• European bourses remain firmer but off best levels as sentiment slips throughout the morning
• Stateside, futures in-fitting though action has been more contained and they remain much closer to Unch.
• DXY fails to benefit from the pullback in risk appetite as CHF and JPY outperform with UST yields pulling back, EUR unreactive to weak ZEW
• Core benchmarks are bid, with Gilts in-fitting despite hawkish wage metrics
• Crude has succumbed to the above move while precious and base metals prove more resilient
• Looking ahead, highlights include Fed Discount Rate Minutes, NATO Summit & EIA STEO, Speech from Fed's Bullard, Supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer but off of best levels, Euro Stoxx 50 +0.4%, as sentiment has gradually deteriorated throughout the morning from initial APAC performance and as ZEW remains glum.
• Sectors are primarily in the green, though shy of best levels given the above; Autos lag with Volkswagen dragging after a Handelsblatt piece.
• Stateside, futures are directionally in-fitting but have been much closer to unchanged throughout the morning ahead of a relatively thin US agenda, ES +0.1%.
• German Cartel Office says, following the European Court Ruling, see scope for further actions against Big Tech names.. Reminder, On July 4th, the EU's Top Court said the German Antitrust Agency can asses privacy in its investigations.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Yen and Franc outperform amidst retreat in US Treasury yields, USD/JPY extends reversal through 141.00 and a Fib to just under 140.50, USD/CHF towards 0.8800 from 0.8850+ and DXY depressed within 101.960-670 range as a result.
• Pound perks up as UK average earnings exceed expectations, Cable probes 1.2900 briefly and EUR/GBP pivots 0.8550.
• Euro fades between 1.1026-1.0998 parameters vs Buck after downbeat ZEW survey.
• Kiwi lags awaiting RBNZ and confirmation that OCR has peaked at 5.5%, NZD/USD reverses from 0.6225 and AUD/NZD rebounds from just under 1.0750.
• PBoC set USD/CNY mid-point at 7.1886 vs exp. 7.2177 (prev. 7.1926)
• Click here for more detail.
• Click here for the notable option expiries.

FIXED INCOME

• Bonds bounce further from recent lows, with Bunds at best levels since last Thursday at 131.58 and Bobls underpinned near 115.00 following a decent 5 year German auction.
• Gilts lag within 93.31-92.78 range after another UK average earnings beat, but T-note closer to 111-16 peak than 111-04 trough amidst soft US inflation vibes ahead of CPI.
• Click here for more detail.

COMMODITIES

• Crude benchmarks spent much of the European morning resilient to the gradual downtick in broader risk appetite. However, the complex has most recently moved in-line and is now essentially flat and echoing the price action of European/US equity futures.
• Spot gold remains firmer given the lessening risk appetite and as the USD fails to derive any significant benefit from this.
• Base metals are hanging onto their APAC gains spurred by further Chinese stimulus hopes, despite the broader dip in risk appetite.
• Indonesia seized an Iranian-flagged tanker due to alleged illegal transhipment of oil, according to Reuters.
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NOTABLE US HEADLINES

• US NFIB Business Optimism Index (Jun) 91 (Prev. 89.4)
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• UK Average Week Earnings 3M YY (May) 6.9% vs. Exp. 6.8% (Prev. 6.5%); Average Earnings (Ex-Bonus) (May) 7.3% vs. Exp. 7.1% (Prev. 7.2%)
• UK ILO Unemployment Rate (May) 4.0% vs. Exp. 3.8% (Prev. 3.8%); Claimant Count Unemployment Change (Jun) 25.7k (Prev. -13.6k)
• UK BRC Retail Sales YY (Jun) 4.2% (Prev. 3.7%); YY (Jun) 4.9% (Prev. 3.9%)
• German ZEW Economic Sentiment (Jul) -14.7 vs. Exp. -10.5 (Prev. -8.5); Current Conditions (Jul) -59.5 vs. Exp. -60.0 (Prev. -56.5)
• EU ZEW Survey Expectations (Jul) -12.2 (Prev. -10.0)

NOTABLE EUROPEAN HEADLINES

• UK PM Sunak considers delaying cabinet reshuffle until September, according to The Telegraph.
• Barclays said UK consumer spending in June rose 5.4% Y/Y which was boosted by warm weather and noted that food price inflation pushed the annual increase in grocery spending in June to the highest since February 2021, according to Reuters.
• ECB's Villeroy says we are starting to see good news on inflation; inflation will continue to decline and will be back at 2% by 2025; inflation should be at 2.5% on average next year.

CRYPTO

• Bitcoin is a touch softer but remains firmly above the USD 30k mark, as sentiment slips but with the USD unable to benefit thus far.

GEOPOLITICS

• US President Biden is to meet with Ukrainian President Zelensky during the NATO summit on Wednesday, while Japanese PM Kishida also plans to meet with Zelensky at the NATO summit, according to CNN and Nikkei.
• US National Security Advisor Sullivan says allies will send a positive signal on Ukraine's future membership at the NATO summit; Biden intends to move forward with the transfer of F16s to Turkey in consultation with Congress.
• North Korean leader Kim's sister said the US spy plane entered its economic water zone eight times on July 10th and warned US forces will face critical flight in case of repeated illegal intrusion, according to KCNA.
• Azerbaijani border guards suspend transport between Armenia and the Nagorno-Karabakh region, according to Al Arabiya.

APAC TRADE

• APAC stocks were mostly positive following the tailwinds from the US where cyclicals benefitted from encouraging inflation proxies ahead of this week's US CPI data, while participants also reflected on China's support efforts.
• ASX 200 traded higher with the index led by the tech and mining-related industries, while risk sentiment was also facilitated by an improvement in Westpac consumer confidence and NAB business surveys.
• Nikkei 225 was the laggard and gave back most of its early gains with the upside capped by a firmer currency.
• Hang Seng and Shanghai Comp conformed to the upbeat mood as developers benefitted after China extended two financial policies to support the stable and healthy development of the real estate market to the end of 2024.

NOTABLE ASIA-PAC HEADLINES

• Australian PM Albanese is reportedly considering delaying a trip to Beijing until next year as the government prepares the appointment of a new ambassador to China, while turning down an invitation would be seen by China as a snub, according to Sydney Morning Herald.

DATA RECAP

• Australian NAB Business Confidence (Jun) 0.0 (Prev. -4.0); Conditions (Jun) 9.0 (Prev. 8.0)
• Australian Westpac Consumer Confidence Index (Jul) 81.3 (Prev. 79.2); Sentiment MM (Jul) 2.7% (Prev. 0.2%)