• European bourses are a touch softer with yields in focus, US futures slightly firmer ahead of data & Fed speak
• DXY ran into resistance and has faded from a 107.21 best, but does remain incrementally firmer; Antipodeans lag post on-hold RBA
• EGBs pressured with BTPs seemingly leading and pulling Gilts and USTs lower in sympathy
• Crude benchmarks and precious metals little changed overall with the USD dictating
• Looking ahead, highlights include US IBD/TIPP & JOLTS, Australian PMI (Final), Fed’s Bostic. Earnings from McCormick & Company

EUROPEAN TRADE

EQUITIES

• European bourses have been mixed but are currently a touch softer, Euro Stoxx 50 -0.2%; newsflow is relatively light and markets remain focused on yields.
• Sectors are similarly mixed, featuring outperformance in Banks and Insurance names while Utilities and Basic Resources are the relative laggards.
• Stateside, futures are modestly firmer, ES +0.2%, with recent pressure being attributed to yields but action comparably more contained thus far in today's session ahead of JOLTS and Fed's Bostic & Mester.
• For reference, APAC trade remains limited given mass holiday closures though the return of the Hang Seng saw it experience marked pressure and close with downside of circa. 3.0%, with the move similarly attributed to recent yield action.
• Click here for more details.

FX

• Dollar resumes bull run before running into chart and round number resistance, DXY probes Fib at 107.170 and fades within 107.210-106.930 range.
• Yen continues to defend 150.00 vs. Buck, but barely and with 1.1bln option expiries helping, Euro eyes expiry interest at 1.0495 against Greenback after a bounce from 1.0461 and Sterling pivots Fib retracement between 1.2062-96 parameters.
• Aussie lags post-on hold RBA and Kiwi down in sympathy awaiting RBNZ to follow suit, AUSD/USD and NZD/USD cling to 0.6300 and 0.5900 handles respectively.
• Franc deflated after softer than forecast Swiss CPI, USD/CHF hovers above 0.9200.
• Japanese Finance Minister Suzuki said it is important for currencies to move in a stable manner reflecting fundamentals and they will take appropriate steps on FX moves with a sense of urgency, while he added that they will stand ready to respond while closely watching FX moves. Furthermore, he said currency interventions are not targeting FX levels and whether to carry out FX intervention is determined by volatility, according to Reuters.
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• EGB underperformance gradually spills over as Bunds retreat from 127.95 to 127.45 and BTPs reverse through 109.00 within a 109.49-108.86 range.
• Gilts and T-note suffer contagion between 93.18-92.68 and 107-14/06 respective parameters ahead of Fed's Bostic and JOLTS US job openings.
• Orders for the new 5-year BTP Valore have reached EUR 5bln since the beginning of the offer, via Reuters citing Bourse data.
• Click here for more details.

COMMODITIES

• Crude benchmarks are little changed overall having lifted incrementally off initial lows as the USD moves below the 107.00 mark while crude specifics have been light as attention turns to this week's JMMC.
• Currently, WTI and Brent are trading in USD 87.76-88.71/bbl and USD 89.50-90.46/bbl respective ranges.
• Spot gold is essentially flat intraday with the yellow metal holding around USD 1825/oz while spot silver is a touch firmer after Monday's pronounced pressure, finally base metals have seen similar directional action to crude with the metals off lows as the USD eases a touch.
• Spain's Energy Minister showed support for the Dutch call to phase out fossil fuel subsidies.
• India's petroleum minister says an oil price above USD 100/bbl is not going to be in anyone's interest.
• Poland and Ukraine announced a breakthrough on Ukrainian grain transit, according to AFP.
• Click here for the October 4th JMMC primer.
• Click here for more details.

EUROPEAN DATA RECAP

• UK BRC Retail Shop Price Index YY (Sep) 6.2% (Prev. 6.9%)
• Swiss CPI YY (Sep 2023) 1.7% vs. Exp. 1.8% (Prev. 1.6%); MM -0.1% vs Exp. 0.0% (Prev. 0.2%)

NOTABLE EUROPEAN HEADLINES

• EU is to assess risks of four critical technologies being used by third countries such as semiconductors, AI, quantum technologies and biotechnologies, while the EU aims to take measures next year to mitigate risks to these technologies, according to an EU official cited by Reuters.
• Brussels will unfreeze about EUR 13bln in EU funding to Hungary as it seeks help for Ukraine, according to FT.
• ECB's Lane says they have reached the interest rate level that will help tame inflation; the key is to maintain this rate level for as long as needed; seeing wage data coming in lower is very important. Would not focus on December as a critical decision; December is not the end of the inflation challenge. Says he welcomes September inflation data, but we need to see further progress.
• ECB's Valimaki (sitting in for ECB's Rehn) says further rate hikes cannot be ruled out, appears as if a wage-price spiral can be avoided.
• ECB's Simkus says rates need to stay restrictive to tame prices; prompt response of monetary policy was effective; inflation still faces many lines of resistance; inflation shock is not over.

NOTABLE US HEADLINES

• Fed's Mester (non-voter) said the monetary policy path depends on how the economy performs and the Fed will likely need to hike rates one more time this year. Mester stated that inflation is too high but she sees welcome signs of progress in lowering price pressures, while she also commented that the Fed will keep rates restrictive to get inflation down and higher rates are needed to make sure the disinflation process continues.
• US GOP Rep. Gaetz moved to oust House Speaker McCarthy, while McCarthy said 'bring it on' in response to the move, according to Reuters.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Israel carried out an air attack on Syrian armed forces positions in the vicinity of Deir al Zor, according to Syrian state media.
• India told Canada to withdraw dozens of diplomatic staff whereby it must repatriate around 40 diplomats by October 10th, according to FT.

CRYPTO

• Bitcoin is under pressure after experiencing a marked upside in recent sessions, which took BTC to near USD 29k. Currently, residing around the USD 27.5k mark but well within recent ranges.

APAC TRADE

• APAC stocks declined amid the rising global yield environment and the continued absence of some key markets, while the focus turned to central bank announcements beginning with the RBA.
• ASX 200 was dragged lower by underperformance in the mining-related sectors due to the recent declines in commodity prices and with headwinds from the rising yields after Australia’s 10yr yield rose to its highest since 2011, while the RBA decision to keep rates steady provided no major fireworks.
• Nikkei 225 weakened with all industries pressured and energy firms leading the broad declines.
• Hang Seng was the worst hit on return from holiday amid losses in property, tech and energy with developers suffering despite an early spike in Evergrande shares by around 35% on resumption of trade.

NOTABLE ASIA-PAC HEADLINES

• RBA kept the Cash Rate Target unchanged at 4.10%, as expected, while it reiterated that some further tightening of monetary policy may be required and that the Board remains resolute in its determination to return inflation to the target. Furthermore, it stated that returning inflation to the target within a reasonable timeframe remains the Board’s priority and recent data are consistent with inflation returning to the 2–3% target range over the forecast period but also noted significant uncertainties around the outlook..
• "(China) has seen a recovery in consumer spending in terms of trips and transportation, with market confidence and vitality both on the continuous rise" following the first four days of the Chinese holiday, according to Global Times.

DATA RECAP

• Australian Building Approvals MM (Aug) 7.0% vs. Exp. 2.5% (Prev. -8.1%, Rev. -7.4%); YY (Aug) -6.7% vs Exp. -6.4% (Prev. -7.0%)