- APAC stocks were mostly pressured following the mixed performance stateside as this week's major risk events drew closer.
- European equity futures indicate a rangebound open with Euro Stoxx 50 futures up 0.1% after the cash market finished with losses of 1.0% on Monday.
- DXY was directionless overnight, JPY has lost ground to the USD, EUR/USD bounced off support above 1.08.
- US refinancing estimates ahead of the QRA saw the Treasury lower its estimated financing needs.
- Looking ahead, highlights include German CPI, EZ GDP, EZ Economic Sentiment, US JOLTs, Supply from UK & Italy.
- Earnings from Airbus, L'Oreal, Fresenius Medical Care, Covestro, Diageo, Sage, St James's Place, BP, Rio Tinto, Grifols, Leonardo, Intesa Sanpaolo, Merck, Paypal, Pfizer, Procter & Gamble, AMD, Microsoft, Mondelez & Starbucks.
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US TRADE
EQUITIES
- US stocks finished mixed with price action choppy amid light catalysts and with no tier-1 data releases, while participants also lacked conviction ahead of this week's major risk events including the BoJ and FOMC policy meetings, ISM Manufacturing PMI, NFP, key tech earnings and Quarterly Refunding.
- SPX +0.1% at 5,464, NDX +0.2% at 19,059, DJIA -0.1% at 40,540, RUT -1.1% at 2,235.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US Treasury expects to borrow USD 740bln (prev. 847bln) in Q3, assuming an end-September cash balance of USD 850bln and expects to borrow USD 565bln in Q4, assuming a year-end cash balance of USD 700bln.
- WSJ’s Timiraos wrote “The NY Fed's measure of inflation persistence (the "multivariate core trend" rate) fell again in June, to 2.1%”, while he added "With meaningful shelter disinflation arriving in June, the declines in inflation are broadening".
- Former US President Trump said he would probably end up debating VP Harris but added that he could also make a case for not debating.
APAC TRADE
EQUITIES
- APAC stocks were mostly pressured following the mixed performance stateside and with markets cautious as this week's major risk events drew closer.
- ASX 200 was dragged lower amid underperformance in mining stocks after several quarterly production updates and with heavy losses in Fortescue after an investor sought to offload as much as AUD 1.9bln of shares, while a much wider-than-expected contraction in building approvals added to the glum mood.
- Nikkei 225 retreated amid cautiousness as the BoJ kick-started its two-day policy meeting where it will decide on taper plans and is expected to mull lifting its policy rate by 15bps to around 0.25%.
- Hang Seng and Shanghai Comp. conformed to the broad negative mood in which the former tested the 17,000 level to the downside with notable weakness seen in consumer, energy and tech stocks, while the mainland was subdued with Chinese official PMI data also due tomorrow.
- US equity futures (ES -0.1%) were somewhat indecisive as major central bank rate decisions, key data and big tech earnings loom.
- European equity futures indicate a rangebound open with Euro Stoxx 50 futures up 0.1% after the cash market finished with losses of 1.0% on Monday.
FX
- DXY lacked direction in the absence of catalysts as participants brace for the incoming slew of risk events.
- EUR/USD traded little changed but off worst levels following a rebound off support near the 1.0800 level.
- GBP/USD was contained after yesterday's choppy mood and with participants also awaiting the BoE on Thursday.
- USD/JPY price action was indecisive as the BoJ began its 2-day policy meeting where a rate hike is seen as a close call.
- Antipodeans saw two-way trade and ultimately shrugged off the negative mood and weak Australian building approvals.
- PBoC set USD/CNY mid-point at 7.1364 vs exp. 7.2586 (prev. 7.1316).
FIXED INCOME
- 10-year UST futures traded sideways after yesterday's flattening and as risk events loom, while the refinancing estimates ahead of the QRA saw the Treasury lower its estimated financing needs as expected and were at the lower end of forecasts.
- Bund futures were rangebound but held onto recent gains after climbing back above the 133.00 level.
- 10-year JGB futures remained afloat as participants await tomorrow's crucial BoJ policy announcement.
COMMODITIES
- Crude futures were subdued after recent declines and as the downbeat sentiment offset the geopolitical risk premium.
- US DoE finalised the purchase of 4.65mln bbls of crude for the SPR which is to be delivered to the Bayou Choctaw SPR site in Louisiana between October-December.
- US is not currently considering revoking individual licenses previously granted to Chevron (CVX) and other companies for oil operations in Venezuela.
- Spot gold was rangebound after recently pulling back from resistance at the USD 2400/oz level.
- Copper futures were pressured alongside the risk-off mood, while Citi also recently lowered its copper average price forecast to USD 10.5k/ton in 2025 and USD 11k/ton in 2026 vs prev. forecast of USD 12k/ton for both years.
CRYPTO
- Bitcoin was slightly lower after recovering most of the losses from an earlier dip to the USD 66,000 level.
NOTABLE ASIA-PAC HEADLINES
- China customs official said China faces an increasingly uncertain trade environment and challenges to grow trade in H2.
- Japan reportedly taps brokerages to market JGBs abroad as the BoJ steps back, according to Nikkei.
DATA RECAP
- Japanese Unemployment Rate (Jun) 2.5% vs. Exp. 2.6% (Prev. 2.6%)
- Japanese Jobs/Applicants Ratio (Jun) 1.23 vs. Exp. 1.24 (Prev. 1.24)
- Australian Building Approvals (Jun) -6.5% vs. Exp. -1.5% (Prev. 5.5%, Rev. 5.7%)
GEOPOLITICAL
MIDDLE EAST
- Israeli Defence Minister told US counterpart that the Golan Heights rocket attack was a significant escalation and Hezbollah will be held responsible.
- Israeli Channel 14 reported that in Israel, they estimate the Israeli reaction against Hezbollah will lead to war.
- US is leading a diplomatic push to deter Israel from targeting Beirut and southern suburbs in response to the Golan strike, according to Reuters citing sources.
- Israel's Foreign Minister called on NATO to expel Turkey as a member.
- Syrian Observatory said the Israeli army targeted with missiles a military site west of the city of Nawa in the western countryside of Daraa province, according to Sky News Arabia.
OTHER
- US President Biden’s administration announced a new USD 1.7bln lethal aid package for Ukraine.
- Russia's Navy started drills involving 20,000 personnel and 300 ships, while drills involve Russia's Northern, Pacific and Baltic fleets and Caspian Sea flotilla, according to Interfax
- Venezuelan opposition leader Machado said the opposition has the ability to prove truth of election results, while a US senior official accused Venezuela's Maduro government of "electoral manipulation". It was also reported that Uruguay's Foreign Minister said the country will never recognise Maduro's win due to a clear victory of the opposition and Peru's Foreign Ministry ordered Venezuelan diplomats to leave the country within 72 hours.
EU/UK
DATA RECAP
- UK BRC Retail Shop Price Index YY (Jul) 0.2% (Prev. 0.2%)
