• European bourses are mixed and near the unchanged mark overall, Euro Stoxx 50 +0.1%,, after a softer open following a downbeat APAC/Wall St. handover.
• Stateside, futures have lifted off initial lows but reman in proximity to unchanged levels pre-CPI, ES +0.2%.
• DXY has eased but remains in narrow ranges to the modest benefit of peers; Yuan initially softer on below-exp. Chinese CPI
• A decisive move higher in EGBs/USTs without fresh catalyst or drive, yield curve steeper
• Crude benchmarks are under modest pressure but off worst levels while gold and LME metals are mixed/flat
• Looking ahead, highlights include US CPI, Chinese M2, Speeches from BoE's Pill, Fed's Evans & Kashkari, Supply from the US, Earnings from Disney, Fox.

As of 11:10BST/06:10ET

LOOKING AHEAD

• US CPI, Chinese M2, Speeches from BoE's Pill, Fed's Evans & Kashkari, Supply from the US, Earnings from Disney, Fox.

GEOPOLITICS

• Ukraine is not taking responsibility for the explosions at the Russian airbase in Crimea, according to Ukrainian President Zelensky's adviser cited by Reuters.
• Chinese military says they have completed various tasks around Taiwan; Eastern Theatre Command to keep a close eye on changes around the Strait, via Reuters; will conduct regular patrols.
• Around 20 Chinese and Taiwanese warships stayed close to the Taiwan Strait median line on Wednesday morning and some Chinese ships continued to conduct missions off Taiwan's eastern coast, according to a source briefed on the matter cited by Reuters.
• China's Global Times tweeted that a white paper said they make no commitment to renounce the use of force and reserve the option of taking all necessary measures, while this is aimed at external interference and Taiwan secessionists but not Taiwan compatriots, while it added that a non-peaceful means will be the last choice. Chinese state TV also noted that China reiterated not ruling out the use of force and its policy of one country, two systems for Taiwan.
• China and South Korea agreed to maintain supply-chain stability and their foreign ministers discussed THAAD in a meeting on Tuesday.
• China's ambassador to Australia said they have not yet reached the stage to talk about how to solve the trade issue, according to Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed and near the unchanged mark overall, Euro Stoxx 50 +0.1%,, after a softer open following a downbeat APAC/Wall St. handover.
• Stateside, futures have lifted off initial lows but reman in proximity to unchanged levels pre-CPI, ES +0.2%.
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FX

• DXY is softer but within a tight range and still above 106.00 vs a 106.40 high, with G10s benefitting across the board.
• Antipodeans lead the charge while EUR and GBP post modest gains vs the USD.
• Havens are also firmer against the Buck, albeit within narrow parameters ahead of US CPI.
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0050-55 (674M), 1.0100 (874M), 1.0145-50 (555M), 1.0160 (254M), 1.0170-75 (1.84BLN), 1.0185 (544M), 1.0195-05 (690M), 1.0210-20 (1.95BLN), 1.0225 (300M), 1.0260 (398M)
• GBP/USD: 1.1990-00 (277M), 1.2040-50 (558M)
• AUD/USD: 0.6900-10 (307M), *0.6985-0.7000 (735M). *
• USD/CAD: 1.2890-00 (1.39BLN).
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FIXED INCOME

• Decisive march higher experienced in both core and periphery counterparts with catalysts limited pre-CPI.
• US yields are incrementally steeper, though the inversion/flattening theme remains intact.
• German 2048 supply well received, but uneventful.
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COMMODITIES

• WTI Sep and Brent Oct futures remain softer but off worse levels.
• Spot gold is flat below USD 1,800/oz with the 50 DMA today seen at 1,785.31/oz and the 10 DMA seen at 1,775/oz
• LME metal futures are mixed and copper fell back under USD 8,000/t.
• Hungary's MOL says transport through the Friend ship pipeline can resume "thanks to MOL"; has conducted negotiations between Ukraine and Russia to resume transport via the pipeline and has transferred the fee due for the Ukraine section.
• Indian companies are using APAC currencies as payment for Russian coal imports, via Reuters citing sources/documents, in order to avoid sanctions; Yuan among the currencies becoming more popular.
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NOTABLE HEADLINES

• UK Tory leadership frontrunner Truss has rejected calls from the CBI to meet with PM Johnson and former Chancellor Sunak to agree on a common pledge to tackle the cost of living crisis, according to FT.
• German Finance Ministry wants to raise all income tax bracket thresholds apart from tax on the rich, which still kicks in at EUR 277,826 and expects the tax take to drop by EUR 10.1bln in 2023, according to Reuters sources.
• German Finance Minister Lindner says the economic outlook for the nation is fragile; the economic situation is deteriorating and they are planning an inflation relief package, would be worth EUR 10bln in value.
• Rhine river, Germany is seen as being effectively impassable at a key point on August 12th, via Bloomberg;

NOTABLE US HEADLINES

• US HHS Secretary said they took action to allow the FDA to grant EUA for monkeypox vaccines.
  • US SEC is to propose rules to boost hedge fund and private fund leverage disclosures and will require funds to provide more information as part of confidential "Form-PF" disclosures, according to Reuters sources.
  • Tesla (TSLA) CEO Musk sold around USD 6.9bln of shares in the automaker and said that in the hopefully unlikely event that Twitter forces the deal to close and some equity partners don't come through, it is important to avoid an emergency sale of Tesla stock, while he responded 'yes' when asked if he would buy Tesla stock again in case the Twitter deal doesn't close.

APAC TRADE

• APAC stocks were mostly subdued following the weak handover from the US where tech stocks were pressured after Micron’s warnings and with markets also cautious ahead of US CPI data.
• ASX 200 was lacklustre amid a spooked tech industry although the losses in the index were stemmed by strength in utilities, energy and the top-weighted financials sector which benefitted after Australia’s largest lender CBA posted higher profits.
• Nikkei 225 was pressured after it recently fell back beneath the 28,000 level and as the biggest movers remained influenced by earnings releases.
• Hang Seng and Shanghai Comp were subdued with underperformance in Hong Kong amid the tech woes, while the mainland was somewhat choppy after softer than expected Chinese inflation data.

NOTABLE APAC HEADLINES

• Urumqi city in China's Xinjiang will implement a partial lockdown due to COVID, according to state TV.
• Japanese Chief Cabinet Secretary Matsuno, Finance Minister Suzuki and Economy Minister Yamagiwa will remain in their roles following the cabinet reshuffle, while ex-Economy Minister Nishimura will become the new Trade Minister and ex-Defence Minister Hamada will become the new Defence Minister.
• Updates from Foxconn, Honda, Toshiba and TSMC.

DATA RECAP

• Chinese CPI MM (Jul) 0.5% vs. Exp. 0.5% (Prev. 0.0%); YY (Jul) 2.7% vs. Exp. 2.9% (Prev. 2.5%)
• Chinese PPI YY (Jul) 4.2% vs. Exp. 4.8% (Prev. 6.1%)