• APAC stocks were mostly lower following last Friday’s declines on Wall St and with the region cautious in holiday-thinned trade.
• Evergrande shares slumped by more than 20% after some of its wealth management employees were detained by Chinese authorities.
• European equity futures are indicative of a softer open with Euro Stoxx 50 future -0.1% after the cash market closed up 0.4% on Friday.
• DXY and EUR/USD were contained on 105 and 1.06 handles respectively, antipodeans marginally outperform.
• US National Security Adviser Sullivan and Chinese Foreign Minister Wang Yi met in Malta over the weekend in a pre-unannounced meeting
• Looking ahead, highlights include US NAHB Housing Market Index, Bundesbank Monthly Report, remarks from Saudi Arabia’s Energy Minister, ECB de Guindos & Panetta.

US TRADE

EQUITIES

• US stocks were sold on Friday amid a chunky 'Quad Witching' options expiry in the absence of obvious news-driven catalysts and with data releases somewhat mixed as the NY Fed's Manufacturing survey and US Industrial Production topped forecasts, while University of Michigan Sentiment disappointed.
• SPX -1.22% at 4,450, NDX -1.75% at 15,202, DJI -0.83% at 34,619, RUT -1.05% at 1,847.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Two key House Republican factions, the House Freedom Caucus and Main Street Caucus, reached a deal to temporarily fund the government for an extra month and avert a shutdown, according to Semafor.
• UAW and automakers resumed talks on reaching a new contract and Ford (F) said it is committed to reaching an agreement with UAW that rewards workers and allows Ford to invest in the future, while Stellantis (STLA) offered union employees cumulative raises of nearly 21% over the life of the contract and proposed a plan to keep the Illinois assembly plant open. However, UAW stated that Stellantis is playing games with the future of the assembly plant and UAW’s President Fain said in an interview with CBS that they are prepared to do whatever they have to do when asked whether they are ready to order strikes at additional plants.

APAC TRADE

EQUITIES

• APAC stocks were mostly lower following last Friday’s declines on Wall St and with the region cautious in a holiday-thinned start to a busy week of central bank policy announcements
• ASX 200 was pressured with underperformance in tech and telecoms and with the handover of leadership at the RBA met with little fanfare.
• Nikkei 225 remained closed as Japanese participants observed the Respect for the Aged Day holiday.
• Hang Seng and Shanghai Comp retreated at the open with the declines in Hong Kong led by tech and property stocks including Evergrande shares which slumped by more than 20% in early trade after some of its wealth management employees were detained by Chinese authorities. Conversely, the losses in the mainland were later reversed in the aftermath of the PBoC’s firm liquidity efforts and the previously unannounced meeting between Chinese Foreign Minister Wang Yi and US National Security Adviser Sullivan.
• US equity futures traded sideways and only partially nursed the wounds from last Friday's stock slump.
• European equity futures are indicative of a softer open with Euro Stoxx 50 future -0.1% after the cash market closed up 0.4% on Friday.

FX

• DXY was rangebound as participants await a plethora of central bank updates including the FOMC rate decision on Wednesday with money markets currently pricing a 99% chance that the Fed keeps the Fed Funds Rate unchanged, while the attention will also be on the language and the latest dot plots.
• EUR/USD lacked firm direction following several comments from ECB officials over the weekend including Holzmann who stated that they definitely cannot say that last week’s rate increase was the final hike and that the likelihood of another hike is not that big but also noted that inflation risks haven’t receded lately
• GBP/USD was kept afloat but with price action contained by resistance around the 1.2400 level and with the latest UK CPI and the BoE rate decision due later in the week
• USD/JPY slightly softened amid the Japanese holiday but retained a firm grip on the 147.00 handle.
• Antipodeans were marginally higher after a rebound from Friday’s lows in the absence of any pertinent drivers.
• PBoC set USD/CNY mid-point at 7.1736 vs exp. 7.2707 (prev. 7.1786)
• Czech Central Bank Governor Michl said let’s forget about near-term rate cuts and that there will be no rate cuts in September and October, while they expect higher rates in the longer term and want to be a hawkish central bank. Furthermore, Michl said core inflation does not allow a rate cut now and they will wait for data in November and January, according to Reuters.

FIXED INCOME

• 10yr UST futures were subdued and extended on Friday’s losses ahead of the FOMC meeting mid-week and with cash treasuries trade shut during Asia hours owing to the holiday closure in Japan.
• Bund futures retreated closer towards the 130.00 level to the downside despite the somewhat mixed ECB commentary from over the weekend in which some officials suggested the potential for no more rate increases.

COMMODITIES

• Crude futures were kept afloat with WTI crude futures above USD 90/bbl amid ongoing supply-side concerns but with advances capped after Friday's whipsawing and with risk appetite constrained ahead of this week's risk events.
• Australia’s Offshore Alliance union said members began another 24-hour stoppage on Sunday at Chevron’s (CVX) Australian LNG facilities.
• French PM Borne said the government plans to permit gas stations to sell fuel at a loss for a limited period of a few months to help contain inflation.
• Spot gold eked mild gains and revisited Friday's peak but with upside capped by a steady dollar.
• Copper futures were lacklustre amid the cautious risk appetite and indecisive mood in China.

CRYPTO

• Bitcoin eventually edged higher during the session following a flat performance throughout the weekend.

NOTABLE ASIA-PAC HEADLINES

• US National Security Adviser Sullivan and Chinese Foreign Minister Wang Yi met in Malta over the weekend in an unannounced meeting to maintain open lines of communication with the discussions said to be candid, substantive and constructive, while they discussed security issues, Russia’s war in Ukraine and cross-Taiwan-Strait issues, according to the White House. Furthermore, a US official said the US sees some limited signs China may re-establish military communications with the US and the US raised concerns about Chinese assistance to Russia, as well as expressed concerns about China crossing the median line in the Taiwan Strait, according to Reuters.
• China’s Foreign Ministry said following the meeting between Chinese Foreign Minister Wang and White House’s Sullivan that both sides agreed to continue to maintain high-level exchanges and hold consultations on Asia-Pacific affairs, maritime affairs and foreign policy, while it added that the Taiwan issue is the first insurmountable line on Sino-US relations, according to Reuters.
• China's Foreign Minister Wang Yi said in a meeting with Malta's Foreign Minister that the two sides will work together to promote China-EU cooperation and China hopes Malta would continue to play a positive role in the development of China-EU relations. Furthermore, he said China-EU cooperation outweighs differences and China has consistently supported the EU's strategic independence and European integration, according to Reuters.
• Chinese Foreign Minister Wang Yi will visit Russia from September 18th-21st for the China-Russia strategic security consultations.
• IMF’s Georgieva said China’s ageing population and declining productivity are suppressing growth and Beijing should work to boost domestic consumption, while she urged China to address the weakness in the real estate sector and build-up of local government debt. Furthermore, she stated the IMF must carefully monitor the outflow of investments from China and said that some sectors still offer opportunities, according to Reuters.
• German Foreign Minister Baerbock said Europe must reduce its dependence on China and the EU should de-risk from China but not decouple, according to Bloomberg.

DATA RECAP

• Singapore Non-Oil Exports MM (Aug) -3.8% vs. Exp. 5.5% (Prev. 3.4%)
• Singapore Non-Oil Exports YY (Aug) -20.1% vs. Exp. -15.8% (Prev. -20.2%)

GEOPOLITICS

• Ukraine’s general in command of ground forces announced that Ukrainian forces recaptured the eastern village of Klishchiivka on the southern flank of Bakhmut, according to a Telegram post cited by Reuters.
• North Korean leader Kim met with Russian Defence Minister Shoigu in Vladivostok who showed Kim Russia’s hypersonic Kinzhal missiles and three nuclear-capable strategic aircraft, according to Russian media.
• IAEA said Tehran took a disproportionate and unprecedented measure in barring a third of IAEA’s most experienced inspectors in Iran and noted that these inspectors are among the most experienced energy experts with unique knowledge of enrichment technology, according to Reuters.
• Israel PM Netanyahu said Iran is violating all its commitments to the international community after Tehran moved to ban multiple inspectors, according to Reuters.
• Saudi Arabia reportedly informed the Biden admin of its decision to halt all discussions of normalising ties with Israel on Sunday, citing Israeli PM Netanyahu's "extremist" government, according to unconfirmed reports cited by The Jerusalem Post.
• Taiwan's Defence Ministry said during the past 24 hours, 40 Chinese air force planes crossed Taiwan's air defence zone and said China's continuous military harassment can easily lead to a sharp increase in tensions and worsen regional security, while it urged Beijing authorities to immediately stop destructive actions, according to Reuters. Furthermore, AFP reported that Taiwan said it detected 103 Chinese warplanes around the island.
• Turkish President Erdogan said Turkey could part ways with the EU if necessary following a report which criticised Turkey’s democratic shortcomings, according to Bloomberg.

EU/UK

• UK opposition Labour Party leader Keir Starmer pledged to seek a major rewrite of the Brexit deal in 2025 if the party wins the next general election, according to FT.
• ECB’s Holzmann said that they definitely cannot say this was the final hike but the likelihood of another hike is not that big and noted that inflation risks haven’t receded lately. Furthermore, he stated that there is a risk more tightening will be needed and it wasn’t an easy decision at the last meeting where they had to weigh all arguments very carefully in order to come to an agreement.
• ECB’s Muller sees a good case that no further rate hikes are needed and noted a strong case to quicken the balance sheet roll-off, while he added that the ECB should discuss an earlier end of PEPP reinvestment.
• ECB’s Stournaras said governments must do their part in reining in consumer prices after borrowing costs reached a level that could be their peak, while he stated that monetary policy has done its part to fight inflation and it is up to fiscal policy to take off some of the heat, according to Bloomberg.
• Moody’s raised Greece’s sovereign rating by two notches from Ba3; Outlook Stable from BA1; Outlook Positive and S&P affirmed Spain at A; Outlook Stable, while Fitch affirmed Germany at AAA; Outlook Stable and affirmed Malta at A+; Outlook Stable.

DATA RECAP

• UK Rightmove House Price Index MM (Sep) 0.4% (Prev. -1.9%)
• UK Rightmove House Price Index YY (Sep) -0.4% (Prev. -0.1%)