• APAC stocks traded mixed and only partially sustained the momentum from Wall St. which was led higher by tech. 
• Softer-than-expected monthly CPI data from Australia added to the bets for the RBA to keep rates unchanged at next week’s meeting.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.6% yesterday.
• DXY is a touch firmer above 102.50, AUD lags post-CPI, EUR losses stemmed by further hawkish ECB source reports.
• Highlights include EZ M3 Growth, Italian CPI (Prelim), US Mortgage Applications, Speeches from ECB's Lagarde, de Guindos, Lane & Enria,  BoE's Pill, Panel Participation by BoE's Bailey, ECB's Lagarde, Fed's Powell & BoJ's Ueda, Supply from UK & US.

US TRADE

EQUITIES

• US stocks rallied with the major indices led higher by outperformance in the NDX amid a tech rebound and with risk appetite spurred by a slew of strong data releases including US Consumer Confidence, Durable Goods and New Home Sales which all topped forecasts.
• SPX +1.15% at 4,378, NDX +1.75% at 14,945, DJIA +0.63% at 33,927, RUT +1.46% at 1,850.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden said the US economy is so strong now and he doesn't expect a recession, while also stated that China has enormous problems, according to Reuters.
• White House Economic Adviser Brainard said it is important to see greater housing supply over the medium-term, while she added the economy is showing resilience and can avoid a recession.
• A merger review remap by US agencies is expected to delay deal timetables with merging firms set to be required to submit more data for approval.
• Goldman Sachs CEO said the banking system in the US is dealing with a handful of issues and will require more capital, triggering more consolidation, according to Economic Times.

APAC TRADE

EQUITIES

• APAC stocks traded mixed and only partially sustained the momentum from Wall St where risk appetite was lifted and the NDX outperformed amid strong data and a tech rebound.
• ASX 200 was positive with nearly all sectors in the green after softer-than-expected monthly CPI data from Australia added to the bets for the RBA to keep rates unchanged at next week’s meeting.
• Nikkei 225 gained amid tailwinds from recent currency weakness and with Japan leaning towards extending support measures for gas and electricity bills set to expire at the end of September as it seeks to underpin the economy.
• Hang Seng and Shanghai Comp were subdued after Chinese Industrial Profits remained at a steep contraction and with the US considering new curbs on AI chip exports to China amid some concerns China could use AI chips from Nvidia and others for weapons development and hacking.
• US equity futures slightly pulled back but with the reversal only marginal as markets look to comments from Fed Chair Powell.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.6% yesterday.

FX

• DXY recouped some of its losses after weakening yesterday despite the strong data releases from the US, as models from Citigroup and Credit Agricole pointed to USD selling into month-end, while the attention shifts to the numerous central bank speakers later today including panel participation by BoE's Bailey, ECB's Lagarde, Fed's Powell & BoJ's Ueda.
• EUR/USD marginally softened overnight although the pullback was limited by the recent hawkish ECB speakers and as the prospect for a September hike gained more traction after sources noted ECB policymakers see little chance of a pause in hikes in July or September citing conversations with rate-setters at the Sintra forum. More recent source reporting has also suggested that some officials at the Bank are mulling a quicker reduction of its bond portfolio.
• GBP/USD slightly weakened after hitting resistance near 1.2750 albeit with downside stemmed by ongoing hawkish rate bets.
• USD/JPY was kept afloat and retested the 144.00 level owing to the wider yield differentials.
• Antipodeans were pressured in the aftermath of the softer-than-expected monthly Australian CPI data which added to market pricing for the RBA to keep rates unchanged at next week’s meeting.

FIXED INCOME

• 10yr UST futures remained lacklustre after the recent pressure from the firm data releases and post-5yr auction stateside which was not as well received as Monday’s 2yr offering and resulted in the first tail since February.
• Bund futures were contained by recent hawkish ECB commentary and ahead of more speakers today at the ECB Forum.
• 10yr JGB futures tracked the recent downside in peers with demand also subdued by the lack of additional BoJ purchases.

COMMODITIES

• Crude futures clawed back some of the prior day's losses with mild support overnight following the larger-than-expected draws in private sector crude and gasoline inventories data but with the rebound limited by the mixed risk appetite and as the ongoing hawkish central bank narrative in G10 continued to cast a shadow over the demand side of the equation.
• US Private Inventory Report: Crude -2.4mln (exp. -1.8mln), Distillates +0.8mln (exp. +0.8mln), Gasoline -2.9mln (exp. -0.1mln), Cushing +1.5mln.
• Russian Energy Ministry said Russia's gasoline exports fell 30% in June from May and Russian refineries' gasoline production was up 3.1% Y/Y as of the last week of June, while diesel production rose 2% Y/Y with reserves at a historical high, according to Reuters.
• Spot gold was restricted after the recent upside in yields and as the dollar attempted to nurse losses.
• Copper futures languished near yesterday's lows with price action not helped by the downbeat mood in China.
• Chile's Codelco said it is still evaluating the impact on operations from stoppages caused by rains in the central-south region, while it also noted that some operations were still halted at the El Teniente mine after rains, according to Reuters.

CRYPTO

• Bitcoin was mildly pressured alongside the mixed risk appetite and dipped beneath USD 30,500.
• Speculation is mounting that the BlackRock Bitcoin ETF will get the green light, according to FT.

NOTABLE ASIA-PAC HEADLINES

• US considers new curbs on AI chip exports to China amid some concerns China could use AI chips from Nvidia (NVDA) and others for weapon development and hacking, according to WSJ.

DATA RECAP

• Chinese Industrial Profit YY (May) -12.6% (-18.2%)
• Chinese Industrial Profit YTD (May) -18.8% (Prev. -20.6%)
• Australian Weighted CPI YY (May) 5.6% vs. Exp. 6.1% (Prev. 6.8%)

GEOPOLITICS

• Ukraine said the main event in its counteroffensive is still to come and its main troop reserves have yet to be used in the operation, while Defence Minister Reznikov said their forces made gains that were not made public to avoid exposing troops, according to FT.
• NATO Secretary General Stoltenberg said NATO is ready to defend itself against Russia or Belarus, according to Sky News Arabia.
• US officials said a senior Russian general had advanced knowledge of the Wagner Group chief's plans to rebel against Russia’s military leadership and they are trying to learn if former top Russian commander in Ukraine General Surovikin helped plan Prigozhin's actions. Furthermore, there are signs that other Russian generals may also have supported Prigozhin’s attempt to change the leadership of the Defense Ministry by force, according to the New York Times.
• South Korea designated new sanctions on 2 individuals and 2 entities over North Korea's weapons programme.

EU/UK

NOTABLE HEADLINES

• Two-fifths of UK sellers are accepting discounts of more than 5% on property asking prices as rising mortgage costs spook buyers, according to property website Zoopla cited by FT.
• ECB policymakers see little chance of a pause in rate hikes in July or September as inflation remains stubborn, according to sources cited by Reuters. Policymakers don't expect evidence that stubborn inflation is easing to be clear enough for them to pause this summer and conversations with seven rate-setters at the Sintra forum showed that most expected to increase borrowing costs again at both the July and September meetings despite signs the Eurozone economy is flagging. Furthermore, it was stated that out of a group of hawks, only one opened the door to a pause in September after recent data showed inflation and economic activity slowing, while the others said a hike at the September meeting was more likely than not.
• Some ECB officials are reportedly mulling a faster reduction of bond portfolio, according to Bloomberg sources
• ECB's Wunsch commented that a rate pause needs a clear signal that core inflation is slowing and noted stagflation is the base case with more action needed if core inflation does not moderate.
• ECB's Panetta is to replace Ignazio Visco as Bank of Italy chief, according to Il Sole 24.