• Asian equities have kicked the week off mostly higher with the Nikkei 225 lifted by a softer JPY. Chinese CPI prints in-line
• UK Press attention has been placed on reports suggesting that PM May will seek opposition support in pushing tspanough Brexit legislation
• Looking ahead, highlights include Fed’s Williams

ASIA

The start of a new week saw Asian bourses broadly in the green with exception of China. Much of the positive tone stemmed from the firmer close on Wall Street, where equities were buoyed by Friday’s NFP release. Broad based gains in Australia led by financials and tech names kept the ASX 200 (+0.6%) in the green, while Japanese exporters benefitted from the softer JPY, which subsequently supported the Nikkei 225 (+0.7%). Chinese equities traded in a mixed fashion (Shanghai Comp -0.2%, Hang Seng +0.1%) with the latest inflation data holding no surprises as the release came largely in line with expectations and as such will unlikely have an impact on monetary policy. Additionally, the PBoC continued to skip open markets operations for a 12th consecutive session, resulting in a net drain of CNY 30bln. In fixed income markets, JGB yields are ticking higher with the 10Y eying 0.1% having inched higher by 0.3bps, while the curve is showing a steepening bias. Additionally, the JGB prices have been hampered by the risk tone with flow in equities.

Chinese CPI (Jun) Y/Y 1.5% vs. Exp. 1.5% (Prev. 1.5%)

CPI (Jun) M/M -0.2% vs. Exp. -0.1% (Prev. -0.1%)

PPI (Jun) Y/Y 5.5% vs. Exp. 5.5% (Prev. 5.5%)

PBoC set CNY mid-point at 6.7964 (Prev. 6.7914). (Newswires)

PBoC refrained from conducting open market operations for the 12th consecutive session and stated that liquidity in the banking system is moderate. (Newswires)

EUROPE/UK

UK PM May is set to ask Jeremy Corbyn for support in delivering Brexit and pushing tspanough legislation in a speech on Tuesday ahead of the publication of the great repeal bill on Thursday. (Telegraph)

EU Parliament may veto UK citizen’s rights offer with the EU branding it a ‘damp squib’ which risks creating a ‘second class of citizenship’. (Telegraph)

ECB's Praet stated that reflation remains highly dependent on loose monetary policy, underlying inflationary pressure remains subdued and that Eurozone inflation will take a long time to rise back to target. (Newswires)

Fitch affirmed Ireland at 'A'; Outlook Stable. (Newswires)

FX

The main focus in FX markets was on the JPY, which weakened across the board as USD/JPY consolidated above 114.00 amid the persistent spread widening between USTs and JGBs, while EUR/JPY reached levels last seen in Feb’16, having made a push tspanough 130.00 after soft Japanese machine orders data which prompted the government to cut its related-assessment for the first time since Sep’16. Aside from the softer JPY, major pairs traded in subdued fashion with commodities currencies (AUD, NZD) somewhat unmoved by the mild rebound in crude prices, following weekend reports that Libya and Nigeria may be asked to cap oil output soon after recently ramping up production.

COMMODITIES

Oil prices clawed back some of Friday’s weakness with WTI and Brent crude futures gaining by a modest 0.8%. Across the precious metals complex, demand for gold had been rather subdued with prices slipping in Asian trade amid the risk on tone.

OPEC Secretary General Barkindo stated that it is premature to discuss deeper oil output cuts, while Kuwait stated that OPEC and Non-OPEC producers invited Libya and Nigeria to meet in Russia and may asked to cap oil output soon. (Newswires)

US Baker Hughes Total Rig Count (Jul) W/W 952 (Prev. 940)

Baker Hughes Oil Rig Count (Jul) W/W 763 (Prev. 756)

Baker Hughes Gas Rig Count (Jul) W/W 189 (Prev. 184)

LME is to launch gold and silver futures contracts today for the 1st time in decades. (Newswires)

US

It was the US employment situation report that influenced price action and we saw Treasuries find buyers immediately after the data release, but as the details were digested the Tsy curve bear steepened. 2s30s widened by 2.3bps, 2s10s by 1.4bps, and 5s30s by around 1.6bps. The 10yr future settled 7.5 ticks lower at 124-31+.

US Treasury Sec. Mnuchin said the administration plans to release its tax plan in early Sept. and is aiming for a vote on Congress by the end of this year. (Newswires)