• Stocks in Europe have clambered off worst levels with the region now trading mixed on the eve of the FOMC following the initial Russian-induced downside
• US equity futures are modestly firmer, but near the unchanged mark overall
• USD bid on risk-aversion pre-FOMC, though the DXY has since eased from the fresh YTD high at 110.87
• The concerted initial bid for core benchmarks has waned with yields subdued
• Crude propped up by the Russian rhetoric and relatively resilient to the paring of initial moves elsewhere
• Specifically, Russian President Putin declared a partial mobilisation and used "nuclear" language in a threat to the west
• Looking ahead, highlights include the FOMC Policy Announcement & Press Conference

As of 11:00BST/06:00ET

LOOKING AHEAD

• FOMC Policy Announcement/Press Conference.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin, in his televised speech to the nation this morning, announced that partial mobilisation will begin today (September 21st) whilst threatening the west with “All means of destruction, including nuclear ones”, and warned that this is not a bluff. The Russian Defence Minister Shoigu was interviewed in the minutes after Putin and suggested Russia is not fighting just against Ukraine, but NATO and the collective West. Full Newsquawk analysis, details and reaction available here
• "Negotiations with Ukraine will become impossible after the entry of Donbass into Russia", according to Tass citing the head of the State Duma Committee on International Affairs.
• Ukrainian President Zelensky said the situation on the front-line clearly shows the initiative belongs to Ukraine and said their positions do not change because of noise or announcements from somewhere when referring to "noisy news from Russia", according to Reuters.
• US Secretary of State Blinken tweeted that any Russian sham “referenda” in Ukraine would be illegitimate and an affront to the principles of sovereignty and territorial integrity that are the foundation of the UN Charter, while he added the US and the international community will never recognise Russia's claims to any purportedly-annexed parts of Ukraine.
• US senior US State Department official said the US made it clear there will be increased consequences on Russia if it goes ahead with plans to annex parts of Ukraine, according to Reuters.

CHINA-TAIWAN

• China's Taiwan Affairs Office spokesperson said China is willing to make the utmost effort to strive for peaceful unification, according to Reuters.

EUROPEAN TRADE

EQUITIES

• Stocks in Europe have clambered off worst levels with the region now trading mixed on the eve of the FOMC following initial Russian-induced downside.
• Overall sectors are now more mixed, and the earlier defensive bias has somewhat dissipated.
• Stateside, after the dust settled and earlier moves have been trimmed, with US equity futures now trading on either side of the unchanged mark.
• Click here for more detail.

FX

• USD bid on risk-aversion pre-FOMC, though the DXY has since eased from the fresh YTD high at 110.87.
• Amidst this, the EUR slipped below 0.99 and away from hefty OpEx with G10 peers broadly softer amid the above USD move.
• However, petro-fx bucks the trend given the pronounced crude rally and has seen the CAD and NOK derive modest upside.
• PBoC set USD/CNY mid-point at 6.9536 vs exp. 6.9539 (prev. 6.9468).
• BoC's Beaudry said the bank will continue to do whatever is necessary to restore price stability and maintain confidence it can meet the 2% target, while Beaudry thinks August inflation data is still too high but added that the data shows we are headed in the right direction. Beaudry also stated that to avoid de-anchoring and to bring inflation sustainably back to target, some suggested a substantial slowdown or even a recession be engineered.
• Click here for more detail.

FIXED INCOME

• A concerted initial bid for core benchmarks driven by broad risk-aversion, lifting Bund to a unsuccessful test of 142.00 briefly.
• Though, as action settles post-Putin and pre-Fed EGBs have backed away from best levels though retain a positive foothold.
• Note, it is worth caveating that today's upside is well within existing parameters for the week - given the pronounced hawkish action on Tuesday.
• 10 year T-note is hovering on the 114-00 handle within a 114-07+/113-27+ band and awaiting the Fed & Chair Powell.
• Click here for more detail.

COMMODITIES

• The crude complex has been propped up by the escalation in rhetoric from Russia.
• US Private Inventory Data (bbls): Crude +1.0mln (exp. +2.2mln), Cushing +0.5mln, Gasoline +3.2mln (exp. -0.4mln), Distillates +1.5mln (exp. +0.4mln).
• Spot gold caught a bid despite the firmer Dollar on the back of post-Putin haven demand.
• LME copper has given up its earlier gains as the Dollar gained and sentiment soured.
• Click here for more detail.

CRYPTO

• Crypto markets saw a leg lower following the Putin-induced risk aversion, with Bitcoin still under the USD 19,000 mark.

NOTABLE EUROPEAN HEADLINES

• UK PM Truss is to tell the UN General Assembly that she will lead a new Britain for a new era and will call on democracies to harness the power of cooperation seen since Russia's invasion of Ukraine "to constrain authoritarianism", according to Downing Street. Furthermore, PM Truss is to tell the UN that Britain will no longer be dependent on those who seek to weaponise the global economy and will argue that the free world must prioritise economic growth and security, according to Reuters and Sky News. Furthermore, PM Truss is to launch a new defence review and call on Russian reparations, according to FT.
• UK PM Truss is to announce plans to cut stamp duty in the mini-budget this week in an effort to drive economic growth, according to The Times.
• ECB SSM member McCaul said the ECB is particularly concerned about banks that are heavily exposed to highly vulnerable corporates with a weak debt servicing capacity.
• ECB's de Guindos said FX rate is one of the most important variables that need to be looked at carefully.

NOTABLE US HEADLINES

• US HHS Secretary declared a public health emergency for Puerto Rico after Hurricane Fiona, while NOAA Hurricane Hunter Aircraft finds Fiona strengthening with strong winds and heavy rains over Turks and Caicos, according to Reuters.

APAC TRADE

• APAC stocks traded lower as the region followed suit to the global risk aversion heading into today’s FOMC policy announcement and amid heightened geopolitical concerns surrounding Ukraine as several separatist regions plan to hold a referendum to join Russia, while Russian President Putin is to address the nation in which many expect him to call for a mobilisation.
• ASX 200 declined with the commodity-related sectors and tech leading the downturn seen across all industries.
• Nikkei 225 was subdued ahead of central bank announcements including the BoJ which began its 2-day meeting.
• Hang Seng and Shanghai Comp were also negative with underperformance in Hong Kong amid tech weakness and with sentiment not helped by the US FCC adding more companies to its national security threat list.

NOTABLE APAC HEADLINES

• Asian Development Bank cut its Developing Asia growth forecast for 2022 to 4.3% from 5.2% and for 2023 to 4.9% from 5.3%, while it cut its China growth forecast for 2022 to 3.35 from 5.0% and for 2023 to 4.5% from 4.8%.
• FCC added China Unicom (762 HK) to its national security threats list.
• North Korean leader Kim sent a message to Chinese President Xi and said that ties with China are to reach a new high stage, according to state media.
• RBA Deputy Governor Bullock said policy is not restrictive as yet and is looking at opportunities to slow hikes at some point, while she noted concerns about the health of China's economy, zero-COVID policy and property market.
• RBA announced its review of the pandemic bond-buying program (BPP) in which it found that it should only be used in extreme circumstances and said it recorded large mark to market losses on BPP bonds in 2021/22, while it plans to hold BPP bonds to maturity and receive face value to offset accounting losses, according to Reuters.

NOTABLE APAC DATA

• Australian Westpac Leading Index MM (Aug) -0.1% (Prev. -0.2%)
• New Zealand Credit Card Spending YY (Aug) 29.4% (Prev. 4.9%, Rev. 5.1%)