• European bourses spent the morning in the red but have benefited from a broader yield-induced pick up in sentiment
• Stateside, futures remain in the red but as above are off lows. NQ lags given marked AAPL pressure in the pre-market
• DXY remains firmer but has been unable to breach the 105.00 mark with GBP suffering as BoE expectations drift further
• Gilts lead European benchmarks higher, though the complex is yet to retain the bulk of Wednesday’s downside
• Further consolidation for crude benchmarks while metals are impaired by the USD and APAC handover
• Looking ahead, highlights include US IJC, G20 Finance & Energy Meeting, Speeches from Fed’s Goolsbee, Bowman, Logan, Harker, Williams & Bostic.

EUROPEAN TRADE

EQUITIES

• European bourses spent the morning in the red but have benefitted from a broader yield-induced pick up in sentiment, Euro Stoxx 50 +0.2%.
• Sectors are now mainly in the green, outperformance in Utilities whilst Basic Resources and Tech continue to lag.
• On Tech, the sector is impaired by marked pre-market downside in Apple -2.7%, following reports of a further crackdown by China in iPhones.
• Action which is also affecting US futures, ES -0.2% and NQ -0.5%; though, they are off lows given the mentioned influence of yields and as attention turns to the busy afternoon docket.
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• Click here and here for a recap of the main European equity updates.

FX

• Dollar eases off post-ISM peaks and trades mixed vs peers pre-IJC and more Fed speak, DXY confined to 104.980-800 range.
• Sterling suffers after drop in UK house prices and DMP 1 year inflation expectations, Cable below 1.2500 and Fib support at one stage.
• Euro defends 1.0700 vs Greenback again and aided by 1.85bln option expiries.
• Kiwi regains composure and sight of 0.5900 against Buck as NZ manufacturing sales rebound.
• Yen benefits from retreat in US Treasury yields and bounces from 147.87 to 147.37.
• Aussie draws encouragement from not so weak Chinese imports and exports, AUD/USD closer to 0.6400 than 0.6350.
• PBoC set USD/CNY mid-point at 7.1986 vs exp. 7.3121 (prev. 7.1969)
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Gilts correct higher and overtake debt peers on UK specifics including weak data and a decline in inflation expectations.
• 10 year bond extends from 93.78 to 94.44, while Bunds and T-note lag within 130.35-87 and 109-21/29 respective ranges.
• OATs and Bonos bid after somewhat mixed French and Spanish auctions, BTPs underpinned ahead of new Valore issuance due in early October.
• Italian Treasury offers a new issue of the BTP Valore from October 2nd-6th, five year maturity.
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COMMODITIES

• Another session of consolidation for the crude benchmarks, continuing Wednesday’s pullback, despite bullish inventory data and Saudi lifting its Asia OSPs, with markets broadly looking to Fed speak and US data points.
• Strike action at Chevron’s LNG facilities in Australia has been pushed back from the scheduled start of today until Friday.
• Spot gold is benefitting from the subdued risk tone ahead of data and Fed speak while base metals pullback in-line with APAC trade despite better-than-feared Chinese trade figures.
• US Energy Private Inventory Data (bbls): Crude -5.5mln (exp. -2.1mln), Gasoline -5.1mln (exp. -1mln), Distillate +0.3mln (exp. +0.2mln), Cushing -1.4mln.
• Texas declared a grid emergency as the heat stoked demand for power, while it warned that rolling blackouts may be needed amid grid emergency, according to Reuters.
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NOTABLE US HEADLINES

• China reportedly seeks to broaden the Apple (AAPL) iPhone ban to state firms and agencies, via Bloomberg.

NOTABLE EUROPEAN HEADLINES

• BoE Monthly Decision Maker Panel data - August 2023: One-year ahead CPI inflation expectations decreased to 4.8% in August, down from 5.4% in July. Three-year ahead CPI inflation expectations decreased slightly to 3.2% in August, down 0.1 percentage points relative to July. Expected year-ahead wage growth remained the same at 5.0% on the month in August, and the three-month moving average decreased slightly by 0.1 percentage points to 5.1%.
• German IFO Institute maintains its 2023 GDP forecast at -0.4%, whilst lowering its 2024 forecast to +1.4% from +1.5%

NOTABLE EUROPEAN DATA

• German Industrial Output MM (Jul 2023) -0.8% vs. Exp. -0.5% (Prev. -1.5%)
• UK Halifax House Prices MM (Aug 2023) -1.9% vs. Exp. -0.3% (Prev. -0.3%)
• EU GDP Revised QQ (Q2 2023) 0.1% vs. Exp. 0.3% (Prev. 0.3%); YY (Q2 2023) 0.5% vs. Exp. 0.6% (Prev. 0.6%)

CRYPTO

• Bitcoin is essentially flat on the session in a continuation of the recent relatively rangebound performance after last week's much more pronounced action. BTC currently holding above 25.7k, in tight parameters of circa. USD 200.

APAC TRADE

• APAC stocks were pressured as the region took its cue from the losses stateside where stocks and bonds declined in the aftermath of hawkish ISM Services data, while participants also digested the latest Chinese trade data.
• ASX 200 was dragged lower by underperformance in the commodity-related sectors and amid the key data from Australia’s largest trade partner.
• Nikkei 225 swung between gains and losses with early support from currency weakness and reports that Japan will put together economic measures around October, although the index eventually succumbed to the selling pressure.
• Hang Seng and Shanghai Comp conformed to the downbeat mood as the latest Chinese trade data showed a continued contraction in the nation’s exports and imports but was not as bad as feared, while tech stocks were pressured by frictions after the FCC chair asked US government agencies to address the threat posed by Chinese cellular connectivity modules and a lawmaker called for an investigation into SMIC for potentially violating US sanctions by supplying components to Huawei. Furthermore, China reportedly banned government officials from using iPhones at work and was said to be seeking to extend this to state firms and agencies.

NOTABLE ASIA-PAC HEADLINES

• China seeks to broaden the Apple (AAPL) iPhone ban to state firms and agencies, according to Bloomberg.
• FCC chair asked US government agencies to address the threat posed by Chinese cellular connectivity modules and to consider adding Chinese firms Quectel and Fibocom to the list of companies posing national security risks.
• US House Speaker McCarthy said China has the responsibility to repair relations with the world. It was also reported that the US Ambassador to Japan said Japan has done everything right according to science regarding the Fukushima water release and that is in direct contrast with what China has done during the COVID pandemic.
• China's Big 4 banks adjusted rates for some existing first-home mortgages, according to Reuters.
• Chinese Premier Li says China will further open up and offer bigger market for countries including Australia; both side should properly handle differences in spirit of mutual respect

DATA RECAP

• Chinese Trade Balance (USD)(Aug) 68.36B vs. Exp. 73.9B (Prev. 80.6B)
• Chinese Exports YY (USD)(Aug) -8.8% vs. Exp. -9.2% (Prev. -14.5%); Imports YY (USD)(Aug) -7.3% vs. Exp. -9.0% (Prev. -12.4%)
• Chinese Trade Balance (CNY)(Aug) 488.0B (Prev. 575.7B)
• Chinese Exports YY (CNY)(Aug) -3.2% (Prev. -9.2%); Imports YY (CNY)(Aug) -1.6% (Prev. -6.9%)
• Chinese FX Reserves (Monthly) (Aug 2023) 3.16Trl vs. Exp. 3.187Trl (Prev. 3.204Trl)
• Australian Trade Balance (AUD)(Jul) 8.0B vs. Exp. 10.0B (Prev. 11.3B)
• Australian Exports MM (Jul) -2.0% (Prev. -2.0%); Imports MM (Jul) 3.0% (Prev. -4.0%)