• UK PM May unveiled proposals for EU citizens at the Brussels summit including a proposal that would allowed 3 million EU citizens to stay in the UK Permanently
• Asian equity markets lacked impetus amid quiet newsflow and after a subdued Wall St. close in which stocks posted a 3rd consecutive day of losses
• Looking ahead, highlights include Eurozone PMIs, Canadian CPI, Fed’s Bullard, Mester and Williams

ASIA

Asian equity markets lacked impetus amid quiet newsflow and after a subdued Wall St. close in which stocks posted a 3rd consecutive day of losses. ASX 200 (+0.1%) and Nikkei 225 (+0.1%) traded relatively flat, with the former restricted by weakness in its largest-weighted financial sector. Shanghai Comp (-0.7%) and Hang Seng (+0.1%) fared no better amid increased regulatory scrutiny with the CBRC probing loans to the large deal-making firms and after the PBoC refrained from open market operations due to current high liquidity levels. 10yr JGBs edged gains in late trade, although upside has only been minimal despite an indecisive risk tone and the BoJ in the market for JPY 880bln in JGBs.

PBoC refrained from open market operations for a net weekly drain of CNY 60bln vs. CNY 410bln injection last week. (Newswires)

PBoC set CNY mid-point at 6.8238 (Prev. 6.8197).

EUROPE/UK

UK PM May unveiled proposals for EU citizens at Brussels summit including a proposal that would allowed 3 million EU citizens to stay in the UK Permanently. (Newswires) There were later comments German Chancellor Merkel who stated that UK PM May's offer on EU citizens' rights was a good start but many issues still need to be resolved, while Austrian Chancellor Kern stated UK PM May's offer leaves a long, long way for negotiations, with many citizens' concerns not covered. (Newswires)

Outgoing BOE external MPC member Kristin Forbes reiterated calls for UK rate hikes and stated that GBP fall has shifted underlying inflation dynamics. (Newswires)

Hometrack stated that home values in London are increasing at their slowest pace since 2012 due to Brexit. (Newswires)

FX

Price action across the major currencies was mundane amid a lack of key data releases and light newsflow. Nonetheless, the greenback slightly weakened which translated to minimal gains in its counterparts across the pond and saw GBP/USD test 1.2700 to the upside. This also followed a softer tone from PM May who unveiled proposals for EU citizens at the Brussels summit and stated that she doesn't want to break families up or force people out. PBoC continued its superficial weakening of the CNY, while AUD/NZD found some respite from yesterday’s downturn with the cross attempting a reclaim of the 1.0400 handle.

COMMODITIES

The commodities complex experienced sideways trade during the session, with a lack of key market data and/or USD price action to spur significant demand or supply in the sector. Gold is on its way for a 3rd weekly decline, whilst copper stayed firm near 10-day highs. Elsewhere, WTI crude continued to nurse some of the recent considerable losses, although the recovery has only been minimal with prices remaining below USD 43/bbl.

Kuwait gave Qatar a list of demands from boycotting countries in which Saudi Arabia and other gulf nations demanded Qatar cut ties with Iran, shut Al-Jazeera and its base in Turkey within 10 days. (Newswires)

GEOPOLITICAL

North Korea conducted another ballistic missile rocket engine test, according to US officials. (Newswires)

US

Treasuries trade was lacklustre on Thursday, with yields little changed (between 0bps and 2bps lower across the curve). The Sep 17 10yr T-Note future settled 2+ ticks lower at 126.21+. The US sold USD 5bln of 30yr TIPS, which stopped tspanough by around 2.6bps; at 0.88%, the yield was close to the coupon rate of 0.875%, it was noted. Investors were also encouraged by the breakeven rate around 1.84%.

Fed's Bullard (Non-voter, Dove) said Fed officials' forecasted hike trajectory is unnecessarily aggressive and that the Fed should begin cutting balance sheet soon. (Newswires)

Fed said 34 largest US banks cleared the 1st phase of stress tests and that big US banks would meet minimum capital requirements in most severe stress test scenario. Fed also added that Aggregate Common Equity Tier 1 Capital ratio would be a minimum of 9.2%, which is an improvement from 8.4% last year. (Newswires)

Four GOP senators have opposed yesterday’s health-care proposal unveiled by Senate Republicans. (Newswires)