• BoE is to undertake temporary Gilt purchases and is pushing back the commencement of QT to restore orderly conditions.
• Initial debt pressure has given way to pronounced and increasing upside following the BoE's statement, Gilts +350ticks, Cable whipsawed but ultimately settled near pre-release.
• European bourses remain softer on the session, with sectors still defensive; though, this pressure has waned in wake of BoE action.
• Crude benchmarks gradually recovering as geopolitical tensions continue to simmer, EU meetings occur and as we look towards next week's OPEC+.
• DXY printed a fresh YTD peak at 114.78, to the broad detriment of peers (ex-CHF & JPY initially); though, has been easing from this peak since.
• Yuan buoyed by PBoC remarks against one-way bets vs the Yuan.
• Looking ahead, highlights include speeches from Fed's Daly, Bostic, Bullard, Bowman & Barkin, ECB's Elderson, BoE's Dhingra, Supply from the US.

As of 11:30BST/06:30ET

LOOKING AHEAD

• Speeches from Fed's Daly, Bostic, Bullard, Bowman & Barkin, ECB's Elderson, BoE's Dhingra, Supply from the US.

CENTRAL BANKS

BOE

• Bank of England says market repricing has become more significant on recent days; bank will carry out temporary purchases of longer-dated UK gov't bonds from 28th Sept to restore orderly market conditions; purchases to be time limited.
• BoE will carry out temporary purchases of long-dated UK government bonds from 28 September until 14th October. The purpose of these purchases will be to restore orderly market conditions. The purchases will be carried out on whatever scale is necessary to effect this outcome.
• Thereafter, the first gilt sale operations will take place on 31 October. (previously scheduled to commence on October 3rd); MPC’s annual target of an GBP 80bln stock reduction is unaffected and unchanged.
• Full details and reaction available here.

OTHER

• PBoC warns against one-way bets against the Chinese Yuan; top priority is to keep Forex market stable, says Yuan is basically stable on equilibrium level this year; must prevent large fluctuations in the FX rates, via Reuters. Urges banks to conduct proprietary trading on risk neutral basis.
• 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.
• ECB's Lagarde says we need to provide a strong signal that we will not allow inflation expectations to become de-anchored, will continue to hike in the next several meetings, not at the neutral rate yet, via Reuters.
• ECB's Rehn says ECB requires a "significant" rate hike in October, be it "75 or 50bps or something else", should reach neutral by Christmas. No qualms about restrictive policy if warranted by the inflation outlook, ECB should look at changing TLTRO terms, via Reuters.
• ECB's Kazimir says, re. October, that 75bps is a "very good candidate" to keep the pace of tightening, via Reuters.
• ECB's Holzmann says need to assess QT in nations where its begun, will discuss QT in Cyprus next week; says 75bps is a good figure for October whilst 100bps is currently too much; does not see rates being lowered in 2023, via Bloomberg.
• 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.
• Riksbank's Jansson says it is important to address the inflation situation now while we have the opportunity, hard to determine how much we have to raise rates, SEK weakness is not welcome, via Reuters..

GEOPOLITICS

• Click here for newsquawk analysis on the potential Russian oil and gas price caps.
• 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.
• Russia's Kremlin says the special operation must, at a minimum, continue until all of Donetsk Oblast is 'liberated', via Reuters.
• 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.
• Denmark's Defence Ministry, at a press briefing, has discussed increased NATO focus on the Baltic Sea area, in talks with NATO Secretary General Stoltenberg.
• 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.
• South Korean spy agency says, if a North Korean nuclear tests takes place, will likely be between October 7th and 16th, according to Yonhap; chances of test has increased.
• North Korea fired what could be a ballistic missile, according to the Japanese coast guard cited by Reuters; South Korea said North Korea fired a missile off the East Coast. North Korean missile appears to have landed outside Japan's Exclusive Economic Zone (EEZ), according to TV Asahi.

EUROPEAN TRADE

EQUITIES

• European bourses remain softer on the session, with sectors still defensive; though, this pressure has waned in wake of BoE action.
• Stateside, futures have seen similar action in that they were initially pressured but are now lifting as the BoE intervenes to restore Gilt stability.
• The sectoral breakdown has Healthcare outperforming, amid an update from Eisai which is lifting European peers and the likes of Biogen (+40% pre-market) significantly.
• Click here for more detail.

FX

• DXY has once again extended to a fresh YTD peak at 114.78, to the broad detriment of peers; though, the move ran out of steam as US yields eased a touch - further pullback seen post BoE action.
• Cable experienced a substantial move on the BoE statement, lifting to 1.0840 before paring to 1.0610 and then settling around the mid-point thereafter; overall, Cable remains softer on the session.
• JPY and CHF are little changed and as such are the 'outperformers' against the Buck, deriving some risk-related support though domestic data dented the latter.
• Yuan continues to falter lifting above 7.25 before benefitting from PBoC remarks warning against one-way bets vs the Yuan.
• Click here for more detail.
• Click here for OpEx for the NY Cut.

FIXED INCOME

• Core debt benchmarks spent the vast majority of the session underwater, with Gilts down by circa. 200ticks and Bunds pressured amid debt updates.
• However, this pressure has dissipated and been replaced by pronounced and increasing upside in Gilts of over 250ticks, with EGBs/USTs buoyed as well.
• In a reaction to the BoE intervening in the Gilt market to restore orderly market conditions (details above).
• More broadly, USTs are cognisant of the last leg of the week's supply (7yr) and commentary from Fed officials including Chair Powell today.
• German Debt Agency says it is to raise EUR 22.5bln more debt than previously planned in Q4 amid government measures to tackle the energy crisis, Capital market borrowing to increase by EUR 10.5bln and money markets by EUR 12bln.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have been trimming APAC pressure throughout the morning, as geopolitical tensions continue to simmer, and we look towards next week's OPEC+
• Additionally, deriving upside from the broader market move to the BoE action.
• The yield-induced USD easing (DXY still firmer) has allowed spot gold to move within reach of the unchanged mark despite pronounced initially losses, LMEs seeing similar action.
• 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)
• 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.
• 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.
• Kazakhstan's Energy Minister expects CPC to return to full capacity by mid-October, Kashagan to return to full capacity by end-October, via Reuters; adding, will consider proposals to supply oil to Europe.
• NHC says Air Force Hurricane Hunters find Ian has strengthened into an extremely dangerous Category 4 hurricane and is expected to cause life-threatening storm surge, catastrophic winds and flooding in the Florida peninsula. Ian is rapidly intensifying.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Kwarteng, in a meeting with bankers expected later today, will ask financiers not to bet against the GBP and is expected to underline his commitment on fiscal discipline, according to Sky News' understanding. However, UK Treasury source has dismissed reporting by Sky News that Chancellor Kwarteng will ask banks not to bet against GBP, according to Reuters.
• 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%)
• German GfK Consumer Sentiment (Oct) -42.5 vs. Exp. -39.0 (Prev. -36.5, Rev. -36.8)

NOTABLE HEADLINES

• 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.

CRYPTO

• Bitcoin is under pressure and has dipped to an incremental fresh low for the week at USD 18.46k, however, it remains above last week's USD 18.15k trough.

APAC TRADE

• 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.

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.

NOTABLE APAC DATA

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