• European bourses & US futures are incrementally positive ahead of numerous key earnings from both sides of the pond
• DXY slipped to 101.18 before deriving support from an Ifo/ECB BLS driven hit to the Euro, AUD leads pre-CPI
• Core benchmarks are modestly pressured as earlier upside dissipates despite a strong DMO sale, US 5yr due
• German Ifo shows a return to growth contraction in Q3 while the ECB survey illustrates the ongoing impact of policy tightening
• Crude trims APAC gains on German growth concerns while metals welcome Chinese stimulus, XAU near the 100-DMA
• Looking ahead, highlights include US Consumer Confidence, Supply from the US, Earnings from EssilorLuxottica, Kering, LVMH, Microsoft, Alphabet, Visa, Moody's & GE.

EUROPEAN TRADE

EQUITIES

• European bourses are managing to eke out marginal gains, Euro Stoxx 50 +0.1%, with macro drivers downbeat since the APAC upside seen on Chinese stimulus.
• Mining names outperform given Politburo stimulus while Unilever +5.0% is supporting the FTSE 100 and AEX post-earnings; on that point, European heavyweight LVMH reports after the Paris close.
• Stateside, futures are in the green but only modestly so with specific drivers somewhat light ahead of tomorrow's FOMC and with numerous large-cap earnings due in- and after-hours today; ES +0.1%.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• DXY slips within 101.430-180 range before another boost from the Euro after weak German Ifo.
• EUR/USD tests Fib support at 1.1055 from 1.1086 peak near 1bln option expiry interest.
• Aussie rebounds alongside Yuan ahead of CPI data, AUD/USD probes 0.6770 expiries from 0.6726 base, USD/CNY and USD/CNH both sub-7.1400 from 7.1600+ and 7.1900 respective highs.
• Yen retains recovery momentum vs Dollar between 141.62-21 bounds amidst demand at the overnight Tokyo fix.
• Pound holds onto the 1.2800 handle against Buck amidst supportive EUR/GBP tailwinds within 0.8637-03 range.
• PBoC set USD/CNY mid-point at 7.1406 vs exp. 7.2044 (prev. 7.1451)
• China's major state-owned banks were seen selling dollars in the offshore and onshore spot FX markets in early Asian trades, according to sources cited by Reuters.
• Click here for more detail.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bond bears back in the driving seat as post-EU PMI momentum wanes and EGBs only bounce partially after dire German Ifo survey.
• Bunds back below par within 133.77-14 range, Gilts remain soft between 96.78-38 parameters irrespective of decent demand for 2038 DMO issuance and T-note nearer 111-23+ trough than 112-01+ peak ahead of US data, consumer confidence and 5 year supply.
• BTPs also on the back foot following mixed Italian auctions.
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COMMODITIES

• WTI and Brent are now mostly softer intraday as the complex came off the best levels seen overnight with added pressure from the German Ifo Survey which, in fitting with yesterday’s PMIs, underscored a worsening economic situation in Germany.
• Spot gold continues to oscillate on either side of its 100 DMA (1,962.91/oz) ahead of a triple-threat of central banks including the likes of the FOMC tomorrow, ECB on Thursday, and BoJ on Friday.
• Base metals have been underpinned this week by the Chinese Politburo meeting which reignited some optimism in industrials via the hint of further stimulus, albeit the upside is currently capped by the German economic woes telegraphed by the Ifo data.
• Agriculture remains a theme as supply risks grow with Chicago Wheat rallying some 10% overnight at one point, whilst corn prices were also supported.
• Kremlin says it is impossible to return to lapsed Black Sea Grain deal.
• Russian Finance Ministry plans to cut the discount it uses to set taxes on the country's crude oil exports to USD 20/bbl from USD 25/bbl currently, according to Finance Minister Siluanov cited by Reuters.
• Kazakh Energy Minister said there are no issues with shipping Kazakh crude via Russia amid Black Sea tensions.
• Kazakhstan's Tengizchevroil has reduced daily output by 12-13k/T due to unscheduled maintenance, via Deputy Energy Minister.
• China's H1 gold output rose 2.2% Y/Y to 178.6 metric tons and gold consumption rose 16.4% Y/Y to 554.9 metric tons, according to Reuters citing state media.
• Click here for more detail.

NOTABLE US HEADLINES

• US President Biden says the administration is pushing insurers to improve access to mental health treatment, according to Reuters citing officials.
• US will be short 67k chip workers by 2030, according to Reuters citing an industry group.
• Click here for the US Early Morning note.

NOTABLE EUROPEAN HEADLINES

• ECB Euro area bank lending survey: net 14% of EZ banks tightened credit standards in Q2 vs. 27% in Q1. Banks expect more moderate net tightening on loans to firms in Q3. The cumulated net tightening since the beginning of 2022 has been substantial. Firms’ net demand for loans fell strongly in the second quarter of 2023, dropping to an all-time low since the start of the survey in 2003. Click here for more detail.
• EU ministers have given the final approval to the EU chips, according to the European Council.
• UK pensions regulator warned that pension fund trustees must consider widening the range of their investments including in start-ups and other illiquid assets or face "robust intervention", according to FT.
• 5.7 magnitude earthquake occurred in central Turkey, via EMSC.

DATA RECAP

• German Ifo Business Climate New (Jul) 87.3 vs. Exp. 88.0 (Prev. 88.5); German GDP is likely to shrink in Q3.
• German Ifo Expectations New (Jul) 83.5 vs. Exp. 83.0 (Prev. 83.6); Current Conditions New (Jul) 91.3 vs. Exp. 93.0 (Prev. 93.7)

GEOPOLITICS

• White House said the US does not support attacks inside of Russia when asked about the drone strikes in Moscow.
• Japan launched a protest against North Korea over its missile launch, while it noted that North Korea's missile launch is unacceptable and threatens not only Japan but also the regional and international society's peace and stability.
• China's government said a delegation led by Politburo member Li Hongzhong is to visit North Korea from July 26th. Subsequently, a Russian delegation is to visit North Korea this week, led by the Russian Minister of Defence, via KCNA. Additionally, the Russian Defence Ministry says Defence Minister Shoigu 's visit to North Korea will contribute to strengthening military relations between the two countries, via Al Arabiya.
• Russian authorities have announced the suspension of navigation within the Gulf of Sevastopol, via Al Arabiya.
• China's Foreign Ministry said a senior official of the Japanese defense ministry has grossly interfered in China’s internal affairs, and China is firmly opposed to this and has lodged stern representations with Japan, via Global Times.
• Japan and Italy to hold joint fighter jet drills at Komatsu Base Aug 2-10; Japan and Australia to hold joint fighter jet drills at the Base Aug 23-September 15.

CRYPTO

• Binance and CEO Zhao are planning to seek a dismissal of the CFTC complaint, according to Bloomberg.
• Crypto exchange Kraken says it is investigating reports that some clients are experiencing funding delays.
• UK Information Commission will examine Worldcoin (WDC), a project by OpenAI CEO Sam Altman, according to a spokesperson cited by CoinDesk.

APAC TRADE

• APAC stocks traded mostly higher amid a rally in Chinese stocks after the Politburo’s support pledges, although gains for the rest of the region were capped after soft global PMIs and with some cautiousness heading into risk events.
• ASX 200 was positive with the index led by gains in the mining and energy sectors amid recent strength in underlying commodity prices owing to the Chinese stimulus hopes.
• Nikkei 225 lagged as speculation remained rife regarding this week’s BoJ meeting with source reports noting the central bank is to consider a large increase in its 2023 inflation outlook and could raise its forecast to around 2.5%.
• Hang Seng and Shanghai Comp were boosted with gains led by a surge in property and tech stocks after the Politburo’s support pledges which lifted the Hang Seng Tech Index by around 5%, while the Hang Seng Mainland Properties Index rose by a double-digit percentage from early on as the Politburo’s statement omitted the language that homes are not for speculation.

NOTABLE ASIA-PAC HEADLINES

• China's NDRC held a meeting with private firms including ANTA (2020 HK), NIO (9866 HK) and TCL where it listened to the companies' opinions and suggestions on the current economic situation, according to Reuters.

DATA RECAP

• South Korean GDP QQ (Q2 A) 0.6% vs. Exp. 0.5% (Prev. 0.3%); YY (Q2 A) 0.9% vs. Exp. 0.8% (Prev. 0.9%)