• European bourses are under pressure amid the weekend's central bank hawkishness, Euro Stoxx 50 -1.5%; note, FTSE 100 away for a Bank Holiday.
• US futures are similarly subdued, ES -1.0%, in tandem with Europe as specific updates are somewhat limited ahead of a packed week of data.
• DXY neared 109.50 but has since pulled back below the 109.00 mark with peers under pressure across the board and the JPY lagging.
• EGBs slump following weekend Central Bank updates from ECB officials which follow on from and continue the tone of Friday's hawkish sources
• Crude contracts have been choppy on the first trading day of the week, awaiting JCPOA/Nord Stream updates
• Looking ahead, highlights include ECB's Lane & Fed's Brainard, UK Bank Holiday.

As of 11:15BST/06:15ET

LOOKING AHEAD

• ECB's Lane & Fed's Brainard, UK Bank Holiday.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Ministry said on Saturday that Ukrainian forces shelled the Zaporizhzhia nuclear power plant three times over 24 hours and that Russian ground-based artillery destroyed a large ammunition depot in the Dnipropetrovsk region containing US-made HIMARS rockets and shells for the M777, according to Reuters. It was also reported that Russian air forces hit a Motor Sich factory in Ukraine’s Zaporizhzhia region where helicopters were being repaired, according to RIA citing the Defence Ministry.
• US State Department said Russia decided to block consensus on the final document at the conclusion of the 10th review conference of the nuclear non-proliferation treaty after weeks of talks as it did not want to acknowledge the grave radiological risk at the Zaporizhzhia nuclear power plant in Ukraine, according to Reuters.
• EU is to suspend the visa travel agreement on preferential treatment with Russia as a first step to curb Russian travel permits, according to FT. There were also comments from EU’s foreign policy chief Borrell that he doesn’t think a visa ban for all Russians would have the required unanimity among EU foreign ministers, according to ORF TV.
• IAEA mission has not informed Russian-backed authorities about the visits to Zaporizhzhya nuclear power plant, according to a Russian-backed official.
• Russian Defence Ministry says Ukraine attempted to attack the Zaporizhzhia nuclear plant with a drone that was shot down near the nuclear waste enclosure, via Tass; no serious damage to the nuclear plant.

CHINA-TAIWAN

• US officials said that two US Navy warships passed through the Taiwan Strait which was the first time since the heightened tensions from House Speaker Pelosi’s visit to Taiwan and National Security Council spokesperson Kirby said the transition through the Taiwan Strait was very consistent with the US policy of a free and open Indo-Pacific. There were also comments from China’s military that it was monitoring US Navy vessels sailing through the Taiwan Strait and it is maintaining a high alert and is ready to defeat any provocations, according to Reuters.
• Taiwan Defence Ministry said China is still carrying out military activities around the island and that it detected 23 Chinese aircraft and 8 Chinese ships around Taiwan on Sunday, according to Reuters.
• UK Foreign Secretary Truss is to declare China an official security threat under plans for a tougher approach to Beijing, according to The Times.
• Russia and China will conduct a series of military exercises this week in a sign of deepening ties between the two nations, according to FT.

IRAN

• Iran state-run Nour News said it would take until at least September 2nd to respond to US comments on an EU-drafted text aimed at salvaging the 2015 pact as it carefully reviews the US' response at the expert level.
• Iranian President says Iran is determined to broaden cooperation with China in various fields, via Tehran Times; "We are in the process of completing the procedures for obtaining full membership in the Shanghai Economic Cooperation Organization". Adds, a meeting with US President Biden is "futile and useless".
• WSJ's Norman writes, on the commentary from Iranian President Raisi re. JCPOA that "...there’s a hint here he’s unhappy with safeguards language in the EU text & wants to push again for a guarantee." Adds, "That looks awfully like demanding an upfront guarantee that safeguards probe will be resolved in the JCPOA revival text. IF that’s where Iran now is, then we’ve come full circle back to start of Vienna talks & deal looks far less likely. "

CENTRAL BANKS

• ECB’s Schnabel said both the likelihood and the cost of current high inflation becoming entrenched in expectations are uncomfortably high and said that central banks need to act forcefully in this environment, according to Reuters.
• ECB’s Villeroy said a significant rate increase is needed in September and that they should get rates to neutral by year-end with neutral somewhere between 1.00%-2.00%, according to Reuters.
• ECB’s Kazaks said the ECB should discuss 50bps and 75bps hikes in September and that a 50bps rate increase is the least the bank should do, while he added that Euro zone recession risk is substantial and a technical recession is likely, according to Reuters.
• ECB’s Rehn said its action time for the ECB with a weak Euro a key point and that a ‘significant’ hike in interest rates is needed in September, while he added it is too early to publicly discuss quantitative tightening, according to Bloomberg.
• SNB’s Jordan said there is no need to adjust the definition of price stability or broaden SNB’s mandate, while he added they are prepared to act decisively if price stability is at threat and that unconventional monetary policy instruments are likely to continue to have an important part to play in Switzerland, according to Reuters.
• BoJ Governor Kuroda reiterated the view regarding transitory inflation in Japan in which he stated they have 2.4% inflation but is almost wholly caused by rising international commodity and food prices, while they expect inflation to approach 2% or 3% by year-end but decelerate again to 1.5% next year.
• BoK Governor Rhee said it is premature to say inflation has peaked and that rates will increase until it is clear that inflation is falling. Rhee also commented they will intervene in FX markets if speculative forces are seen and that the KRW’s movement is in line with EUR and other major currencies, while he noted that a weakening KRW from the rally in USD is a bad factor for inflation and that BoK policy tightening is unlikely to end before the Fed, according to Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are under pressure amid the weekend's central bank hawkishness, Euro Stoxx 50 -1.5%; note, FTSE 100 away for a Bank Holiday.
• US futures are similarly subdued, ES -1.0%, in tandem with Europe as specific updates are somewhat limited ahead of a packed week of data.
• Qualcomm (QCOM) - USD 991mln fine against the Co. which was rejected by an EU court will not be appealed by EU antitrust regulator, according to Reuters sources
• Click here for more detail.

FX

• DXY printed a fresh YTD peak just shy of 109.50 overnight as APAC players reacted to the Jackson Hole Symposium, but the index then pulled back below 109.
• G10s are pressured to varying degrees but EUR/USD has been trimming losses though remains under parity as the DXY wanes.
• JPY is the clear laggard as the widening FOMC-BoJ pricing lifted USD/JPY to test 139.00 to the upside, ahead of the YTD peak at 139.39.
• The Yuan was in focus in APAC hours as USD/CNH topped 6.9000 before finding resistance around 6.9300.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• EGBs slump following weekend Central Bank updates from ECB officials which follow on from and continue the tone of Friday's hawkish sources
• At worst, Bunds lower by over 200 ticks while USTs have stabilised somewhat near lows of 116.26+ with yield curves elevated but somewhat mixed directionally.
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COMMODITIES

• WTI and Brent contracts have been choppy on the first trading day of the week; gains are capped by risk aversion.
• Spot gold remains pressured under its 21 DMA (1,766/oz), 50 DMA (1,763/oz) and 10 DMA (1,749/oz).
• Copper declined in APAC hours, whilst the LME is closed today due to the UK bank holiday.
• Austrian Chancellor Nehammer called for an EU-wide cap on power prices and said they must decouple the price of electricity from the gas price and bring it closer to actual production costs, while he added that they must finally stop the madness that is occurring in energy markets and cannot let Russian President Putin determine the European power price, according to Reuters.
• US temporarily waived truck driver hours of service rules to transport fuel to Illinois, Indiana, Michigan and Wisconsin following the unanticipated shutdown of BP’s Whiting refinery, according to Reuters.
• Ukraine PM Shmyhal said Ukraine will permit merchant sailors to leave Ukraine if they receive approval from their local military administrative body, according to Reuters.
• UN Coordinator for the Black Sea Grain Initiative said Ukrainian silos are still stocked with millions of tonnes from previous harvests and that much more grains need to shift to provide room for the new harvest, according to Reuters.
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NOTABLE HEADLINES

• UK Tory leadership frontrunner Truss is reportedly mulling cutting the 20% VAT by 5% across the board to help ease the cost-of-living pressures under a nuclear option, while other options include a more modest 2.5% reduction, according to a source cited by The Telegraph. Furthermore, Truss is under renewed pressure to outline the cost-of-living support with Tory MPs voicing increasing concerns regarding the impact of higher energy prices on households and small businesses, according to FT.
• A senior economist warned that UK Foreign Secretary and Tory leadership front runner Truss's plan to cut tens of billions of pounds in VAT would crash public finances, according to The Times citing the Institute of Fiscal Studies Director.
• UK corner shops are calling for government support to offset energy costs and have warned that thousands risk going out of business if the government doesn’t provide support, according to FT.
• Goldman Sachs sees the UK economy entering a recession in Q4 and said the recession will be mild, while it lowered its 2022 GDP forecast to 3.5% from 3.7% and the 2023 GDP forecast to 0.6% from 1.1%.
• S&P affirmed Austria at AA+; Outlook revised to Stable from Positive.

NOTABLE US HEADLINES

• US Senator Warren said she is very worried that the Fed will tip the economy into a recession and said that high prices and millions of people out of work are worse than high prices and a strong economy, according to Reuters.
• White House believes new COVID-19 vaccines will be key in controlling a potential surge in the fall and a new COVID-19 booster shot campaign is anticipated to begin in early September.
• Tesla (TSLA) CEO Musk says "we do need to use oil and gas in the short term", some additional oil and gas exploration is warranted. Thinks by 2030 almost half of all cars made will be electric; thinks some 80% will be electric by 2035. Hopes to announce another TSLA plant location this year, no shortage of battery raw materials.
• Click here for the US Early Morning Note.

CRYPTO

• Monetary Authority of Singapore is considering further measures to reduce the harm to consumers from cryptocurrency trading and MAS will issue public consultation on new measures by October, according to Reuters.

APAC TRADE

• APAC stocks took their cue from Friday's sell-off on Wall St amid higher yields and following hawkish central bank rhetoric from Jackson Hole including from Fed Chair Powell.
• ASX 200 was pressured as underperformance in tech led the declines across all sectors and with better-than-expected Retail Sales doing little to brighten the mood.
• Nikkei 225 gapped beneath the 28K level and shed around 800 points despite a weaker currency and reports of a potential further easing of COVID restrictions.
• Hang Seng and Shanghai Comp declined at the open although losses in the mainland were stemmed after Sichuan resumed power to most industries and participants digested a deluge of earnings releases, while the US and China reached a preliminary agreement on audit inspections.
• Agricultural Bank of China (1288 HK) - H1 2022 (CNY): net profit 128.95bln vs. prev. Y/Y 122.3bln. Will support local government efforts to complete construction of properties.

NOTABLE APAC HEADLINES

• Chinese authorities informed the US Department of Agriculture that Chinese customs will suspend meat imports transported by Tyson Fresh Meat (TSN) from Monday after its pig trotters failed inspection, according to Global Times.
• Huaqiangbei, China has been ordered to shut between Monday and Thursday to contain a new COVID outbreak, via SCMP.
• Moody's affirms China at A1, maintains Stable outlook. Driven by assessment that core strengths of the credit profile are likely to remain in the medium-term.

DATA RECAP

• Chinese Industrial Profits YTD YY (Jul) -1.1% (Prev. 1.0%)
• Australian Retail Sales MM Final (Jul) 1.3% vs. Exp. 0.3% (Prev. 0.2%)