• European bourses are modestly on the backfoot, though have trimmed this slightly as the session progresses, in limited newsflow pre-NFP.
• Stateside, futures are similarly contained and lie either side of the unchanged mark with NQ -0.1% modestly lagging amid yield upside
• Typically tense pre-NFP trade has seen the DXY briefly dip below 112.00, to a 111.94 low, before regathering itself and holding marginally above the figure.
• Core benchmarks dipped to lows amid the morning's German data release, with Import Prices lifting again, though have gained some poise since in quiet trade.
• WTI and Brent are off highs but still holding onto gains of around USD 0.50/bbl and are at the top-end of the week’s USD 86.35/bbl – 95.00/bbl parameter in Brent Dec’22.
• Fed's Mester (2022/2024) and Waller (voter) spoke overnight and added to the pivot-pushback
• Looking ahead, highlights include US & Canadian jobs reports, BoE's Ramsden, Fed's Williams, Kashkari, Bostic

As of 10:55BST/10:55ET

LOOKING AHEAD

• Looking ahead, highlights include US & Canadian jobs reports, BoE's Ramsden, Fed's Williams, Kashkari, Bostic
• Click here for the Week Ahead preview.
• Click here for the newsquawk NFP Preview.

GEOPOLITICS

• US President Biden said the nuclear 'Armageddon' threat is back for the first time since the Cuban Missile Crisis, according to AFP News Agency.
• Japanese government spokesperson Kihara said Japan is to impose additional sanctions against Russia and will freeze assets of more Russians after the annexation of parts of Ukraine, according to Reuters.
• US and South Korea are to conduct joint maritime drills involving the US aircraft carrier off the east coast on October 7th-8th, while the South Korean military said it will continue to strengthen its abilities to respond against North Korean provocation through joint drills, according to Yonhap.
• US forces conducted an airstrike in northern Syria on Thursday which killed Islamic State leader Abu-Hashum Al-Umawi and another IS official, according to Reuters.
• Turkish President Erdogan in a call with Russian President Putin discussed improving bilateral relations, according to the Turkish readout via Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly on the backfoot, though have trimmed this slightly as the session progresses, in limited newsflow pre-NFP.
• Nonetheless, are still on track to conclude the week with upside of just over 2% WTD for the Stoxx 600.
• Stateside, futures are similarly contained and lie either side of the unchanged mark with NQ -0.1% modestly lagging amid yield upside as officials pushback on an imminent pivot.
• ECB recently told some banks to exercise restraint on pay and dividends amid concerns about a potential wave of defaults, according to Bloomberg.
• Click here for more detail.

FX

• Typically tense pre-NFP trade has seen the DXY briefly dip below 112.00, to a 111.94 low, before regathering itself and holding marginally above the figure.
• Action that comes to the benefit of peers across the board with GBP the primary beneficiary, Cable to a 1.1218 peak, but closely followed by other activity FX.
• EUR/USD is more contained given a hefty amount of OpEx around today's NY Cut, with participants also cognisant of worrying German data.
• After yesterday's relative outperformance, the CHF and NZD are the relative laggards and are currently unchanged on the session.
• CNB Minutes (Sep): Mora and Holub voted for a 75bp hike, other members regarded rates as commensurate with the current situation. Consensus that inflation was probably close to peaking.
• HKMA purchases HKD 1.57bln from the market as the HKD hits the weak end of its trading range.
• Click here for more detail.
• Click here for OpEx for the NY Cut.

FIXED INCOME

• Core benchmarks dipped to lows amid the morning's German data release, with Import Prices lifting again, though have gained some poise since in quiet trade.
• Currently, Bunds are towards the mid-point of a ~70tick range with similarly settled action in USTs and Gilts before US data & Fed speak.
• As such, yields are elevated but off highs of 3.85%, 2.16% & 4.22% for US, German and UK 10yrs respectively.
• Click here for more detail.

COMMODITIES

• WTI and Brent are off highs but still holding onto gains of around USD 0.50/bbl and are at the top-end of the week’s USD 86.35/bbl – 95.00/bbl parameter in Brent Dec’22.
• For today, the main potential catalyst is the EU’s informal meeting of heads of state. A gathering which is focused on “Russia's war in Ukraine, energy and the economic situation.”
• US Secretary of State Blinken said the US will not do anything that infringes upon its interests and is reviewing a number of response options when asked about ties with Saudi Arabia and OPEC+ cuts, according to Reuters.
• US Republican Senator Grassley will seek to add the NOPEC bill to the defence policy bill, according to Reuters.
• OPEC Sec Gen says oil production capacity freed up by the latest production reductions could allow nations to intervene in the event of any crises in the oil market, according to Al Arabiya.
• Spot gold is little changed overall having derived some very brief upside from the DXY’s move below 112.00; however, the metal remains capped by the 50-DMA.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK PM Truss is watering down former UK PM Johnson's plans to cut 91k civil service jobs, according to FT.
• Irish Foreign Minister Coveney says the new air of positivity has created a flicker of optimism, lots of issues yet to be resolved (re. Brexit/N. Ireland).

DATA:

• German Retail Sales YY Real (Aug) -4.3% vs. Exp. -4.3% (Prev. -2.6%); MM Real (Aug) -1.3% vs. Exp. -1.1% (Prev. 1.9%, Rev. 0.7%)
• German Import Prices YY (Aug) 32.7% vs. Exp. 29.9% (Prev. 28.9%); MM (Aug) 4.3% vs. Exp. 2.0% (Prev. 1.4%)

NOTABLE US HEADLINES

• Fed's Mester (2022, 2024 voter) said the focus right now is on the inflation part of the Fed's mandate and they have to be singularly focused on inflation. Mester also suggested that getting inflation down is the first priority and that they will keep at it until they do so, while she added that they will not be cutting rates at all next year.
• Fed's Waller (voter) said he supports continued rate hikes until they see meaningful and persistent progress on US inflation, while he added that monetary policy can and must be used aggressively to bring down inflation. Waller also anticipates additional rate hikes into early next year and said they will have a very thoughtful discussion about the pace of tightening at the next meeting. Furthermore, he said they are not considering slowing rate increases or halting them due to financial stability concerns.
• Click here for the US Early Morning Note.

CRYPTO

• Bitcoin is contained within very narrow parameters, essentially pivoting the USD 20k mark as we head into the NFP release.

APAC TRADE

• APAC stocks were lower as the region followed suit to the weak performance seen in global counterparts with risk appetite sapped amid the slew of hawkish Fed rhetoric and with participants awaiting the key US jobs data.
• ASX 200 was subdued by underperformance in the real estate sector and after the RBA Financial Stability Review noted financial stability risks have increased globally and that some households are already feeling the strain from higher rates which is likely to persist for some time.
• Nikkei 225 was pressured and briefly dipped below the 27,000 level after disappointing data in which Household Spending showed a surprise M/M contraction and with wage growth softer than previous.
• Hang Seng declined amid weakness in property and tech stocks with sentiment also not helped by reports that the US is to announce new measures that will effectively halt some exports of US equipment to Chinese firms making advanced NAND and DRAM memory chips.

NOTABLE APAC HEADLINES

• BoK said it will maintain its stance of raising interest rates going forward to combat inflation which is expected to remain in the 5-6% range for a considerable period of time, according to Yonhap.
• RBA Financial Stability Review stated that financial stability risks have increased globally and markets are stressed by synchronised policy tightening, geopolitical tension, higher USD and rising energy prices. RBA also stated that stability risks would be magnified by further substantial tightening in global markets and some households are already feeling the strain from higher rates which is likely to persist for some time.
• Japanese top currency diplomat Kanda says has never felt a limit to ammunition for currency intervention, making various steps so as not to face a limit to ammunition when it comes to FX intervention, via Reuters.

NOTABLE APAC DATA

• Japanese All Household Spending MM (Aug) -1.7% vs. Exp. 0.2% (Prev. -1.4%); YY (Aug) 5.1% vs. Exp. 6.7% (Prev. 3.4%)
• Japanese Average Cash Earnings YY (Aug) 1.7% (Prev. 1.8%); Foreign Reserves (Sep) 1238B (Prev. 1292B)
• Chinese FX Reserves (USD)(Sep) 3029B vs. Exp. 3000B (Prev. 3055B)