• European bourses and US futures are pressured as growth concerns draw focus before key US data
• Cyclicals lag while defensives outperform, but remain red; Meta is bolstered as Threads launches
• DXY slips post-Minutes while USD/JPY reverses through 144.00 and Antipodeans lead despite risk aversion
• Gilts gap lower as BoE tightening expectations continue to lift, EGBs and USTs in-fitting with yields lifting further
• Crude holds onto modest upside while spot gold benefits from the USD and risk, factors which are denting base peers
• Looking ahead, highlights include US ADP, US S&P Services PMI, US ISM Services PMI, US EIA Crude Stocks, Speeches from Fed's Logan.

EUROPEAN TRADE

EQUITIES

• European bourses are in the red with cyclicals in particular lagging on ongoing growth concerns, Euro Stoxx 50 -1.5%.
• Sectors are all in the red with the negative price action extending shortly after the cash open given Construction PMIs, Cyclicals lag while Defensive names are the relative outperformers but remain firmly negative.
• Stateside, futures slip ahead of a busy data docket with the RTY -0.7% lagging given the above while the NQ -0.4% fares slightly better given META +1.7% pre-market action as Threads launches.
• Meta (META) CEO Zuckerberg says Threads passed 10mln signups in seven hours.
• ASML (ASML NA) "told the Global Times on Thursday that it did not roll out a special-edition lithography machine for the Chinese market, responding to the market rumour of a special ASML DUV system for Chinese market."
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Yen turns the tide in choppy risk waters, with USD/JPY reversing through 144.00 where hefty option expiries reside and JPY crosses also retracing a chunk of their recent upside.
• DXY slips from post-FOMC minutes peak within 103.460-100 range as focus shifts to ADP, IJC, ISM services and JOLTS.
• Aussie and Kiwi resist aversion with the former underpinned by encouraging trade data and both relieved to see Yuan propped by PBoC; AUD/USD and NZD/USD towards upper end of 0.6686-34 and 0.6214-0.6164 bands.
• Euro is losing sight of 1.0900, but holding above key support and Pound propped around 1.2700 as BoE rate expectations continue to rocket.
• PBoC set USD/CNY mid-point at 7.2098 vs exp. 7.2510 (prev. 7.1968)
• Click here for more detail.
• Click here for the notable option expiries.

FIXED INCOME

• No respite for debt and hawkish Central Bank vibes compound bearish technical impulses.
• Bunds probe support zone between 132.09-65 bounds, Gilts towards base of 93.14-94.03 range and T-note nearer 11-01+ than 111-15 overnight high.
• OATs and Bonos weak after lacklustre demand for French and Spanish supply irrespective of marked concessions.
• Click here for more detail.

COMMODITIES

• WTI and Brent are firmer by around USD 0.30/bbl a piece with specific drivers limited and despite broader growth concerns impacting elsewhere.
• Reminder, the OPEC summit has entered its second day though remarks thus far have been less impactful than Saudi's commentary on Wednesday.
• Spot gold is benefitting from the softer USD and downbeat sentiment with the yellow metal attempting to move above USD 1920/oz.
• Base metals are, in contrast, lower and in-fitting with broader sentiment with LME Copper slipping below USD 8250/T, despite Codelco warning its copper production will end 2023 at the low-end of its forecast range.
• US Energy Inventory Data (bbls): Crude -4.4mln (exp. -1.8mln), Cushing +0.3mln, Gasoline +1.6mln (exp. -1.1mln), Distillate +0.6mln (exp. +0.5mln)
• Caspian Pipeline Consortium says all pumping stations are working as usual.
• Click here for more detail.

NOTABLE US HEADLINES

• Fed's Williams (voter) said he is not content with where inflation is right now and that fighting inflation remains the Fed's main job, while he sees progress on inflation but noted price pressures are still too high. Williams also noted a data-dependent approach when it comes to future Fed actions and thinks that they still have more work to do on rates. Furthermore, he said real rates are projected to be restrictive for some time and the June rate pause was the right move but future hikes are still in play.
• US Secretary Yellen arrived in Beijing as expected, according to Chinese State media.
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• German Industrial Orders MM (May) 6.4% vs. Exp. 1.2% (Prev. -0.4%)
• EU HCOB Construction PMI (Jun) 44.2 (Prev. 44.6). “An end to the downturn can probably be expected at the earliest when it is clear that the European Central Bank (ECB) will not raise its key interest rates any further and that long-term yields will also stop rising. While the ECB is approaching its "terminal rate," there is still room for loftier long-term yields given the relatively high inflation rate. Higher interest rates have been cited as an important burdening factor by some of the companies surveyed for many months now.”
• EU Retail Sales YY (May) -2.9% vs. Exp. -2.7% (Prev. -2.6%); MM (May) 0.0% vs. Exp. 0.2% (prev. 0.0%)
• UK S&P Global/CIPS Construction PMI (Jun) 48.9 vs. Exp. 51.0 (Prev. 51.6)

NOTABLE EUROPEAN HEADLINES

• SNB's Maechler said the SNB still sees inflation as being very high and doesn't rule out further rate increases, according to Le Temps.
• BoE's Bailey says moves by regulators on retail prices, particularly in the fuel market, will help to lower inflation, via BBC; evidence that some retailers are overcharging customers. Expects quite a marked fall in inflation but it will be hard for borrowers, cannot provide a date for when interest rates will begin to come down.
• BoE Decision Maker Panel: One-year ahead CPI inflation expectations decreased to 5.7% in June, down from 5.9% in May. Expected year-ahead wage growth slightly increased to 5.3% on the month in June (up from 5.2% in May) although the three-month moving average decreased by 0.1 percentage points to 5.3%.
• UK PM Sunak has reportedly tapped German Chancellor Scholz to help delay the EU EV tariff, according to Bloomberg News.

CRYPTO

• Notable upside has been seen throughout the morning in key crypto's including Bitcoin and ETH, up over 2% thus far with Bitcoin surpassing and climbing further above the USD 31k mark.

GEOPOLITICS

• Ukrainian President Zelensky said he wanted the counteroffensive to happen much earlier and he told US and European leaders that Ukraine needed the weapons for that, while he also noted that difficulties on the battlefield slowed the pace of the counteroffensive, according to a CNN interview.
• US Air Force said 3 Russian fighter jets harassed drones during a mission against ISIS which forced the US to perform evasive manoeuvres, according to AJA Breaking.
• Swedish PM Kristersson said after meeting with US President Biden that Biden expressed very strong support for Sweden's NATO accession and they both agreed the NATO Summit in Vilnius is a natural time for Swedish NATO accession, according to Reuters.
• US Secretary of State Blinken stressed the importance of NATO unity in a call with the Turkish Foreign Minister and encouraged Turkey's support for Sweden to join the NATO alliance now.
• Two shells fired by Israel towards southern Lebanon fell after a missile was fired from Kafr Shuba, according to Al Arabiya. Additionally, at least one rocket has been fired from Southern Lebanon towards Israel, via Reuters citing three security sources. Subsequently, "There was no rocket from Lebanon into Israel this morning, there is controlled mine explosions being conducted along the border.", according to AuroraIntel. Most recently, Israel's Kan Radio saying Israeli forces shelling Lebanon is in response to rocket launch.
• Belarusian President Lukashenko says Russia will consult with Belarus in case nuclear weapons are used, according to Tass; says we are not going to attack anyone with nuclear weapons, but if aggression is shown, the response will be immediate. Adding that targets have been determined.
• Belarusian President Lukashenko says talks on Ukraine hit dead end; nuclear weapons will not be used during special military operation, it's only possible in case of NATO aggression, according to Tass.

APAC TRADE

• APAC stocks were mostly lower following the post-Independence Day hangover in the US owing to recent weak global data releases, a rising yield environment and after the FOMC Minutes provided little to deviate from the current view of future rate increases.
• ASX 200 traded lower as underperformance in the mining and materials-related industries spearheaded the declines seen in nearly all sectors and with risk appetite also sapped by a rise in Aussie yields.
• Nikkei 225 was pressured at the open with selling exacerbated after slipping beneath the 33,000 level.
• Hang Seng and Shanghai Comp declined with acute selling in Hong Kong-listed Chinese banks after China’s largest lenders cut rates for corporate US dollar deposits amid efforts to support the yuan and with banks said to have stopped buying bonds issued in the Shanghai free trade zone after heightened regulatory scrutiny, while losses in the mainland were stemmed ahead of US Treasury Secretary Yellen’s arrival in Beijing for meetings with senior officials.

NOTABLE ASIA-PAC HEADLINES

• Chinese banks stopped buying bonds issued in the Shanghai free trade zone after heightened regulatory scrutiny.
• US Commerce Department firmly opposes export controls announced by China on gallium and germanium, while the US will engage with allies and partners to address the export controls announced by China.

DATA RECAP

• Australian Trade Balance (AUD) (May) 11.8B vs. Exp. 10.5B (Prev. 11.2B)
• Australian Exports MM (May) 4.0% (Prev. -5.0%); Imports MM (May) 2.0% (Prev. 2.0%)