• APAC stocks traded mostly lower after the post-CPI dovish unwinding seen stateside, Chinese property concerns and holiday-thinned conditions.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.6% after the cash market closed up by 1.6% yesterday.
• DXY is contained just above the 102.50 mark, USD/JPY eyes 145, EUR/USD sits just below 1.10.
• Looking ahead, highlights include French Unemployment Rate, UK GDP, Trade Balance, US PPI, UoM (Prelim), Speeches from RBA's Lowe, Bullock & Kohler.

US TRADE

EQUITIES

• US stocks mostly finished in the green albeit with gains limited across the major indices as the initial knee-jerk dovish reaction to the softer-than-expected US inflation data unwound throughout the day alongside rising yields.
• SPX +0.03% at 4,468, NDX +0.18% at 15,128, DJIA +0.15% at 35,175, RUT -0.42% at 1,922.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Harker (voter) said the Fed is making progress in the inflation fight, according to Reuters.
• Fed's Bostic (non-voter) said the Fed has been working hard to reduce too-high inflation and he does not know how persistent pandemic changes to the labour market will be.
• Fed's Collins (non-voter) said in an interview on Monday that her view of the data so far is that they are near or perhaps at a sufficiently restrictive level for monetary policy to hold for some time, according to WSJ's Timiraos.
• US moderate Democratic Senator Manchin weighs leaving the Democratic party, according to WSJ.
• Hawaii's Governor said the wildfire death toll is to increase 'very significantly', according to AFP News Agency.
• Writers Guild plans to meet with studios on Friday as Hollywood studios seek a meeting with writers' negotiators.

APAC TRADE

EQUITIES

• APAC stocks traded mostly lower after the post-CPI dovish unwinding seen stateside and amid Chinese developer concerns, with trade also hampered by thinned conditions with Japanese participants away for Mountain Day.
• ASX 200 was lacklustre with the upside in consumer stocks negated by the losses in the commodity-related sectors, while RBA Governor Lowe’s testimony provided very little in the way of fresh insight in which he reiterated that further tightening may be required.
• Hang Seng and Shanghai Comp declined with developers pressured including Country Garden after it flagged a loss of up to CNY 55bln for H1 and hired CICC for debt restructuring. Furthermore, shares in Fantasia Holdings dropped more than 50% on resumption of trade after being halted since March last year, while participants await details from the securities regulator’s emergency meeting with developers and financial institutions. Conversely, Alibaba, China Mobile and Li Ning were among the best performers in Hong Kong following their results including the beat on top and bottom lines by China’s e-commerce giant.
• US equity futures traded sideways amid the uninspired mood in Asia and as the focus in US shifts to PPI data.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.6% after the cash market closed up by 1.6% yesterday.

FX

• DXY was marginally softer although price action was contained within a tight range and back to within close proximity of the 102.50 level after the dust settled from the recent US CPI data and treasury selling.
• EUR/USD traded flat and took a breather following yesterday’s roundtrip journey into 1.1000 territory.
• GBP/USD languishes beneath the 1.2700 handle as the attention turns to the incoming UK GDP data.
• USD/JPY was quiet amid the holiday in Japan but held onto gains after approaching closer towards 145.00.
• Antipodeans were lacklustre owing to the subdued risk appetite and with NZD/USD pressured following the contractions in New Zealand PMI and food inflation.
• PBoC set USD/CNY mid-point at 7.1587 vs exp. 7.2193 (prev. 7.1576)

FIXED INCOME

• 10yr UST futures were subdued following the prior day’s slump despite the softer-than-expected CPI data and after selling was further exacerbated by the lacklustre 30yr auction.
• Bund futures remained pressured and extended on lows after breaching 132.00 to the downside.

COMMODITIES

• Crude futures were little changed during Asian trade after succumbing to the post-CPI dovish unwind.
• Saudi Arabia is reportedly in advanced talks for a USD 14bln refinery in Pakistan and is negotiating regarding a stake in a giant copper mine in Pakistan, according to WSJ citing sources.
• Spot gold was uneventful as price action largely reflected the flat dollar performance.
• Copper futures languished at the prior day's lows amid ongoing Chinese developer woes.

CRYPTO

• Bitcoin traded marginally lower alongside the uninspired mood across risk assets.

NOTABLE ASIA-PAC HEADLINES

• China is to shift USD 139bln of troubled local government financing vehicle debt to provinces under a new program that aims to support financial stability and named 12 cities and provinces as high-risk, according to Bloomberg.
• US President Biden said China is a "ticking time bomb" because of its economic challenges and that the country is in trouble because of weak growth, according to Reuters.
• China is to pause plans to build a new embassy in London, according to a Reuters source.
• New Zealand national intelligence agency said competition between countries is becoming more acute and some countries are seeking advantage through subversive and dishonest means such as espionage and foreign interference against New Zealand. Furthermore, it is aware of ongoing activity against New Zealand and near regions linked to China's intelligence services and said this is a complex intelligence concern.
• RBA Governor Lowe said things are moving in the right direction but it is too early to declare victory on inflation and the board remains resolute in its determination to return inflation to the 2%-3% target range. Lowe added it is possible that some further tightening of monetary policy will be required to ensure that inflation returns to target within a reasonable timeframe and whether or not this is the case will depend upon the data and the Board’s evolving assessment of the outlook and risks. Furthermore, Lowe said rates are restrictive so they are in a calibration stage with policy, while the worst is over for inflation and they are in a reasonable place to return it to the target.

DATA RECAP

• Singapore GDP QQ (Q2 F) 0.1% vs Exp. 0.3% (Prev. -0.4%)
• Singapore GDP YY (Q2 F) 0.5% vs Exp. 0.7% (Prev. 0.4%)
• New Zealand Manufacturing PMI (Jul) 46.3 (Prev. 47.5)
• New Zealand Food Price Index MM (Jul) -0.5% (Prev. 1.6%)

GEOPOLITICS

• US Secretary of State Blinken said the release of Americans in Iran from prison is a positive step but this is just the beginning of the process and more work is to be done to bring the Americans in Iran home. Blinken added that Iran will not receive any sanctions relief and that the US will continue to enforce all of its Iran sanctions.
• China took measures against a Chinese national accused of spying for the CIA, according to state TV.