• European bourses & US futures are firmer and back towards best as lower yields take precedence over European growth concerns
• Germany’s PMI saw a marked contraction for services and a bleak accompanying GDP nowcast, input costs increased in the EZ for the first time in 11 months
• USD benefits as EUR & GBP decline following dire PMIs while JPY outperforms as yields tumble
• Mentioned data has trimmed the probability of ECB/BoE tightening, core benchmarks at highs with US yields lower across the curve
• Crude is pressured by the USD alongside demand- and supply-side factors, metals remain underpinned
• Looking ahead, highlights include US Flash PMIs, US MBAs, Canadian Retail Sales, Supply from the US. Earnings from NVIDIA Corp, and the BRICS summit.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer, Euro Stoxx 50 +0.5%, but off of pre-data highs as the morning's dismal PMIs sparked selling pressure given the negative growth outlook; however, this proved short-lived amid the broader backdrop of a marked pullback in yields.
• Sectors are mostly in the green with Utilities, Real Estate and Basic Resources outperforming while Auto names lag modestly.
• Stateside, futures are firmer and attempt to claw back some of Tuesday's pressure, ES +0.6%, directional action in-fitting with the above European moves given an absence of specific catalysts.
• Focus ahead includes a handful of data points before NVIDIA earnings after the bell, the name is currently +1.5% in pre-market trade after closing lower by 2.8% on Tuesday.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Buck benefits at the expense of the Euro and Sterling after dire PMIs.
• DXY rallies to 103.840 as EUR/USD hovers between decent option expiries at 1.0830-25 and 1.0800, while Cable reverses towards 1.2650 from 1.2764 at best.
• Yen outperforms as yields tumble and JPY crosses recede, USD/JPY down from 145.89 through importer bids at 145.50 and aiming for expiry interest at 145.00.
• Aussie underpinned on 0.6400 handle vs Buck as iron ore continues to soar and Yuan via another much stronger than forecast PBoC fix, USD/CNY around 7.2900 and USD/CNH circa 7.3000.
• PBoC set USD/CNY mid-point at 7.1988 vs exp. 7.3050 (prev. 7.1992)
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Dire EU PMIs revive debt futures and trim the probability of ECB/BoE policy tightening.
• Bunds up to 132.49 from 131.20 low, Gilts reach 93.74 from 92.38 at one stage and T-note towards the top of 109-16+/00+ range awaiting US PMIs and 20-year supply amidst busy PM agenda.
• UK DMO to undertake gilt syndication via re-opening the 4.0% 2063 line, transaction planned for the week of September 4th.
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COMMODITIES

• Crude benchmarks are under-pressure amid a firmer USD and factors on both the supply- and demand-side of the equation, WTI & Brent -1.0%.
• On the demand side, PMIs noted a reduction in manufacturing output again in Germany alongside broader negative growth expectations. Supply wise, the resumption of flows on the Iraqi-Turkish pipeline serves as a headwind.
• For LNG, Woodside is meeting unions for discussions later today though an exact time is not currently known, as a reminder the ballot opens on Thursday for Chevron’s Gorgon and Wheatstone workers; more recently, Woodside said there is no update yet. A remark which came alongside renewed pressure in TTF.
• In terms of metals, silver is the standout gainer with limited fundamental updates but desks are attentive to bullish technicals incl. the 50-DMA. While spot gold remains firmer despite the USD upside as it takes cues from the yield environment.
• US Energy Inventory Data (bbls): Crude -2.4mln (exp. -2.9mln), Gasoline 1.9mln (exp. -0.9mln), Distillate -0.2mln (exp. +0.2mln), Cushing -2.2mln.
• Woodside Energy (WDS AT) is meeting unions for talks as strike threats loom over Australian LNG facilities. Talks are expected to continue until the evening, according to Bloomberg.
• More recently, Woodside Energy says there is no update yet on LNG strike talks.
• Turkish Energy Minister says an agreement has been reached to resume the flow of oil from the Iraqi-Turkish pipeline, according to Sky News Arabia.
• An oil tanker broke down at the northern entrance to the Bosphorus Strait, according to a shipping agency cited by Al Arabiya.
• Iran's Oil Minister Owji says crude output will reach 3.4mln BPD by end-September (3.19mln BPD in August), via SNN.
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NOTABLE US HEADLINES

• Citi (C) cuts 2023 Global Economic Growth forecast to 2.4% (prev. 2.5%)
• Teamsters ratified the historic UPS (UPS) contract in which the five-year contract protects and rewards more than 340k members, raising wages for full-time and part-time workers.
• Click here for the US Early Morning Note.

NOTABLE EUROPEAN HEADLINES

• British small businesses saw sales fall by over 20% over the past year, according to research by Sage cited by Bloomberg.
• A mini-reshuffle among UK ministers is expected at the end of next week, according to GBNews' Hope, Defence Secretary Wallace is expected to leave; a wider reshuffle is expected in October.

EUROPEAN DATA RECAP

• EU HCOB Composite Flash PMI (Aug) 47.0 vs. Exp. 48.5 (Prev. 48.6); "... eurozone will shrink by 0.2% in the third quarter." and the "rate of input cost inflation across both sectors edged higher for the first time in 11 months".
• EU HCOB Services Flash PMI (Aug) 48.3 vs. Exp. 50.5 (Prev. 50.9); Manufacturing Flash PMI (Aug) 43.7 vs. Exp. 42.6 (Prev. 42.7)
• German HCOB Composite Flash PMI (Aug) 44.7 vs. Exp. 48.3 (Prev. 48.5); "Our GDP nowcast model, ... now indicates a deeper fall of the whole economy than it did before, at almost -1%." adding that "turning to prices, rates of input cost and output charge inflation ticked up for the first time in 11 and seven months respectively in August, driven in part by a rise in fuel prices."
• German HCOB Services Flash PMI (Aug) 47.3 vs. Exp. 51.5 (Prev. 52.3); Manufacturing Flash PMI (Aug) 39.1 vs. Exp. 38.7 (Prev. 38.8)
• French HCOB Composite Flash PMI (Aug) 46.6 vs. Exp. 47.5 (Prev. 46.6); "... might be headed for a contraction in the third quarter."
• French HCOB Manufacturing Flash PMI (Aug) 46.4 vs. Exp. 45.0 (Prev. 45.1); Services Flash PMI (Aug) 46.7 vs. Exp. 47.5 (Prev. 47.1)
• UK Flash Composite PMI (Aug) 47.9 vs. Exp. 50.3 (Prev. 50.8); "... August PMI data will add to speculation that rates could soon peak." adding that the survey suggests inflation should moderate further ahead, but "cost pressures remain elevated, thanks mainly to rising wages".
• UK Flash Services PMI (Aug) 48.7 vs. Exp. 51.0 (Prev. 51.5); Manufacturing PMI (Aug) 42.5 vs. Exp. 45.0 (Prev. 45.3)

GEOPOLITICS

• Moscow airports suspended flights after Ukrainian drone attacks, according to TASS. Furthermore, Moscow's Mayor said a drone hit a building in central Moscow and another drone was downed over the Moscow region, while the Russian military announced it downed three drones that tried to attack Moscow and the US State Department also commented that the US does not encourage drone attacks in Russia, according to Reuters.
• Russian Security Council Deputy Chairman Medvedev said Russia may annex Georgian breakaway regions of South Ossetia and Abkhazia, according to TASS.
• China Coast Guard patrolled the territorial waters of the Diaoyu Islands, which is a disputed territory and also known as Japan's Senkaku Islands, to conduct right-protection cruises, according to Reuters.
• Brazilian President says "we are ready to join efforts for a cease-fire in Ukraine", according to Al Jazeera.

CRYPTO

• Bitcoin is little changed on the session, holding around the USD 26k mark; though, the crypto does have a slight negative skew given the USD's pronounced upside this morning on the back of European data prints.

APAC TRADE

• APAC stocks traded mixed amid a slew of earnings releases alongside the latest PMI data from the region, but with price action relatively rangebound heading closer to the Jackson Hole Symposium.
• ASX 200 was led higher by strength in consumer stocks and the mining sector, with the index unfazed by weaker PMI data from Australia which showed manufacturing at a 6th consecutive monthly contraction.
• Nikkei 225 pared opening losses although the upside was capped ahead of the 32,000 level after mixed PMI figures, and with Japan facing backlash from China and Hong Kong for its plan to release Fukushima water.
• Hang Seng and Shanghai Comp were mixed with trade in Hong Kong indecisive and the mainland subdued amid several earnings releases, and as participants await results from China’s big banks.

NOTABLE ASIA-PAC HEADLINES

• US Commerce Secretary Raimondo met with China's ambassador to the US Xie Feng and shared a productive discussion ahead of Raimondo's upcoming trip to Beijing and Shanghai, while Raimondo raised issues of importance to the US, American businesses and workers, according to Reuters.
• RBNZ Chief Economist Conway said he is mindful of the drop in NZD and said they would lower the OCR sooner than they have signalled if there was a more significant slowdown in China than the RBNZ expects.
• Chinese regulators will continue to propel domestic companies to seek listing at overseas markets and further facilitate long-term overseas funds to invest in the A-share market, according to Global Times citing the CSRC Vice Chairman.

DATA RECAP

• Japanese Manufacturing PMI (Aug P) 49.7 (Prev. 49.6); Services PMI (Aug P) 54.3 (Prev. 53.8); Composite PMI (Aug P) 52.6 (Prev. 52.2)
• Australian Manufacturing PMI (Aug P) 49.4 (Prev. 49.6); Services PMI (Aug P) 46.7 (Prev. 47.9); Composite PMI (Aug P) 47.1 (Prev. 48.2)
• New Zealand Retail Sales QQ (Q2) -1.0% vs Exp. -0.4% (Prev. -1.4%, Rev. -1.6%)