• European bourses are pressured across the board after the Flash PMI releases for the region indicate a contraction & resurgence in price pressures; Euro Stoxx 50 -1.5%
• Stateside, futures are lower in sympathy and continuing APAC performance awaiting their own PMI metrics and Fed commentary
• Gilts decimated to sub-99.00 from the 102.30 region in wake of the mini-Budget and accompanying fund consideration and potential inflationary implications
• DXY surging to a fresh 112.3+ peak to the detriment of peers across the board, GBP pressure exacerbated post-Kwarteng
• Crude benchmarks are pressured by pronounced USD strength and risk action amid recessionary fears; awaiting potential weekend updates
• Looking ahead, highlights include US Flash PMIs and a speech from Fed Chair Powell.

As of 11:20BST/06:20ET

LOOKING AHEAD

• Looking ahead, highlights include US Flash PMIs and a speech from Fed Chair Powell.
• Click here for the Week Ahead preview.

UK MINI-BUDGET

• Click here for the newsquawk snap analysis and reaction to the mini-Budget.
• Chancellor Kwarteng says to support the energy market, is announcing a financing scheme with the BoE; energy cap will reduce cost of servicing index-linked debt.
• Estimated cost of energy plan is uncertain, total cost likely to be GBP 60bln over the next six-months; It is right to borrow to fund temporary support, like UK did in COVID pandemic.
• Announced numerous wide-ranging tax reductions/incentives, to be worth GBP 45bln in total.. Full details on the newsquawk headline feed
• UK DMO says net financing requirement for 2022-23 is GBP 234.1bln (April revision: GBP 161.7bln); gross 2022-23 Gilt issuance seen at GBP 193.9bln (vs April revision of GBP 131.5bln). Increased Gilt issuance concentrated on shorter-dated Gilts, DMO to hold one additional conventional Gilt syndication in week of 31st October, for Jan 2038, DMO to hold 13 extra Gilt auctions in the rest of the 2022-23 year.
• Cost of UK Chancellor Kwarteng's fiscal package is GBP 161bln over a five-year period, via Bloomberg.
• UK Chief Secretary to the Treasury says OBR forecast most likely to be published in December; says Government is sticking to its spending review which was published in 2021

GEOPOLITICS

RUSSIA-UKRAINE

• Referendums on Russian annexation begin in occupied Ukrainian territory, according to AFP News Agency.
• Russia's Kremlin says "The negotiation process with Ukraine is required to achieve our goals, but we see no signs of resuming it", via Sky News Arabia.

CHINA-TAIWAN

• G7 Foreign Ministers' statement noted there is no change in G7 policy positions on Taiwan and called for a peaceful resolution of China-Taiwan issues.

OTHER

• US State Department senior official said they have hit a wall on the Iran nuclear deal because of Iran's position and there has been nothing this week indicating Iranians are ready to change. The official said there will be more steps to come after Thursday's sanctions on Iran which will be to help those who are trying to express themselves, while the US is committed to concluding negotiations on the release of detained US citizens in Iran regardless of the fate of the nuclear deal and there is still debate going on with Iran's leadership on whether or not a deal is worth taking.
• US Secretary of State Blinken tweeted that he had a productive conversation with Kyrgyz Foreign Minister Kulubaev at the UN General Assembly on shared goals for regional peace, cooperation and prosperity.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board after the Flash PMI releases for the region indicate a contraction; Euro Stoxx 50 -1.5%
• Pressure that was exacerbated, particularly in the UK, on the mini-Budget and subsequent Gilt/BoE pricing, despite the measures being designed to stimulate the economy.
• Stateside, futures are lower in sympathy and continuing APAC performance awaiting their own PMI metrics and Fed commentary.
• Click here for more detail.

FX

• DXY has surged to a fresh 112.3+ peak to the detriment of peers across the board with the Yuan taking the strain.
• GBP dented post-PMIs/budget despite initial support from BoE pricing as the USD's surge continues.
• Amidst this, EUR has been hit on the flash-PMIs and accompanying commentary around recession fears and a resurgence in price pressures.
• Click here for more detail.
• Click here for OpEx for the NY Cut.

FIXED INCOME

• Gilts decimated to sub-99.00 from the 102.30 region in wake of the budget and accompanying fund consideration and potential inflationary implications
• Action that has sparked a surge in BoE pricing with markets now implying a 50/50 chance of a 100bp increase in November.
• More broadly, EGBs and USTs are dragged down in tandem though seem to have reached a 'floor' ahead of the afternoon's events.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are pressured by pronounced USD strength and risk action amid recessionary fears.
• Additionally, participants are attentive to potential weekend developments with EU member states set to discuss Russian sanctions.
• Russian President Putin spoke to Saudi Crown Prince MBS and discussed the question of coordination to ensure stability in the oil market, while they praised efforts within the OPEC+ framework and confirmed the intention to continue sticking to existing agreements, according to Reuters.
• Metals dented across the board by the USD with base metals in particular hit amid broader sentiment with LME Copper slipping below USD 7.5k/T.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• ECB's Kazaks says they will continue to hike rates, via Bloomberg; adds, faster Fed hikes have weakened the EUR. His choice for the October ECB hike is either 50bps or 75bps.
• UK COVID-19 hospitalisations rose 17% in a week which is the first significant increase since July and is sparking fears of a new wave, according to The Telegraph.

DATA RECAP

• EU S&P Global Composite Flash PMI (Sep) 48.2 vs. Exp. 48.2 (Prev. 48.9) - “The surge in energy costs has meanwhile reignited inflationary pressures which, having shown some signs of cooling in prior months amid easing supply shortages, have reaccelerated."
• EU S&P Global Manufacturing Flash PMI (Sep) 48.5 vs. Exp. 48.7 (Prev. 49.6); Services Flash PMI (Sep) 48.9 vs. Exp. 49.0 (Prev. 49.8)
• UK Flash Composite PMI (Sep) 48.4 vs. Exp. 49.0 (Prev. 49.6) - “Inflationary pressures continue to run higher than at any time in over two decades of survey history prior to the pandemic."
• UK Flash Services PMI (Sep) 49.2 vs. Exp. 50.0 (Prev. 50.9); Manufacturing PMI (Sep) 48.5 vs. Exp. 47.5 (Prev. 47.3)
• UK GfK Consumer Confidence (Sep) -49 vs. Exp. -42.0 (Prev. -44.0); lowest since records began in 1974.
• German S&P Global Composite Flash PMI (Sep) 45.9 vs. Exp. 46.0 (Prev. 46.9) - "a fresh surge in energy prices has seen business input costs rise at a faster rate for the first time in five months.. leading to a renewed acceleration in average prices"; “The German economy looks set to contract in the third quarter, and with PMI showing the downturn gathering in September and the survey’s forward-looking indicators also deteriorating, the prospects for the fourth quarter are not looking good either"
• French S&P Global Composite Flash PMI (Sep) 51.2 vs. Exp. 49.8 (Prev. 50.4) - "Another worrying find from the latest survey was the pickup in inflationary pressures"; "...raising the risk of a recession in France".

APAC TRADE

• APAC stocks were negative in the aftermath of the rush of global central bank rate hikes during 'Super Thursday' and with risk appetite not helped by the absence of participants in Japan for the Autumnal Equinox Day.
• ASX 200 was heavily pressured on return from yesterday’s national day of mourning closure and took its first opportunity to react to the hawkish FOMC with the tech and consumer-related sectors the worst hit.
• KOSPI declined with the recent flurry of central bank rate hikes adding to the arguments for the BoK to continue on its hiking cycle as South Korean officials look to avert one-sided currency moves.
• Hang Seng and Shanghai Comp slightly deteriorated throughout the session as the early support from reports regarding Hong Kong and Macau potentially easing restrictions for arrivals gradually waned, while US audit watchdog officials recently arrived in Hong Kong for audit inspections as firms seek to avoid delisting from US exchanges.

NOTABLE APAC HEADLINES

• White House Indo-Pacific coordinator said China clearly has ambitions in the Pacific which have caused concerns among Pacific Island leaders, according to Reuters.
• Hong Kong will announce today the end of mandatory hotel quarantine for overseas arrivals, according to SCMP.
• Japan PM Kishida said excessive yen movement repeatedly caused by speculation cannot be overlooked and they will take action should there be any excessive volatility in the yen, according to Reuters.

NOTABLE APAC DATA

• Australian Manufacturing PMI Flash (Sep) 53.9 (Prev. 53.8)
• Australian Services PMI Flash (Sep) 50.4 (Prev. 50.2)
• Australian Composite PMI Flash (Sep) 50.8 (Prev. 50.2)