• European bourses have dipped from initial mixed/flat performance and are modestly into negative territory, Euro Stoxx 50 -0.5%.
• Stateside, futures are under similar pressure awaiting fresh corporate updates (LOW & TGT thus far) and the July FOMC Minutes, ES -0.6%.
• USD bid but off best with Retail Sales and Minutes ahead, GBP pulls back from initial post-CPI gains, JPY hit on differentials
• Debt retracement continues as yields climb while Sonia drops on further hawkish pricing after UK data
• Crude benchmarks little changed overall awaiting JCPOA developments
• Gold is softer as USD is the haven of choice currently, Aluminium outperforms at Slovalco to close amid elevated energy costs
• Looking ahead, highlights include US Retail Sales, Business Inventories, FOMC Minutes, Supply from the US, and Earnings from Cisco.

As of 11:25BST/06:25ET

LOOKING AHEAD

• US Retail Sales, Business Inventories, FOMC Minutes, Supply from the US, Earnings from Cisco.
• Click here for the Week Ahead preview.

GEOPOLITICS

• China's military is to partake in a military exercise in Russia, their participation has nothing to do with the international situation.
• Taiwan's Defence Ministry says they have detected 21 Chinese aircraft and five ships around Taiwan on Wednesday, via Reuters.
• Iran is calling on the US to free jailed Iranian's, says they are prepared for prisoner swaps, via Fars.

EUROPEAN TRADE

EQUITIES

• European bourses have dipped from initial mixed/flat performance and are modestly into negative territory, Euro Stoxx 50 -0.5%.
• Stateside, futures are under similar pressure awaiting fresh corporate updates and the July FOMC Minutes, ES -0.6%.
• Fresh drivers relatively limited throughout the session with known themes in play and focus on upcoming risk events; stocks also suffering on further hawkish yield action.
• Lowe's Companies Inc (LOW) Q1 2023 (USD): EPS 4.68 (exp. 4.58), Revenue 27.47 (exp. 28.12bln); expect FY22 total & comp. sales at bottom-end of outlook range, Operating Income and Diluted EPS at top-end.
• Target Corp (TGT) Q1 2023 (USD): EPS 0.39 (exp. 0.72), Revenue 26.0bln (exp. 26.04bln); current trends support prior guidance.
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FX

• Greenback underpinned ahead of US retail sales data and FOMC minutes, DXY holds tight around 106.500.
• Pound pegged back after spike in wake of stronger than expected UK inflation metrics, Cable hovers circa 1.2100 after fade into 1.2150.
• Kiwi retreats following knee jerk rise on the back of hawkish RBNZ hike, NZD/USD near 0.6300 from 0.6380+ overnight peak.
• Aussie undermined by marginally softer than anticipated wage prices and lower RBA tightening bets in response, AUD/USD well under 0.7000 vs 0.7026 at one stage.
• Yen weaker as yield differentials widen again, but Euro cushioned by more pronounced EGB reversal vs USTs, USD/JPY probes 21 DMA just below 135.00, EUR/USD bounces from around 1.0150 towards 1.0200.
• Loonie and Nokkie soft amidst latest slippage in oil, USD/CAD closer to 1.2900 than 1.2800, EUR/NOK nudging 9.8600 within 9.8215-9.8740 range.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Debt retracement ongoing and gathering pace ahead of Wednesday's key risk events.
• Bunds now closer to 154.00 than 156.00 and 157.00 only yesterday, Gilts not far from 114.50 vs almost 116.00 and 117.00+ earlier this week and T-note sub-119-00 vs 119-31 at best on Monday.
• Sonia strip hit hardest as markets price in aggressive BoE hikes in response to UK inflation data toppy already elevated expectations.
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COMMODITIES

• Crude benchmarks are currently little changed overall, having recovered from a bout of initial pressure; newsflow thin awaiting fresh JCPOA developments
• Spot gold is little changed overall but with a slight negative bias as the USD remains resilient and outpaces the yellow metal as the haven of choice.
• Aluminium is the clear outperformer amid updates from Norsk Hydro that they are shutting production at their Slovalco site (175k/T year) by end-September, due to elevated energy prices.
• OPEC Sec Gen says he sees a likelihood of an oil-supply squeeze this year, open for dialogue with the US. Still bullish on oil demand for 2022. Too soon to call the outcome of the September 5th gathering. Spare capacity at around the 2-3mln BPD mark, "running on thin ice".
• US Private Inventory Data (bbls): Crude -0.4mln (exp. -0.3mln), Cushing +0.3mln, Gasoline -4.5mln (exp. -1.1mln), Distillates -0.8mln (exp. +0.4mln).
• Shell (SHEL LN) announced it is to shut its Gulf of Mexico Odyssey and Delta crude pipelines for two weeks in September for maintenance, according to Reuters.
• Uniper (UN01 GY) says the energy supply situation in Europe is far from easing and gas supply in winter remains "extremely challenging".
• China sets the second batch of the 2022 rare earth mining output quota at 109.2k/T, via Industry Ministry; smelting/separation quota 104.8k/T.
• Click here for more detail.

NOTABLE HEADLINES

• UK Foreign Minister Truss has commenced formal dispute proceedings against the EU, accusing the bloc of a "clear breach" of the post-Brexit trade agreement, according to the Telegraph.

NOTABLE DATA

• UK CPI YY (Jul) 10.1% vs. Exp. 9.8% (Prev. 9.4%); 0.6% vs. Exp. 0.4% (Prev. 0.8%)
• UK Core CPI YY (Jul) 6.2% vs. Exp. 5.9% (Prev. 5.8%); (Jul) 0.3% vs. Exp. 0.2% (Prev. 0.4%)
• UK ONS House Prices (Jun) +7.8% vs. prev. +12.8%

NOTABLE US HEADLINES

• US President Biden signed the USD 750bln health care, tax and climate bill known as the Inflation Reduction Act into law, according to CNN.

APAC TRADE

• APAC stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings, but with gains capped overnight ahead of the FOMC Minutes and as participants digested another 50bps rate hike by the RBNZ.
• ASX 200 swung between gains and losses with the index indecisive amid a slew of earnings and with strength in the consumer sectors offset by underperformance in tech, energy and healthcare.
• Nikkei 225 climbed above the 29,000 level with the index unfazed by mixed data releases in which Machinery Orders disappointed although both Exports and Imports topped forecasts.
• Hang Seng and Shanghai Comp were somewhat varied with Hong Kong led higher by tech amid plenty of attention on Meituan after reports its largest shareholder Tencent could reduce all or the bulk of its shares in the Co. which a Tencent executive later refuted, while the mainland was less decisive amid headwinds from the ongoing COVID situation and with power restrictions disrupting activity in Sichuan, although reports also noted that Chinese Premier Li told top provincial officials that they must have a sense of urgency to consolidate the economic recovery and reiterated to step up macro policies.

NOTABLE APAC HEADLINES

• RBNZ hiked the OCR by 50bps to 3.00%, as expected, while it stated that conditions need to continue to tighten and they agreed that maintaining the current pace of tightening remains the best means. RBNZ also agreed that further increases in the OCR were required to meet the remit objective and that domestic inflationary pressures had increased since May. Furthermore, the RBNZ raised its projections for the OCR and inflation with the OCR seen at 3.69% in Dec. 2022 (prev. 3.41%) and at 4.1% for both Sept. 2023 and Dec. 2023 (prev. 3.95%), while it sees annual CPI at 4.1% by Sept. 2023 (prev. 3.0%).
• RBNZ Governor Orr stated at the press conference that they are not forecasting a recession but expected below-potential growth amid subdued consumer spending. Governor Orr also stated that they did not discuss a 75bps rate hike today and that 50bps moves have been orderly and sufficient, while he added that getting rates to 4% would buy comfort for the policy committee and that a Cash Rate of around 4% is unambiguously above neutral and sufficient to meet the inflation mandate.
• Chongqing, China is to curb power use for eight days for industry.

DATA RECAP

• Japanese Trade Balance Total Yen (Jul) -1436.8B vs. Exp. -1405.0B (Prev. -1383.8B, Rev. -1398.5B)
• Japanese Exports YY (Jul) 19.0% vs. Exp. 18.2% (Prev. 19.4%, Rev. 19.3%)
• Japanese Imports YY (Jul) 47.2% vs. Exp. 45.7% (Prev. 46.1%)
• Japanese Machinery Orders MM (Jun) 0.9% vs. Exp. 1.3% (Prev. -5.6%)
• Japanese Machinery Orders YY (Jun) 6.5% vs. Exp. 7.5% (Prev. 7.4%)
• Australian Wage Price Index QQ (Q2) 0.7% vs. Exp. 0.8% (Prev. 0.7%)
• Australian Wage Price Index YY (Q2) 2.6% vs. Exp. 2.7% (Prev. 2.4%)