• European bourses are in the red as expectations for the ECB September meeting turns more hawkish
• Stateside, futures are in the red with the NQ lagging slightly as yields lift
• German regional & Spanish Flash CPIs spurred ECB pricing to a circa. 60% chance of 25bp in Sep., vs 50/50 recently
• Broad debt retracement after Tuesday’s US-data inspired highs with EGBs leading post-data
• Crude benchmarks at highs as Idalia intensifies into a category four hurricane, expected to intensify as it nears Florida
• US Commerce Secretary Raimondo said some Chinese gov’t actions are positive, US businesses want to do business in China
• Looking ahead, highlights include US ADP National Employment, US GDP Estimates (Prelim) & PCE Prices Prelim (Q2), German HICP (Flash).

EUROPEAN TRADE

EQUITIES

• European bourses are in the red, Euro Stoxx 50 -0.6%, with stocks generally soft after yesterday's upside. The current session's pressure is a function of more hawkish ECB expectations for September after German-state and Spanish metrics.
• Sectors are mostly in the red with Tech underperforming as yields rise, a narrative which is supporting Banking/Insurance names.
• Stateside, futures are modestly softer, ES -0.2% ahead of a busy US agenda; NQ -0.3% lags incrementally given the mentioned yield moves.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Greenback steadier after a collapse on lower job openings and loss of consumer confidence.
• DXY attempts to form a base around 103.50 - Kiwi cedes ground to Buck along with Yen and Aussie following weak Antipodean data and somewhat mixed BoJ rhetoric
• NZD/USD pivots 0.5950, USD/JPY reclaims 146.00+ status and AUD/USD tests 0.6450 from a peak above 21 DMA.
• Euro underpinned as German state CPIs imply upside bias to national outturn.
• EUR/USD approaches 1.0900 and the top of the band of expiries.
• PBoC sets USD/CNY mid-point at 7.1816 vs exp. 7.2773 (prev. 7.1851)
• Click here for more detail.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Broad debt retracement from Tuesday's US data-inspired highs, with EGBs leading the way and peers down in sympathy.
• Bunds below the prior session low within 131.83-132.56 range.
• T-note towards base of 110-18+/28 bounds and Gilts trying to stay afloat between 94.35-91 parameters.
• Australia sells AUD 700mln 2.75% 2028 Bonds: b/c 3.25x (prev. 5.70x), average yield 3.8331% (prev. 3.5188%)
• UK DMO intends to schedule 11 conventional Gilt auctions and four I/L in the October-December period.
• Click here for more detail.

COMMODITIES

• Currently, WTI Oct’23 and Brent Nov’23 are at the top-end of sub-USD 1/bbl parameters, a peak which printed in proximity to Idalia getting upgraded to a category four hurricane.
• Spot gold is unchanged in extremely narrow circa. USD 3/oz bounds as the DXY struggles to meaningfully deviate from the neutral point ahead of a packed afternoon agenda; base metals mixed.
• US Energy Inventory Data (bbls): Crude -11.5mln (exp. -2.9mln), Gasoline +1.4mln (exp. -1.4mln), Distillate +2.5mln (exp. +0.1mln), Cushing -2.2mln.
• NHC says Idalia rapidly intensifies into a Category 4 Hurricane, catastrophic storm surge and destructive winds are nearing Florida Big Bend region. "Idalia could continue to strengthen before it reaches the Big Bend coast of Florida in a few hours. While Idalia should weaken after landfall, it is likely to still be a hurricane while moving across southern Georgia, and near the coast of Georgia or southern South Carolina late today. Idalia should emerge off the southeastern United States coast early on Thursday and move eastward through late week."
• Japanese PM Kishida says aims to bring down retail gasoline prices to around JPY 175/litre in October (currently JPY 185/litre).
• Click here for more detail.

NOTABLE US HEADLINES

• US Commerce Secretary Raimondo says US businesses want to do business in China; hopes in next few months to "see some results" after China meetings, US told China in an export control meeting this week we are not targeting China. Had no expectation in the first meetings the US would suddenly resolve specific issues involving companies like Intel (INTC), Micron (MU) or Boeing (BA). Brought up Visa (V) and Mastercard (MA) China business issues in meetings. Some actions of the Chinese government are positive, but the US needs to see the situation on the ground match the rhetoric.
• Cleveland-Cliffs (CLF) has reached a tentative agreement with the United Steelworkers (USW) on a new 3-year labour agreement, according to Reuters.
• Goldman Sachs (GS) bought UK and US companies using Chinese state funds, according to FT.
• Click here for the US Early Morning Note.

NOTABLE EUROPEAN HEADLINES

• EU Chamber of Commerce President says "uninvestable" is not a term that we would use to describe China; China is under-invested in terms of the FDI it has been able to attract for Europe.
• ECB's Centeno says EZ economic growth indicators have been surprising on the downside recently, downside risks for growth outlined in June projections are materialising. Not seeing de-anchoring of inflation expectations. Seeing a degree of flexibility in the labour market that was not evident in the past.

NOTABLE EUROPEAN DATA

• German North Rhine-Westphalia State CPI YY (Aug 2023) 5.9% (Prev. 5.8%); Core 5.3% (prev. 5.4%); Bavaria State CPI YY (Aug 2023) 5.9% (Prev. 6.1%); Saxony State CPI YY (Aug 2023) 6.8% (Prev. 6.7%). The initial skew of the data was hawkish vs. mainland consensus, more recent metrics have been slightly dovish but the overall bias is now leaning towards the forecast/slightly above.
• Spanish HICP Flash YY (Aug 2023) 2.4% vs. Exp. 2.5% (Prev. 2.1%); CPI YY Flash NSA (Aug) 2.6% vs. Exp. 2.6% (Prev. 2.3%)
• EU Consumer Confidence Final (Aug 2023) -16.0 vs. Exp. -16.0 (Prev. -16.0)
• EU Consumer Inflation Expectations (Aug 2023) 9.0 (Prev. 4.8); Selling Price Expectations (Aug 2023) 3.6 (Prev. 3.4)
• UK M4 Money Supply (Jul 2023) -0.5% (Prev. -0.1%); BOE Consumer Credit (Jul 2023) 1.191B GB vs. Exp. 1.3B GB (Prev. 1.661B GB)
• UK Mortgage Approvals (Jul 2023) 49.444k vs. Exp. 51.0k (Prev. 54.662k); Lending (Jul 2023) 0.23B GB (Prev. 0.136B GB)

GEOPOLITICS

• Explosions were reported at Pskov Airport in western Russia, near the border with Estonia, according to BNO Newsroom.
• The Chinese Embassy in the US said China is working to ease market access further and treat foreign firms in the same manner as domestic firms, and added that China will only open its doors wider to the outside world. The embassy noted cyber security review on Micron (MU) is necessary for safeguarding national security, according to Reuters.
• Senior Gabonese military officers appear on television and claim they have taken power and borders are closed until further notice; Gabon soldiers announce the cancellation of elections, and the dissolution of institutions on TV, via AFP.

CRYPTO

• Bitcoin is under modest pressure despite the relatively directionless USD action. Currently, BTC resides at the low end of USD 27.29-27.75k parameters, which are well within Tuesday's more pronounced USD 26-28.14k bounds.

APAC TRADE

• APAC stocks traded positively across the board following the JOLTS-induced gains seen on Wall Street and in the run-up to month end.
• ASX 200 saw its upside driven by the industrial sector and closely followed by its gold sector, with a further boost seen from the softer-than-expected Aussie CPI data.
• Nikkei 225 saw its machinery sector leading the gains, although the index’s upside is hampered by the recent gains in the JPY.
• Hang Seng and Shanghai Comp both opened with gains as the region conformed to the global risk appetite, with the Shanghai Comp on a more cautious footing after US Commerce Secretary Raimondo suggested US firms complain that China is “un-investable”, while participants also awaited the speculated mortgage rates cuts. In other news, China is reportedly exploring ways to make its own AI memory chips despite US sanctions, according to SCMP sources.

NOTABLE ASIA-PAC HEADLINES

• BoJ Board Member Tamura said BoJ will take steps to curb an excessive rise in interest rates, such as increasing bond buying if BoJ sees speculative and sharp moves that deviate from fundamentals. BoJ Board Member Tamura said he personally feels that sustained and stable achievement of the 2% inflation target is in sight, and it is appropriate to keep easy policy now given uncertainty on hitting the price goal; does not expect 10yr JGB yield to rise to 1.0%. There is a good chance Japan's economic growth will exceed expectations, he said.
• China is reportedly exploring ways to make its own AI memory chips despite US sanctions, SCMP sources said; "China’s top DRAM maker, ChangXin Memory Technologies, is the country’s best hope for specialist chips, but it may take up to four years to deliver products".
• Country Garden (2007 HK) will raise HKD 270mln via new share issues at HKD 0.77 each, according to Reuters.
• Chinese regulators urge money brokers to ensure data security, according to Reuters.
• PBoC injected CNY 382bln via 7-day reverse repos with the maintained rate at 1.80% for a CNY 81bln net injection.
• PBoC holds a meeting with private firms in order to promote their financing, according to Yicai.

DATA RECAP

• Australian Weighted CPI YY (Jul) 4.9% vs. Exp. 5.2% (Prev. 5.4%)
• Australian Construction Work Done (Q2 2023) 0.4% vs. Exp. 0.8% (Prev. 1.8%)
• Australian Building Approvals (Jul 2023) -8.1% vs. Exp. -0.8% (Prev. -7.7%); Private House Approvals (Jul 2023) 0.1% (Prev. -1.3%)