• APAC stocks were mixed following a soft Wall St. lead heading into month-end; S&P 500 -0.67%.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down by 0.9% yesterday.
• DXY is back below 109.00, price action in G10 FX is largely contained, EUR/USD hovers around parity.
• Fed's Kashkari (2023 voter) said he was happy to see how Fed Chair Powell's Jackson Hole speech was received.
• Looking ahead, highlights include German HICP (Prelim.), EZ Consumer Confidence (Final), US Consumer Confidence & JOLTS, Speeches from Fed's Williams & Barkin, Supply from Italy.

US TRADE

• US stocks declined in a choppy, rangebound session heading into month-end and amid the UK bank holiday, with US treasuries sold in sympathy with EGBs as yields climbed following the slew of weekend hawkish ECB speak and catch-up to Powell's Jackson Hole speech.
• SPX -0.67% at 4,030, NDX -0.96% at 12,484, DJIA -0.57% at 32,099, RUT -0.89% at 1,883.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kashkari (2023 voter) said in an Odd Lots podcast that he was happy to see how Fed Chair Powell's Jackson Hole speech was received and stock market losses show investors got the message the Fed is serious about tackling inflation.
• Fed’s Vice Chair Brainard said the Fed is to launch the 'FedNow' instant payments system between May and July 2023.
• US FDA is expected to authorize COVID booster shots targeting the most contagious strains as early as Wednesday, according to sources cited by Politico.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian troops broke through Russian defences in several sectors of the front line near Kherson, according to a senior advisor to President Zelensky cited by Reuters.
• Ukraine's Foreign Ministry said the IAEA delegation was expected to arrive in Kyiv and will begin work at Zaporizhzhia nuclear plant in the coming days.
• US National Security Council Coordinator for Strategic Communication spokesperson Kirby called for Russia to agree to a demilitarised zone around the Zaporizhzhia nuclear power plant and said a controlled shutdown of the plant would be safest.
• Ukraine war is reportedly depleting US ammunition stockpiles, sparking concerns among US officials that its military readiness could be jeopardised by the shortage, according to the WSJ.
• Russian Foreign Ministry said the Iranian Foreign Minister will travel to Moscow on Wednesday 31st August to meet with Russian Foreign Minister Lavrov and discuss a slew of issues, including the nuclear deal, according to BBC.

OTHER

• Iran began enriching uranium with one of three cascades of advanced IR-6 centrifuges recently installed at the underground Natanz plant, according to Reuters citing the IAEA report.

APAC TRADE

EQUITIES

• APAC stocks were somewhat mixed as most of the regional bourses recouped some of the prior day’s losses but with gains capped amid a slew of earnings releases and as participants look towards month-end, as well as the upcoming risk events.
• ASX 200 was led higher by the energy sector after recent gains in oil prices which printed a fresh monthly high and with strong earnings from Woodside Energy.
• Nikkei 225 outperformed and reclaimed the psychologically key 28k level.
• Hang Seng and Shanghai Comp were negative with participants digesting earnings releases and amid further COVID-related disruptions as China's Dalian region limited movements for five days and Shenzhen ordered to close the Huaqiangbei subdistrict which is a global electronics sourcing centre.
• US equity futures eked marginal gains overnight amid the improved mood in Asia trade; ES +0.3%
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down by 0.9% yesterday.

FX

• DXY lacked firm direction and remained below the 109.00 level after pulling back from YTD highs, while there was a further endorsement of Fed Chair Powell’s comments last week in which Fed's Kashkari suggested he was happy with how Powell's speech was received and that losses in the stock market show investors got the message that the Fed is serious about tackling inflation.
• EUR/USD was choppy after yesterday’s advances and several flirtations with parity, although the downside was cushioned by the recent hawkish ECB rhetoric.
• GBP/USD briefly slipped back beneath 1.1700 with price action tentative as UK participants return from the bank holiday closure.
• USD/JPY eased off the prior day’s best levels with price action at the whim of yield differentials.
• Antipodeans were lacklustre with AUD not helped by the disappointing Building Approvals data.

FIXED INCOME

• 10yr UST futures nursed yesterday's losses but with upside capped by recent hawkish Fed rhetoric.
• Bund futures partially atoned for the recent sell-off but with upside capped with some ECB officials open to a more aggressive rate move next week. Regional CPI from North Rhine-Westphalia showed a cooling in the M/M rate to 0.3% from 1.1% with the Y/Y rising to 8.1% from 7.8%.
• 10yr JGBs futures rebounded in tandem with global counterparts and despite mixed results at the 2yr JGB auction.

COMMODITIES

• Crude prices traded sideways and held on to most of the prior day's gains with supply concerns stoked by deadly political clashes in Iraq and amid some frictions concerning the Iran nuclear deal.
• China was reported to provide Europe with an energy lifeline through the resale of surplus LNG, according to FT.
• Energy Intel noted there is plenty of speculation on what official selling prices will be in October and that it is too early to say if they will be discounted, raised or kept the same, while Energy Intel's Amena Bakr also suggested to "avoid the noise" about speculation regarding production cuts at the September OPEC+ meeting.
• BP (BP/ LN) said it is making significant progress and is working toward a phased restart of its Whiting refinery (435k BPD). It was later reported that the BP Whiting, Indiana refinery may begin restarting this week, according to Reuters sources.
• UK PM Truss is set to approve a series of oil and gas drilling licences in the North Sea in one of her first acts as PM, should she be elected, according to The Times
• Canada said it is invoking the 1977 pipeline treaty with the US for the second time over Enbridge's (ENB) Line 5 (540k BPD) dispute.
• Sadrist protesters in Iraq reportedly closed the oil production distribution company in Basra and there were explosions in Baghdad's Green Zone from mortars targeting the former PM's residential area, according to Iraqi Day.
• Spot gold lacked direction with price action contained by the indecisive greenback.
• Copper remained pressured amid the cautious mood and with prices not helped by the latest bout of COVID restrictions in China, while LME copper prices tumbled after reopening from the long weekend.
• Ukraine's Agricultural Minister said agriculture exports are to rise to 6.0mln-6.5mln tons in October thanks to unblocked seaports and which would be about double the current level of exports, according to Reuters.

CRYPTO

• Bitcoin traded rangebound and took a breather after having reclaimed the 20,000 level.

NOTABLE APAC HEADLINES

• Chinese Finance Ministry said it will make good use of local government special bonds and strictly curb new local government hidden debt in H2, while it will strive to stabilise employment and prices.
• US President Biden's administration plans to ask Congress to approve an estimated USD 1.1bln arms sale to Taiwan, according to Politico.
• US Senator Blackburn said on Bloomberg TV that it may be time to revisit the 'One China' policy and that her referring to Taiwan as a country was intentional.
• US companies' business outlook for China sunk to a record low, driven by tense diplomatic relations and regulatory crackdowns, according to the US-China Business Council's annual survey cited by Nikkei.

DATA RECAP

• Australian Building Approvals (Jul) -17.2% vs. Exp. -2.0% (Prev. -0.6%, Rev. -0.6%)
• Australian Private House Approvals (Jun) 0.7% (Prev. -2.7%, Rev. -1.8%)