• APAC stocks were mostly positive albeit with gains capped for many of the regional bourses.
• US equity futures lacked excitement as participants look ahead to this week's risk events including US CPI data; European equity futures are indicative of a lower open.
• The latest Chinese inflation data missed estimates with zero consumer inflation in the mainland and a deeper contraction in factory gate prices.
• US Treasury Secretary Yellen had a candid, in-depth, pragmatic, and constructive exchange with Chinese Vice Premier He Lifeng.
• Looking ahead, highlights include Norwegian CPI, EZ Sentix, Chinese M2, NY Fed SCE, Riksbank Minutes, and Speeches from BoE's Bailey, Fed’s Barr, Daly, Mester & Bostic.

US TRADE

EQUITIES

• US stocks were choppy on Friday in the aftermath of the US jobs data which initially lifted stocks although US indices then gradually unwound the gains heading into the close aside from the cyclically-levered Russell 2k small-cap index which notably outperformed.
• SPX -0.29% at 4,399, NDX -0.35% at 15,037, DJI -0.55% at 33,735, RUT +1.22% at 1,862.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Goolsbee (voter, dove) said on Friday to never make too much out of any one month of jobs numbers and that it is clear the jobs market is strong but is cooling, while he said they are getting to a more sustainable pace of job gains. Goolsbee said that he hasn't seen anything that says one or two more rate hikes this year is wrong and noted there are modest increases in rates to come, but timing is a question, and he still wants to see inflation data, according to CNBC.
• US Senate Banking Committee will vote on the Fed nomination of Adriana Kugler to the Fed board, the nomination of Lisa Cook to a full term, and the nomination of Philip Jefferson for Vice Chair on Wednesday at 14:00EDT, according to reports in WSJ on Friday.
• US Treasury Secretary Yellen said it is too early to rule out a US recession and that inflation remains too high.
• International Brotherhood of Teamsters said striking Amazon (AMZN) delivery drivers and dispatchers from Palmdale, California extended the picket line to the Amazon warehouse in Massachusetts.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive albeit with gains capped for many of the regional bourses as participants digested softer-than-expected inflation data from China.
• ASX 200 gave back early gains with price action rangebound as the gains in the commodity-related sectors are offset by losses in industrials, real estate and consumer stocks.
• Nikkei 225 spent most of the session extending on last week’s slump before rebounding in late trade.
• Hang Seng and Shanghai Comp traded higher with the Hong Kong benchmark boosted by the tech sector amid hopes that China could be nearing the end of the tech crackdown. Conversely, the gains in the mainland were capped after the latest Chinese inflation data missed estimates with zero consumer inflation in the mainland and a deeper contraction in factory gate prices, while there were recent comments from Treasury Secretary Yellen that they made some progress during her trip to Beijing and that ties were put on a super footing, although expectations had been pre-set at a low level
• US equity futures lacked excitement as participants look ahead to this week's risk events including US CPI data.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.2% after the cash market closed up by 0.3% on Friday.

FX

• DXY was marginally firmer which provided some reprieve from post-NFP losses albeit with price action contained after a lack of major catalysts over the weekend and as participants look ahead to the US CPI data mid-week.
• EUR/USD traded rangebound and held on to Friday’s spoils with the single currency unmoved by comments from ECB’s officials including Centeno who sees inflation slowing and noted that all indicators say inflation has peaked, while Villeroy said Eurozone rates will soon reach their high point but it will be more of a high plateau than a peak.
• GBP/USD slightly pulled back from around YTD highs but with trade muted as recent comments from BoE Governor Bailey provided little incrementally in which he rejected calls to raise the inflation target to above 2%.
• USD/JPY nursed some of last week’s late losses and gradually edged closer towards the 143.00 handle.
• Antipodeans were pressured in the aftermath of the softer Chinese inflation data which also weighed on CNY.
• PBoC set USD/CNY mid-point at 7.1926 vs exp. 7.2132 (prev. 7.2098)

FIXED INCOME

• 10yr UST futures were subdued following Friday’s whipsawing in the aftermath of the somewhat mixed jobs report which was still seen as strong enough to keep Fed rate hikes in play, while Fed’s Goolsbee commented late last week that he hasn't seen anything that says one or two more rate hikes this year is wrong.
• Bund futures remained lacklustre and slipped beneath the 131.00 level, while mixed ECB rhetoric had little effect.
• 10yr JGB futures were pressured amid mild upticks in Japanese yields and despite the BoJ upping purchases of 5yr-10yr JGBs in today’s scheduled market operations.

COMMODITIES

• Crude futures gave back some of last week's gains amid the contained risk appetite and soft China data.
• Kuwait’s Oil Minister said Kuwait and Saudi Arabia have exclusive rights in the Durra Gas Field and that Iran should unilaterally demarcate its maritime borders in accordance with international law, according to Reuters citing comments to Al Ekhbariya TV.
• US DoE issued a request on Friday for proposals to purchase another 6mln bbls for the strategic petroleum reserve for October and November.
• Gold was contained as the buck nursed some of Friday's losses and with US inflation data due mid-week.
• Copper reversed initial gains after the Chinese inflation data further emphasised a slow economic recovery.

CRYPTO

• Bitcoin was indecisive after trading sideways throughout the weekend but held above the USD 30,000 level.

NOTABLE ASIA-PAC HEADLINES

• China’s regulator supports mutual fund managers to reasonably lower fund product fees and said they will optimise the mutual fund fee scheme and steadily lower industry comprehensive fee rates.

DATA RECAP

• Chinese CPI MM (Jun) -0.2% vs. Exp. 0.0% (Prev. -0.2%)
• Chinese CPI YY (Jun) 0.0% vs. Exp. 0.2% (Prev. 0.2%)
• Chinese PPI YY (Jun) -5.4% vs. Exp. -5.0% (Prev. -4.6%)

GEOPOLITICS

US-CHINA

• US President Biden said he told Chinese President Xi earlier this year that he should be careful to observe what happened with Russia as China relies on Western investment and that since Russia went into Ukraine, 600 American corporations have pulled out of Russia. Furthermore, Biden said a Ukraine NATO membership vote would be premature and he doesn’t think Ukraine is ready to join NATO yet.
• US Treasury Secretary Yellen said the US and China have significant disagreements and they must be communicated clearly and directly, while she noted they made some progress and that the objective of her visit was to establish and deepen ties to the new Chinese economic team and reduce the risk of misunderstanding. Yellen added that bilateral meetings with Chinese officials were direct, substantive and productive with ties put on a super footing but noted that she raised serious concerns about China’s unfair economic practices and uptick in coercive action against US firms. Furthermore, she warned that Chinese firms must avoid providing Russia with material support or help in evading sanctions and said if the US moves ahead with curbs on outbound investment, it would be done in a transparent, narrowly targeted way with a rule-making process.
• US Treasury Secretary Yellen had a candid, in-depth, pragmatic and constructive exchange with Chinese Vice Premier He Lifeng in which China expressed concerns about US sanctions and restrictions against China, while China believes that generalising national security is not conducive to normal economic and trade exchanges. Yellen also met with PBoC Party Secretary Pan Gongsheng on Friday in which they discussed global macroeconomic and financial developments including the disproportionate impact of recent economic shocks on low-income countries, while she emphasised the importance of the US and China working together on global challenges.
• Chinese Finance Ministry said regarding US Treasury Secretary Yellen's visit that they ask the US to take practical actions in response to China's major economic concerns about US economic sanctions and crackdown, while the Chinese side once again reiterated its concerns on the lifting of tariffs on China and the cessation of suppression of Chinese enterprises. Furthermore, it stated that China and the US agreed to keep high-level exchanges and all-level communications in the economic area, according to Reuters.

RUSSIA-UKRAINE

• US President Biden held a call with Turkish President Erdogan in which they discussed a range of issues and expressed their commitment to continue supporting Ukraine, while President Biden conveyed his desire to welcome Sweden into NATO as soon as possible and they agreed to meet at the NATO summit in Vilnius. In relevant news, US Secretary of State Blinken emphasised to Turkish Foreign Minister Fidan that now is the time for Sweden to formally join the NATO alliance, according to Reuters.
• US and Germany are reportedly under intense pressure from other allies to show greater support for Ukraine’s eventual membership in NATO and have backed a form of words for the NATO summit’s concluding statement that does not fully endorse a pathway to NATO membership, according to FT.
• White House National Security Adviser Sullivan said Ukraine’s written assurance mentions they will not use cluster munitions on Russian territory or in populated areas, according to Reuters.
• UK PM Sunak commented on US plans to supply Ukraine with cluster munitions in which he stated the UK is part of a convention which prohibits the production or use of cluster munitions and discourages their use, according to Reuters.
• Russian embassy in the US alleged that the White House 'confesses to war crimes' by sending cluster munitions to Ukraine, according to RIA.
• Ukrainian President Zelensky returned from a visit to Turkey and brought back five former commanders of Ukraine’s garrison in Mariupol despite a prisoner exchange last year under which the men were meant to remain in Turkey, according to The Guardian. It was also reported that the Kremlin said Ankara violated agreements on the detention of Ukrainian Azov fighters and said they were not informed of the release, according to RIA.
• Russian Foreign Minister Lavrov discussed Ukraine and the Black Sea grain deal in a phone call with Turkish Foreign Minister Fidan, while they also discussed the return of Ukrainian military commanders to Ukraine, according to Reuters.

OTHER

• North Korea said it denounces the US move to introduce a nuclear-powered submarine in waters near the Korean peninsula and the US move creates a dangerous situation that takes military tension in the region close to nuclear conflict, while North Korea claimed US spy planes recently intruded its airspace and said there is no guarantee that a US spy plane will not be shot down, according to KCNA.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey rejected calls to raise the inflation target to above 2% and warned that a change in the target would “unpick expectations”, according to Bloomberg.
• UK Treasury said Mansion House reforms will simplify the rules for buying and selling shares, as well as improve research facilities.
• Dutch PM Rutte visited the king to turn in the resignation of his four-party coalition after the government collapsed on Friday due to irreconcilable differences within the coalition about how to rein in migration, according to Euronews.
• ECB’s Centeno sees inflation slowing with core prices to follow, while he noted that inflation will be well below 3% by year-end and that all indicators say inflation has peaked.
• ECB’s Villeroy said Eurozone rates will soon reach their high point but it will be more of a high plateau than a peak, while he added that raising the central bank’s inflation target is not a good idea, according to Reuters.