• APAC stocks traded positive after the advances in global peers including on Wall St; S&P 500 +1.1%. 
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.2% after the cash market closed up by 2.1% yesterday.
• DXY remains on a 108 handle, EUR/USD sits north of 1.01, GBP/USD briefly breached 1.17 and JPY narrowly leads G10 FX.
• Crude was choppy amid ongoing supply-related concerns, demand pressures and fresh China lockdowns.
• Looking ahead, highlights include UK jobs, German ZEW, US CPI, Supply from Italy & the US.

US TRADE

• US stocks were firmer as participants positioned into Tuesday's CPI, accompanied by a softer Dollar and broader risk appetite, while there was early outperformance towards tech stocks amid an initial fall in yields, although that unwound into the close as bonds dipped back lower after poor 3yr and 10yr auctions.
• SPX +1.09 at 4,111, NDX +1.20% at 12,739, DJIA +0.72% at 32,383, RUT +1.23% at 1,906.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Senate Majority Leader Schumer said negotiations continue on a stopgap funding bill.

GEOPOLITICS

RUSSIA-UKRAINE

• Kremlin said Russia will press on until it achieves all its goals in Ukraine, according to FT.
• US Secretary of State Blinken said the latest counteroffensive by Ukraine has benefitted from US support and they have seen significant progress by Ukrainians but it is early days and Russians still have very significant forces in Ukraine, according to Reuters.
• US senior military official said many retreating Russian forces have crossed the border into Russia and that Russia has largely ceded gains near Kharkiv, according to Reuters.

CHINA-TAIWAN

• Chinese President Xi Jinping is expected to stack the country's senior military leadership during next month's Communist Party congress with loyalists aligned on his goal of unifying Taiwan and the mainland, according to Nikkei.

OTHER

• US Secretary of State Blinken said Iran's response to EU proposal on nuclear deal makes prospects for an agreement in the near term unlikely, according to Reuters.
• Twitter sources reported fighting in the Kalbajar-Lachin border regions between Azerbaijan and Armenia, while Armenia's Foreign Minister was said to have informed Russian Foreign Minister Lavrov about the situation resulting from Azerbaijan's aggression. Furthermore, Tehran Times reported that Azerbaijan's Defence Ministry said a number of its forces were killed in an exchange of fire with Armenian forces, while US Secretary of State Blinken commented that the US is deeply concerned about reports of attacks along the Armenia-Azerbaijan border and urged an end to any military hostilities along the border immediately.
• Armenia officially goes to Russia to activate the Treaty of Friendship and Cooperation, which includes mutual defense, according to Al Jazeera citing Armenian media.

APAC TRADE

EQUITIES

• APAC stocks traded positive after the advances in global peers including on Wall St. where sentiment was helped by slowing inflation expectations, although gains were capped ahead of US CPI data and amid further China COVID woes.
• ASX 200 reclaimed the 7,000 level with advances led by the commodity-related sectors and with the risk tone also helped by an improvement in business and consumer sentiment data.
• Nikkei 225 marginally gained amid hopes of further supportive measures with Japan to potentially implement a nationwide travel incentive this month.
• Hang Seng and Shanghai Comp were slightly firmer but with upside contained after fresh COVID restrictions including in Sanhe near Beijing and with Shijiazhuang city in Hebei also locking down a district due to coronavirus.
• US equity futures were steady as participants await the key US inflation data. ES +0.1%.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.2% after the cash market closed up by 2.1% yesterday.

FX

• DXY was lacklustre after the prior day’s losses and a brief dip beneath 108.00 amid the positive risk tone in stocks and cooling NY Fed Consumer Inflation Expectations, while the focus turns to the looming US CPI data.
• EUR/USD traded rangebound above parity after central bank rhetoric continued to suggest further rate increases ahead.
• GBP/USD held on to most of the prior day’s gains but with further upside capped by resistance around the 1.1700 level and with senior UK officials reportedly downplaying the recent EU offer on Brexit.
• USD/JPY lacked firm direction and was stuck beneath 143.00 following mixed PPI data.
• Antipodeans were subdued with AUD hampered after a recent failed approach toward the 0.6900 handle.
• PBoC set USD/CNY mid-point at 6.8928 vs exp. 6.9080 (prev. 6.9098)

FIXED INCOME

• 10yr UST futures found reprieve from yesterday’s late selling pressure in the aftermath of the weak US 3yr and 10yr auction results, with the overnight rebound helped by positioning heading into the US CPI data.
• Bund futures were subdued after pulling back from yesterday’s peak near 144.50 although the downside was stemmed amid uncertainty regarding the magnitude of future rate hikes by the ECB.
• 10yr JGBs futures traded higher with further upside seen following the improved demand at the 5yr auction.

COMMODITIES

• Crude was choppy amid ongoing supply-related concerns, demand pressures and fresh China lockdowns.
• Iraq set October Basrah medium crude price to Asia at + USD 1.40/bbl vs Oman/Dubai average (prev. +5.10); to Europe at - USD 9/bbl vs dated brent (prev. -8.10), to North & South America at - USD 2.10/bbl vs ASCI (unch.).
• Iraq will start sending oil to Jordan from next Monday, according to Bloomberg.
• Barclays said it remains constructive on oil prices despite intensifying headwinds to demand, as the supply side remains supportive, according to Reuters.
• Morgan Stanley cut its Brent oil forecast by USD 12 to USD 98/bbl for Q3, according to Bloomberg.
• Spot gold was contained amid an uneventful dollar.
• Copper traded flat as tailwinds from the positive risk appetite were offset by China's COVID woes.

CRYPTO

• Bitcoin was subdued overnight although remained above the 22,000 level.

NOTABLE APAC HEADLINES

• China's city of Sanhe near Beijing is reportedly to be under lockdown for 4 days, while Shijiazhuang city in Hebei province locked down a district due to coronavirus.
• China Securities Daily noted that analysts expect the PBoC to maintain the MLF rate.
• Japan may implement a nationwide travel incentive this month, according to Kyodo.

DATA RECAP

• Japanese Corp Goods Price YY (Aug) 9.0% vs. Exp. 8.9% (Prev. 8.6%, Rev. 9.0%)
• Japanese Corp Goods Price MM (Aug) 0.2% vs. Exp. 0.4% (Prev. 0.4%, Rev. 0.7%)
• Japanese Business Survey Index* (Q3) 1.7% (Prev. -9.9%)
• Australian NAB Business Confidence* (Aug) 10 (Prev. 7, Rev. 8)
• Australian NAB Business Conditions* (Aug) 20 (Prev. 20, Rev. 19)
• Australian Westpac Consumer Sentiment Index (Sep) 84.4 (Prev. 81.2)

EU/UK

NOTABLE HEADLINES

• UK shops have announced that they will close on September 19th as a mark of respect for Queen Elizabeth II, according to the Telegraph.
• UK Chancellor Kwarteng told Treasury officials to adapt to a new approach focused on boosting GDP to 2.5%, the long-term average pre-GFC, ahead of the mini-Budget announcement next week which includes tax cuts and increased borrowing, according to FT.
• UK and EU are reportedly seeking to avoid a September 15th legal deadline over ‘grace periods’ becoming a flashpoint in talks, according to officials from both sides cited by the FT.
• The EU is delaying plans to cut the use of pesticides amid food production fears and subsequent price increases as a result, according to the FT.