• European bourses & US futures are firmer as the post-inflation action continues ahead of IJC
• DXY extends the post-inflation decline towards 100.00 amid a further retreat in yields
• Antipodeans outperform, EUR & GBP also bid; as above, fixed benchmarks continue to climb
• Crude inches higher with attention on Urals while spot gold is more contained but base metals extend
• Looking ahead, highlights include US IJC, ECB Minutes, OPEC OMR, Supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer across the board in a continuation of the post US CPI trade, Euro Stoxx 50 +0.6%.
• Sectors are primarily in the green with Retail names outperforming after Fast Retailing while Homebuilders lag following Barratt Developments earnings commentary.
• Stateside, futures are also firmer ahead of IJC and Fed speak ES +0.3%; NQ +0.6% outperforms as yields continue to pullback.
• PepsiCo Inc (PEP) Q2 2023 (USD): Core EPS 2.09 (exp. 1.96), Revenue 22.32bln (exp. 21.73bln); raises annual revenue and profit forecasts after price hikes and steady demand. FY EPS view 7.47 (exp. 7.32). +3.1% in pre-market trade
• US FTC investigating whether ChatGPT harms consumers, WaPo reports.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• DXY extends post-CPI decline towards 100.000 as Treasury yields retreat further and markets position for less aggressive Fed.
• Kiwi and Aussie outperform due to high beta properties, with NZD/USD probing 0.6350 and AUD/USD touching 0.6850.
• Pound encouraged by less weak than feared UK GDP data and Euro gains at the expense of soft Dollar, as Cable tops 1.3050 and EUR/USD approaches 1.11-75-85 resistance zone.
• Yen lags after stalling near 138.00 and takes note of verbal intervention from Japan's top currency diplomat Kanda.
• PBoC set USD/CNY mid-point at 7.1527 vs exp. 7.1623 (prev. 7.1765)
• Click here for more detail.
• Click here for the notable option expiries.

FIXED INCOME

• Bonds bounce further in follow-on reaction to soft US inflation data.
• Bunds breach several resistance levels and trip stops on the way to 133.13 from 131.92.
• Gilts more contained within 94.91-33 range post-better than forecast UK GDP and OBR warning on Government's debt recovery strategy.
• T-note nearer 112-24+ peak than 112-07 trough after big block trade in 5 year futures that looked like a buy given price action at the time.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are incrementally firmer but well within earlier ranges as Brent loses a little bit of its upward momentum after surpassing USD 80/bbl.
• Meanwhile, spot gold is inching higher as the USD remains downbeat but with upside once again capped by the broader tone; base metals firmer, given the aforementioned factors are both supportive.
• Russian Urals oil price has moved USD 2-3/bbl above the price cap on Thursday, via Reuters' calculations.
• IEA Monthly Oil Market Report: oil demand is set to increase by 2.2mln BPD in 2023 to reach a record 102.1mln BPD (vs. June view of 102.3mln BPD). China is to account for 70% of global oil demand gains. China’s widely anticipated reopening has so far failed to extend beyond travel and services.
• EU's VP Sefcovic says the EU has gathered 16BCM of demand in the second round of joint gas purchases, results which exceed expectations.
• Click here for more detail.

NOTABLE US HEADLINES

• US Senator Warren said Fed Chair Powell should halt the rate hikes, while she added that the banking industry is still overly concentrated and anything that causes the demise of small banks is a bad idea, according to Bloomberg.
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• UK GDP Estimate MM (May) -0.1% vs. Exp. -0.3% (Prev. 0.2%); YY (May) -0.4% vs. Exp. -0.7% (Prev. 0.5%); 3M/3M (May) 0.0% vs. Exp. -0.1% (Prev. 0.1%)
• UK RICS Housing Survey (Jun) -46.0 vs. Exp. -34.0 (Prev. -30.0)
• EU Industrial Production MM (May) 0.2% vs. Exp. 0.3% (Prev. 1.0%); YY (May) -2.2% vs. Exp. -1.2% (Prev. 0.2%)

NOTABLE EUROPEAN HEADLINES

• UK PM Sunak is set to be presented a plan on Thursday to give a million public sector workers a pay rise of around 6%, according to The Telegraph.
• ECB's Visco says we are not very far from a peak in interest rates, somewhat disagrees with the preference for tightening.
• ECB's Stournaras says we said a July hike was likely, but data since has become weaker, via Econostream; September hike is not a given, particularly since data points to a Q3 stagnation. Emphasises data-dependence.

CRYPTO

• Bitcoin is comfortably above the USD 30k mark but yet to make much traction above the USD 30.5k figure with catalysts light and price action broadly still a function of Wednesday's inflation update.

GEOPOLITICS

• North Korea said it test-launched a Hwasong-18 ICBM on Wednesday and leader Kim guided the missile test, while Kim said they will continue military offensive measures until the US abandons its hostile policy against Pyongyang.
• UN Security Council is to meet publicly on Thursday regarding North Korea's missile launch, according to Reuters.

APAC TRADE

• APAC stocks traded higher as the region reacted to the softer-than-expected US inflation data which underpinned the global risk appetite, while weaker-than-expected Chinese trade data failed to dampen the spirit.
• ASX 200 was firmer with all sectors lifted by the constructive mood and as yields continued to decline.
• Nikkei 225 reclaimed the 32,000 level at the open after the US CPI data provided a rising tide for stocks.
• Hang Seng and Shanghai Comp were positive with outperformance in the Hong Kong benchmark due to tech strength after Chinese Premier Li met with several HK-listed tech giants, endorsed the platform economy and pledged more support for the sector, while gains in the mainland were somewhat capped alongside the latest Chinese trade data which missed forecasts.
• Credit Suisse upgrades Chinese equities to Overweight.

NOTABLE ASIA-PAC HEADLINES

• China's Customs said the nation's exports showed strong resilience in H1 but also noted that sluggish global economic growth, slowing global trade and investment, geopolitical risks and weakening external demand continue to impact China's trade. Furthermore, it stated that China's trade growth faces relatively big pressure but China is confident it can consolidate its market share in global trade this year, while a Customs official noted feelings of pressure and optimism for China trade in H2, according to Reuters.
• US Secretary of State Blinken will meet with China's top diplomat Wang Yi at the ASEAN meetings.
• Chinese hackers reportedly breached the email of US Commerce Secretary Raimondo and State Department officials, according to WSJ.
• Bank of Korea kept its base rate unchanged at 3.50%, as expected, with the rate decision made unanimously and 6 members wanted to keep the door open for one more rate hike. BoK said domestic economic growth is expected to recover gradually, while GDP growth and consumer price inflation this year are expected to be consistent with forecasts. Furthermore, BoK Governor Rhee said several board members expressed concern about the rise in household debt, while he added that inflation will rebound to around 3% by year-end and fall again to the 2% level next year.
• Fast Retailing (9983 JT) 9-month(JPY): PBT 359bln, +2.8%; Operating Profit 330.6bln, +21.9%; Net Profit 238bln, +0.3%. CFO says Chinese consumption appears to be recovering strongly.
• Japan Top FX Diplomat Kanda says closely watching FX market moves; there is a view that speculative Yen short positions are unwinding rapidly; there is a view that deflationary norm may be changing.

DATA RECAP

• Chinese Trade Balance (USD)(Jun) 70.62B vs. Exp. 74.8B (Prev. 65.81B)
• Chinese Exports YY (USD)(Jun) -12.4% vs. Exp. -9.5% (Prev. -7.5%); Imports YY (USD)(Jun) -6.8% vs. Exp. -4.0% (Prev. -4.5%)
• Chinese Trade Balance (CNY)(Jun) 491.3B (Prev. 452.3B)
• Chinese Exports YY (CNY)(Jun) -8.3% (Prev. -0.8%); Imports YY (CNY)(Jun) -2.6% (Prev. 2.3%)