• European bourses are under pressure, Euro Stoxx 50 -1.8%, amid Nord Stream 1 maintenance.
• US futures are in-fitting both in terms of direction and magnitude, ES -1.3%, amid global recession and inflation fears.
• DXY has extended above Friday's peak as EUR/USD probes parity once as safe havens benefit somewhat from the broader tone
• Action that also saw pronounced initial fixed income upside; however, this has waned as inflation implications draw focus
• European gas prices surge amid unscheduled Nord Stream maintenance while crude benchmarks are subdued
• PBoC undertook asymmetric cuts to its LPRs while ECB's Nagel and RBNZ's Hawkesby provided hawkish commentary
• Looking ahead, highlights include Israel Policy Announcement & US National Activity Index.

As of 10:55BST/05:55ET

LOOKING AHEAD

• Israel Policy Announcement & US National Activity Index.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Ministry said Russian Kalibr missiles destroyed an ammunition depot containing missiles for US HIMARS rocket systems in Ukraine’s Odesa region, according to RIA.
• Ukrainian President Zelensky warned of a potential escalation by Russia ahead of Ukraine’s Independence Day on Wednesday, according to WSJ.
• UK PM Johnson, US President Biden, German Chancellor Scholz and French President Macron stressed in a call the importance of ensuring the safety and security of nuclear sites in Ukraine, according to Reuters citing a Downing Street spokesperson.
• US Deputy Treasury Secretary Adeyemo told Turkish Deputy Finance Minister Elitas that Russian entities and individuals are attempting to use Turkey to bypass western sanctions, while they discussed ongoing efforts to implement and enforce sanctions against Russia, according to Reuters.
• UN Secretary-General Guterres said it is important that all governments and the private sector cooperate to bring Russian food and fertilisers to the market, while he added that they are getting more food and fertiliser out of Ukraine and Russia is important to further calm commodity markets and lower prices for consumers. Guterres also said they are working hard with parties to remove obstacles in financing and insurance to enable Russian fertiliser and food exports, according to Reuters.
• The daughter of a prominent supporter of Russian President Putin was killed in a car bomb attack in a suburb near Moscow on Saturday night, according to FT.

CHINA-TAIWAN

• Taiwan’s Defence Ministry said 17 Chinese military aircraft and 5 warships continued activities around Taiwan on Saturday, while it detected 12 Chinese aircraft and 5 ships around Taiwan on Sunday in which 5 aircraft crossed the Taiwan Strait median line, according to Reuters.
• Indiana state governor Holcomb arrived in Taiwan on Sunday night ahead of other scheduled foreign visits to Taiwan this week including a group of Japanese lawmakers on Monday and another US delegation at the weekend, according to FT.

OTHER

• US President Biden's administration has recently been seeking to reassure Israel that it hasn’t agreed to new concessions with Iran and that a nuclear deal is not imminent although Israeli officials said they were not reassured, according to an Axios report citing US and Israeli officials.
• North Korea is expected to conduct a nuclear test before the US mid-term elections, according to Yonhap citing former South Korean spy chief Park Jie-won.
• Iranian Foreign Ministry spokesman, on the Iranian Nuclear deal, said "we are still on the path of negotiations", via Tehran Times; "Relatively good progress has been made, but nothing is agreed until everything is agreed." Adding, if the US responds negatively, will continue with Plan B which is existing foreign policy with serious determination, regardless of JCPOA revival discussions

CENTRAL BANKS

• PBoC 1-Year Loan Prime Rate (Aug) 3.65% vs. Exp. 3.60% (Prev. 3.70%)
• PBoC 5-Year Loan Prime Rate (Aug) 4.30% vs. Exp. 4.35% (Prev. 4.45%)
• ECB’s Nagel said the central bank must keep raising rates even if the risk of a recession increases as inflation will remain too high otherwise and said that Germany could see price growth of over 10% in the coming months, according to Rheinischen Post.
• RBNZ Deputy Governor Hawkesby said the strategy is to get monetary policy conditions comfortably above neutral and that they considered both a 25bps and 75bps hike before deciding to raise by 50bps this month. Hawkesby added that they will have a more balanced view on policy outlook once rates get to 4.00%-4.25% and said there is ambiguity surrounding the Cash Rate peak.
• RBNZ's Richardson said recent strong domestic and inflation pressure was a surprise, while he added that the bank is using full flexibility of its medium-term inflation mandate and that a 25bps rate hike wasn't a major part of the discussion.
• Citi forecasts UK CPI at 18.6% in January (prev. forecast Q1 2023 "above 15%"); scale of inflation will push the BoE to tighten further, via FT.

EUROPEAN TRADE

EQUITIES

• European bourses are under pressure, Euro Stoxx 50 -1.8%, amid Nord Stream 1 maintenance.
• Updates that sparked a continuation of Friday's downbeat price action and has caused particular downside for the likes of Uniper (-10%) while defenisve sectors outperform slightly.
• US futures are in-fitting both in terms of direction and magnitude, ES -1.3%, amid global recession and inflation fears.
• Panasonic (6752 JT) is to increase prices on 17 products from September 1st due to increasing material and manufacturing costs, hike will range between 2-33%.
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FX

• DXY sees a firm start to the week as the index extends gains above 108.00, topping Friday’s peak.
• EUR/USD has again dipped under parity amid jitters over a potential supply disruption as Russia is to shut the Nord Stream 1 pipeline.
• The Antipodeans are the relative outperformers but have waned off best levels amid the broader deterioration in sentiment.
• The JPY has climbed its way up the ranks having experienced mild losses in APAC trade owing to widening yield differentials alongside losses in broad APAC FX.
• Turkey’s Central Bank revised rules for Lira government bond collateral for FX deposits in which it raised the RRR for credit from 20% to 30% for bond collateral, according to Reuters.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• A session of pronounced two-way action for fixed benchmarks as energy and inflation vie for the limelight.
• Initial upside (Bunds tested 152.85 Fib of Friday) occurred as sentiment deteriorate on Nord Stream 1's unscheduled maintenance announcement.
• However, this then swiftly retraced with core benchmarks modestly negative at worst, perhaps as attention pivoted to the associated inflation implications.
• Stateside, USTs have been moving in tandem though the move lower was somewhat more contained as participants look to Jackson Hole at the tail-end of the week.
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COMMODITIES

• WTI and Brent October contracts have continued trending downwards in a resumption of Friday’s action.
• The main focus of this morning has been on European gas prices surging on news that Russia’s Gazprom will shut down the Nord Stream 1 pipeline for three days.
• Dutch TTF October surged over 18% whilst European coal for the next year rose over 5% to a new record.
• Metals markets are hit by the firmer Dollar with spot gold losing further ground under USD 1,750/oz while LME copper eyes USD 8,000/t to the downside
• Libya’s NOC said oil production was running at 1.211mln bpd, while the Waha Oil Co said gas output from the Faragh field increased to 149mcfd on Sunday from 95mcfd on Saturday, according to Reuters.
• Caspian Pipeline Consortium suspended oil loadings from two of three single mooring points at its Black Sea terminal for inspection, while CPC exports continue from the third mooring point and August loadings are currently unaffected, according to Reuters sources. Subsequently confirmed
• Turkey has increased its imports of Russian oil to over 200k BPD so far this year (vs 98k BPD in the same period last year), according to Refinitiv data.
• Norway Prelim. July production: Oil 1.646mln BPD (vs 1.298mln BPD in June); gas 10.9bcm (vs 10.0bcm in June), according to the Norway Oil Directorate.
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NOTABLE HEADLINES

• Workers at UK’s largest container port Felixstowe began an 8-day strike which the union and shipping companies have warned could seriously impact trade and supply chains, according to Reuters.
• UK plans to enable households to get discounts on electricity bills if they cut use at peak times are set to be announced in the next two weeks, according to the BBC. Separately, GPs could write prescriptions for discounts on energy bills for the most vulnerable under a plan drawn up by the Treasury, according to The Guardian.
• Germany is to prioritise coal trains over passenger services amid its energy crisis, according to Welt am Sonntag.
• German Finance Minister Lindner plans to implement a relief package next month, according to Focus.
• Fitch affirmed Estonia at AA-; Outlook revised to Negative from Stable and affirmed Slovakia at A; Outlook revised to Negative from Stable, while Moody’s affirmed Cyprus at Ba1; Outlook revised to Positive from Stable and S&P raised Ukraine to CCC+ from SD.

NOTABLE US HEADLINES

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APAC TRADE

• APAC stocks were mostly lower after last Friday’s declines in stocks and bonds across global markets in the aftermath of red-hot PPI data from Germany which rose by a new record high and stoked inflationary concerns, while the region also digests the PBoC’s latest actions on its benchmark lending rates.
• ASX 200 was pressured with all sectors subdued and as the influx of earnings continued.
• Nikkei 225 declined at the open as it took its cue from global peers and following reports that PM Kishida tested positive for COVID-19, although the index clawed back around half of the losses with help from a weak currency.
• Hang Seng and Shanghai Comp were mixed with early indecision as participants reflected on the PBoC’s rate actions in which it cut the 1-Year LPR by 5bps to 3.65% and reduced the 5-Year LPR by 15bps to 4.30% vs expectations for a 10bps cut to both, while the reduction in the 5-Year LPR which is the reference for mortgages, also followed recent measures to support the construction and delivery of unfinished residential projects through special loan schemes from policy banks. This provided some early support for developers although the broader sentiment was restricted amid the extension of factory power cuts in Sichuan.

NOTABLE APAC HEADLINES

• China’s Sichuan extended its factory power cuts to August 25th, according to Caixin.
  • Japanese PM Kishida tested positive for COVID-19 and is recuperating at his official residence, according to NHK.
  • Singapore PM Lee announced to reduce mask requirements as the COVID-19 situation stabilises with masks to only be required for public transport and healthcare settings with everywhere else optional. PM Lee also confirmed that Deputy PM Wong has been chosen to be the next leader and said authorities will soon announce new initiatives to attract talent, according to Reuters.