• APAC stocks were mixed, Chinese data missed expectations whilst the PBoC surprised with 10bps rate cuts to its 1yr MLF rate and 7-day Reverse Repo rate
• DXY failed to sustain the early gains against its major counterparts, EUR/USD remained lacklustre, USD/JPY initially retreated but then pared most of its losses
• 10yr UST futures were steady after last Friday’s curve flattening, Bund futures were uneventful, 10yr JGBs futures eked marginal gains
• Crude prices were subdued; Saudi Aramco’s CEO said they are working to increase production from multiple energy sources
• Bitcoin traded higher and briefly reclaimed the USD 25,000 level, while Ethereum fleetingly rose above USD 2,000
• Looking ahead, highlights include US NY Fed Manufacturing, Speech from Fed’s Waller, and earnings from Hellofresh

LOOKING AHEAD

• US NY Fed Manufacturing, Speech from Fed’s Waller. Earnings from Hellofresh.
• Click here for the Week Ahead preview

US TRADE

• Stocks rose throughout the session on Friday with a bias to cyclical and growth stocks as exhibited by the NDX and RUT leading the SPX, while the University of Michigan preliminary survey for August was the key data point, with a strong bounce in consumer outlooks lifting market sentiment.
• SPX +1.69% at 4,278, NDX +2.06% at 13,565, DJIA +1.27% at 33,761, RUT +1.77% at 2,011.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Wells Fargo (WFC) is planning to reduce its vast mortgage empire which is the largest amongst US banks, according to Bloomberg.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Ministry said their forces have taken full control of Pisky village in Ukraine’s Donetsk region and have destroyed an ammo depo and HIMARS rocket system near Kramatorsk, according to Interfax. However, the Ukrainian military later stated that fierce fighting continues at Pisky village.
• Russian Foreign Ministry warned that the possible seizure of Russian assets by the US in favour of Ukraine will complete the destruction of Russia-US relations, while it was reported late on Friday that Russia told the US that diplomatic relations would be badly damaged and could even be broken off if Russia is declared a state sponsor of terrorism, according to TASS.
• US Secretary of State Blinken said that they are concerned about reports of British, Swedish and Croatian nationals being charged by illegitimate authorities in Eastern Ukraine, while he also said that Russia and its proxies have an obligation to respect international humanitarian law including the rights and protections afforded to prisoners of war.
• Several major Wall Street banks have begun offering facilitating trades in Russian debt after guidelines from the Treasury last month that allowed US holders to wind down their positions, according to Reuters

CHINA-TAIWAN

• A delegation of US lawmakers led by Democratic Senator Markey arrived in Taiwan on Sunday and are said to have sought to reaffirm US support for Taiwan, as well as encourage stability and peace across the Taiwan Strait.
• China’s PLA Eastern Theater Command is likely to conduct strong and powerful military operations in the waters and airspaces around Taiwan as a countermeasure to the latest US lawmakers’ visit to Taiwan, according to Global Times.
• Taiwan said 13 Chinese air force planes crossed the Taiwan Strait median line on Saturday and 11 PLA aircraft crossed the median line or entered Taiwan's air defence identification zone on Sunday, according to Reuters.

OTHER

• Israel was reported to have conducted an attack on targets in the vicinity of Syria’s port city of Tartous. Furthermore, explosions were heard and Syrian air defences confronted the “hostile targets” over Tartous, while the Syrian military said three military men were killed and three others were injured following the attack, according to Reuters.
• Russia’s chief negotiator in Iranian nuclear talks Ulyanov said an agreement may be reached as early as next week but added that “If amendments, objections appear it is difficult to project further developments now. We have to wait for the beginning of next week”, according to TASS.
• The terms of the EU's Iranian Nuclear deal draft "make it sound like the Biden administration is prepared to make greater concessions", according to Politico.
• Author Salman Rushdie was stabbed several times on Friday at a conference near Buffalo New York and was rushed to hospital, while a Hezbollah official said the group does not know anything about the attack and VICE World News separately reported that the suspect had been in contact with Iran's Revolutionary Guard.
• EU called for Serbia and Kosovo abandon their war rhetoric as the EU and NATO prepare to hold crisis talks with the rivals this week in an effort to avoid fresh conflict in the Balkans, according to FT.
• Russian President Putin told North Korean leader Kim in a letter that Russia and North Korea will expand bilateral ties, according to KCNA.

APAC TRADE

EQUITIES

• APAC stocks were mixed with markets focused on China, as the PBoC’s surprise 10bps rate cuts to its 1-year MLF rate and 7-day Reverse Repo was overshadowed by the latest activity data from China in which both Industrial Production and Retail Sales fell short of market expectations.
• ASX 200 was positive with upside led by tech and miners amid a busy schedule of earnings this week and with Bluescope Steel firmly higher after its FY net more than doubled.
• Nikkei 225 outperformed and was unfazed by the Japanese GDP data for Q2 which printed weaker-than-expected but returned to expansion territory.
• Hang Seng and Shanghai Comp swung between gains and losses with early support after the PBoC delivered surprise 10bps rate cuts for the 1-year MLF and 7-day Reverse Repo rates, although Chinese stocks then slipped back into the red after disappointing Chinese activity data
• US equity futures were steady and plateaued after Friday's data-driven gains.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 future +0.3% after the cash market closed higher by 0.4% on Friday.

FX

• DXY failed to sustain the early gains against its major counterparts and returned flat despite advances in USD/CNY on widening policy divergence between the Fed and the PBoC.
• EUR/USD remained lacklustre and briefly approached Friday's lows with economic and energy concerns stoked by the low water levels at the Rhine River which disrupted shipping operations last week and with the key waypoint expected to steady at extremely low levels this week.
• GBP/USD was subdued alongside weakness across activity currencies and with the government planning a lending scheme for suppliers which would reduce energy bills for households by an extra GBP 400 this winter.
• USD/JPY initially retreated but then pared most of its losses after it found support near 133.00, with price action choppy as participants digested the GDP data which missed forecasts but returned to growth.
• Antipodeans softened after the weak activity data from China and pressure in commodities.

FIXED INCOME

• 10yr UST futures were steady with price action uneventful after last Friday’s curve flattening as the front end was weighed by University of Michigan data, while weekend macro news flow from the US was light with markets looking towards Wednesday’s FOMC Minutes.
• Bund futures were uneventful and stuck in a tight range amid energy and shipping disruption concerns in Germany.
• 10yr JGBs futures eked marginal gains as participants digested the weaker than expected GDP data from Japan but with upside capped alongside the muted performance across global peers.

COMMODITIES

• Crude prices were subdued with pressure from the recent rise in China's COVID-19 cases and weak activity data.
• Saudi Aramco’s CEO said they are working to increase production from multiple energy sources and they will invest in the reliable energy and petrochemicals that the world needs, while he added that global oil demand is healthy in which he expects the recovery in oil demand to continue for the rest of the decade and said that global spare capacity is under 2mln bpd and declining fast. Saudi Aramco’s CEO also stated that Saudi oil production capacity increase will come gradually with a limited increase in 2024 and in 2025 they should go to 12.3mln bpd, as well as noted that they are confident in their ability to ramp up to 12mln bpd whenever there is a call from the government or Energy Ministry, according to Reuters.
• Ukrainian state gas transit operator said Gazprom booked transit capacity of 41.82mcm for August 15th (prev. 40.81mcm on August 14th), according to Reuters.
• Iran set September Iranian light crude prices to Asia at Oman/Dubai + USD 9.50/bbl, according to the National Iranian Oil Company.
• The damaged pipeline at the Louisiana port has been repaired, according to a port spokesman cited by Reuters.
• Germany’s top network regulator warned that Germany must cut gas use by 20% to avoid winter rationing, according to FT.
• Spot gold pulled back after recent gains with the precious ack beneath the USD 1800/oz level.
• Copper extended on Friday's declines with further pressure seen after the weak Chinese activity data.

CRYPTO

• Bitcoin traded higher and briefly reclaimed the 25,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 400bln vs CNY 600bln maturing via 1-year MLF with the rate cut by 10bps to 2.75% (exp. 2.85%), while it conducted CNY 2bln of 7-day reverse repos with the rate cut by 10bps to 2.10%.
• China’s local COVID-19 cases topped 2,000 on Friday despite the recent tighter restrictions and lockdowns, according to Bloomberg.
• Shanghai extended the weekly COVID-19 testing requirement until end-September, although it was also reported that Shanghai announced primary schools, middle schools, kindergartens and nurseries will be permitted to reopen on September 1st, according to a statement cited by Reuters.
• China's stats bureau said China's economy continued a recovery trend in July but the foundation for a recovery is not solid and said the momentum of China's economic recovery slowed in July, while it added that the economy remains resilient despite facing difficulties and they expect China's economy to continue to recover, according to Reuters.

DATA RECAP

• Chinese Industrial Output YY (Jul) 3.8% vs. Exp. 4.6% (Prev. 3.9%)
• Chinese Retail Sales YY (Jul) 2.7% vs. Exp. 5.0% (Prev. 3.1%)
• Chinese Urban Investment (YTD)YY (Jul) 5.7% vs. Exp. 6.2% (Prev. 6.1%)
• Chinese House Prices YY* (Jul) -0.9% (Prev. -0.5%)
• Japanese GDP QQ (Q2) 0.5% vs. Exp. 0.6% (Prev. -0.1%)
• Japanese GDP QQ Annualised (Q2) 2.2% vs. Exp. 2.5% (Prev. -0.5%)

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey told Chancellor Zahawi that he would be "open to a review" of the Bank's mandate, following Liz Truss's criticism of its approach to inflation, according to The Telegraph.
• Reuters poll showed 30 out of 51 economists expect the BoE to hike rates by 50bps to 2.25% next month and the remaining 21 economists expect a 25bps increase.
• UK Treasury plans a government-backed lending scheme for suppliers which would reduce energy bills for households by an extra GBP 400 this winter, according to The Times.
• Two of the biggest UK energy suppliers are calling for a special fund that would allow the industry to freeze customers’ bills for two years and spread the cost of the gas-price crisis over a decade or more, according to The Times. It was also reported that UK energy suppliers called for the UK government to scrap levies and charges on bills, according to FT.

DATA RECAP

• UK Rightmove House Prices MM (Aug) -1.3% (Prev. 0.4%)