• European bourses are in the red following the risk-off sentiment in APAC trade, US futures tentative pre-CPI
• European autos saw brief marked outperformance on von der Leyen’s comments, though this has since pared
• DXY is on a firmer footing with EUR & GBP softer while the PLN experienced marked appreciation after the Polish PM’s advisor spoke
• EGBs softer after hawkish ECB sources while Gilts remain in the green after particularly soft growth data; USTs under marginal pressure pre-CPI/supply
• Crude benchmarks are modestly firmer continuing Tuesday’s upside while metals are mixed/subdued as the USD remains resilient
• Looking ahead, highlights include US CPI & supply

EUROPEAN TRADE

EQUITIES

• European bourses are in the red, Euro Stoxx 50 -0.8%, following on from risk-off sentiment seen in the Asian markets overnight.
• Within Europe, sectors are primarily in the red featuring underperformance in Retail and Consumer Discretionary following earnings from Inditex while Auto names saw marked upside after von der Leyen's announcement on Chinese EVs, though much of this has since pared.
• Stateside, futures are marginally weaker with the general tone a tentative one ahead of the US CPI report, ES -0.1%; NQ & RTY in-fitting.
• As a reminder, Asia-Pacific stocks were pressured following the tech-led declines on Wall St owing to the post-Apple event disappointment and with participants cautious ahead of the upcoming US CPI data.
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FX

• The DXY is on a modestly firmer footing overall, but caged to a tight range above 104.50 in the run-up to the US CPI metrics later today.
• EUR and GBP are modestly softer against the Buck whilst the GBP is modestly softer against the EUR following soft UK GDP data and hawkish ECB sources.
• The antipodeans trade on either side of the spectrum, with the NZD resilient against the Buck following yesterday’s notable losses, whilst the AUD remains subdued by the woes in China alongside the broader cautious mood ahead of the US inflation metrics.
• Substantial strength was seen in the Polish Zloty after the Polish PM's Adviser said the PLN has weakened beyond the optimal level for Poland and added the optimal level for EUR/PLN is between 4.40-4.60 range.
• Polish PM Adviser says the PLN has weakened beyond the optimal level for Poland; says optimal level for EUR/PLN is between 4.40-4.60 range; have the tools to ensure the PLN is at an optimal level.
• PBoC set USD/CNY mid-point at 7.1894 vs exp. 7.2783 (prev. 7.1986)
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• EGBs are under modest pressure with participants skewing their expectations hawkishly following Tuesday’s late-doors ECB sources piece; BTP-Bund yield spread has hit multi-month highs as a result, though remains markedly shy of the YTD peak.
• Gilts are firmer in contrast following particularly soft GDP data which has prompted a number of desks to trim their UK 2023 growth view, though a 25bp hike in September continues to be the base case from a market pricing perspective.
• Stateside, USTs are a touch softer taking cues from the above EGB move with US participants entirely focused on the upcoming CPI release.
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COMMODITIES

• Crude benchmarks are modestly firmer following the rally seen yesterday, which resulted in the contracts settling higher by around USD 1.50/bbl apiece.
• The weekly Private Inventory data proved to be bearish, with builds seen in headline crude stocks; following on from bullishly-received OPEC OMR and subsequent Brent oil price forecast upgrade via the EIA.
• Spot gold is subdued amid the firmer Dollar, but the yellow metal’s prices remain north of USD 1,900/oz and in a tight range in the run-up to the US CPI report, with the 21 DMA to the upside at USD 1,916.44/oz while downside levels include yesterday’s low of USD 1,907.62/oz.
• Base metals meanwhile now trade relatively mixed and with the breadth of the market narrow as markets await the US CPI data, 3M LME copper is back towards the session highs above USD 8,400/t after finding a floor near USD 8,350/t overnight.
• US Energy Inventory Data (bbls): Crude +1.2mln (exp. -1.9mln), Gasoline +4.2mln (exp. +0.2mln), Distillate +2.6mln (exp. +1.3mln), Cushing -2.4mln.
• All Libyan eastern oil ports have reopened following a shutdown on September 9th due to a storm, via the port agent.
• Hungarian Farm Minister Nagy says they have agreed on a unilateral extension of the import ban on Ukrainian grains beyond September 15th, agreement with Romania, Slovakia and Bulgaria. Ban will be imposed on a broader range of products.
• IEA OMR: Maintains 2023 and 2024 global oil demand growth forecast steady; says extension of oil-output cuts by Saudi and Russia will lock in a substantial market deficit through Q4 2023; OPEC+ cuts tempered by sharply higher Iranian oil flows. Click [here](IEA OMR: Maintains 2023 and 2024 global oil demand growth forecast steady; says extension of oil-output cuts by Saudi and Russia will lock in a substantial market deficit through Q4 2023; OPEC+ cuts tempered by sharply higher Iranian oil flows) for more detail.
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NOTABLE US HEADLINES

• The US government is reportedly looking to offload almost USD 13bln of mortgage bonds it amassed from Silicon Valley Bank and Signature Bank following the collapse of the lenders,** according to Bloomberg.
• China's Foreign Ministry says China has not issued a ban on the purchase and use of foreign brands of phones such as Apple's (AAPL) iPhone; hope all firms operating within China strictly abide by data security law. Subsequently, China says it has noticed "some" security incidents with regards to Apple (AAPL) iPhones, via Bloomberg citing the daily press briefing.
• Apple (AAPL) says it has provided French ANFR representatives with multiple Apple/independent lab results confirming its compliance re. iPhone 12 radiation levels.
• Click here for the US Early Morning Note.
• Click here for the US CPI preview.

NOTABLE EUROPEAN HEADLINES

• ECB’s new 2024 inflation projection is to be above 3% vs. 3% in June, firming the case for an interest rate hike, according to Reuters sources. Furthermore, the ECB is to cut its 2023 and 2024 economic growth projections to be broadly in line with market expectations, while a source said the rate decision is still a close call and formal proposals for the meeting have not yet been presented. Market pricing now ascribes a ~79% chance of a 25bps hike at Thursday’s meeting vs. ~50% in recent sessions.
• European Commission President von der Leyen says global markets are flooded by cheaper Chinese EVs, saying Chinese EV prices are kept artificially low by subsidies. Commission to begin an anti-subsidy investigation into Chinese EVs. Subsequently, reported that EU Commission President von der Leyen conveyed the bloc's concerns re. China's EV trade practices to Chinese Premier Li Qiang alongside the G20, via FT citing sources.
• JP Morgan cuts UK 2023 GDP growth forecast to 0.4% (prev. 0.6%); Goldman Sachs cuts UK 2023 GDP growth forecast to 0.3% from 0.5%
• German Economy Ministry reports say early indicators point to subdued development of private consumption in coming months; current indicators point to weak Q3; noticeable economic recovery to be seen at the turn of the year 2023-24 at the earliest.
• Germany is to revise its 2023 GDP outlook to a contraction of up to 0.3%, according to Bloomberg.

NOTABLE EUROPEAN DATA

• UK GDP Estimate MM (Jul) -0.5% vs. Exp. -0.20% (Prev. 0.50%); "This is the first month since June 2022 that all three sectors contributed negatively to GDP on the month."
• All of the main sectors fell in July 2023. Output in the services sector fell by 0.5% and was the largest contributor to the fall in monthly GDP; production output fell by 0.7% and construction output fell by 0.5%. This is the first month since June 2022 that all three sectors contributed negatively to GDP on the month.
• UK GDP Est 3M/3M (Jul) 0.2% vs. Exp. 0.30% (Prev. 0.20%); YY (Jul) 0.0% vs. Exp. 0.40% (Prev. 0.90%).
• EU Industrial Production MM (Jul 2023) -1.1% vs. Exp. -0.7% (Prev. 0.5%, Rev. 0.4%); YY (Jul 2023) -2.2% vs. Exp. -0.3% (Prev. -1.2%, Rev. -1.1%)

GEOPOLITICS

• Russian-installed Governor of Sevastopol said Ukraine launched an air attack on Sevastopol in Crimea, while the air attack sparked a fire at Sevastapol's shipyard and 24 people were injured, according to Reuters.
• Russian President Putin and North Korean leader Kim met at the Vosotchny Cosmodrome for talks. Russian President Putin responded that it is why they have come to the Vostochny Cosmodrome when asked if Russia will help North Korea build satellites, while he added that they will discuss all issues and that North Korean Leader Kim is showing a big interest in Russian rocket equipment.
• Romanian Defence Ministry says elements of possible drone found on Romanian territory (NATO).
• North Korea fired projectiles believed to be ballistic missiles which landed outside of Japan's exclusive economic zone, according to NHK citing the Japanese Coast Guard.
• Taiwan's Defence Ministry said 28 Chinese military aircraft entered Taiwan's air defence zone on Wednesday morning and some Chinese aircraft crossed the Bashi channel to carry out drills with Chinese carrier Shandong, while it also showed a picture of a Taiwanese warship shadowing the Shandong.

CRYPTO

• Bitcoin is firmer on the session but remains within prior WTD boundaries. BTC has eclipsed the USD 26k mark with gains of around half a percent, though is shy of yesterday's USD 26.53k best.
• Binance US reduced staff and its president departed, according to The Block.

APAC TRADE

• APAC stocks were pressured following the tech-led declines on Wall St owing to the post-Apple event disappointment and with participants cautious ahead of the upcoming US CPI data.
• ASX 200 declined as tech stocks mirrored the underperformance seen in US counterparts and with nearly all sectors on the retreat aside from energy and utilities after further upside in oil prices.
• Nikkei 225 swung between gains and losses with early advances seen following mixed PPI data and the improvement in BSI large industry surveys, although the index eventually slipped with money markets now pricing the BoJ to exit negative rates in January compared to a previous pricing of an exit in September next year.
• Hang Seng and Shanghai Comp were initially kept afloat amid strength in the energy names and with developers underpinned as some cities further loosened restrictions for the sector, but then conformed to the soured mood.

NOTABLE ASIA-PAC HEADLINES

• China will extend tariff exemptions for imports of some US products until April 30th, 2024.
• Japanese Finance Minister Suzuki said PM Kishida asked him to stay on in the current job in the cabinet reshuffle, while he added that they need to respond appropriately to market moves and will decide on the size and content of the new economic package from now on, according to Reuters.
• PBoC will support prices to rise moderately, and will pay close attention to the effect of financial policies, via Central Bank Publication. Will strengthen the guidance of expectations.

DATA RECAP

• Japanese Business Survey Index Large Manufacturing (Q3 2023) 5.4% (Prev. -0.4%); All Industry (Q3 2023) 5.8% (Prev. 2.7%)
• Japanese PPI MM (Aug) 0.3% vs. Exp. 0.1% (Prev. 0.1%); YY (Aug) 3.2% vs. Exp. 3.2% (Prev. 3.6%)