• European bourses are under modest pressure as sentiment broadly takes a slight turn for the worst amid limited newsflow as participants look to Friday's NFP.
• USD benefits from the mentioned risk tone, with the DXY extending to a 111.35 peak to the modest detriment of peers; though EUR is relatively resilient.
• Gilts are once again the standout laggard following rating agency action and the BoE DMP showing inflation pressures were already elevated MM before the fiscal update.
• Crude benchmarks are modestly firmer at present, extending marginally above yesterday’s best levels with fresh newsflow limited as participants digest yesterday’s OPEC+ action.
• Softer sentiment has led strength to the USD, to the detriment of metals with spot gold once again capped by the 50-DMA at USD 1722/oz.
• The EU has approved the 8th round of Russian sanctions, as expected. While N. Korea fired missiles and bombers/jets have been seen.
• Looking ahead, highlights include ECB Minutes, Speeches from Fed's Waller, Evans, Cook & Mester.

As of 11:10BST/06:10ET

LOOKING AHEAD

• ECB Minutes, Speeches from Fed's Waller, Evans, Cook & Mester.
• Click here for the Week Ahead preview.

GEOPOLITICS

• North Korea launched two short-range ballistic missiles which were fired from Pyongyang and landed outside of Japan's exclusive economic zone, according to the South Korean military cited by Yonhap. Furthermore, North Korea said that its missile launches are counteraction measures against the US and South Korean military drills.
• North Korean jets and bombers have been seen flying in an exercise, according to Yonhap; South Korean jets take off in response, via Reuters.
• US State Department condemned North Korea's ballistic missile launch and said North Korea's missile launches pose a threat to regional neighbours and the international community, while it added that the US remains committed to a diplomatic approach to North Korea and called on North Korea to engage in dialogue, according to Reuters.
• The EU has approved the 8th round of Russian sanctions; as expected.

EUROPEAN TRADE

EQUITIES

• European bourses are under modest pressure as sentiment broadly takes a slight turn for the worst amid limited newsflow as participants look to Friday's NFP.
• Currently, European benchmarks are lower by 0.1-0.3% while US futures are posting slightly larger losses of circa 0.7 ahead of Fed speak.
• Click here for more detail.

FX

• USD benefits from the mentioned risk tone, with the DXY extending to a 111.35 peak to the modest detriment of peers.
• However, EUR is relatively resilient and holding around 0.99 vs the USD as we await the ECB Minutes account for near-term guidance.
• Cable faded sub-1.1400 and reversed through 1.1300 again amid the USD's move and prior to a letter exchange from the BoE to Treasury re. the Gilt Intervention.
• Antipodeans under pressure given the USD move and associated action in metals, while the Yuan initially lent a helping hand but this has since dissipated.
• Given the broader tone, the traditional havens are holding near unchanged levels though yield dynamics are a hinderance.
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• Click here for OpEx for the NY Cut.

FIXED INCOME

• Gilts are once again the standout laggard following rating agency action and the BoE DMP showing inflation pressures were already elevated MM before the fiscal update.
• As such, the UK yield has extended back above 4.10%; in the US, yields are also bid though to a much lesser extent before Fed speak and Friday's jobs.
• Back to Europe, Bunds are pressured though only modestly so vs UK counterparts awaiting the ECB's September account.
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COMMODITIES

• Crude benchmarks are modestly firmer at present, extending marginally above yesterday’s best levels with fresh newsflow limited as participants digest yesterday’s OPEC+ action.
• WTI and Brent are towards the mid-point of circa. USD 1/bbl ranges, though Brent Dec’22 briefly surpassed the 200-DMA at USD 94.11/bbl before moving back below the figure.
• Acting Kuwaiti Oil Minister said the OPEC+ decision to cut output will have positive ramifications for oil markets, while they understand consumers' concerns about prices increasing but added that the main motive in OPEC+ is balancing supply and demand, according to Reuters.
• US National Security official stated the US sanctions policy on Venezuela remains unchanged and there are no plans to change the sanctions policy without constructive steps from Maduro, according to Reuters.
• Norway's Budget proposes changing the temporary tax rules for the petroleum sector, entails that the uplift is reduced to 12.40% (prev. 17.69%), via Reuters.
• Saudi sets the November Arab Light OSP to N.W Europe at Ice Brent +USD 0.90/bbl; to the US at ASCI +USD 6.35/bbl, via Reuters citing a document; to Asia at Oman/Dubai +USD 5.85 (Unch.), via Reuters sources.
• Softer sentiment has led strength to the USD, to the detriment of metals with *spot gold *once again capped by the 50-DMA at USD 1722/oz.
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NOTABLE EUROPEAN HEADLINES

• Fitch affirmed the UK at AA-; Outlook revised to Negative from Stable, while it stated that the fiscal package announced as part of the new UK government's growth plan could lead to a significant increase in deficits over the medium-term, according to Reuters.
• The UK Treasury is set to impose GBP 21bln of additional income taxes despite the "tax-cutting mini-budget", according to a study by the Institute for Fiscal Studies. (Times)
• BoE Monthly Decision Maker Panel data - September 2022; looking ahead, DMP members expected CPI inflation to be 9.5% one-year ahead, up from 8.4% in the August survey, and 4.8% in three years’ time.
• BoE's Cunliffe says the FPC will publish its next financial policy statement and record on October 12th, liquidity conditions in the run up to the BoE gilt intervention were "very poor", MPC will make a full assessment of recent developments at its November 3rd meeting.
• UK government has proposed easing the fee cap for illiquid assets in pensions, according to a rule consultation publication by the government.

DATA:

• German Industrial Orders MM* (Aug) -2.4% vs. Exp. -0.7% (Prev. -1.1%, Rev. 1.9%)
• EU S&P Global Construction PMI (Sep) 45.3 (Prev. 44.2), German S&P Global Construction PMI (Sep) 41.8 (Prev. 42.6)

NOTABLE US HEADLINES

• Twitter (TWTR) and Elon Musk agreed to postpone Musk's Thursday deposition with no new time set, according to a source familiar with the litigation cited by Reuters.
• Click here for the US Early Morning Note.

CRYPTO

• Bitcoin is modestly firmer a present but, once again, remains within fairly contained parameters and holding around the USD 20k mark.

APAC TRADE

• APAC stocks traded mixed as the region partially shrugged off the lacklustre lead from the US where the major indices snapped a firm two-day rally and finished the somewhat choppy session with mild losses amid higher yields and as Fed rhetoric essentially pushed back against a policy pivot.
• ASX 200 lacked direction amid underperformance in the Real Estate and the Consumer sectors, although the downside was also limited by strength in energy after oil prices were lifted by the OPEC+ output cut.
• Nikkei 225 was positive with notable gains in exporter names and with Rakuten leading the advances as Mizuho looks to acquire a 20% stake in Rakuten Securities for USD 555mln.
• Hang Seng was lacklustre and took a breather after the prior day’s more than 5% jump with the mood also not helped after Hong Kong PMI slipped into contraction territory for the first time in 6 months.

NOTABLE APAC HEADLINES

• Haikou city in China's Hainan imposed a COVID lockdown for Thursday, according to Bloomberg.

NOTABLE APAC DATA

• Hong Kong PMI (Sep) 48.0 (Prelim. 51.2)
• Australian Trade Balance (AUD)(Aug) 8.3B vs. Exp. 10.1B (Prev. 8.7B)
• Australian Exports (Aug) 3% (Prev. -10%); Imports (Aug) 4% (Prev. 5%)