• European bourses tread water with modest gains following a relatively mixed APAC lead; US futures post mild gains
• DXY is softer and trades on either side of 108.00, EUR/USD faded at 1.0160, JPY continues its correction vs the USD
• Choppy and divergent price action in debt futures as EZ bonds digest decent auction results from Germany and Italy
• WTI and Brent are firmer intraday as a function of the receding Dollar, but traders are wary as China continues with lockdowns
• Looking ahead, highlights include US CPI and supply from the US

13th September 2022

LOOKING AHEAD

• US CPI and supply from the US
• Click here for the Week Ahead preview.
• Click here for the Newsquawk US CPI preview.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukraine Deputy Defence Minister says that fighting is continuing in the Kharkiv region and it is too early to say if Ukraine has restored full control over the region.

CHINA-TAIWAN

• Chinese President Xi Jinping is expected to stack the country's senior military leadership during next month's Communist Party congress with loyalists aligned on his goal of unifying Taiwan and the mainland, according to Nikkei.

ARMENIA-AZERBAIJAN

• Twitter sources reported fighting in the Kalbajar-Lachin border regions between Azerbaijan and Armenia, while Armenia's Foreign Minister was said to have informed Russian Foreign Minister Lavrov about the situation resulting from Azerbaijan's aggression. Furthermore, Tehran Times reported that Azerbaijan's Defence Ministry said a number of its forces were killed in an exchange of fire with Armenian forces.
• Click here for Newsquawk analysis on the developments.

EUROPEAN TRADE

EQUITIES

• European bourses tread water with modest gains following a relatively mixed APAC lead.
• European sectors are mostly higher with no overarching theme or bias.
• Stateside, futures are edging higher in early European trade with a broad-based performance seen across the ES, NQ, YM, and RTY.
• Click here for more detail.

FX

• DXY is softer and trades on either side of 108.00, ahead of yesterday's 107.80 low and the 50 DMA at 107.52.
• EUR/USD faded at 1.0160 with decent option expiry interest between 1.0170-80 (1.21bn).
• The JPY continued its correction to almost 142.00 against the Greenback, irrespective of mixed Japanese PPI prints.
• Click here for more detail.

FIXED INCOME

• Choppy and divergent price action in debt futures as EZ bonds digest decent auction results from Germany and Italy.
• Gilts regroup after underperformance on the back of better than expected UK data.
• Bunds are holding above 144.00 having fallen to a marginal new Eurex low at 143.86
• US Treasuries are firmer across the board pre-US CPI, irrespective of Monday’s poorly received 3 and 10 year offerings.
• Click here for more detail.

COMMODITIES

• WTI and Brent are firmer intraday as a function of the receding Dollar, but traders are wary of short-term upward moves as China continues with strings of lockdowns.
• Spot gold trades on either side of the flat mark in the run-up to US CPI, under its 50 and 21 DMAs at 1,740.82/oz and USD 1,731.05/oz respectively
• Base metals are mostly firmer amid the weaker Buck and upside across stocks.
• Click here for more detail.

CRYPTO

• Bitcoin trades on either side of USD 22,500, whilst Ethereum pulled back after reaching levels close to 1,800.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Kwarteng told Treasury officials to adapt to a new approach focused on boosting GDP to 2.5%, the long-term average pre-GFC, ahead of the mini-Budget announcement next week which includes tax cuts and increased borrowing, according to FT.
• UK and EU are reportedly seeking to avoid a September 15th legal deadline over ‘grace periods’ becoming a flashpoint in talks, according to officials from both sides cited by the FT.
• The EU is delaying plans to cut the use of pesticides amid food production fears and subsequent price increases as a result, according to the FT.
• UK's Felixstowe port has received notice from union of further strike action from 27th Sept to 5th Oct; collective bargaining process has been exhausted - no prospect of an agreement being reached with union.
• EU Commission President is to call another energy meeting by end-September, according to the Spanish Energy Minister, according Reuters.
• German Economy Ministry report says early indicators and polls point to a rising number of insolvencies in H2, but there is no 'insolvency wave' in sight, via Reuters.
• EU is reportedly mulling a EUR 180-200 price cap from lower-cost sources (vs guided EUR 200); eyes taking 33% of extra profits from fossil fuel companies, according to Bloomberg sources.

NOTABLE EUROPEAN DATA

• UK Avg Earnings (Ex-Bonus) (Jul) 5.2% vs. Exp. 5.0% (Prev. 4.7%)
• UK ILO Unemployment Rate (Jul) 3.6% vs. Exp. 3.8% (Prev. 3.8%)
• UK HMRC Payrolls Change (Aug) 71k (Prev. 73k)
• EU ZEW Survey Expectations (Sep) -60.7 (Prev. -54.9)
• German ZEW Current Conditions (Sep) -60.5 vs. Exp. -52.2 (Prev. -47.6)
• German ZEW Economic Sentiment (Sep) -61.9 vs. Exp. -60.0 (Prev. -55.3)

APAC TRADE

• APAC stocks traded positive after the advances in global peers including on Wall St. where sentiment was helped by slowing inflation expectations, although gains were capped ahead of US CPI data and amid further China COVID woes.
• ASX 200 reclaimed the 7,000 level with advances led by the commodity-related sectors and with the risk tone also helped by an improvement in business and consumer sentiment data.
• Nikkei 225 marginally gained amid hopes of further supportive measures with Japan to potentially implement a nationwide travel incentive this month.
• Hang Seng and Shanghai Comp were slightly firmer but with upside contained after fresh COVID restrictions including in Sanhe near Beijing and with Shijiazhuang city in Hebei also locking down a district due to coronavirus.

NOTABLE APAC HEADLINES

• PBoC set USD/CNY mid-point at 6.8928 vs exp. 6.9080 (prev. 6.9098)
• China's city of Sanhe near Beijing is reportedly to be under lockdown for 4 days, while Shijiazhuang city in Hebei province locked down a district due to coronavirus.
• China Securities Daily noted that analysts expect the PBoC to maintain the MLF rate.
• Japan may implement a nationwide travel incentive this month, according to Kyodo.
• China's state planner says a second batch of pork reserves will be released this week, according to Reuters.

DATA RECAP

• Japanese Corp Goods Price YY (Aug) 9.0% vs. Exp. 8.9% (Prev. 8.6%, Rev. 9.0%)
• Japanese Corp Goods Price MM (Aug) 0.2% vs. Exp. 0.4% (Prev. 0.4%, Rev. 0.7%)
• Japanese Business Survey Index* (Q3) 1.7% (Prev. -9.9%)
• Australian NAB Business Confidence* (Aug) 10 (Prev. 7, Rev. 8)
• Australian NAB Business Conditions* (Aug) 20 (Prev. 20, Rev. 19)
• Australian Westpac Consumer Sentiment Index (Sep) 84.4 (Prev. 81.2)