• European bourses are entirely in the green with the region taking impetus from the prior day’s strength seen on Wall Street; US futures are modestly firmer.
• Dollar is flat ahead of US PPI/IJC, JPY & CHF are subdued amid their haven statuses in risk-on trade.
• Bonds are modestly lower giving back some the prior day’s advances ahead of ECB.
• Crude oil and base metals are on a firmer footing benefiting from the risk-on mood, precious metals hold an upward bias.
• Looking ahead, US IJC, PPI (F), ECB Policy Announcement, ECB President Lagarde's Post-Meeting Press Conference, Supply from the US, Earnings from Lennar, Adobe & Kroger.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx 600 (+1%) are firmer across the board as the region catches up to the late gains on Wall Street which saw a surge in the tech sector, with NVIDIA closing higher by 8.2% on Wednesday, with the impact reverberating across APAC and now in Europe.
• European sectors are mostly firmer; Basic Resources is the clear outperformer amid the positive action in the base metals complex, overtaking the Tech sector which opened as the best performer following the strong performance on on Wall Street. Healthcare is dragged down by Roche (-4.2%) after its obesity-related updates.
• US Equity Futures (ES +0.1%, NQ +0.1%, RTY +0.4%) are modestly firmer and holding onto the significant gains made in the prior session.
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FX

• DXY is steady after Wednesday's trading session which saw a scaling back of bets for a 50bps Fed rate cut next week (currently priced at just 13%). Inflation will remain front of mind today with PPI metrics due on the docket.
• EUR steady vs. USD in the run-up to today's ECB press conference which is widely expected to deliver a 25bps cut to the deposit rate. Focus will also fall on any guidance over future easing plans. EUR/USD is currently sat within Wednesday's 1.1001-54 range.
• GBP flat vs. the USD with the pair contained within Wednesday's 1.3001-1.3111 trading range. Fresh UK drivers remain light during today's session and therefore it may be the case that the USD leg of the equation provides the greater source of traction for the pair with PPI and IJC due on deck later.
• JPY is the laggard across the majors despite hawkishly-perceived comments from BoJ's Tamura overnight who followed suit from other policymakers this week alluding to the upward policy path at the bank. USD/JPY briefly traded on a 143 handle vs. Wednesday's 140.70 trough.
• Antipodeans are both steady vs. the USD. AUD/USD attempted to extend on Wednesday's bounce after the pair printed an MTD low at 0.6622. Currently, AUD/USD is back above its 100 and 50DMAs at 0.6649 and 0.6667 respectively.
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FIXED INCOME

• USTs are a touch lower in an extension of Wednesday's downside post-CPI which saw the curve flatten. Today's docket holds US PPI (F) and the weekly jobless claims. The 10yr yield currently sits towards the top-end of Wednesday's 3.605-689% range.
• Bunds are lower in the run-up to today's ECB policy announcement which is widely expected to deliver a 25bps cut to the deposit rate and 60bps reductions in the main refi and marginal lending rates. Focus will also fall on any guidance over future easing plans; the German 10yr yield sits around the mid-point of Wednesday's 2.086-2.157% range.
• Gilts are currently tracking losses in global peers with not much in the way of fresh UK drivers for today's session. Focus for the UK will begin to turn towards next week's UK CPI print which is followed up the next day by the latest BoE rate decision. UK 10yr yield is currently tucked within Wednesday's 3.745-3.809% band.
• UK DMO sells GBP 2bln 0.125% 2026 Gilt via tender; b/c 4.17x, average yield 3.559%, yield tail 0.9bps
• Italy sells EUR 6.5bln vs exp. EUR 5.5-6.5bln 3.45% 2027 & 3.45% 2031 BTP
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COMMODITIES

• Crude is firmer and benefits from the broader risk-on mood across markets, whilst some desks also flag potential short covering after the market moved into "oversold" territory. Within IEA's Oil Market Report, it cut its 2024 world oil demand growth forecast to 900k BPD (prev. 970k BPD). Brent Nov printed a USD 70.59/bbl trough before rising to a USD 71.87/bbl session high.
• Precious metals are firmer across the board but to varying degrees. Spot palladium briefly outperformed in the European morning whilst spot gold posts shallower gains ahead of the ECB decision. Spot gold trades in a narrow USD 2,511.09-2,522.36/oz range.
• Base metals are firmer across the board amid the continued revival across industrial commodities, with prices also helped by the broader risk-on mood.
• NHC announced that Francine became a category 2 hurricane as the eye approaches the Louisiana coast, with a life-threatening storm surge and hurricane conditions spreading onto the Louisiana coast.
• 39% of oil production and 49% of natgas production in the US Gulf of Mexico is shut, due to Hurricane Francine.
• Chile's Codelco reached an early contract agreement with El Teniente union.
• Indian oil secretary wants OPEC+ to raise oil output; Indian Cos to maximise crude purchases from cheapest suppliers including Russia. Oil cos to consider fuel price cut if crude oil stays low for long.
• Russia attacked energy infrastructure in six regions in the past 24 hours, Ukraine's energy ministry said.
• IEA OMR: cuts 2024 world oil demand growth forecast to 900k BPD (prev. 970k BPD), sees 2025 demand growth at 950k BPD; said "The rapid decline in global oil demand growth in recent months, led by China, has fuelled a sharp sell-off in oil markets". "Outside of China, oil demand growth is tepid at best". China is leading rapid decline.
• UBS said Hurricane Francine likely disrupted about 1.5mln barrels of US oil production; due to the hurricane, September production in the Gulf of Mexico will be reduced by some 50k BPD.
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NOTABLE DATA RECAP

• UK RICS Housing Survey (Aug) 1.0 vs. Exp. -14.0 (Prev. -19.0, Rev. -18.0)
• German Wholesale Price Index YY (Aug) -1.1% (Prev. -0.1%); Wholesale Price Index MM (Aug) -0.8% (Prev. 0.3%)
• Swedish CPIF MM (Aug) -0.5% vs. Exp. -0.4% (Prev. 0.1%); CPIF YY (Aug) 1.2% vs. Exp. 1.3% (Prev. 1.7%); CPI MM (Aug) -0.6% vs. Exp. -0.5% (Prev. 0.1%); CPI YY (Aug) 1.9% vs. Exp. 2.1% (Prev. 2.6%)
• Spanish HICP Final YY (Aug) 2.4% vs. Exp. 2.4% (Prev. 2.4%); CPI YY Final NSA (Aug) 2.3% vs. Exp. 2.2% (Prev. 2.2%); CPI MM Final NSA (Aug) 0.0% vs. Exp. 0.0% (Prev. 0.0%); Core CPI YY (Aug) 2.7% (Prev. 2.8%)

NOTABLE EUROPEAN HEADLINES

• UK Treasury refused to disclose key details of the GBP 22bln fiscal black hole that Chancellor Reeves claimed to have discovered, following a freedom of information request by the FT.
• Brussels explores Draghi option of extending up to EUR 350bln in EU debt as officials examine ways to roll over hundreds of billions of Covid-era bonds to avoid the common budget from being underwhelmed by repayment costs, according to FT.
• BoE has made "substantial amendments to our proposals in response to consultation feedback and evidence". "In terms of the capital impact, the BoE said there will only be a very small impact on requirements, on average, across UK firms.". "In some cases, changes were designed following "too much conservatism" in the original proposals, or where reforms were too difficult or costly to implement in practice."
• Norges Bank Regional Network Report: expects activity to increase somewhat in H2 2024

NOTABLE US HEADLINES

• Fed’s Office of Inspector General released a report on Atlanta Fed President Bostic’s (2024 Voter) financial disclosures in which it stated that Bostic violated Fed rules on trading and created an appearance of acting on confidential information, as well as created the appearance of a conflict of interest. However, it didn’t find evidence that Bostic traded on confidential information.
• Goldman Sachs CEO Solomon said he sees 2 or maybe 3 Fed rate cuts, while he added that they could see the possibility of a 50bps cut but his base case is for a cut of 25bps, according to a CNBC interview.

GEOPOLITICS

MIDDLE EAST

• Hamas said its negotiation team met Qatar's PM and Egypt's intelligence chief in Doha on Wednesday to discuss the latest Gaza developments. Furthermore, it reiterated its readiness to implement an 'immediate' ceasefire based on the US's previous proposal without accepting new conditions from any party.
• Palestinian draft resolution at the United Nations demands that Israel end its illegal presence in the occupied territories and called for the establishment of a mechanism to compensate for the damage committed by Israel in the occupied territory, while the draft resolution is expected to be voted on on September 18th during the 10th session of the General Assembly, according to Al Jazeera.

OTHER

• White House is finalising plans to expand where Ukraine can strike inside of Russia, according to POLITICO.
• North Korea fired a suspected ballistic missile which fell shortly after outside of Japan’s Exclusive Economic Zone, while the South Korean military later announced that North Korea fired multiple short-range ballistic missiles.
• Top Chinese general is to visit the US Indo-Pacific Command in Hawaii next week as the two militaries step up engagement, according to FT.

CRYPTO

• Bitcoin climbs above USD 58k, whilst Ethereum is relatively contained around USD 2.3k.

APAC TRADE

• APAC stocks gained as the region took impetus from the post-CPI tech-led rebound stateside.
• ASX 200 advanced with strength in the tech and the energy sectors making up for the slack in mining stocks.
• Nikkei 225 outperformed on the back of recent currency weakness and softer Japanese PPI data.
• Hang Seng and Shanghai Comp were mixed as the former benefitted from the broad risk-on mood and with tech stocks inspired by their global peers, while the mainland lagged behind regional counterparts in the absence of any major pertinent drivers and amid protectionist policies with China said to have asked its carmakers to keep key EV technology at home.

NOTABLE ASIA-PAC HEADLINES

• BoJ's Tamura said Japan's neutral rate is likely to be around 1% at the minimum and the path toward ending easy policy is still very long, while he added they will carefully scrutinise the balance of pros and cons in exiting easy policy and must push up short-term rates at least to around 1% by the latter half of their long-term forecast period through fiscal 2026, to stably achieve the 2% inflation target. Furthermore, Tamura said the pace at which markets expect the BoJ to hike rates is very slow and hiking at such a pace could further heighten upward inflation risk, as well as noted that the likelihood of Japan sustainably achieving the BoJ's price target is heightening further.
• China asked its carmakers to keep key EV technology at home, according to Bloomberg.
• South Korean aims to end short-selling ban on all stocks in March, according to Bloomberg.
• China's CSI 300 index closes at the lowest level since early 2019.
• Chinese Commerce Ministry will visit Europe next week to discuss EV tariffs; Chinese Commerce Minister to meet with EU Commission Vice President on September 19th for talks, according to the Chinese Commerce Ministry.
• China is to reportedly cut rates on USD 5tln mortgages as soon as September to boost consumption; China to cut rates by up to 50bps, according to Bloomberg sources

DATA RECAP

• Japanese Corp Goods Price MM (Aug) -0.2% vs Exp. 0.0% (Prev. 0.3%)
• Japanese Corp Goods Price YY (Aug) 2.5% vs. Exp. 2.8% (Prev. 3.0%)