• European bourses & US futures are relatively contained ahead of Fed speak and banking earnings
• Within Europe, Telecoms lag after updates from Ericsson and Nokia
• DXY struggles for direction just above 99.75 with peers mixed & JPY retreating
• Core fixed benchmarks diverge slightly as EGBs/Gilts extend while USTs slip ahead of data
• Commodities are generally contained with catalysts thin after a week of USD-driven upside
• Looking ahead, highlights include US Import & Export Prices, UoM Sentiment (Prelim), US Treasury Dealer Meeting Agenda. Earnings from JPMorgan, Wells Fargo, BlackRock & Citigroup. Fed's Goolsbee.

EUROPEAN TRADE

EQUITIES

• European bourses are contained but remain on track to close the week out with marked gains, Stoxx 600 set for +3% WTD upside.
• Sectors are somewhat mixed with defensive names outperforming on the tentative tone while Telecom. lags after Nokia and Ericsson's respective updates.
• Stateside, futures are near the unchanged mark as we await the final scheduled Fed speak before blackout commences alongside the formal commencement of Q2 earnings season.
• UnitedHealth Group Inc (UNH) Q2 2023 (USD): EPS 6.14 (exp. 6.01), Revenue 92.9bln (exp. 91.bln); FY23 adj. Net guidance 24.70-25.00/shr (exp. 24.76). +2.1% in pre-market trade
• Nokia (NOKIA FH) - Q2 (EUR): Revenue 5.7bln (exp. 6.03bln), adj. EBIT Margin 11%. Cuts FY23 sales outlook to EUR 23.2-24.6bln (exp. 25.57bln, prev. 24.6-26.2bln). Weaker demand outlook in H2 is due to both the macro-economic environment and customers inventory digestion.
• UK CMA considers there is insufficient time remaining within the statutory period for a full and proper consideration of Microsoft's (MSFT) submission re. the proposed Activision (ATVI) deal; revised period to end on 29th August 2023.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• DXY finds a base just above 99.500 after another heavy decline and approaching end of bleak week that started with the index peaking around 102.500.
• Aussie and Kiwi make way for Buck bounce as AUD/USD fades ahead of 0.6900 and NZD/USD from 0.6400+ at best.
• Yen retreats from 137.26 towards 138.50 as JGB-UST spreads re-widen.
• Euro and Pound pull up shy of 1.3150 and 1.1250 vs Dollar respectively, but EUR/USD evades 1bln option expiries at 1.1200, for now.
• BoJ to host the first long-term policy review workshop in December, to discuss monetary policy and financial systems. Second workshop in May 2024. To discuss analyses comprehensively until that point.
• PBoC set USD/CNY mid-point at 7.1318 vs exp. 7.1453 (prev. 7.1527)
• Click here for more detail.
• Click here for the notable option expiries.

FIXED INCOME

• Debt diverges towards the end of a hectic and mainly corrective bull-steepening week
• Bunds and Gilts above par between 133.18-132.69 and 95.02-94.53 respective bands, but T-note underwater within 113-01+/112-21 overnight range awaiting US import/export prices
• Fed's Goolsbee and UoM sentiment with inflation expectation. JGBs volatile amidst contrasting BoJ vibes
• Click here for more detail.

COMMODITIES

• A contained and catalyst-thin session thus far to conclude a busy week of macro developments before the Fed blackout begins and attention turns to the next round of Central Bank announcements.
• WTI Aug’23 and Brent Sep’23 are on track to conclude the week with gains of circa. USD 2.50/bbl and are currently at the upper-end of the week’s USD 72.67-77.33/bbl and USD 77.36-81.75/bbl respective parameters.
• Spot gold is a touch softer but holds above the USD 1950/oz handle around the USD 1954/oz 50-DMA; base metals more mixed as it stands.
• Qatar set September-loading Al-Shaheen crude term prices at USD 1.68/bbl above Dubai quotes.
• Click here for more detail.

NOTABLE US HEADLINES

• Fed's Waller (voter) said the Fed will likely need two more 25bps hikes this year and he favours raising rates at the July FOMC, while he is increasingly confident that banking stress won't derail the economy. Waller added that cooler CPI data is welcome but they need to see if it is sustained, while he doubts core inflation is structurally lower and stated that the September Fed meeting is a live meeting for monetary policy.
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• EU Eurostat Trade NSA, Eur (May) -0.3B EU (Prev. -11.7B EU).

NOTABLE EUROPEAN HEADLINES

• Dutch elections to take place on November 22nd, via NOS.

CRYPTO

• Bitcoin is under modest pressure despite the USD continuing to languish with drivers thin and the docket ahead relatively spares aside from crucial banking updates.

GEOPOLITICS

• Russian President Putin said new weapons supplies will further escalate the conflict in Ukraine and worsen the situation. It was separately reported that Putin also said he proposed to Wagner fighters at a meeting this month to continue serving in the military, while he added that Russia's government and parliament must discuss the legal framework for private armies and said without a legal framework, 'Wagner does not exist', according to Kommersant.

APAC TRADE

• APAC stocks traded mostly higher after the positive lead from Wall St where yields continued to decline as PPI data followed suit to the softer consumer inflation and supported the case for just one more Fed rate hike.
• ASX 200 was firmer with gains in the index led by the tech sector after similar outperformance of US counterparts amid a decline in yields, while the announcement that RBA Deputy Governor Bullock will take over from Governor Lowe in September had little effect on markets and was largely seen as policy continuation.
• Nikkei 225 swung between gains and losses with headwinds from JPY strength and speculation that the BoJ could raise its inflation forecast above the 2% target at its meeting this month, which could pave the way for policy normalisation, while former BoJ Director Hayakawa expects the BoJ to tweak yield curve control at the upcoming meeting by potentially raising the 10yr yield ceiling to 1.0%.
• Hang Seng and Shanghai Comp were positive albeit with gains capped despite the renewed support pledges by the PBoC to keep credit growth appropriate, as well as step up counter-cyclical adjustments and support for key sectors.

NOTABLE ASIA-PAC HEADLINES

• PBoC Deputy Governor Liu said China's overall liquidity is ample and its credit structure improved in H1, while he also noted that financing costs stabilised and dropped in H1. Liu said the PBoC has ample policy tools and will step up counter-cyclical adjustments, as well as improve financial services for tech companies, guide banks to boost lending for tech companies and will increase support for SMEs and the green sector, according to Reuters.
• PBoC official said they will keep credit growth appropriate and step up support for key sectors, while the central bank will deepen interest rate reforms and will guide banks to increase lending to small firms and private firms. Furthermore, the official said there is ample room and various policy tools to cope with challenges, while they will use policy tools such as RRR and MLF, as well as innovate new policy tools if needed, according to Reuters.
• China's top diplomat Wang Yi said US and China need to take practical actions to bring back ties onto the right track and that the US should adopt a rational and pragmatic attitude and meet China halfway. Wang also said the US must refrain from interfering in China's internal affairs and stop suppressing China's economy, trade, and technology, while the US must lift illegal and unreasonable sanctions against China, according to Xinhua.
• Australia named Deputy Governor Bullock as the next RBA Governor from September 18th, while Bullock said she is committed to ensuring that the Reserve Bank delivers on its policy and operational objectives.
• Chinese regulators are reportedly to meet with global investors in order to shore up economic confidence, via Reuters citing sources; focused on the current conditions of USD-denominated investment firms and the main challenges they face. Meeting will take place on Friday 21st July. Investors will be invited to provide suggestions on how to combat the challenges they are facing and to give their views on the Chinese economy.

DATA RECAP

• Singapore GDP QQ (Q2 P) 0.3% vs Exp. 0.3% (Prev. -1.6%); YY (Q2 P) 0.7% vs Exp. 0.6% (Prev. 0.4%)