• European bourses are in the green as sentiment improves after constructive Chinese data
• Though, US futures are more contained with specifics light into Quad Witching
• DXY idles above 105.00, JPY pressured as yields lift despite sources while Yuan rebounds on mentioned data
• Fixed benchmarks under pressure in a marked reversal of post-ECB highs with multiple factors weighing
• Crude benchmarks firmer intraday, though shy of best, metals more mixed
• Looking ahead, highlights include US UoM Sentiment, NY Fed Manufacturing, Import & Export Prices, BoE/IPSOS Inflation Attitude Survey. CBR’s Nabiullina, Quad Witching.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +0.9%, as sentiment picks up following constructive Chinese data and after yesterday's ECB announcement, despite subsequent sources.
• Sectors are mostly in the green with Consumer Products & Services the major outperformer, given Luxury names; with sectors exposed to China also underpinned.
• At the other end of the spectrum, Chip names are pressured following a Reuters source piece that TSMC told vendors to delay chip equipment delivery, citing nervousness about consumer demand.
• Stateside, futures are flat/mixed after the modest rally on Thursday, ES +0.1%; Arm gave the NQ +0.1% a helping hand and continues to climb in the pre-market.
• US auto names are pressured in pre-market trade as strike action commences; Ford (F) -1.7%.
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FX

• DXY idles above 105.000 after Thursday's near 100 tick bounce on a combination of Euro losses and strong US data releases.
• Yen retreats amidst a rebound in UST yields towards YTD lows vs. USD circa 147.87 after hitting resistance ahead of 147.00.
• Yuan rebounds as Chinese activity data beats consensus and PBoC cuts 14-day reverse repo to provide more stimulus.
• USD/CNY and USD/CNH probe 7.2500 and 7.2600 respectively.
• Aussie extends gains vs Buck to 0.6470+ as iron ore soars.
• Sterling and Euro recover as Gilts and EGBs retreat further than Treasuries
• Cable back above 200 DMA after bounce from 1.2400, EUR/USD off multiple lows within 1.0635-69 range.
• PBoC set USD/CNY mid-point at 7.1786 vs exp. 7.2849 (prev. 7.1874)
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bonds in freefall following deeper reversal from post-ECB highs through levels prevalent prior to the 'dovish' hike.
• Bunds towards base of 131.27-130.43 range, Gilts nearer 95.39 than 96.08 and T-note hovering close to 109-15+ having peaked at 109-28+.
• Multiple factors weighing on debt including better-than-forecast Chinese data, ongoing strength in crude prices and hawkish ECB/BoJ sources.
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COMMODITIES

• WTI and Brent futures are firmer intraday but off best levels, with overnight gains fuelled by the broader constructive tone and better-than-expected Chinese activity data.
• Spot gold held onto the USD 1,900/oz handle yesterday despite the gains in the DXY, with the yellow metal climbing north of USD 1,915/oz in APAC trade, and briefly topped its 21 DMA (1,918.55/oz) as it eyes its 200 DMA at USD 1,921.93/oz.
• Metals are relatively mixed and off best levels after seeing some upside on the aforementioned Chinese data, with 3M LME copper briefly rising above USD 8,500/t before waning alongside the mainland Chinese stock market.
• Qatar set November-loading Al-Shaheen crude term price at about USD 2.73/bbl above Dubai quotes.
• Turkish Energy Minister says a survey of the Iraq-Turkey oil pipeline is complete with a report expected soon; the pipeline will soon be technically operational.
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NOTABLE US HEADLINES

• UAW President announced workers' strikes at the Stellantis (STLA) Toledo Jeep plant, Ford's (F) Bronco assembly plant in Michigan and GM's (GM) Wentzville mid-size truck plant from midnight, while Ford said the UAW made a counterproposal but showed little movement from initial demands.
• Click here for the US Early Morning Note.

NOTABLE EUROPEAN HEADLINES

• Several of the ECB's more hawkish rate-setters believe that rates could rise again in December, in the scenario of hot wages and inflation, via FT citing sources. Three individuals involved in the September meeting said if EZ inflation were above forecast the door remains open to a hike in December, when the next set of projections are provided. One respondent said a "very negative surprise" on inflation would be needed for an October move.
• ECB's de Guindos says both headline and core CPI will continue to ease, any future cuts will depend on multiple factors, via Cope radio.
• ECB's Muller says no additional hikes expected in the coming months, though higher inflation could merit a further hike.
• ECB's President Lagarde says ECB will return to 2% inflation target, will set rates at restrictive level as long as needed for it.
• ECB's Kazaks says this week's rate decision was not a 'dovish hike'; does not preclude future decisions
• ECB TLTRO.III September early repayment figure (EUR): 34.2bln (prev. 29.5bln).
• Bank of England/Ipsos Inflation Attitudes Survey - August 2023: Median expectations of the rate of inflation over the coming year were 3.6%, up from 3.5% in May 2023.

NOTABLE EUROPEAN DATA

• EU Wages In Euro Zone (Q2 2023) 4.6% (Prev. 4.6%); Labour Costs YY (Q2 2023) 4.5% (Prev. 5.0%)
• CBR hikes by 100bps as expected to 13.00%; sees its key rate in the 9.6-9.7% range (prev. view 7.9-8.3%)).

GEOPOLITICS

• Russia seeks to expand its naval presence in the Mediterranean in which it wants access for its warships to a Mediterranean port in Libya, according to WSJ.

CRYPTO

• Bitcoin is a touch firmer on the session, holding around the USD 26.5k mark with newsflow light to end a busy week ahead of a particularly busy week for Central Bank activity.

APAC TRADE

• APAC stocks gained after global risk was fuelled by the upside in Europe and the US, while sentiment was also bolstered by better-than-expected Chinese activity data.
• ASX 200 was boosted with miners leading the advances seen across all sectors following the reserve ratio cut in China which is expected to release over CNY 500bln of liquidity for Australia’s largest trading partner and with recent comments from RBA watcher McCrann that there will likely be no more rate hikes.
• Nikkei 225 extended its gains amid notable outperformance in power companies and with SoftBank boosted after shares in its Arm unit climbed 25% in its US debut.
• Hang Seng and Shanghai Comp were both initially underpinned by the encouraging Chinese activity data in which Industrial Production and Retail Sales both topped forecasts, while attention was also on the PBoC which recently cut the RRR by 25bps but maintained its 1-year MLF rate at 2.50%, although Shanghai Comp later faded into the red.

NOTABLE ASIA-PAC HEADLINES

• PBoC announced CNY 591bln (CNY 400bln maturing) through 1-year MLF with the rate maintained at 2.50%.
• China reportedly told brokers to cut FX trading to shore up a weak yuan, according to Bloomberg.
• PBoC injected CNY 105bln via 7-day reverse repos with the rate kept at 1.80% and CNY 34bln via 14-day reverse repos with the rate at 1.95% (prev. 2.15%).
• China's NBS said the economy saw accelerated demand but domestic demand remains insufficient and the foundation of the economic recovery needs to be consolidated. Furthermore, the stats bureau stated the domestic economy is recovering but still faces difficulties and that China should focus on expanding domestic demand.
• US senior House Republicans urged the US Commerce Department to toughen export controls against Huawei and SMIC citing the new advanced smartphone from Huawei.
• Sino-Ocean Group (3377 HK) announced the suspension of trading of offshore USD securities and said the group has been in talks with creditors, while it noted that the optimal path forward is holistic restructuring and payments under all of its offshore debts will be suspended until holistic restructuring and/or extension are implemented.
• JP Morgan upgrades China's 2023 GDP growth forecast to 5.0% (prev. 4.8%); Goldman Sachs maintains China's Q3 GDP growth forecast 4.9% YY while acknowledging elevated uncertainties surrounding the property sector.
• BoJ is said to see continued upside risks to the price outlook and discrepancy between recent comments by Governor Ueda and how traders interpreted the comments, according to Bloomberg citing sources.

DATA RECAP

• Chinese Industrial Production YY (Aug) 4.5% vs. Exp. 3.9% (Prev. 3.7%)
• Chinese Retail Sales YY (Aug) 4.6% vs. Exp. 3.0% (Prev. 2.5%)
• Chinese House Prices YY (Aug) -0.1% (Prev. -0.1%)
• "Better-than-expected growth in industrial output and retail sales, among others, in August also presented fresh confidence that the Chinese economy could meet its annual growth target, analysts said. " via Global Times