• APAC stocks traded mixed as a rebound in Chinese Industrial Profits partially offset the subdued handover from Wall St.
• European equity futures are indicative of a contained open with Euro Stoxx 50 future flat after the cash market closed down 0.9% yesterday.
• US Senate voted to clear a procedural hurdle of the Senate bipartisan bill to avoid a shutdown; McCarthy says stopgap funding bill will be brought to the House floor on Friday.
• DXY is steady on a 106 handle, EUR/USD remains sub-1.06, USD/JPY lingers around 149, antipodeans lag.
• Looking ahead, highlights include German Gfk Consumer Sentiment, CNB Policy Announcement, Supply from the UK, Germany & US.

US TRADE

EQUITIES

• US stocks retreated throughout the session and bonds failed to sustain an early recovery attempt amid a lack of major catalysts and with rebalancing flows likely affecting tape action ahead of month-end, while weaker-than-expected US Consumer Confidence and New Home Sales added to the glum mood.
• SPX -1.47% at 4,273, NDX -1.51% at 14,545, DJIA -1.14% at 33,618, RUT -1.27% at 1,761.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Bowman (voter) said higher rent burdens underscore the need to curb inflation.
• US Senate voted to clear a procedural hurdle of the Senate bipartisan bill to avoid a government shutdown, while it was separately reported that the Senate short-term spending bill would fund the government through to November 17th and includes USD 4.5bln for Ukraine, according to Punchbowl.
• US House voted to start the debate on the bill to fund parts of the federal government, while US House Speaker McCarthy said a stopgap funding bill will be brought to the House floor on Friday.
• US auto supplier groups urged President Biden to provide federal assistance to support the auto parts sector during the UAW strike, according to a letter. It was also reported that President Biden said the UAW union should get a 40% pay increase when questioned on the matter.
• Hollywood screenwriters agreed to end their strike and return to work on Wednesday after securing a new three-year contract, according to AFP and FT.
• US judge ruled that former US President Trump fraudulently inflated his wealth to get cheap loans in a civil case brought by the New York Attorney General.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as a rebound in Chinese Industrial Profits partially offset the subdued handover from Wall St. where the major indices extended on losses heading closer to month-end.
• ASX 200 was lower albeit with downside stemmed as participants digested the monthly CPI data from Australia which matched expectations at 5.2% Y/Y but accelerated from the prior.
• Nikkei 225 initially underperformed and briefly dipped below 32,000 before bouncing off lows.
• Hang Seng and Shanghai Comp were positive after the PBoC pledged to step up policy coordination at its quarterly policy meeting and noted the need to enhance efforts of macro policy adjustments, while sentiment was also underpinned by the improvement in Industrial Profits which returned to growth for August.
• US equity futures were slightly higher (ES +0.3%) which provided some reprieve from yesterday's selling.
• European equity futures are indicative of a contained open with Euro Stoxx 50 future flat after the cash market closed down 0.9% yesterday.

FX

• DXY was steady on a 106 handle and held on to the prior day’s gains after climbing to a 10-month high.
• EUR/USD remained subdued following its recent failure to hold on to the 1.0600 handle and with the latest ECB rhetoric doing little to spur the currency.
• GBP/USD languished at a 6-month low owing to the recent dollar strength.
• USD/JPY was indecisive and oscillated in a thin range around the 149.00 level following a lack of surprises from the outdated minutes of the BoJ’s July meeting.
• Antipodeans ultimately weakened although price action was choppy following the whipsawing in CNH which was briefly supported by several factors including the PBoC meeting, Chinese Industrial Profits and with Chinese state banks selling dollars in the onshore market to boost the yuan.
• PBoC set USD/CNY mid-point at 7.1717 vs exp. 7.3103 (prev. 7.1727)
• Chinese state banks were said to be selling dollars onshore to boost the yuan.
• RBI likely sold dollars in the NDF market at around 83.24-83.25 ahead of spot market open, according to traders cited by Reuters.

FIXED INCOME

• 10yr UST futures nursed some of their recent losses with some slight reprieve during Asian trading hours as yields marginally eased, while the threat of a shutdown lingers with House Speaker McCarthy to bring a stopgap funding bill to the House floor on Friday.
• Bund futures mildly rebounded to test the 129.00 level where it was met with resistance.
• 10yr JGB futures were kept afloat amid the BoJ’s presence in the market for nearly JPY 1.5tln of JGBs on top of its fixed rate operations.

COMMODITIES

• Crude futures extended on yesterday's rebound despite the lack of catalysts and with the energy complex also unfazed by the surprise build of oil stocks in the latest private sector inventory report.
• US Energy Inventory Data (bbls): Crude +1.6mln (exp. -0.3mln), Gasoline -0.1mln (exp. -0.1mln), Distillates -1.7mln (exp. -1.3mln), Cushing -0.8mln.
• US is postponing the Gulf of Mexico oil and gas lease sale that was scheduled for September 27th.
• Spot gold trickled beneath the USD 1900/oz level amid the recent dollar strength.
• Copper futures traded sideways alongside the mixed risk appetite in the region.

CRYPTO

• Bitcoin eked mild gains in a continuation of this week's uneventful and rangebound performance.

NOTABLE ASIA-PAC HEADLINES

• PBoC's policy committee held a meeting on Q3 monetary policy and vowed to step up policy coordination, while it stated that they need to enhance efforts of macro policy adjustment and will implement monetary policy in a precise and forceful manner. PBoC also pledged to keep prices at a reasonable level and prevent excessive adjustments in exchange rates. Furthermore, it is to promote a healthy and stable development of the property market and will implement financial support measures to improve the healthy development of the platform economy according to Bloomberg and Reuters.
• PBoC Governor Pan met with EU trade chief Dombrovskis on China-EU financial cooperation.
• China put Evergrande's (3333 HK) Chairman Hui under police control, while Hui was taken away by Chinese police earlier this month and is being monitored at a designated location, according to Bloomberg.
• China's funding round to support the semiconductor industry is struggling in the initial phases to raise the target of USD 41bln, according to FT.
• US restricted imports from three more companies in China's Xinjiang connected to forced labour.
• BoJ July meeting minutes noted it is important to continue easing and members also agreed it was important to check whether wage hikes will continue next year and onwards, while a few members said the chance of firms continuing to raise wages next year was high. Furthermore, many members said stable and sustained achievement of the price target accompanied by wage growth was not yet in sight.

DATA RECAP

• Chinese Industrial Profit YY (Aug) 17.2% (Prev. -6.7%)
• Chinese Industrial Profit YTD (Aug) -11.7% (Prev. -15.5%)
• Australian Weighted CPI YY (Aug) 5.2% vs. Exp. 5.2% (Prev. 4.9%)

GEOPOLITICS

• US Secretary of State Blinken spoke with Azerbaijan President Aliyev to emphasise the need to refrain from further hostilities in Nagorno-Karabakh and to provide assurances to residents there, while Binken urged Aliyev to commit to broad amnesty and allow observer missions, according to the State Department.
• China's Taiwan Affairs Office said the aim of Chinese drills near Taiwan is to resolutely combat the arrogance of separatist forces, according to Reuters.
• North Korea's UN Envoy told the UN General Assembly that 2023 is an extremely dangerous year as the Korean peninsula was driven closer to the brink of nuclear war and blamed the US and South Korea for the current dangerous situation.

EU/UK

NOTABLE HEADLINES

• ECB's Holzmann (hawk) said it is unclear whether they are at peak rates yet, while he noted upside inflation risks are still out there and they cannot exclude further rate hikes. Furthermore, he said the economy could yet surprise on the upside and is happy if rates stay high with the economy strong.