in a move which could stoke fears of energy shortages in Europe and the UK this winter, according to The Telegraph.
• China's NDRC is to lower retail prices of gasoline and diesel by CNY 130/tonne and CNY 125/tonnes respectively as of August 10th; 4th consecutive decline in prices.
• Russia suspends oil exports via southern-leg of the Druzhba pipeline amid transit payment issues, via Reuters citing sources.
• Click here for more detail.

NOTABLE HEADLINES

• Barclaycard said UK consumer spending rose 7.7% Y/Y in July which was boosted by clothing, beauty and staycations, while it added that UK consumers are starting to cut back on overseas travel, eating out and drinking to offset higher outgoings.
• Poland’s Kaczynski (de-facto leader) has pledged they will not undertake any further steps in adhering to the EU Commission’s rule of law demands regarding unlocking grants/loans, saying “..shown maximum goodwill, but concessions have yielded nothing”. Will, if necessary, veto EU initiatives and seek to remove President von der Leyen. (Politico)

NOTABLE DATA:

• UK BRC Retail Sales YY (Jul) 1.6% (Prev. -1.3%); Total Sales YY (Jul) 2.3% (Prev. -1.0%)
• US NFIB Business Optimism Index (Jul) 89.9 (Prev. 89.5)

NOTABLE US HEADLINES

• US President Biden's administration will permit a new injection method for the monkeypox vaccine, while the US is reportedly seeking to stretch out supply by injecting 20% of the current dose into the skin, according to NYT.
• Former US President Trump said his Mar-a-Lago home was raided by FBI agents although Trump was in New York at the time, while the raid was part of a probe into his handling of classified information, according to AP.

CRYPTO

• Bitcoin is underpressure after yesterday's strong performance, action that has pushed the crypto back below USD 23.5k.

APAC TRADE

• APAC stocks eventually traded mostly higher but with gains capped as the region focused on key earnings releases and initially followed suit to the indecisive performance in the US.
• ASX 200 was just about kept afloat by strength in tech and miners although gains were limited by weakness in financials including NAB despite posting earnings growth as it also flagged higher costs.
• Nikkei 225 was the laggard with the worst performing stocks pressured by earnings releases including SoftBank which suffered a record quarterly loss and warned of a potentially dramatic reduction in its headcount.
• Hang Seng and Shanghai Comp were indecisive in early trade with participants tentative amid lingering geopolitical concerns and after a Chinese press report suggested that interest rate and RRR cuts are unlikely. The Hang Seng Index later strengthened with property names underpinned after reports that Hong Kong is considering waiving double stamp duty for mainland Chinese homebuyers. However, these reports were later refuted by the government.

DATA RECAP

• Australian NAB Business Conditions (Jul) 20 (Prev. 13, Rev. 14)
• Australian Westpac Consumer Sentiment Index (Aug) 81.2 (Prev. 83.8); MM (Aug) -3.0% (Prev. -3.0%)
• New Zealand Electronic Card Retail Sales MM (Jul) -0.2% (Prev. 0.1%); YY (Jul) -0.5% (Prev. 1.9%)