• APAC stocks were lower across the board following the renewed bond selling on Wall Street.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -1.2% after the cash market closed down 0.4% yesterday.
• DXY has extended gains above 114.00, antipodeans lag majors, EUR/USD and GBP/USD are on 0.95 and 1.06 handles respectively.
• 10yr UST futures remained subdued after the prior day’s renewed selling with the 10yr yield briefly breaching 4.0%.
• Looking ahead, highlights include German GfK, Speeches from Fed's Daly, Bostic, Bullard, Bowman & Barkin, ECB's Lagarde & Elderson, BoE's Cunliffe & Dhingra, Supply from the US.

US TRADE

• US stocks were mixed and finished relatively flat on the session as selling was contained following strong data releases but with headwinds from the higher yield environment amid the renewed bond selling.
• SPX -0.17% at 3,649, NDX +0.16% at 11,271, DJIA -0.43% at 29,134, RUT +0.40% at 1,662.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Harker (2023 voter) said the Fed is working to stabilise inflation and getting shelter inflation under control will require action not just by the Fed, but also by federal, state and local governments.
• Fed's Kashkari (2023 voter) said markets understand what the Fed is doing and Fed policymakers are united and committed to bringing down inflation. Kashkari said he is not sure policy is tight enough, while he added they are moving very aggressively and there is a lot of tightening in the pipeline.
• Fed's Daly (2024 voter) said she wants to bring inflation down but not unnecessarily tip the economy into a downturn, while she added it is important to navigate through the high inflation environment as carefully as they can and that they are resolute and committed to doing that, according to Reuters.
• US Treasury Secretary Yellen said financial markets are functioning well and that they are not seeing liquidity issues or deleveraging, while they are also not seeing disorderly financial market conditions. It was separately reported that the White House is mulling the potential departure of Yellen after the mid-terms, according to Axios.
• White House Economic Adviser Deese said a stronger dollar is a reflection of the relative strength of the US economy and that they are paying a lot of attention to the weakness in the global growth trajectory, while Deese said he does not expect the need for a global accord to adjust currency values, according to Reuters.
• US Senate voted 72-23 to pass the stop-gap funding bill. This was after Senator Manchin asked Senate Majority Leader Schumer to remove the energy permitting language from the Continuing Resolution, according to Reuters.
• Democrats released the text of the bill banning stock trading for Congress and judges, according to WSJ.
• Apple (AAPL) reportedly abandoned its plans to increase iPhone production due to lower demand, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks were lower across the board following the renewed bond selling on Wall Street and with sentiment in the region also soured by news that Apple ditched its plan to boost iPhone production due to weaker demand.
• ASX 200 was subdued with underperformance in Real Estate, Tech, Healthcare and Financials, although the downside in the index was initially stemmed by strength in the commodity-related sectors and after Retail Sales data topped forecasts.
• Nikkei 225 was among the worst performers and dipped below 26,000 amid weakness in large retailers.
• Hang Seng and Shanghai Comp were pressured as tech and property stocks led the declines in Hong Kong and with the mainland also suffering despite the latest support measures including the cabinet’s postponement of more than CNY 53bln of fees for small companies and tax relief for some individual commercial pensions.
• US equity futures were subdued (e-mini S&P -0.7%) amid Apple's output disappointment and higher yields.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -1.2% after the cash market closed down 0.4% yesterday.

FX

• DXY continued to strengthen amid the recent upside in yields and the broad risk-off mood (overnight peak of 114.70).
• EUR/USD declined after failing to reclaim the 0.9600 handle with the single currency not helped by ongoing geopolitical and energy-related headwinds.
• GBP/USD retreated to below 1.0700 owing to the firmer greenback and after BoE’s Pill recently downplayed the prospects of an emergency/interim hike.
• USD/JPY was rangebound after stalling just shy of the 145.00 level and with JPY-crosses on the back foot.
• Antipodeans extended on recent losses alongside the downbeat tone across the region.
• PBoC set USD/CNY mid-point at 7.1107 vs exp. 7.1095 (prev. 7.0722).

FIXED INCOME

• 10yr UST futures remained subdued after the prior day’s renewed selling alongside firm data and a weak auction, while yields continued to edge higher overnight and the US 10yr yield briefly breached 4.0%.
• Bund futures remained dispirited and prodded lows beneath 137.00 after the recent sell-off.
• 10yr JGB futures were uneventful amid the lack of additional BoJ purchases and following outdated BoJ minutes from the July meeting.

COMMODITIES

• Crude prices were subdued amid the risk aversion and bearish headline private inventory data which offset much of the prior day's supply-driven gains from a potential OPEC+ output cut proposal, Hurricane Ian disruption and suspected sabotage behind the Nord Stream gas leaks.
• US Energy Inventory Data (bbls): Crude +4.2mln (exp. +0.4mln), Cushing +0.4mln, Gasoline -1.0mln (exp. +0.7mln), Distillate +0.4mln (exp. -0.1mln)
• US Secretary of State Blinken said if it is confirmed that the Nord Stream leak was due to sabotage, it will not be in anyone's interest and said they have not confirmed initial reports that it could be a result of an attack or sabotage, while his understanding is that the leaks will not have a significant impact on Europe's energy resilience.
• Denmark geological survey said it registered two tremors in the Baltic Sea which matches the times and locations of gas leaks from Nord Stream 1 and 2, while a Danish minister said Nord Stream gas leaks are set to last "at least a week", according to AFP.
• BP (BP/ LN) determined Hurricane Ian no longer poses a significant threat to its Gulf of Mexico assets, while it is looking to redeploy personnel to Na Kika and Thunder Horse platforms. It was also reported that 190,358 barrels of oil and 184mln cubic feet of gas were shut in on Tuesday in the Gulf of Mexico by Hurricane Ian.
• Indian Foreign Minister Jaishankar said the US and India discussed the oil price cap and said that developing countries are worried about energy security.
• Spot gold was contained amid a firmer greenback and recent gains in yields.
• Copper extended on declines as risk sentiment deteriorated overnight.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said the referendums were not even imitations of a referendum and that they will act to defend their people in all occupied areas, while he said there will be good news from the front and that they are advancing but offered no details, according to Reuters.
• Ukraine is to go ahead with its plan to recapture occupied territory from Russia, according to a Presidential adviser
• US Pentagon said it had not seen any changes by Russia that would cause the US to change its nuclear posture.
• EU Ambassadors are set to be briefed at 13:30BST today by the European Commission on a new Russian sanctions package, via Politico citing officials/diplomats; Commission will also be proposing a Russian oil price cap Shipping/insurance firms will be banned from transporting/insuring Russian oil if the price is sold above a certain price point, a point that will be the current sale price to Asia.
• Pro-Russian separatists in Ukraine's Lugansk and Donetsk regions claim victory in the annexation vote, according to AFP News Agency.
• Canadian PM Trudeau said Canada is actively engaging with international partners and allies to ensure a united rejection of these illegitimate votes, according to Reuters.
• China's ambassador to the UN told the Security Council meeting regarding Russia's referendums in Ukraine, that political isolation, sanctions and pressurisation will only lead to a dead end, according to Reuters.
• Turkey state lenders are to exit Russia's MIR payment system, according to Bloomberg.

CRYPTO

• Bitcoin was pressured alongside the risk aversion and fell beneath the 19,000 level.

ASIA

NOTABLE APAC HEADLINES

• PBoC injected CNY 133bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 67bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 198bln net injection.
• Shanghai will provide subsidies to consumers to support the economy with up to CNY 1,000 of subsidies to buyers of environment-friendly smart home appliances, while Shanghai will promote the delivery of residential houses and ensure steady and sound development of the property market.
• BoJ Minutes from the July meeting stated that members shared the view that market sentiment remains cautious and global slowdown fears were heightening, while a few members said price increases were broadening in Japan. BoJ also stated it is closely monitoring the impact of COVID on the economy and won't hesitate to add easing if necessary.

DATA RECAP

• Australian Retail Sales MM Final * (Aug) 0.6% vs. Exp. 0.4% (Prev. 1.3%)

EU/UK

NOTABLE HEADLINES

• UK Chancellor Kwarteng is reportedly set to meet Wall Street bankers on Wednesday, according to Bloomberg.
• Brussels believes a deal on the Northern Ireland protocol could be struck within a month due to economic turmoil in Britain, according to Telegraph sources.
• IMF said it is closely monitoring developments in the UK and is engaged with UK authorities, while it does not recommend "large and untargeted fiscal packages" given the inflation backdrop in many countries including Britain.
• German Economy Ministry said a decision on whether to extend the life of nuclear power plants based on grid stress tests should be made this year, while it added that data from France suggests they will call up and use the nuclear power reserve.
• Slovakian Premier said Slovakia may suspend power exports due to the EU energy plan.

DATA RECAP

• UK BRC Shop Price Index YY (Sep) 5.7% (Prev. 5.1%)