• European equities are attempting to claw back some of yesterday’s downside on quarter and month end; US futures similarly bid
• GBP's revival has continued ahead of a meeting between PM Truss and the OBR, with a statement expected
• A move that has taken Cable above 1.12 but shy of mini-Budget levels; DXY sub-112.00 at worst, though still firmer overall.
• Debt Benchmarks bid but modestly off best levels with Bunds leading the charge, but well within recent ranges, amid potential month/quarter-end influence.
• EZ assets largely unreactive to HICP Flash YY hitting a record high 10.0% for September
• Commodities broadly benefiting from the relative USD move, participants attentive to the EU Energy Meeting & Russian President Putin
• Looking ahead, highlights include US PCE Price Index, Russian President Putin, Moody's on Italy, Speeches from Fed's Williams & Brainard, ECB's Elderson & Schnabel, EU Energy Meeting & Russian President Putin

As of 11:10BST/06:00ET

LOOKING AHEAD

• US PCE Price Index, Russian President Putin, Moody's on Italy, Speeches from Fed's Williams & Brainard, ECB's Elderson & Schnabel.

CENTRAL BANKS

• China loosened FX restrictions in response to the Fed rate hike and the yuan's fall over the past week, according to people familiar with the matter cited by FT.
• China's FX body is reportedly asking banks to trade the Yuan closer to the PBoC fixing, according to Bloomberg.
• PBoC injected CNY 128bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 58bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 184bln net daily injection and a net CNY 868bln weekly injection.
• RBI hiked Repurchase Rate by 50bps to 5.90%, as expected, via 5-1 vote and the Standing Deposit Facility was adjusted to 5.65%. RBI Governor Das said MPC is to remain focused on the withdrawal of accommodation and that the persistence of high inflation necessitates further calibrated withdrawal of monetary accommodation. However, Das noted that the Indian economy continues to be resilient with economic activity stable and overall monetary and liquidity conditions still remain accommodative, while Real GDP growth forecast for 2022/23 was revised lower to 7.0% from 7.2% and 2022/23 CPI was seen at 6.7%.
• RBI is reportedly encouraging state-run refiners to reduce USD buying in the spot market; asking to lean on USD 9bln credit line instead, according to Reuters sources.
• BoE was reportedly warned about a looming catastrophe in the pensions sector within the next 5 years before it was forced to intervene to prevent a market collapse, according to The Telegraph.
• Fed's Daly (2024 voter) said a downshift in economic activity and labour is needed to bring down inflation and additional rate increases are necessary and appropriate. Daly also stated that a myriad of risks narrows the path to a smooth landing but does not close it, while she added they have gotten rates to neutral and expect to raise rates further in coming meetings and early next year.
• Norges Bank will purchase FX equivalent to NOK 4.3bln/day in October (3.5bln in September); reflecting an increase in projected NOK revenues from petroleum activity.
• BoJ announces Q4 bond purchase plans, available here.
• Japan spent JPY 2.8382tln on FX intervention between August 40th and September 28th, via Ministry of Finance.

GEOPOLITICS

• Russian President Putin signed decrees recognising occupied Ukrainian regions of Kherson and Zaporizhzhia as independent territories which is an intermediate step before the regions are formally incorporated into Russia, according to Reuters.
• ** Russia's Kremlin says strikes against the new territories incorporated into Russia will be considered an act of aggression against Russia**; says Ukraine has shown no willingness to negotiate, via Reuters.
• Russia's Spy Chief says they have material which show a Western role in Nord Stream incidents, via Ifx.
• Armenia's Foreign Ministry says their Ministers and Azerbaijani counterparts will meet in Geneva on October 2nd, via AJA Breaking.
• NATO Secretary General to host a press conference at 17:00BST today.

EUROPEAN TRADE

EQUITIES

• European equities are attempting to claw back some of yesterday’s downside on quarter and month end.
• Sectors are firmer across the board with Real Estate outperforming peers in what has been a tough week for the UK property market.
• Stateside, futures are also attempting to recover from yesterday’s losses which saw a tough session for the tech sector after Apple shed the best part of 5%.
• Click here for more detail.

FX

• GBP's revival has continued ahead of a meeting between PM Truss and the OBR, with a statement expected, a move that has taken Cable above 1.12 but shy of mini-Budget levels.
• USD is firmer overall but continues to retreat from YTD peaks, though the DXY is seemingly drawn to the 112.00 area.
• Yuan derived further, fleeting, support from reports the FX body has asked banks to trade closer to the onshore fixing.
• Elsewhere, FX peers are under modest pressure but more contained vs USD; EUR unfased by a record EZ flash CPI print of 10.0%.
• Click here for more detail.
• Click here for OpEx for the NY Cut.

FIXED INCOME

• Benchmarks bid but modestly off best levels with Bunds leading the charge, but well within recent ranges, amid potential month/quarter-end influence.
• Gilts lifted, but the 10yr yield remains above 4.0% ahead of the OBR statement.
• Stateside, USTs are equally buoyed ahead of a packed PM agenda include PCE Price Index and Fed speak.
• Click here for more detail.

COMMODITIES

• The broader commodity market is benefitting from a pullback in the USD coupled with a broader risk appetite.
• Metals are buoyed by the recent pullback in the Dollar with spot gold edging above its 10 DMA (USD 1,656.72/oz) and towards the USD 1,680/oz mark which coincides with the yellow metal’s 21DMA (USD 1,680.56/oz) and 200WMA (USD 1,680.20/oz).
• Base metals are also firmer across the board with 3M LME copper back above the USD 7,500/t mark, whilst nickel and aluminium outperform on the exchange.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK OBR Chair Hughes says a statement will be released today after the meeting with UK PM Truss and Chancellor Kwarteng. On this, the UK Treasury has not sought to accelerate watchdog's economic forecast, according to Bloomberg. Reminder, UK PM Truss to conduct emergency talks with the OBR on Friday after failing to calm markets, according to the Guardian.
• UK cross-party MPs in the Treasury Select Committee called for Chancellor Kwarteng to release a full economic forecast from the OBR by end of October, according to Sky News.
• UK PM Truss has confirmed she will attend next week's European Political Community summit, via BBC.
• Reports that technical level discussions between the UK and EU could resume as soon as next week, via BBC's Parker; writing, that there has been a 'warmer' tone in recent weeks, some believe pressure from the US on the UK has had influence.
• German VDMA, survey of members: majority expect nominal sales growth in 2022 and 2023.

DATA RECAP

• EU HICP Flash YY (Sep) 10.0% vs. Exp. 9.7% (Prev. 9.1%); Ex-F&E Flash YY (Sep) 6.1% vs. Exp. 5.6% (Prev. 5.5%)
• EU HICP-Ex Food, Energy, Alcohol & Tobacco Flash YY (Sep) 4.8% vs. Exp. 4.7% (Prev. 4.3%).
• UK GDP QQ (Q2) 0.2% vs. Exp. -0.1% (Prev. -0.1%); YY (Q2) 4.4% vs. Exp. 2.9% (Prev. 2.9%)
• UK Lloyds Business Barometer (Sep) 16 (Prev. 16)

NOTABLE HEADLINES

• US Department of Education estimated that the Biden-Harris student debt relief is to cost an average of USD 30bln annually over the next decade, according to Reuters.

CRYPTO

• Bitcoin is essentially unchanged and in very tight ranges of circa. USD 400 and as such well within the week's existing parameters.

APAC TRADE

• APAC stocks were mostly lower after the negative performance across global peers amid inflationary headwinds and with risk appetite subdued heading quarter-end, while the region also digested mixed Chinese PMI data.
• ASX 200 declined amid weakness across most sectors and with tech the notable underperformer after the recent upside in yields and with Meta the latest major industry player to announce a hiring freeze.
• Nikkei 225 was pressured and fell below the 26,000 level with better-than-expected Industrial Production and Retail Sales data releases overshadowed by the broad risk aversion.
• Hang Seng and Shanghai Comp were indecisive after the PBoC conducted its largest weekly cash injection in more than 32 months ahead of the week-long closure in the mainland, while participants also digested mixed PMI data in which Official Manufacturing PMI topped forecasts with a surprise return to expansion, but Non-Manufacturing and Composite PMIs slowed and Caixin Manufacturing PMI printed at a wider contraction.
• NIFTY eventually notched mild gains in the aftermath of the RBI rate decision in which it hiked the Repurchase Rate by 50bps to 5.90% as expected via 5-1 split and with the central bank refraining from any major hawkish surprises.

NOTABLE APAC HEADLINES

• Japan's Chief Cabinet Secretary Matsuno said they want to compile an extra budget swiftly after the economic package in late October, while they will consider further support for hard-hit consumers and businesses in view of higher energy and food prices, as well as consider steps to promote wage hikes, according to Reuters.
• Chinese Finance Ministry is to offer a tax refund for people who sell their homes and repurchases new ones by the end of 2023; additionally, China has told banks to provide USD 85bln in property funding by the end of the year, according to Bloomberg.

NOTABLE APAC DATA

• Chinese NBS Manufacturing PMI (Sep) 50.1 vs. Exp. 49.6 (Prev. 49.4); Non-Manufacturing PMI (Sep) 50.6 vs Exp. 52.4 (Prev. 52.6)
• Chinese Composite PMI (Sep) 50.9 (Prev. 51.7)
• Chinese Caixin Manufacturing PMI Final (Sep) 48.1 vs. Exp. 49.5 (Prev. 49.5)
• Japanese Industrial Production MM SA (Aug P) 2.7% vs. Exp. 0.2% (Prev. 0.8%); Retail Sales YY (Aug) 4.1% vs. Exp. 2.8% (Prev. 2.4%)