• APAC stocks declined amid US-China tech-related frictions and disappointing Japanese GDP revisions.
• Fed’s Logan who noted that it could be appropriate to skip an interest rate increase this month and that skipping does not imply stopping rate hikes.
• European equity futures are indicative of a slightly higher open with Euro Stoxx 50 future +0.1% after the cash market closed down 0.4% yesterday.
• DXY retreated back below 105, EUR/USD sits in the low 1.07's, Cable lingers below 1.25 and USD/JPY trades on a 147 handle.
• Looking ahead, highlights include German CPI (Final), Canadian Employment & Chinese Money Supply, Fed’s Bostic & Barr.

US TRADE

EQUITIES

• US stocks were predominantly lower with the declines led by tech as Apple (AAPL) remained pressured after reports that China plans to expand an iPhone ban to some state-backed firms. Russell 2000 underperformed against the major indices amid headwinds for regional banks after an FDIC report noted bank profits and deposits were broadly steady in Q2 but regulators are still keeping watch on unrealised losses and its "problem bank" list was unchanged at 43 in Q2.
• SPX -0.32% at 4,451, NDX -0.73% at 15,258, DJIA +0.17% at 34,500, RUT -0.99% at 1,855.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Goolsbee (voter) said it is possible to get on the 'golden path' and that monetary policy is working, while he added that overall inflation is above where they want it and there are risks. Goolsbee also stated that they are very rapidly approaching the time when the argument is not about how high should rates go, but rather how long rates have to stay high and collectively, the Fed forecast is that rates will have to stay up for a relatively extended period, according to a Marketplace interview.
• Fed's Logan (voter) said it could be appropriate to skip an interest rate increase in September and skipping does not imply stopping rate hikes, while she noted that there is work left to do to get to sufficiently restrictive policy and is not yet convinced that they have extinguished excess inflation.
• Fed's Williams (voter) said the Fed is focused on its dual mandate and inflation is moving in the right direction, as well as noted that there is still more data to come before the next FOMC meeting. Furthermore, Williams stated that policy is in a good place and is data dependent, while he added that policy is restrictive, but the question is whether it is sufficiently restrictive.
• Fed's Bostic (non-voter) said there is still work to do to get inflation back to 2%, while he added the US economy is still working through pandemic dynamics and consumer strength has kept economic pain at bay.
• US Senate confirmed World Bank economist Adriana Kugler as a Fed Governor.

APAC TRADE

EQUITIES

• APAC stocks declined amid US-China tech-related frictions and disappointing Japanese GDP revisions.
• ASX 200 was led lower by continued underperformance in the commodity-related sectors and with strike action beginning in some offshore LNG platforms, although losses in the index were stemmed by resilience in defensives.
• Nikkei 225 fell below 33,000 with risk appetite sapped by disappointing GDP revisions and slower wage growth.
• Hang Seng was shut due to severe rainfall and Shanghai Comp traded subdued amid tech frictions as China seeks to expand its iPhone ban and with the US Commerce Department investigating the ‘made in China’ Huawei chip.
• US equity futures traded rangebound and largely ignored the selling pressure seen in Asian counterparts.
• European equity futures are indicative of a slightly higher open with Euro Stoxx 50 future +0.1% after the cash market closed down 0.4% yesterday.

FX

• DXY was softer and retreated below the 105.00 level amid gains in its major counterparts and following a flurry of Fed commentary ahead of the blackout period including from Fed’s Logan who noted that it could be appropriate to skip an interest rate increase this month and that skipping does not imply stopping rate hikes.
• EUR/USD returned to above 1.0700 after briefly slipping beneath in the wake of dismal German data.
• GBP/USD benefitted from the softer dollar and attempted to reclaim the 1.2500 status.
• USD/JPY was choppy with early pressure from the risk-off mood and currency jawboning as Finance Minister Suzuki reiterated rapid FX moves are undesirable and warned they won't rule out any options against excessive FX moves.
• Antipodeans took advantage of a softer greenback despite the subdued risk tone and recent commodity pressure.
• PBoC set USD/CNY mid-point at 7.2150 vs exp. 7.3284 (prev. 7.1986).
• BoC Governor Macklem said the longer they wait, the harder it is likely to reduce inflation and they are prepared to raise rates again but don't want to hike more than they have to. Furthermore, he added that monetary policy may not be restrictive enough to restore price stability, while he also commented that maybe they don't need to do more on rates or maybe they do.

FIXED INCOME

• 10yr UST futures continued to build on yesterday's advances despite the recent fall in jobless claims to a 7-month low with prices underpinned amid the risk-off mood and after the recent bout of Fed rhetoric.
• Bund futures gained ahead of next week’s ECB meeting with expectations split between a hike and a pause.
• 10yr JGB futures tracked the upside in global peers with the BoJ present in the market for nearly JPY 1.8tln of JGBs on top of its fixed-rate operations.

COMMODITIES

• Crude futures extended on the prior day's losses with prices pressured by the downbeat sentiment.
• Australia union confirmed planned strikes by Chevron (CVX) Australia LNG workers from 13:00 local time on Friday and said Chevron is demanding to be given special concessions in bargaining which the union rejected.
• Spot gold eked mild gains and was kept afloat owing to a softer greenback and haven demand.
• Copper futures tested this week's lows alongside the broad risk-averse mood across Asia.

CRYPTO

• Bitcoin took a breather following the prior day's late ramp-up to back above the USD 26,000 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li said in a meeting with UN Secretary-General Guterres that it is necessary to uphold the concept of open and inclusive development, as well as jointly resist the practice of securitising and politicising economic issues.
• Japanese PM Kishida is expected to reshuffle the Cabinet as early as next Wednesday and Chief Cabinet Secretary Matsuno is expected to stay on or take another key post, according to Nikkei.

DATA RECAP

• Japanese GDP Revised QQ (Q2) 1.2% vs. Exp. 1.3% (Prev. 1.5%)
• Japanese GDP Revised Annualised (Q2) 4.8% vs. Exp. 5.5% (Prev. 6.0%)
• Japanese Overall Labour Cash Earnings (Jul) 1.3% (Prev. 2.3%)

GEOPOLITICS

• Russia's embassy in the US said Washington is meddling in Russia's internal affairs by calling elections in occupied areas of Ukraine illegitimate, according to RIA.
• US State Department said Secretary of State Blinken and Romanian Foreign Minister Odobescu discussed Romania's investigation of drone debris found in Romania, close to the border with Ukraine.
• UK is to urge India to 'call out' Russia over the war in Ukraine, according to FT.
• North Korea said leader Kim inspected a new strategic nuclear attack submarine, while Kim said they will accelerate the push to build nuclear-powered submarines, according to NHK and Yonhap.
• South Korea's military said North Korea's new submarine doesn't appear poised to operate normally and noted some external features appear to be scaled up to carry missiles, while the Unification Ministry condemned North Korea's launch of a nuclear-armed submarine and said Pyongyang's action is hurting its citizens' lives.

EU/UK

• Italian PM Meloni said if EU countries fail to reform budget rules this year, she would raise the issue of prolonging the suspension of the rules.