• European bourses and US futures are firmer as the US tech-led rally reverberated into Europe
• APAC trade was more mixed, though a late-doors revival occurred in Chinese-stocks despite limited catalysts
• DXY continues to slip and nears 103.00 with Antipodeans benefitting from the risk tone pre-data while JPY gets respite from a stabilisation in yields
• Fixed benchmarks have bounced firmly after Monday’s marked yield upside
• Energy benchmarks are failing to benefit from the above tone; Woodside Energy says talks are constructive, elsewhere the Iraqi minister arrives in Turkey.
• Looking ahead, highlights include Richmond Fed Index, Fed Discount Rate Minutes, Speeches from Fed’s Barkin, Bowman & Goolsbee.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +1.4%, as the US tech-rally reverberates into European trade alongside a late doors recovery in Chinese trade.
• As such, Tech remains the outperforming sector. Followed by Basic Resources given base metal performance in tandem with commentary from BHP post-earnings.
• Stateside, futures are in the green but with magnitudes less pronounced given they have already reacted to the US-led tech turnaround, ES +0.3%, NQ +0.5%; ahead, Richmond Fed and a handful of speakers feature.
• Forthcoming iPhone models from Apple (AAPL) will be more costly, via DigiTimes citing industry sources which are less optimistic about shipments for the year.
• Baidu Inc (BIDU) Q2 2023 (USD): Adj. EPS 3.11 (exp. 2.32), Revenue 4.70 (exp. 4.62bln). Says it is well positioned to capitalize on opportunities arising from generative AI and LLM.
• Lowe's Companies Inc (LOW) Q2 2023 (USD): EPS 4.56 (exp. 4.49), Revenue 24.956bln (exp. 24.99bln). Affirms FY23 outlook, Quarterly comp sales -1.6% (exp. -2.36%)
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Greenback grounded as USTs grind higher and risk sentiment improves.
• DXY slips from 103.370 to 103.010 after another technically soft close.
• Kiwi and Aussie latch on to Buck retreat and form firmer bases above 0.5900 and 0.6400 respectively ahead of NZ retail sales and Australian prelim PMIs.
• Euro back on 1.0900 handle where 1.3bln option expiries reside, Cable tests 1.2800 after a brief breach of 50 DMA and Yen rebounds towards 145.50 from effective double top around 146.39.
• Yuan fades from just over 7.2700 vs Dollar after PBoC sets the most depressed USD/CNY reference rate to date.
• PBoC set USD/CNY mid-point at 7.1992 vs exp. 7.3097 (prev. 7.1987)
• Click here for more detail.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bonds bounce firmly and steadily.
• Bunds breach Fib resistance and top 131.00 at 131.04 vs a 130.54 low.
• Gilts lag initially irrespective of 'supportive' UK public finance data, but get a boost via DMO supply to top 92.00 from 91.43 Liffe base.
• T-note firm within 109-07+/108-28 range ahead of busy US agenda.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are subdued and failing to benefit from broader risk, with desks attentive to reports that the Iraqi oil minister arrived in Turkey on Monday to discuss the resumption of exports from the Ceyhan terminal.
• Currently, WTI and Brent Oct are under USD 80.00/bbl and near USD 84.00/bbl respectively.
• For LNG, extensive remarks from the Woodside CEO (see below) with developments otherwise somewhat light, Dutch TTF pulling back modestly.
• Spot gold is firmer despite the constructive risk tone and taking impetus from the USD's downside and has managed to inch above USD 1900/oz at best. Base metals followed the tone of Chinese trade and as such experienced a marked bid towards the APAC close with fresh fundamentals light at the time.
• Woodside Energy (WDS AT) CEO said they continue to have constructive bargaining talks with unions regarding LNG facilities in Australia and noted there is a wide range of possible strike actions that might be taken at LNG facilities. Woodside CEO said demands of unions are focused on working conditions, certainty and wages, as well as noted that they have been spending a lot of time listening and trying to understand the key areas of concern, while the CEO added they are proceeding with goodwill and respect, but also have a duty to shareholders.
• Woodside Energy CEO said that talks with gas workers remain constructive despite increasingly bitter rhetoric, via FT; adding, the market reaction to potential strikes was "fairly irrational" and a sign of market fragility.
• NHC says Depression Nine has strengthened into Tropical Storm Harold, heavy rains and tropical-storm-force winds over portions of South Texas from later today. Headed for the south Texas Coast with heavy rains and strong winds beginning to spread onshore in the warning area.
• Iraqi Oil Minister meets Turkish counterpart in Ankara and Iraqi; Turkish oil ministers discuss joint relations in oil and energy sector; talks will include the resumption of oil export through Ceyhan Oil Terminal, via statement.
• India is reportedly considering an export tax for parboiled rice variety, via ET Now citing agencies.
• Click here for more detail.

NOTABLE US HEADLINES

• S&P joins Moody's in cutting US banks amid a tough environment with KeyCorp (KEY) and Comerica (CMA) among the five banks cut by S&P, according to Bloomberg.
• US Commerce Ministry Raimondo to visit China Aug 27-30 to meet Senior Government officials.
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• UK PSNB, GBP (Jul 2023) 3.48B GB (Prev. 17.666B GB); Ex Banks GBP (Jul 2023) 4.301B GB vs. Exp. 5.0B GB (Prev. 18.487B GB)
• UK PSNCR, GBP (Jul 2023) -7.474B GB (Prev. 11.976B GB)
• UK CBI Trends - Orders (Aug 2023) -15.0 (Prev. -9.0); 3M Output Balance -19.0 (Prev. +3.0); Output Price Expectations +8.0 (Prev. +18.0)
• EU Current Account SA, EUR (Jun 2023) 35.84B (Prev. 9.1B); NSA, EUR (Jun 2023) 36.77B (Prev. -11.3B)

GEOPOLITICS

• Explosions were reported on the outskirts of Moscow around Strogino and air defences shot down a drone over Krasnogorsk, Moscow oblast, while TASS noted all Moscow airports were closed for arriving and departing flights.
• North Korea notified Japan of a plan to launch a satellite on August 24th-31st, according to NHK.
• North Korea is said waiting for the right time to punish the US and South Korea, while it was suggested that US military drills could trigger ‘thermonuclear war’, according to commentary in KCNA.
• South Korea urged North Korea to immediately abandon the plan to launch a satellite, while Japanese PM Kishida also called on North Korea to stop its satellite launch and said the possible launch is extremely regrettable. Furthermore, Kishida said they are preparing to station PAC3 and Self-Defence Force Aegis ships as a precaution.
• Taiwan's Defence spokesperson says "so far I have not heard any confirmation. As far as I understand, this information is currently a statement circulating on social media", via Tingting Liu. In the context of unconfirmed social media speculation that a Chinese Navy nuclear powered attack submarine experienced an incident in the Taiwan Strait.
• Progress has been made in the grain corridor talks, according to a source cited by the Turkish Presidency, "and the path without Russia is not guaranteed", via Sky News Arabia.

CRYPTO

• Coinbase (COIN) said it is increasing its support for stablecoins with an investment in Circle which will take full control of USDC issuance and governance, while Coinbase and Circle will also maintain a commercial relationship.

APAC TRADE

• APAC stocks traded mixed following a similar performance stateside where tech rallied but the gains in the broader market were capped amid further upside in global yields; however, as the session progressed a bounce was seen in Chinese equities, in a similar fashion to previous sessions.
• ASX 200 was rangebound amid a slew of earnings releases including a drop in profits for mining giant BHP.
• Nikkei 225 was underpinned as tech names in the Asia-Pac region took inspiration from US peers and with SoftBank among the notable performers after its Arm unit filed for a US IPO.
• Hang Seng and Shanghai Comp were initially indecisive as participants digested the latest support efforts from Premier Li and the State Council, as well as the PBoC’s net liquidity drain. Action which became markedly more constructive as European players entered the fray and the tech strength from Wall St continued; though, the positive move occurred despite an absence of fresh catalysts at the time.

NOTABLE ASIA-PAC HEADLINES

• BoJ Governor Ueda met with Japanese PM Kishida and did not discuss FX volatility in the meeting but explained to him the BoJ's July policy decision which Kishida said he understood the July policy move. PM Kishida asked questions on various aspects of the economy and financial developments which Ueda answered as much as he could although Ueda wanted to refrain from mentioning exactly what was discussed and noted his predecessor Kuroda had met with the PM on a regular basis and this meeting was of the same nature, according to Reuters.
• China has extended the waiver for capital gains tax for the HK stock connect, according to Bloomberg.
• Japanese PM Kishida instructed LDP executives to come up with overall direction of the measures by the end of the month, gas retail prices are approaching highest level due to Forex and reduction in oil production. Wants to consider economic measures in September.