• APAC stocks were mostly positive after the relief rally on Wall St where a lower yield environment and declines in oil prices underpinned risk appetite.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.5% after the cash market closed up by 0.1% yesterday.
• DXY is back on a 109 handle, antipodeans lag, EUR/USD hovers just below parity, GBP/USD sits just above 1.15.
• Crude nursed some of the recent losses after falling to post-Ukraine lows but with the overnight rebound kept thin following lockdown extensions in China.
• Looking ahead, highlights include US IJC, ECB Announcement, Speeches from ECB's Lagarde, Fed's Powell, Evans, Kashkari & BoC's Rogers.

US TRADE

• US stocks rallied with a bias towards higher risk stocks which saw the Nasdaq-100 and Russell 2k outperform as growth and tech benefitted from softer yields, while energy was the laggard after oil prices fell to fresh post-Ukraine lows against the backdrop of EU price cap proposals and China lockdowns.
• SPX +1.84% at 3,980, NDX +2.07% at 12,259, DJIA +1.40% at 31,581, RUT +1.66% at 1,822.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Beige Book stated that price levels remained highly elevated although nine districts reported some degree of moderation in their rate of increase. Furthermore, economic activity was unchanged on balance since early July and five districts reported slight to modest growth in activity, while five others reported slight to modest softening.
• Fed's Brainard (voter) said rates will need to rise further and policy will need to be restrictive "for some time", while she added that they need "several months of low monthly inflation readings" to be confident that inflation is moving down to 2%.
• Fed's Barr (voter) said the Fed is conducting a "holistic" review of capital tools and will inform of adjustments, if any, to the supplementary leverage ratio, countercyclical capital buffer and stress tests.
• US SEC will propose rules next week on US treasuries market trading and clearing, according to a notice cited by Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• US Envoy to UN accused Russia of filtration of Ukrainians to prepare for an attempted annexation, according to Reuters.
• UN and Russian officials met in Geneva to discuss Russian grain and fertiliser exports, while talks were said to be positive and constructive, according to a UN spokesperson.

CHINA-TAIWAN

• Taiwan President Tsai told visiting US lawmakers that Taiwan will continue to work with the US to forge closer trade and economic ties, while US Representative Stephanie Murphy told Taiwan President Tsai that Congress should advocate for greater Taiwanese participation in international organisations when appropriate. Furthermore, Murphy said one of the most important things Congress can do is deepen economic relations with Taiwan including through a high-quality free trade agreement between the US and Taiwan.
• US National Security Advisor Sullivan is to meet with lawmakers on Taiwan and said some elements of the proposed Taiwan security bill "give us some concern", while he noted that China invading Taiwan is a "distinct threat", according to Bloomberg.
• US House Panel is to hold a September 14th hearing on US-Taiwan trade.

OTHER

• US Senator Cardin said there have been active discussions on how the transfer of Iran's enriched uranium to Russia is going to be handled in light of sanctions against Russia and there are some conflicting provisions that have to be resolved before any deal.
• South Korea offered talks with North Korea on the reunion of separated families, according to Yonhap. South Korean unification minister said they will take into account the preference of North Korea for the date, venue and agenda of talks, while the official added that South Korea will continue to suggest talks even if North Korea rejects them.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive after the relief rally on Wall St where a lower yield environment and declines in oil prices underpinned risk appetite, although Chinese markets underperformed on COVID woes.
• ASX 200 was positive with tech and gold miners leading the advances across nearly all sectors aside from energy after the recent fall in oil.
• Nikkei 225 surged towards the 28,000 level with sentiment lifted following the larger-than-expected upward revisions to Q2 GDP.
• Hang Seng and Shanghai Comp underperformed their regional peers after the megacity of Chengdu extended its lockdown in most areas and Shenzhen also temporarily lowered its entry quota for Hong Kong travellers amid a resource squeeze from the ongoing outbreak.
• US equity futures took a breather but held on to the spoils from yesterday's relief rally. ES +0.2%.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.5% after the cash market closed up by 0.1% yesterday.

FX

• DXY was steady overnight but remained beneath the 110.00 level after recent declines which coincided with softer yields and a rebound in risk appetite.
• EUR/USD slightly eased to below parity with focus turning to the looming ECB policy decision.
• GBP/USD marginally pulled back but with downside stemmed by support around 1.1500.
• USD/JPY was choppy after recent momentum was stalled by resistance just shy of 145.00
• Antipodeans were subdued following weaker manufacturing sales data from New Zealand and comments from RBA Governor Lowe that the case for a slower pace of rate hikes becomes stronger as the level of the Cash Rate increases.
• PBoC sets USD/CNY mid-point at 6.9148 vs exp. 6.9204 (prev. 6.9160)
• Russia said CNY is the main alternative to the USD and EUR, according to RBC.

FIXED INCOME

• 10yr UST futures extended on gains amid softer yields and with recent declines in oil prices helping ease some of the inflationary pressures.
• Bund futures remained firmer heading into the ECB announcement and with further upside across global bond futures following comments from RBA Governor Lowe.
• 10yr JGBs futures tracked the upside in global peers and with prices helped by stronger demand at the enhanced liquidity auction for longer-dated JGBs.

COMMODITIES

• Crude nursed some of the recent losses after falling to post-Ukraine lows but with the overnight rebound kept thin following the lockdown extensions in China.
• US Private Energy Inventory (bbls): Crude +3.6mln (exp. -0.3mln), Distillates +1.8mln (exp. +0.5mln), Gasoline -0.8mln (exp. -1.7mln), Cushing -0.8mln.
• EIA STEO 2022 world oil demand growth forecast was raised by 20k BPD to +2.1mln BPD Y/Y and 2023 world oil demand growth forecast was cut by 90k BPD to +1.97mln BPD, while 2022 US crude oil production forecast was cut to +540k BPD at 11.79mln BPD (prev. +610k BPD) and 2023 forecast at +840k BPD at 12.63mln BPD (prev. +840k BPD).
• Poland has called for the EU to prioritise other measures over windfall taxes on power producers, according to the FT. The report frames it as a sign of divisions in Brussels.
• Indian and Chinese oil purchases have offset most of the decline in Russian shipments to Europe, according to an FT analysis.
• UK is to scrap its fracking ban on Thursday, according to The Telegraph. UK is to announce dozens of new North Sea Oil and Gas exploration licences to boost domestic production, according to Reuters sources who suggested it could be as many as 130.
• Italy reportedly proposed a measure to apply gas price caps in all European hubs ahead of the September 9th EU energy summit, according to Reuters citing a document.
• Spot gold was rangebound with prices contained as the dollar composed itself after recent selling.
• Copper gradually edged higher amid the mostly constructive risk tone and with workers voting for a strike in Chile's largest copper mine.
• Workers at Chile's Escondida copper mine vote to strike over safety concerns, while BHP earlier commented it was compliant at the Chile mine and any labour stoppages would be unlawful.

CRYPTO

• Bitcoin was marginally softer but off this week's lows after having reclaimed the 19,000 level.

NOTABLE APAC HEADLINES

• US President Biden delayed the decision on Trump-era tariffs on China, according to Bloomberg.
• The 14 nations in the US-led Indo-Pacific Economic Framework will consider creating a formal system for sharing semiconductor devices, medical products and other vital supplies during international emergencies, according to Nikkei.
• RBA Governor Lowe said further rate rises will be required but they are not on a preset path and said the case for a slower pace of rate hikes becomes stronger as the level of the Cash Rate increases. Lowe also commented that demand has to grow more slowly to bring it back in line with supply and there is a significant demand element to higher inflation, while he added it is very possible that wage growth does not pick up much further and said quantitative tightening is not on the agenda.

DATA RECAP

• Japanese GDP Revised QQ (Q2) 0.9% vs. Exp. 0.7% (Prev. 0.5%)
• Japanese GDP Rev QQ Annualised (Q2) 3.5% vs. Exp. 2.9% (Prev. 2.2%)
• Australian Trade Balance G&S (AUD) (Jul) 8.7B vs. Exp. 14.5B (Prev. 17.7B)
• Australian Goods/Services Exports (Jul) -10% (Prev. 5%)
• Australian Goods/Services Imports (Jul) 5% (Prev. 1%)
• New Zealand Manufacturing Sales (Q2) -4.9% (Prev. -3.5%)

EU/UK

NOTABLE HEADLINES

• UK PM Truss is set to unveil today a GBP 150bln package to freeze energy bills for up to two years with household bills set to be limited to GBP 2,500, according to The Times
• UK recruiters said hiring slowed in August and pay growth was the slowest in more than a year, according to data from the REC cited by Reuters.
• UK RICS reported the lowest expected sales balance since 2012 and the weakest new buyer enquiries since April 2020, according to Reuters.

DATA RECAP

• UK RICS Housing Survey (Aug) 53 vs. Exp. 61 (Prev. 63, Rev. 62), lowest since January 2021.