• European bourses are mixed, Euro Stoxx 50 +0.2%, as the complex wanes from best levels ahead of a packed Central Bank agenda.
• DXY has eased from newly formed peaks as yields ease from highs and broader sentiment stages a modest recovery.
• GBP and Gilts have reclaimed some composure following recent pronounced pressure, all eyes on BoE's Pill.
• Stateside, USTs are holding firm and similarly at the top-end of ranges ahead of numerous Fed officials and 5yr issuance.
• Crude benchmarks have been meandering higher throughout the session, after yesterday's lower settlement.
• Focus on Nord Stream 1 & 2 pipeline damage, cause unknown, and fresh reporting around a potential EU price cap.
• Looking ahead, highlights include US Durable Goods, Consumer Confidence & New Home Sales, Speeches from Fed's Powell, Bullard, & Kashkari, ECB's Lagarde, de Guindos, & Panetta, BoE's Pill, Supply from the US.

As of 11:10BST/06:10ET

LOOKING AHEAD

• US Durable Goods, Consumer Confidence & New Home Sales, Speeches from Fed's Powell, Bullard, & Kashkari, ECB's Lagarde, de Guindos, & Panetta, BoE's Pill, Supply from the US.

CENTRAL BANKS

• Fed's Mester (2022, 2024 voter) said further rate hikes will be needed and will need a restrictive stance for some time, while she added it can be better to act more aggressively in an uncertain environment and that pre-emptive action can prevent the worst-case outcome. Mester said this is the time to be decisive and the Fed policy rate may be right below the restrictive level, as well as noted that they are not at neutral yet and need to get above that. Furthermore, Mester said rates are not coming down next year and that at some point they would have done enough and it will be a case of balancing risk at some point, but this is not that moment, according to Reuters.
• Fed's Evans (non-voter, departing) says US inflation is high, getting it under control is the number one job, via CNBC; Real rate could be around 1.5% by next spring, in Evans' judgement. By this period, can perhaps sit and wait on rates; end-2022 consensus view on rates is 4.25-4.50%. Tougher rate environment is here for a while.

GEOPOLITICS

• Nord Stream says it has detected damage at three lines of the Nord Stream gas pipeline system; damages are unprecedented and is impossible to estimate when gas transportation infrastructure will be restored. Subsequently, Russia's Kremlin said pipeline damage is a very concerning development; cannot rule out sabotage.
• Russian Head of Security Council says Russia has the right to use nuclear weapons if necessary, says it is not a bluff, via Reuters.
• US State Department Spokesman Price said the US does not see an Iran deal coming together soon.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed, Euro Stoxx 50 +0.2%, as the complex wanes from best levels ahead of a packed Central Bank agenda.
• Catalysts behind the pullback have been sparse with newsflow focused on geopols/energy; though, GS and BlackRock are turning more bearings on equities in the short-term.
• Stateside, futures remain in positive territory though have similarly drifted from initial peaks, ES +0.8%.
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FX

• DXY has eased from newly formed peaks as yields ease from highs and broader sentiment stages a modest recovery.
• A pullback that is benefitting GBP in particular, with Cable outperforming after recent pressure as the Pound manages to gain some composure ahead of BoE's Pill.
• Similarly, NZD is among the best performers following RBNZ Governor Orr stating that further tightening is likely required.
• More broadly, G10 peers are taking advantage of the USD's pullback though the magnitude of this does differ somewhat; on the flip side, Yuan remains under pressure following a weaker fix, soft data and World Bank updates.
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FIXED INCOME

• Core benchmarks are mixed and feature 'outperformance' in Gilts after yesterday's heft losses with the morning's I/L relatively robust.
• More broadly, Bunds initially waned a touch from a 138.75 best, though have reverted back towards the top-end of parameters as broader sentiment slips.
• Stateside, USTs are holding firm and similarly at the top-end of ranges ahead of numerous Fed officials and 5yr issuance.
• UK DMO intends to hold 19 Gilt auctions in October through December, now plans three syndications for remainder of year.
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COMMODITIES

• Crude benchmarks have been meandering higher throughout the session, after yesterday's lower settlement.
• Focus on Nord Stream 1 & 2 damage with the cause currently unknown and fresh reporting around a potential EU gas price cap, to be discussed on Friday.
• At least 12 countries have signed a letter which calls on the EU to propose a gas price cap at this week's Energy Ministers meeting via Politico citing a letter; proposals will be discussed on Friday, September 30th
• US President Biden said companies running gas stations need to bring down gasoline prices at the pump now, according to Reuters.
• German network regulator later stated that it did not know the cause of the Nord Stream 1 pressure drop but didn't see any impact on the security of supply, according to Reuters.
• BP (BP/ LN) halted production and evacuated staff at two offshore oil platforms in the US Gulf of Mexico ahead of Hurricane Ian.
• Intercontinental Exchange is reportedly planning to accept allowances generated by the carbon market as collateral in its European futures market to ease the pressure on utilities and traders amid the energy crisis, according to FT.
• Hurricane Ian has strengthened to a Category 3 storm (major hurricane), via NHC; expected to strengthen further today, has made landfall.
• UBS says that only a production cut by OPEC+ can break the negative momentum within oil in the short-term, adding that to provide a stronger floor in oil prices, Saudi would need to make extra voluntary cuts.
• Metals are deriving support from the USDs relative pullback, though spot gold for instance remains within yesterday's parameters.
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NOTABLE EUROPEAN HEADLINES

• UK opposition Labour Party surged to its largest poll lead over the Conservatives in more than two decades with a YouGov poll showing a 17-point lead against the Tories, according to The Times.

NOTABLE HEADLINES

• US Senate panel releases spending bill to avert a government shutdown which includes Manchin's plan to speed energy permits and would fund the government until December 16th, according to NYTimes' Cochrane
• US HHS Secretary declared a public health emergency for Florida in response to Hurricane Ian, while the NHC said Hurricane Ian continues to quickly intensify and conditions in western Cuba were to deteriorate with significant wind and storm surge impact expected.

APAC TRADE

• APAC stocks were mostly higher in which the majority of indices shrugged off the negative lead from Wall St as the overhang from the recent FX turmoil dissipated but with the recovery somewhat contained by the higher yield environment.
• ASX 200 eked slight gains led by the commodity-related sectors as they atoned for yesterday’s underperformance.
• Nikkei 225 gained after recent comments from BoJ Governor Kuroda who reaffirmed his commitment to maintaining easy monetary policy, while the central bank also announced unscheduled purchase operations.
• Hang Seng and Shanghai Comp were mixed with the mainland underpinned amid reports that China is to ramp up financial support for new types of infrastructure, while the PBoC conducted its largest cash injection in seven months ahead of next week’s National Day holiday. However, growth concerns lingered with the World Bank forecasting China’s economic growth to lag behind the rest of Asia for the first time since 1990.
• India will likely be included in the JP Morgan Emerging Market Index early 2023, according to Reuters sources.

NOTABLE APAC HEADLINES

• PBoC injected CNY 113bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 62bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 173bln net injection.
• Some Chinese fund managers and brokers were called by regulators to help stabilise the stock market ahead of the 20th party congress and regulators asked institutions to avoid trading activities that could cause large fluctuations, according to sources cited by Reuters.
• China’s growth will lag behind the rest of Asia for the first time since 1990, according to FT citing forecasts by the World Bank.
• World Bank lowered its East Asia and Pacific region 2022 growth forecast to 3.2% from 5.0% and sees 2023 growth at 4.6%, while it sees China's economy to expand 2.8% this year and 4.5% next year, according to Reuters.
• China's MOFCOM has issued measures to support foreign trade; China is to step up support for cross-border e-commerce sector and vows to boost port efficiency, via Reuters.

NOTABLE APAC DATA

• Chinese Industrial profit YTD (Aug) -2.1% (Prev. -1.1%)
• Japanese Services PPI YY (Aug) 1.9% (Prev. 2.1%)