• European bourses are trading higher across the board with the Stoxx 600; US equity futures are also firmer in a continuation of yesterday's gains.
• DXY succumbs to more intense selling pressure amid softer US Treasury yields and renewed risk appetite; Antipodeans outperform.
• EGBs rebound following softer-than-expected German Retail Sales, French and pan-EZ inflation metrics.
• Crude prices have been relatively flat throughout the European morning, but the contracts have been tilting higher in lockstep with broader risk sentiment on month and quarter-end.
• Looking ahead, highlights include US PCE, Chicago PMI, UoM Sentiment, Speeches from Fed’s Barkin, Williams.

29th September 2023

• Click here for the Newsquawk Week Ahead summary.

EUROPEAN TRADE

EQUITIES

• European bourses are trading higher across the board with the Stoxx 600 now virtually flat week-to-date after yesterday’s positive session helped erase losses earlier in the week, while EZ inflation metrics this morning printed below expectations.
• Sectors in Europe are mostly firmer with Consumer Products & Services top of the leaderboard as luxury names benefit from broker action. Other gainers include Tech, Real Estate and Basic Resources, whilst Insurance and Energy are the only sectors in the red.
• US futures are trading firmer as they continue to advance on yesterday's gains, owing to a generally more positive risk tone and as yields see some downside over the past couple of sessions.
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FX

• DXY succumbs to more intense selling pressure and retreats to 105.660 amid softer US Treasury yields and renewed risk appetite.
• Euro bounced from around 1.0559 to 1.0616 irrespective of weaker than consensus German retail sales, French and pan-Eurozone inflation metrics that exacerbated the revival in EGBs.
• Pound secured a firmer grip of the 1.2200 handle against the Dollar, even before better-than-expected BoE consumer credit, mortgage approvals and lending, but stalled just ahead of the 10 DMA that came in at 1.2259.
• Antipodeans sit as the top G10 performers amid the constructive risk tone while the Yen benefits from the pullback in yields.
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FIXED INCOME

• EGBs were already clawing back some of their heavy losses before below-forecast German retail sales provided a bit more impetus, but weaker than expected French CPI offered more incentive and the ensuing softer-than-consensus pan-Eurozone readings further bolstered the benchmarks.
• Bunds extended their rebound to exactly 100 ticks from Eurex low to 128.46 high, OATs probed 123.00 at 123.05 from 121.98 at worst and even BTPs got close to 110.00 from sub-109.00 irrespective of mixed Italian inflation metrics.
• Gilts reached 94.18 compared to their early 93.62 Liffe base and the T-note is hovering close to the top of a 108-8+/107-26 range.
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COMMODITIES

• Crude prices have been relatively flat throughout the European morning, but the contracts have been tilting higher in lockstep with broader risk sentiment on month and quarter end, but the range of price action this morning is narrow.
• Spot gold is modestly firmer amid the pullback in the Dollar after tumbling to a low of USD 1,857.79/oz this week – the lowest since early March – largely due to this week's rise of the Greenback.
• Base metals are also on a firmer footing amid the Dollar pull-back and the broader constructive risk profile.
• UK treasury minister Penn said the efficacy of the Russian oil price cap must be kept under review.
• US President Biden administration's 5-year offshore oil plan will be released on Friday but does not include any sales for 2024 and will have no more than 1 auction in each of the final four years, according to Reuters sources.
• Russia may introduce quotas on overseas fuel exports if the complete export ban (imposed last week) does not bring down high domestic gasoline and diesel prices, according to Russian Deputy PM Novak cited by Reuters.
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EUROPEAN DATA RECAP

• EU HICP-X F&E Flash YY (Sep 2023) 5.5% vs. Exp. 5.7% (Prev. 6.2%)
• EU HICP Flash YY (Sep 2023) 4.3% vs. Exp. 4.5% (Prev. 5.2%)
• EU HICP-X F,E,A&T Flash YY (Sep) 4.5% vs. Exp. 4.8% (Prev. 5.3%)
• French CPI Prelim YY NSA (Sep) 4.9% vs. Exp. 5.1% (Prev. 4.9%)
• French CPI Prelim MM NSA (Sep) -0.5% vs. Exp. -0.3% (Prev. 1.0%)
• French CPI (EU Norm) Prelim MM (Sep) 0.6% vs. Exp. -0.3% (Prev. 1.1%)
• French CPI (EU Norm) Prelim YY (Sep 2023) 5.6% vs. Exp. 5.9% (Prev. 5.7%)
• Italian Consumer Price Prelim YY (Sep 2023) 5.3% vs. Exp. 5.3% (Prev. 5.4%)
• Italian Consumer Price Prelim MM (Sep 2023) 0.2% vs. Exp. 0.1% (Prev. 0.3%)
• Italian CPI (EU Norm) Prelim YY (Sep 2023) 5.7% vs. Exp. 5.3% (Prev. 5.5%)
• Italian CPI (EU Norm) Prelim MM (Sep 2023) 1.7% vs. Exp. 1.3% (Prev. 0.2%)
• German Retail Sales YY Real (Aug 2023) -2.3% vs. Exp. -0.7% (Prev. -2.2%)
• German Retail Sales MM Real (Aug 2023) -1.2% vs. Exp. 0.5% (Prev. -0.8%)
• German Import Prices YY (Aug 2023) -16.4% vs. Exp. -16.4% (Prev. -13.2%)
• German Unemployment Chg SA (Sep 2023) 10.0k vs. Exp. 15.0k (Prev. 18.0k)
• German Unemployment Rate SA (Sep 2023) 5.7% vs. Exp. 5.7% (Prev. 5.7%)
• UK GDP YY (Q2 2023) 0.6% vs. Exp. 0.4% (Prev. 0.4%, Rev. 0.5%)
• UK GDP QQ (Q2 2023) 0.2% vs. Exp. 0.2% (Prev. 0.2%, Rev. 0.3%)
• UK Business Invest QQ (Q2 2023) 4.1% (Prev. 3.4%, Rev. 4.0%)
• UK Business invest YY (Q2 2023) 9.2% (Prev. 6.7%, Rev. 7.0%)
• UK Lloyds Business Barometer (Sep) 36 (Prev. 41)
• UK Mortgage Approvals (Aug 2023) 45.354k vs. Exp. 45.0k (Prev. 49.444k, Rev. 49.532k)
• UK BOE Consumer Credit (Aug 2023) 1.644B GB vs. Exp. 1.3B GB (Prev. 1.191B GB, Rev. 1.271B GB)
• UK M4 Money Supply (Aug 2023) 0.2% (Prev. -0.5%, Rev. -0.6%)
• UK Mortgage Lending (Aug 2023) 1.218B GB (Prev. 0.23B GB, Rev. 0.201B GB)
• Polish CPI Flash MM -0.40% vs. Exp. -0.05% (Prev. 0.00%)
• Polish CPI Flash YY 8.20% vs. Exp. 8.50% (Prev. 10.10%)

NOTABLE EUROPEAN HEADLINES

• LVMH (MC FP) CEO Bernard Arnault and Russian oligarch Nikolai Sarkisov are under investigation for alleged money laundering, via Yahoo Finance.
• ECB's Vasle said headline inflation is on a declining trend; growth is slowing but the labour market remains strong; transmission of ECB policy to the banking sector is strong, according to Bloomberg.
• ECB's Vujcic said he is confident that inflation will slow in the coming months, according to Bloomberg.

NOTABLE US HEADLINES

• Fed's Barkin (non-voter) said a government shutdown would create uncertainty and the lack of data due to a shutdown would complicate understanding the economy. Barkin also stated that it is too soon to say what is next for monetary policy and if another hike is needed, while he added the economy will drive what the Fed decides on monetary policy.
• US House Republicans release stopgap bill to fund the US government, according to Bloomberg.
• US House passed State Department, Defense and Homeland appropriations bills.
• US House GOP hardliners are reportedly plotting an attempt to replace House Speaker McCarthy with one of his deputies as early as next week as a shutdown looms, according to the Washington Post.
• US President Biden's top aides were questioned in an inquiry into the handling of documents including Steve Ricchetti and National Security Adviser Sullivan, according to NYT
• French authorities approved Apple's (AAPL) software update of its iPhone 12, according to Reuters.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Saudi Arabia is reportedly determined to secure a military pact requiring the US to defend the kingdom in return for opening ties with Israel, and will not hold up a deal even if Israel does not offer major concessions to Palestinians, via Reuters citing sources A pact might fall short of the NATO-style defence guarantees the kingdom initially sought when the issue was first discussed between MBS and US President Biden during the Biden's visit to Saudi Arabia in July 2022. Washington could also sweeten any deal by designating Saudi Arabia a Major Non-NATO Ally, a status already given to Israel, according to the source.
• US Assistant Secretary of State Kritenbrink met with China's Vice Foreign Minister in Washington and the two sides held candid, in-depth and constructive consultations on regional issues. Furthermore, Kritenbrink reaffirmed the importance of maintaining peace and stability across the Taiwan Strait and the sides discussed regional issues including Myanmar, North Korea and maritime matters.
• US Treasury Secretary Yellen is to use improved communications with China to discuss contentious issues and gain new insights into China's economy, via Axios.

CRYPTO

• Bitcoin prices trade flat intraday around the USD 27,000 mark following yesterday's risk-induced rally.

APAC TRADE

• APAC stocks mostly took impetus from Wall St’s positive lead after risk appetite was spurred as yields and oil prices declined from recent peaks but with some of the gains in the region capped heading into quarter-end and amid several holiday closures.
• ASX 200 was kept afloat by outperformance in the mining and materials sectors but with trade constricted amid quasi-holiday conditions with Victoria state on a public holiday.
• Nikkei 225 failed to sustain early gains and pulled back from resistance around the 32,000 level despite several encouraging data releases.
• Hang Seng outperformed as property and tech surged after the recent easing of yields and following further supportive measures by Chinese authorities, while the index was unfazed by the absence of mainland participants and Stock Connect flows due to the Mid-Autumn Festival and next week’s National Day holidays.

NOTABLE ASIA-PAC HEADLINES

• Japanese Finance Minister Suzuki said don't have a defence line in dealing with FX moves and that current FX moves suggest the Yen's weakness has progressed, according to Reuters.

DATA RECAP

• Tokyo CPI YY (Sep) 2.8% vs. Exp. 2.7% (Prev. 2.9%)
• Tokyo CPI Ex. Fresh Food YY (Sep) 2.5% vs. Exp. 2.6% (Prev. 2.8%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Sep) 3.8% vs. Exp. 3.9% (Prev. 4.0%)
• Japanese Industrial Production MM (Aug P) 0.0% vs. Exp. -0.8% (Prev. -1.8%)
• Japanese Industrial Production YY (Aug P) -3.8% vs. Exp. -4.6% (Prev. -2.4%)
• Japanese Retail Sales MM (Aug) 0.1% vs. Exp. 0.4% (Prev. 2.1%, Rev. 2.2%)
• Japanese Retail Sales YY (Aug) 7.0% vs. Exp. 6.6% (Prev. 6.8%, Rev. 7.0%)
• Japanese Unemployment Rate (Aug) 2.7% vs. Exp. 2.6% (Prev. 2.7%)