• APAC stocks were mostly subdued after the holiday lull stateside and as the region digested disappointing data including weaker-than-expected Chinese Caixin Services PMI.
• European equity futures are indicative of a slightly lower open with Euro Stoxx 50 future -0.1% after the cash market closed down 0.1% yesterday.
• DXY is contained above the 104.00 level, EUR/USD lingers below 1.08 and AUD lags.
• RBA kept the Cash Rate Target unchanged at 4.10%, as expected and reiterated that some further tightening of monetary policy may be required.
• Looking ahead, highlights include Spanish, Italian, French, EZ, UK PMI, US IBD/TIPP & Durable Goods, Speech from ECB’s Lagarde, Schnabel & de Guindos, Supply from Germany.

US TRADE

EQUITIES

• US stock markets were closed for the Labor Day holiday.

NOTABLE HEADLINES

• US First Lady Jill Biden tested positive for COVID-19 and is currently experiencing only mild symptoms, while President Biden tested negative for COVID-19, according to the White House.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued after the holiday lull stateside and as the region digested disappointing data releases including the weaker-than-expected Chinese Caixin Services PMI.
• ASX 200 was lower amid underperformance in the commodity-related sectors and as participants braced for the conclusion of RBA Governor Lowe’s final policy meeting in which the central bank kept rates unchanged as expected.
• Nikkei 225 stalled on its approach to the 33,000 level and with headwinds from disappointing household spending data which suffered its worst drop since February 2021.
• Hang Seng and Shanghai Comp were pressured after Chinese Caixin Services PMI data missed forecasts and with the property sector dampened by default fears with about a third of 50 major private builders said to face around USD 1.5bln dollars of payments this month, while Country Garden narrowly averted a default and paid USD-denominated coupons hours before the end of the grace period.
• US equity futures remained lacklustre amid the subdued risk appetite across Asia-Pac bourses.
• European equity futures are indicative of a slightly lower open with Euro Stoxx 50 future -0.1% after the cash market closed down 0.1% yesterday.

FX

• DXY traded rangebound but remained afloat above the 104.00 level amid the subdued risk appetite in Asia and with US participants yet to return from the extended weekend.
• EUR/USD was uneventful as the 1.0800 level continues to elude the single currency.
• GBP/USD lacked firm direction and remains on a 1.26 handle ahead of Services PMI data from both sides of the Channel.
• USD/JPY edged further above 146.00 with Japan's currency not helped by the weak household spending data.
• Antipodeans underperformed amid the risk aversion and disappointing Chinese PMI data, while AUD/USD was choppy in reaction to the RBA rate decision where there were no major surprises.
• PBoC set USD/CNY mid-point at 7.1783 vs exp. 7.2703 (prev. 7.1786)

FIXED INCOME

• 10yr UST futures languished around Monday’s lows following the closure of cash treasuries trade.
• Bund futures were off their worst levels but with the rebound limited ahead of German supply.
• 10yr JGB futures were subdued after recent weakness in global peers and mixed results from the 10yr auction which attracted a higher bid-to-cover but resulted in a higher yield, lower accepted prices and a wider tail.

COMMODITIES

• Crude futures traded indecisively within a tight range but held on to the prior day's marginal gains.
• Australia's Offshore Alliance served Chevron (CVX) with further notice of protected industrial action which will commence after the first 7 days of the protected industrial action kicks off on September 7th, while the Australian union said it plans a full strike at Chevron's Wheatstone and Gorgon LNG facilities in Australia for two weeks from September 14th if its demands are not met, according to Reuters.
• Goldman Sachs said it still sees a potentially more aggressive OPEC+ price target as a key moderately bullish risk to its 12-month ahead Brent crude forecast of USD 93/bbl and it no longer expects Saudi to announce a partial unwind of its 1mln bpd production cut, according to Reuters.
• Spot gold was contained by a lack of pertinent catalysts and alongside a rangebound dollar.
• Copper futures remained subdued amid weaker-than-expected Chinese data and property-related woes.

CRYPTO

• Bitcoin was pressured and continued to extend further beneath the USD 26,000 level.

NOTABLE ASIA-PAC HEADLINES

• China's MIIT released a plan to develop the electronics industry and will guide capital to the industry, while it will support qualified enterprises to make good use of financing tools such as domestic and overseas listings and bond issuances, according to Bloomberg and Reuters.
• China's Foreign Minister Wang said following the recent meeting with his Italian counterpart that China and Italy should adhere to the right way of getting along in terms of mutual respect, trust, openness and cooperation, while he added that both countries should strive for bilateral relations to be at the forefront of China-EU relations. Furthermore, Wang said they should jointly safeguard a free and open multilateral trading system, maintain a stable global supply chain and provide a fair business environment for each other's enterprises.
• A debt crisis reportedly threatens to engulf Chinese developers with about two-thirds of 50 major private builders defaulters and with the 16 survivors facing USD 1.5bln of bond payments this month, according to Bloomberg.
• Country Garden Holdings (2007 HK) paid USD-denominated coupons that were due last month before the end of the grace period which was set to expire by September 6th, according to Bloomberg and Reuters.
• RBA kept the Cash Rate Target unchanged at 4.10%, as expected, while it reiterated that some further tightening of monetary policy may be required and the Board remains resolute in its determination to return inflation to the target. RBA higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so but noted inflation is still too high and will remain so for some time yet. Furthermore, the RBA said the pause will provide further time to assess the impact of the increase in interest rates to date and the economic outlook but noted increased uncertainty around the outlook for the Chinese economy due to ongoing stresses in the property market and that the outlook for household consumption also remains uncertain

DATA RECAP

• Chinese Caixin Services PMI (Aug) 51.8 vs. Exp. 53.6 (Prev. 54.1)
• Chinese Caixin Composite PMI (Aug) 51.7 (Prev. 51.9)
• Japanese All Household Spending MM (Jul) -2.7% vs. Exp. 0.7% (Prev. 0.9%)
• Japanese All Household Spending YY (Jul) -5.0% vs. Exp. -2.5% (Prev. -4.2%)
• Australian Current Account Balance (AUD)(Q2) 7.7B vs. Exp. 8.0B (Prev. 12.3B)
• Australian Net Exports Contribution (Q2) 0.8% vs. Exp. 0.3% (Prev. -0.2%)

GEOPOLITICS

• Russian Defence Ministry said it shot down a drone over Russia's Kaluga region, according to Reuters.
• North Korean leader Kim plans to travel to Russia this month and meet Russian President Putin to discuss the possibility of supplying weapons for the war in Ukraine, according to NYT citing US and allied sources.

EU/UK

NOTABLE HEADLINES

• Barclaycard said UK August consumer spending rose 2.8% Y/Y (prev. +4.0% Y/Y in July) and noted that spending on essentials grew at the slowest pace since April 2020 due to lower fuel spending, according to Reuters.

DATA RECAP

• UK BRC Retail Sales YY (Aug) 4.3% (Prev. 1.8%)
• UK BRC Total Sales YY (Aug) 4.1% (Prev. 1.5%)