• Equity futures are generally modestly lower, giving back some of the prior day’s gains
• G10s are flat/lower against the Dollar to varying degrees, JPY underperforms with USD/JPY up to a 144.25 peak
• USTs are essentially flat, Gilts dip lower following a weak auction which also weighed on Bunds
• Crude is modestly lower, XAU is flat and base metals take a breather from the China stimulus-related gains on Tuesday
• Looking ahead, Highlights include US Building Permits, CNB Policy Announcement, Speakers including Fed's Kugler, Supply from the US, Earnings from Micron.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx 600 (-0.2%) are almost entirely in the red (ex-SMI), with indices taking a breather/giving back some of the hefty gains seen in the prior session.
• European sectors are mixed vs initially holding a negative bias at the open. Healthcare tops the index alongside Travel & Leisure; the latter benefiting from gains in Air France (+7%) following a double broker upgrade at JP Morgan. Tech lags, hampered by losses in SAP (-3.5%) amid a US probe.
• US Equity Futures (ES -0.2%, NQ -0.3%, RTY -0.1%) are modestly lower across the board, with slight underperformance in the NQ following on from the gains seen in the prior session.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
• Click for a detailed summary

FX

• USD is firmer and attempting to recoup some lost ground vs. peers after the selling pressure seen in the wake of Tuesday's US Consumer Confidence data. DXY has climbed above the 100.50 level and is towards session highs.
• EUR is flat vs. the USD and continuing to eye a test of 1.12 after yesterday's Consumer Confidence-led dollar weakness. EUR/USD has been as high as 1.1198 today. If 1.12 is breached, the YTD high rests just above at 1.1201.
• Cable has pulled back a touch after its recent run of gains which saw the pair trade on a 1.34 handle for the first time since March 2022. Comments from BoE's Greene this morning have underlined the cautious stance being taken by the MPC relative to some of its peers within the G10 space; commentary which sparked little move in the GBP.
• JPY is on the backfoot vs. the USD and the laggard across the majors, trimming yesterday's gains vs. the greenback. Fresh fundamentals have been lacking for Japan ahead of the LDP leadership race on Friday. For now, the pair is contained within its recent 140-145 trading band.
• AUD a touch softer vs. the USD following soft inflation metrics overnight which put Y/Y CPI within the RBA's target band on a headline basis (core remains above the top end). AUD/USD Printed another YTD high overnight, breaching the 0.69 mark for the first time since Feb 2023.
• SEK saw some fleeting weakness vs. the EUR following the Riksbank's decision to cut rates by 25bps (as expected) whilst signalling that the policy rate could be cut at two remaining meetings this year. Furthermore, the statement noted that a 50bps cut is possible at one of those two meetings.
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FIXED INCOME

• USTs are flat/very slightly lower ahead of 5yr supply later today. Treasuries saw very modest pressure following a poor Gilt auction; a move more pronounced in Bunds/Gilts.
• Bunds are under modest pressure and held around Tuesday's best at 135.01 for most of the morning, but took another leg lower after the the dire UK auction; Bunds fell to a 134.68 trough ahead of the German auction, which passed without issue.
• Gilts were flat and unreactive to commentary from BoE's Greene who outlined her preference for a gradual approach to removing policy restrictiveness. Following the Gilt auction, which had a lower b/c and much wider tail, Gilt Dec'24 futures fell from 99.23 to 99.15 before extending to a 98.99 low.
• UK sells GBP 3.75bln 4.00% 2031 Gilt: b/c 2.98x (prev. 3.29x), average yield 3.814% (prev. 4.074%), tail 1.6bps (prev. 1.9bps).
• Italy sells EUR 2.75bln vs exp. EUR 2.25-2.75bln 3.10% 2026 BTP Short Term & EUR 2.5bln vs exp. EUR 2-2.5bln 1.50% 2029 & 2.40% 2039 BTPei Auctions.
• Germany sells EUR 2.424bln vs exp. EUR 3bln 2.40% 2030 Bund: b/c 2.4x (prev. 2.2x), average yield 2.0% (prev. 2.25%) & retention 19.2% (prev. 17.6%)
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COMMODITIES

• Crude is slightly subdued following the gains seen in the prior session, spurred on by the Chinese stimulus efforts but was unable to benefit from the draws in private sector inventory data. Brent'Nov sits at the foot of a USD 74.73-75.35/bbl parameter.
• Precious metals hold a downward bias with losses of some 1% seen in spot silver and spot palladium, whilst spot gold trades sideways amid a lack of drivers but cushioned by the increasingly tense geopolitical landscape. XAU eked another fresh all-time-high overnight at USD 2,670.60/oz (vs low 2,651.41/oz).
• Base metals are marginally softer as they take a breather from yesterday's surge. 3M LME copper trades closer to the bottom of a USD 9,755.50-9,924.00/t range.
• US Private Energy Inventory (bbls): Crude -4.3mln (exp. -1.4mln), Distillate -1.1mln (exp. -1.6mln), Gasoline -3.4mln (exp. -0.02mln), Cushing -0.0mln.
• NHC said a storm surge and hurricane warnings were issued for the Gulf Coast of Florida, while it added that Helene's large size will likely cause an extensive area to be affected by the storm's hazards.
• Kazakhstan's energy ministry says Kashagan oil field (400k BPD) to suspend operations for 38 days for maintenance.
• NHC says Helene strengthening as the centre approaches the north-eastern coast of the Yucatan Peninsula, new tropical storm watches and warnings for portions of the US.
• OECD World Economic Outlook: 2024 World growth upgraded by 0.1ppt, EZ, US, China unchanged vs prior; 2025 World forecast unchanged, EZ and US downgraded by 0.2ppt, China unchanged. Click for details
• Click for a detailed summary

NOTABLE DATA RECAP

• French Consumer Confidence (Sep) 95.0 vs. Exp. 92.0 (Prev. 92.0, Rev. 93)

NOTABLE EUROPEAN HEADLINES

• ECB's Villeroy says cannot allow France's situation regarding deficit to last; must deal with debt problem as spread widens. Not realistic for France to bring deficit down below 3% level within a three-year timeframe.
• BoE's Greene says it is appropriate to take a gradual approach to removing restrictiveness. Greene outlines three cases in the economy and subsequent risks. In the first case, the global shocks that drove up inflation continue to fade, and the persistence of inflationary pressures dissipates with a less restrictive stance of monetary policy than in other cases. In the second, a period of economic slack is required to bring inflation sustainably to target in the medium-term. In the third, structural changes in the economy that impact wage- and price-setting require monetary policy to remain tighter for longer. Says, like many others on the MPC, she does not fit squarely in any of these cases. However, at the moment, she places the greatest probability on being in the second case. Wage growth has also fallen but remains above what our suite of models can explain. Says that a lot of the latest decline in UK services inflation is in the more volatile components; cannot get the ticker tape out yet. Remains concerned about wage pass-through to inflation. May be seeing some impact from UK economic policy uncertainty, causing business to stay on the sidelines.
• Riksbank cuts its Rate by 25bps as expected to 3.25% (prev. 3.50%); policy rate may also be cut at two remaining meetings this year, with a 50bps cut possible at one of those meetings; rate expected to be cut at a clearly faster pace than before. Click for more details.
• HSBC now see the ECB cutting rates at every meeting, starting from October, according to Bloomberg

NOTABLE US HEADLINES

• US House Foreign Affairs Committee recommended contempt of Congress charges against Secretary of State Blinken, for failing to appear at a hearing regarding the Biden administration’s handling of the 2021 withdrawal from Afghanistan.

GEOPOLITICS

MIDDLE EAST

• "Israeli strikes on Lebanon expanded to reach the Keserwan and Chouf areas in Mount Lebanon", according to Sky News Arabia
• Israeli Defence Minister Gallant said they have more strikes ready against Hezbollah, while he added that they must continue until they achieve their goal and ensure the safe return of Israel's northern residents to their homes.
• Israel conducted a strike on Jiyyeh which is south of Lebanon's capital Beirut, according to security sources cited by Reuters.
• Sirens sounded in Tel Aviv and its surrounding area, as well as in central Israel, while explosions were heard in the sky of Tel Aviv caused by the interception of rockets, according to Sky News Arabia. Furthermore, Israel's military said after Tel Aviv sirens were activated a missile was detected crossing from Lebanon and was intercepted.
• Iran-backed Iraqi militia claimed responsibility for overnight drone attacks on Golan, according to Times of Israel.
• Hezbollah confirmed its senior commander Ibrahim Qubaisi was killed in an Israeli strike on Beirut, while it was separately reported that Hezbollah said it targeted Israel's Atlit navy base south of Haifa with drones.
• Hezbollah urged Iran in recent days to launch an attack against Israel as fighting between the Lebanese militant group and the Israeli military dramatically escalated, but Iran has so far refrained, according to Axios.
• Lebanon's Foreign Minister said US President Biden's UN speech was not strong and not promising, while the official added that the US is the only country that can really make a difference in the Middle East, as well as noted that Lebanon itself cannot end the fighting and needs US help despite disappointments of the past.
• Iran's President Pezeshkian said the international community must immediately stop the violence and work to reach a permanent ceasefire in Gaza, while he added Tehran is ready to work with parties to the 2015 Nuclear Act pact to resolve the standoff and is ready to improve ties with the world.
• Iran's President Pezeshkian met with French President Macron in what is described as a good meeting in which they discussed Gaza and a nuclear deal. Iran's President said he expects a group of countries to meet on the nuclear deal, while Macron warned Iran's President about Tehran's continued support for Russia's war in Ukraine.
• IAEA chief Grossi said he sees a willingness from Iranian officials to re-engage in a more meaningful way, while he will visit Tehran in the coming weeks and is aiming for October. Grossi said Iran is continuing the development of its nuclear programme at a regular pace and any future nuclear talks will be different from the 2015 nuclear deal with a bigger role for the IAEA expected. Furthermore, he noted the need to start preparing now for possible future negotiations between the West and Iran.
• Iran is brokering secret talks to send Russian anti-ship missiles to Yemen's Houthis, according to Reuters citing sources. The report noted that experts said this would increase the Houthis to strike Red Sea commercial shipping and raise the threat to US and allied warships, while experts also stated that Houthis could use the missiles on land to threaten Saudi Arabia.
• "Israel Broadcasting Corporation: Israeli preparations for a possible ground operation in Lebanon", according to Sky News Arabia.
• Israeli Military says a drone crossing into Israeli territory from Syria was intercepted by IDF fighter jets south of the Sea of Galilee.

OTHER

• China's PLA rocket force successfully launched an intercontinental ballistic missile with a simulated warhead in international waters in the Pacific Ocean with the launch said to be routine and part of the rocket force's annual training, according to Xinhua. China notified relevant countries ahead of the missile launch, while China's Defence Ministry said the launch was not directed at any country or target and was in line with international laws and practices.
• Former US President Trump was briefed by US intelligence officials regarding threats from Iran to assassinate him, according to his campaign.

CRYPTO

• Bitcoin is slightly softer and holds just beneath USD 64k.

APAC TRADE

• APAC stocks were mostly positive as Chinese markets continued to rally following the stimulus boost.
• ASX 200 was rangebound with strength in mining and materials offsetting the underperformance in financials and tech, while the latest monthly CPI data from Australia matched estimates and slowed to a 3-year low although core inflation remained above the 2%-3% target.
• Nikkei 225 swung between gains and losses and traded both sides of the 38,000 level with little fresh catalysts, while Services PPI data was firmer than expected but slowed from the prior month's revised print.
• Hang Seng and Shanghai Comp rallied amid ongoing optimism following the stimulus announcements, while the PBoC also conducted an MLF operation with the rate cut by 30bps to 2.00% which it had flagged during Tuesday's press briefing.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted a CNY 300bln 1-year MLF operation with the rate lowered to 2.00% from 2.30%.
• US hopes to discuss fentanyl with China at the APEC Summit in November.

DATA RECAP

• Japanese Services PPI (Aug) 2.70% vs. Exp. 2.60% (Prev. 2.80%)
• Australian Weighted CPI YY (Aug) 2.7% vs. Exp. 2.7% (Prev. 3.5%)
• Australian Trimmed Mean CPI YY (Aug) 3.40% (Prev. 3.80%)