• European bourses are mixed with Flash PMIs flagging increased recession risks while Spain lags after Sunday’s stalemate
• Stateside, futures modestly firmer with the NQ in-fitting ahead of the special rebalance coming into effect
• DXY benefits from EUR & GBP pressure on disappointing PMIs while JPY regroups after further sources
• Crude benchmarks bolstered by the initial readout from China’s Politburo; base metals relatively unreactive while XAU follows the USD
• EGBs bolstered on poor PMIs with USTs following suit ahead of front-loaded supply given the FOMC
• Looking ahead, highlights include US Flash PMIs, Supply from the US, Earnings from NXP Semiconductor

CHINA'S POLITBURO

• China's economy faces new difficulties and challenges mainly due to insufficient domestic demand; will continue to implement prudent monetary policy; will actively expand domestic demand.
• Will implement macro adjustments in a precise and forceful manner; Economic recovery will be tortuous. Click here for a full recap.
• Keep the Yuan exchange rate basically stable.
• To meet the demand of rigid and improving housing needs.
• External environment complex and severe.
• Will continue to to deepen reform and opening up, improve development environment for private firms.
• Will promote secure development of AI.
• Will stabilise trade and foreign investment and increase international flights.
• Will put job stabilisation at a strategically high level and expand middle income group.
• Will enliven capital market and boost investors' confidence.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed with Flash PMIs flagging increased recession risks, Euro Stoxx 50 -0.2%; Spain lags following a political stalemate in Sunday's elections, IBEX 35 -0.7%.
• Sectors are also mixed but with a negative tilt given the above. Telecom names outperform after strong Vodafone results while Travel & Leisure lags given PMIs, Ryanair earnings and the European heatwave causing disruptions.
• Stateside, futures are modestly firmer and picked up to incremental highs following the Politburo readout, ES +0.2%; today's docket is headlined by PMIs alongside a front-loaded supply schedule given Wednesday's FOMC. NQ in-fitting ahead of the special rebalancing taking place.
• Tesla (TSLA) affirms FY23 CapEx guide between USD 7-9bln; also affirms FY24-25 range of USD 7-9bln.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Euro and Sterling undermined by weak PMIs and Buck benefits, EUR/USD retreats from just under 1.1150 to sub-1.1070 and Cable from circa 1.2883 towards 1.2800, while DXY pops from 100.880 to 101.410.
• Kiwi tops 0.6200 vs Greenback after mixed NZ trade data as AUD/NZD cross reverses through 1.0900 and AUD/USD is capped around 0.6750 in wake of sub-50 Australian services and composite PMIs.
• Yen regroups after sharp slide against Dollar amidst reports that the BoJ could raise FY 2023 inflation forecast markedly to 2.5%, USD/JPY towards base of 141.19-81 range.
• PBoC set USD/CNY mid-point at 7.1451 vs exp. 7.1795 (prev. 7.1456)
• Israel judicial compromise talks have collapsed according to N12 News.
• Click here for more detail.

FIXED INCOME

• Disappointing PMIs out of the Eurozone and UK give flagging debt futures a decent lift.
• Bunds top 134.01 marginally from a 132.97 bottom and Gilts rebound from 96.43 to 97.57 at best.
• T-note follows suit with a lag between 114-14/03 bounds ahead of US national activity index, prelim. PMIs and USD 42bln 2 year supply.
• Click here for more detail.

COMMODITIES

• WTI and Brent futures have been edging higher after the release of the Chinese Politburo statement, with prices at session highs as the time of writing.
• Spot gold trades in tandem with the Dollar and trades on either side of its 100 DMA (USD 1,961.55/oz) with the 50DMA seen at USD 1,947.73/oz today, with traders keeping powder dry ahead of a risk-packed week.
• Base metals are mixed with little direction and minimal impetus thus far from the Chinese Politburo statement.
• IEA’s Executive Director Birol said they will revise global oil demand growth projections based on the economic growth prospects of China and some other countries, while he reiterated the view that oil markets are expected to tighten in H2.
• UAE Energy Minister said the role of OPEC+ is crucial in the energy market for producers and consumers, while OPEC+ actions are crucial for the stability of markets and what it is doing is adequate.
• Click here for more detail.

NOTABLE US HEADLINES

• Chevron (CVX) Q2 (USD) Adj. EPS 3.08 (exp. 2.98), adj. net income 5.8bln (exp. 5.6bln), rev. 6.0bln (exp. 5.5bln).. Says PDC Energy (PDCE) acquisition to close in August 2023. Chevron's production levels in the Permian Basin soared to a record high, producing 772k BOEPD in the Permian Basin. CEO Mike Wirth had his mandatory retirement age waived, and he will continue as Chairman and CEO past the usual retirement age of 65 due to a "turbulent time" in the markets; appoints Eimear Bonner as new CFO.
• WSJ's Timiraos "Why the Fed Isn’t Ready to Declare Victory on Inflation" adding, officials remain concerned about whether wages and price growth can slow enough without an economic downturn.
• House Judiciary Committee reportedly mulls vote on Thursday to hold Meta (META) CEO Zuckerberg in contempt.
• Click here for the US Early Morning note.

NOTABLE EUROPEAN HEADLINES

• UK MPs urge for changes to tax relief to boost the country's regional start-ups, according to FT.
• UK Treasury will summon the heads of Britain’s largest banks for a meeting on new free-speech rules and to explain how they intend to ensure customers are not “de-banked” for their political views after former UKIP leader Farage’s account was closed by Coutts, according to FT.
• None of the individual parties, nor the left or right blocs were able to secure a majority in the Spanish parliamentary election in which the conservative People’s Party won 136 seats of the 350-seat parliament and PM Sanchez’s socialists PSOE was in second place with 122 seats, while far-right Vox was third with 33 seats and left-wing Sumar won 31 seats, according to Reuters.
• Click here for newsquawk analysis on the Spanish election.
• Bank of Italy is reportedly to propose Cipollone as the candidate to replace Panetta as an ECB executive board member, via FT citing sources.
• Greece’s Emergency Communications Service issued evacuation orders for part of Corfu due to wildfires, according to Sky News.

DATA RECAP

• French HCOB Composite Flash PMI (Jul) 46.6 vs. Exp. 47.8 (Prev. 47.2); Manufacturing Flash PMI (Jul) 44.5 vs. Exp. 46.0 (Prev. 46.0); Services Flash PMI (Jul) 47.4 vs. Exp. 48.4 (Prev. 48.0)
• German HCOB Composite Flash PMI (Jul) 48.3 vs. Exp. 50.3 (Prev. 50.6); Manufacturing Flash PMI (Jul) 38.8 vs. Exp. 41.0 (Prev. 40.6); Services Flash PMI (Jul) 52.0 vs. Exp. 53.1 (Prev. 54.1)
• EU HCOB Composite Flash PMI (Jul) 48.9 vs. Exp. 49.7 (Prev. 49.9); Manufacturing Flash PMI (Jul) 42.7 vs. Exp. 43.5 (Prev. 43.4); Services Flash PMI (Jul) 51.1 vs. Exp. 51.5 (Prev. 52.0)
• "... eurozone economy will likely move further into contraction territory in the months ahead, as the services sector keeps losing steam" & "... Lagarde will certainly stick to her guns and hike interest rates by 25bp at the next monetary meeting at the end of July."
• UK Flash Composite PMI (Jul) 50.7 vs. Exp. 52.4 (Prev. 52.8); Services PMI (Jul) 51.5 vs. Exp. 53.0 (Prev. 53.7); Manufacturing PMI (Jul) 45.0 vs. Exp. 46.1 (Prev. 46.5)
• “The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries" & "... survey data signal further, potentially marked, falls in consumer price inflation in the months ahead.”

GEOPOLITICS

• Belarusian President Lukashenko met with Russian President Putin and claimed that Wagner fighters want to invade Poland, according to euronews.
• Russian Defence Ministry said Ukraine launched an artillery strike on a group of journalists, according to Reuters.
• Moscow's Komsomolsky Avenue near the Defence Ministry building was closed after drone fragments were found and two explosions were heard before the fragments were found, according to witnesses cited by Reuters. It was also reported that a drone hit a high-rise office building on Moscow's Likhachev Street, according to TASS.
• Russia's FSB says traces of explosives were detected at a vessel which was in transit from Turkey to Rostov, Russia for gain shipment, via Tass; in May, the vessel was in Kiliya, Ukraine. Subsequently, Kremlin says the discovery of explosive traces on Grain ship shows there is a danger and requires increased vigilance.
• US Secretary of State Blinken said Ukraine has taken back 50% of land Russia seized and noted that Ukraine’s counteroffensive against Russia is tough and will play out over several months, according to a CNN interview.
• North Korea fired "several" cruise missiles into the Yellow Sea early Saturday morning, according to the South Korean military cited by Japan Times.
• G7, EU, Australia, New Zealand and South Korea urged China to help stop North Korea from evading UN sanctions by using Chinese territorial waters, according to a letter.

CRYPTO

• Bitcoin spent the first half of the morning with a negative bias but relatively steady; however, more recently we have seen a bout of pressure in the space with Bitcoin moving to just below its 50-DMA at USD 29.02k. Currently, BTC is holding just above the level.
• Binance says it will list Worldcoin (WDC), a Cryptocurrency project founded by OpenAI CEO Sam Altman.

APAC TRADE

• APAC stocks traded mostly positive but with gains capped ahead of upcoming key risk events including the FOMC, ECB and BoJ monetary policy meetings, as well as several big tech earnings results.
• ASX 200 was rangebound as outperformance in the energy sector was offset by losses in mining names and with sentiment also clouded after Australian flash PMIs all printed in contraction territory.
• Nikkei 225 was underpinned after reports on Friday that the BoJ is leaning towards keeping its yield curve control policy unchanged at the upcoming meeting and sees little need to act on YCC for now.
• Hang Seng and Shanghai Comp were mixed with Hong Kong pressured by weakness in the property sector and tech, while the mainland was indecisive as the NDRC’s notice to promote high-quality development of private investment counterbalanced the reduced hopes for aggressive stimulus from China’s politburo meeting where the top officials will review the economic performance for H1.

NOTABLE ASIA-PAC HEADLINES

• China called for better financial support for private investment and is seeking private investment in thousands of projects worth CNY 3.2tln, while the state planner issued a notice to promote high-quality development of private investment. NDRC said it is to spur the activity of private investment and encourage private investment in some projects of transport, water and clean energy, while it will encourage private investment in new infrastructure and modern agriculture. NDRC said it will give 20 cities funding support each year with high private investment growth, as well as guide and strengthen financing support for private-invested projects and will encourage private investment projects to issue real estate investment trusts in the infrastructure sector, according to Bloomberg and Reuters.
• China CSRC Vice Chair Fang Xinghai led a meeting with global funds which included representatives from HongShan, Temasek, GIC and Warburg Pincus, according to Bloomberg.
• China's top diplomat Wang Yi proposed high-level official talks among China, Japan and South Korea in a meeting with the Japanese Foreign Minister this month, according to Kyodo.
• UK Foreign Secretary Cleverly postponed a planned trip to Beijing this month, according to Bloomberg.
• Hong Kong strengthened radiation inspections on seafood imports from Japan, according to Kyodo.
• China's MOFCOM undertook a meeting with semiconductor names to discuss the impact of US/allies sanctions on the domestic semiconductor industry, via Caixin; Cos called for the gov't to take measures to counter the sanctions.
• BoJ is said to mull a large increase in its 2023 inflation outlook, reportedly mulling raising FY23 forecast to around 2.5%, according Bloomberg sources. Reminder, Friday's Reuters sources included reports that the BoJ is expected to revise up core inflation forecasts for FY23, via source; though, FY24 & FY25 expected to be largely in-line with current projections.

DATA RECAP

• Japanese Manufacturing PMI Flash SA (Jul) 49.4 (Prev. 49.8); Services PMI Flash SA (Jul) 53.9 (Prev. 54.0)
• Japanese Composite Op Flash SA (Jul) 52.1 (Prev. 52.1)
• Australian Manufacturing PMI Flash (Jul) 49.6 (Prev. 48.2); Services PMI Flash (Jul) 48.0 (Prev. 50.3)
• Australian Composite PMI Flash (Jul) 48.3 (Prev. 50.1)