• APAC stocks were mixed following a similar indecisive lead from Wall Street; SPX -0.07%, NDX -0.65%.
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future Unch. after the cash market closed higher by 0.2% yesterday.
• DXY maintains 105 status, NZD leads G10 FX whilst JPY lags, EUR/USD sits on a 1.03 handle.
• Crude marginally softened overnight after Brent and WTI encountered resistance at USD 100/bbl and USD 95/bbl respectively.
• Looking ahead, highlights include UK GDP, EZ Industrial Production, US Import/Export Prices, Uni. of Michigan (Prelim.).

US TRADE

• US stocks finished mixed with early gains seen in the post-soft CPI honeymoon period and as softer than expected PPI data supported the peak inflation narrative, although stocks and treasuries pulled back throughout the session with underperformance in the Nasdaq as yields climbed higher.
• SPX -0.07% at 4,207, NDX -0.65% at 13,292, DJIA +0.08% at 33,337, RUT +0.31% at 1,975.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Daly (2024 voter) said inflation is too high and must be brought down, while she said inflation is showing progress but is not a victory and doesn't want to be head faked by the inflation improvement. Daly noted her baseline is for a 50bps hike in September and has an open mind if a 75bps hike will be needed in September in which the decision on 50bps vs 75bps will depend on a lot of data not just one data point. Furthermore, Daly expects the policy rate to be at 3.4% by year-end and it is her opinion that rates will become more restrictive next year, according to a Bloomberg TV interview.
• US CDC no longer recommends quarantine for unvaccinated individuals after exposure to someone with COVID-19 and no longer recommends screening testing of asymptomatic people without known exposures in most community settings.
• Apple (AAPL) expects to sustain iPhone sales in 2022 as the market slows and assemblers are expected to make 220mln iPhones in 2022, according to Bloomberg.

GEOPOLITICS

OTHER

• EU proposed a concession to Iran to revive the nuclear deal in which it offered an end to the UN Atomic Agency investigation that Iran wants closed, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks were mixed following a similar indecisive lead from Wall Street where stocks and treasuries faded the initial gains from the softer-than-expected PPI data, although Japan outperformed on return from holiday.
• ASX 200 was dragged lower by losses across nearly all sectors including the top-weighted financial industry despite the confirmation of a return to profit for IAG, while energy bucked the trend after a recent rebound in oil.
• Nikkei 225 notched firm gains as it played catch-up to global peers and took its first opportunity to react to the softer inflationary signals from the US, while Softbank was among the top performers as it expects to gain USD 34bln from reducing its stake in Alibaba.
• Hang Seng and Shanghai Comp were both subdued in early trade amid weakness in property stocks and ongoing COVID-related headwinds, although the Hong Kong benchmark gradually recovered with earnings releases also in the limelight.
• US equity futures traded sideways amid the cautious mood in Asia and after giving up post-PPI gains. ES +0.2%.
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future Unch. after the cash market closed higher by 0.2% yesterday.

FX

• DXY kept afloat after having recovered from a brief dip beneath 105.00.
• EUR/USD traded rangebound and well off the prior day’s best levels although sustained the 1.0300 handle.
• GBP/USD was lacklustre after slipping beneath 1.2200 with focus now shifting to today’s GDP release.
• USD/JPY initially advanced on widening yield differentials but then lost steam after it met resistance at 133.50.
• Antipodeans eked slight gains with NZD slightly outperforming after firmer PMI and Food Prices.
• Mexican Central Bank hiked rates by 75bps to 8.50%, as expected, in a unanimous decision and raised inflation forecasts out to Q4 2023, while it said the “Board will assess the magnitude of the upward adjustments in the reference rate for its next policy decisions based on the prevailing conditions”.

FIXED INCOME

• 10yr UST futures attempted to nurse some of the wounds from the prior day’s dramatic reversal as support at the 119.00 level provided some respite from the recent selling although the rebound was limited as yields stabilised overnight and Fed rhetoric remained hawkish-leaning.
• Bund futures languished near 2-week lows after longs took profits with the US inflation data in the rear-view.
• 10yr JGBs futures were lacklustre amid the outperformance in Japanese stocks and with the BoJ only in the market under its fixed rate operations.

COMMODITIES

• Crude marginally softened overnight after the prior day's momentum in Brent and WTI was stalled by resistance at USD 100/bbl and USD 95/bbl respectively, while the latest oil market reports from OPEC and the IEA were mixed.
• US DoE announced awards for the latest crude oil sales from the SPR to nine companies including Shell (SHEL LN), Chevron (CVX) and Marathon (MRO) with deliveries to take place from each of the SPR storage sites between September 16th-October 21st.
• Shell (SHEL LN) shut its Mars (600k BPD) and Amberjack (335k BPD) oil pipelines due to a flange leak at Fourchon and shut US Gulf Mars, Ursa, and Olympus oil fields, which have a combined production capacity of 410k BPD, according to Bloomberg. However, the Greater Lafourche Port Commission Executive Director later noted that roughly two barrels of oil spilt in the pipeline leak and the pipeline fix was expected to take about a day, while Shell also expects the pipelines to return to service on Friday.
• Ukraine's Naftogaz resumed oil transportation via a Ukrainian section of the Druzba oil truck pipeline in the direction of Slovakia and Hungary, according to Reuters.
• Uniper (UN01 GY) said the Australian LNG it receives could be swapped for Atlantic gas to supply Europe as part of the preparation for possible European shortages in the winter, according to Reuters.
• Spot gold was contained after the greenback's recent recovery from post-inflation lows.
• Copper traded sideways amid the tentative overnight mood.
• Miners will struggle to expand operations in the US in record time to meet a deadline for sourcing key minerals for electric vehicles in a bill that is set to be passed on Friday, according to companies cited by Reuters.

CRYPTO

• Bitcoin was rangebound but eked slight gains in which prices just about reclaimed the 24,000 level.

NOTABLE APAC HEADLINES

• Chinese President Xi sought to send a message to US President Biden ahead of Pelosi's visit to Taiwan that "now is no time for a crisis" and Xi indicated Beijing had no intention of going to war, according to WSJ sources.
• Japanese PM Kishida plans to hold a meeting on August 15th to address rising goods prices, wages and daily life, while he called for additional measures on dealing with rising food and energy prices, according to Reuters.

DATA RECAP

• New Zealand Manufacturing PMI* (Jul) 52.7 (Prev. 49.7, Rev. 50.0)
• New Zealand Food Price Index (Jul) 2.1% (Prev. 1.2%)

EU/UK

NOTABLE HEADLINES

• The Rhine River is on track to breach its critical level for navigability today and potentially trigger disruptions to trade of fuels across the continent, according to German government data cited by Bloomberg.
• Italy’s Centre-right coalition, which is set to win the 25th September election, is to abandon anti-EU policies but will look to change the terms of the EU-COVID recovery deal, due to inflation/Ukraine altering the circumstances, via Politico citing a draft pledge.