• APAC stocks traded mostly higher albeit with some of the upside capped following the inconclusive performance on Wall St.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.3% after the cash market closed flat yesterday.
• DXY is steady just below 106.50, EUR/USD hit resistance at 1.0550, USD/JPY remains sub-149.
• ECB's Villeroy said the increase in bond yields may be excessive but it is helping to tighten financing conditions.
• Looking ahead, highlights include German Industrial Orders, French Trade Balance, Italian Retail Sales, US NFP & Canadian Employment, Fed's Waller.

US TRADE

EQUITIES

• US stocks were little changed with trade choppy ahead of Friday's key jobs report and amid a bout of central bank comments, while the recovery in bonds continued and oil prices extended on their recent slide.
• SPX -0.13% at 4,258, NDX -0.36% at 14,723, DJI -0.03% at 33,119, RUT +0.14% at 1,731.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Goolsbee (voter) said he does not see the rise in long-term yields as imperilling a soft landing, according to an interview with Odd Lots.
• Fed's Barkin (non-voter) said yields have come up amid fiscal issuance and strong data, while he added that 2% is a very reasonable inflation target.
• Fed's Daly (non-voter) said the moment calls for optionality on policy and they don't have to rush to any decisions. Daly added that the Fed can hold rates steady if labour and prices keep cooling, as well as noted that tighter financial conditions reduce the need for Fed hikes.
• Former US President Trump reportedly shared sensitive information about American nuclear submarines with a billionaire member of Mar-a-Lago shortly after leaving office, according to people familiar with the matter cited by NYT.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher albeit with some of the upside capped following the inconclusive performance on Wall St and as participants await the incoming US Non-Farm Payrolls report.
• ASX 200 was led by gains in the top-weighted financial sector after the latest RBA Financial Stability Review which noted increasing global financial stability risks but also stated that Australian banks are well-capitalised and well-positioned to manage any increase in mortgage arrears and absorb loan losses.
• Nikkei 225 was choppy as better-than-expected Household Spending data was offset by slower wage growth, while former BoJ official Momma said the BoJ will likely discuss whether to tweak forward guidance along with YCC at the end-October meeting.
• Hang Seng outperformed amid strength in tech, property and banking stocks, with sentiment also underpinned by hopes of a stabilisation in US-China ties as the White House is reportedly planning a Biden-Xi meeting in California next month although nothing has been confirmed yet.
• US equity futures traded sideways amid tentativeness heading into the key jobs data.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.3% after the cash market closed flat yesterday.

FX

• DXY was rangebound heading into the key US jobs data and after the prior day’s selling pressure which coincided with softer yields, while the latest Fed rhetoric suggested the recent upside in yields has tightened financial conditions and reduced the need for Fed rate hikes.
• EUR/USD marginally eased back after hitting resistance around the 1.0550 level.
• GBP/USD was slightly off the prior day’s best levels after stalling just shy of 1.2200.
• USD/JPY eked mild gains but remained below 149.00 with price action choppy after mixed data.
• Antipodeans lacked firm direction amid the absence of pertinent data releases and with the downside cushioned by the mostly positive risk environment.

FIXED INCOME

• 10yr UST futures took a breather following a 2-day recovery with participants lacking commitment ahead of the key jobs data and after the latest bout of Fed rhetoric.
• Bund futures held on to the prior day’s gains after climbing above the 128.00 level.
• 10yr JGB futures were kept afloat in tandem with peers and after softer-than-expected wage growth.

COMMODITIES

• Crude futures were rangebound and hovered near the prior day's lows as the recent selling pressure put oil prices on course for their worst weekly loss in more than six months.
• Russian President said Russia is still ready to supply gas to Europe via the Nord Stream 2 pipeline as one of its two lines is not damaged and only Germany has to decide on that.
• Spot gold eked mild gains but with upside capped amid an uneventful dollar.
• Copper futures were slightly firmer alongside the predominantly constructive mood.
• China Mineral Resources Group is reportedly in talks with BHP, Rio Tinto, Fortescue and Vale regarding next year's iron ore supply.

CRYPTO

• Bitcoin traded marginally higher with prices back above the USD 27,500 level.

NOTABLE ASIA-PAC HEADLINES

• Former BoJ official Momma commented that the BoJ will likely discuss whether to tweak forward guidance along with YCC at the October 30th-31st meeting,
• RBA Financial Stability Review stated global financial stability risks are elevated and growing, while the risks include China's property sector, a disorderly fall in global asset prices and exposure to commercial real estate. The FSR also noted that tightening global financial conditions could slow growth and lift unemployment, while a fall in global asset prices could raise funding costs in Australia and limit the supply of credit. Nonetheless, it stated the Australian financial system is sound but there are some pockets of stress among household borrowers and Australian banks are well-capitalised with low exposure to commercial property, as well as well-positioned to manage any increase in mortgage arrears and absorb loan losses.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained the stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the policy stance. RBI Governor Das said they have identified inflation as a major risk to macroeconomic stability and remain focused on aligning inflation to the 4% target with the MPC highly alert and will take timely measures as necessary. However, Das commented that headline inflation is to see further easing in September and the silver lining is the declining core inflation, as well as noted that the transmission of past rate hikes is thus far incomplete.

DATA RECAP

• Japanese All Household Spending MM (Aug) 3.9% vs. Exp. 0.9% (Prev. -2.7%)
• Japanese All Household Spending YY (Aug) -2.5% vs. Exp. -4.3% (Prev. -5.0%)
• Japanese Overall Labour Cash Earnings (Aug) 1.1% vs. Exp. 1.5% (Prev. 1.3%)

GEOPOLITICS

• US President Biden's team is reportedly mulling using State Department grants to fund weapons for Ukraine, according to Politico.
• A US jet fighter shot down a Turkish drone on Thursday after it was deemed a threat to US forces in northeast Syria, according to WSJ citing sources.
• Turkish military conducted airstrikes against Kurdish militant targets in northern Syria which destroyed 30 targets including militant shelters and depots with militants neutralised, according to the Turkish Defence Ministry.

GLOBAL

• IMF's Georgieva said the current pace of global growth remains quite weak and well below the 3.8% pre-pandemic average, while she added that stronger demand for services and progress on inflation boosted chances for a soft landing but vigilance is essential.

EU/UK

NOTABLE HEADLINES

• IFS research showed that official UK estimates vastly inflated the long-run costs of extending the tax break for businesses on investments in IT equipment, plants or machinery, according to FT.
• ECB's Villeroy said the increase in bond yields may be excessive but it is helping to tighten financing conditions and he doesn’t think an additional rate hike is justified now.
• EU official said the launch of EU bond futures next year is increasingly likely and the EU is to approach index providers for its bonds to be included in government indexes.