Newsquawk Rundown, Daily Podcast

• European equities post losses to varying degrees, with autos hit after several guidance cuts; US equity futures are flat/subdued with the focus on Fed Chair Powell later.
• Dollar is slightly softer, Antipodeans benefit from the positivity surrounding China whilst the traditional havens CHF & JPY lag.
• Bonds are modestly softer to varying degrees; Bunds were not too reactive after the German Regional CPI metrics painted a picture of cooling Y/Y inflation ahead of the Nationwide figure at 13:00 BST / 08:00 EDT.
• Crude oil has pared initial gains and is now modestly lower as markets digest the recent geopolitical updates between Israel/Hezbollah; XAU is subdued whilst base metals benefit from the Chinese optimism.
• Looking ahead, German CPI, Chicago PMI, Speakers including ECB President Lagarde, Fed Chair Powell, Bowman, BoE’s Greene, Earnings from Carnival.

EUROPEAN TRADEEQUITIES

• European bourses, Stoxx 600 (-0.7%) are modestly lower across the board and to varying degrees, with sentiment in the region failing to piggy-back off China's performance but instead focusing on escalating geopolitics, profit warnings, and upcoming risk events such as Friday's NFP.
• European sectors are mostly negative; Basic Resources remain aflaot, given the strength in metals prices. Autos is by far the clear laggard after a myriad of guidance cuts today; Stellantis (-12.9%), Aston Martin (-27.5%) and Volkswagen (-2.7%) all slip. As a reminder, Mercedes-Benz (-1.7%) and BMW (-1.9%) both lowered forecasts already earlier in the month.
• US Equity Futures (ES U/C, NQ -0.1%, RTY -0.3%) are flat/subdued on month end, with traders keeping an eye on this week's risk events including Fed Chair Powell today, US ISMs throughout the week, and US NFPs on Friday.
• Bytedance, the owner of TikTok, reportedly plans a new AI model built with Huawei's Ascend 910B chips, according to sources; Bytedance is NVIDIA's (NVDA) largest customer for H20 AI chips tailored for the Chinese market.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
• Click for a detailed summary

FX

• USD is softer vs. cyclically-exposed peers and firmer vs. havens. Incremental US developments have been lacking since Friday's PCE report with markets instead looking ahead to a slew of upcoming data releases, including the key NFP report. DXY is in a 100.17-48 range and within Friday's 100.15-88 parameters.
• EUR is marginally firmer vs. the USD but unable to reclaim 1.12 status which was lost late last week on account of soft inflation prints from Spain and France. Today's German Regional CPI figures have thus far painted a picture of cooling Y/Y inflation, but had little impact on the Single-Currency. EUR/USD is tucked within Friday's 1.1124-1.1203 range.
• GBP is firmer vs. the USD with Cable just about making its way back onto a 1.34 handle after venturing as high as 1.3433 last week. Downward revisions to Q2 GDP metrics had little follow-through into the market. BoE's Greene is due after-hours.
• JPY is a touch softer vs. the USD in the wake of mixed data from Japan overnight. Broader focus for the JPY is on the fallout from Friday's LDP leadership race, with the victory of Ishiba viewed as a hawkish outcome. USD/JPY is currently trading towards the bottom end of today's 141.66-142.95 range.
• Antipodes are top of the leaderboard as the positivity surrounding China continues to reverberate around the market. As such, AUD/USD has printed another YTD peak at 0.6941
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FIXED INCOME

• USTs are currently scaling back some of the post-PCE upside seen on Friday with not a great deal of fresh US drivers over the weekend. NFP will likely be the highlight for the week given the Fed's increased focus on the employment side of its mandate. As it stands, markets currently see the November meeting as a near-enough coinflip between a 25 or 50bps reduction. Dec'24 USTs are currently contained within Friday's 114.08-25 range.
• Bunds showing similar price action to other global peers by scaling back some of the ground made on Friday, which was driven in part by soft regional inflation metrics from Spain and France ahead of the German release today and EZ-wide metric tomorrow. Regional CPIs for Germany have thus far painted a picture of cooling Y/Y inflation. Dec'24 Bunds have returned to a 135 handle but are contained within Friday's 134.31-135.19 range.
• Gilts are also on the backfoot with not much in the way of notable UK newsflow with downward revisions to Q2 GDP metrics having little follow-through into the market. BoE's Greene (voted for a hold in August and September) is due to speak afterhours.
• Click for a detailed summary

COMMODITIES

• Crude oil was initially on a firmer footing, but has since slipped since the European cash open and slowly drifted into negative territory. Price action today is focused on continued industrial commodities tailwinds from Chinese stimulus coupled with escalating geopolitics after Israel’s assassination of Hassan Nasrallah; on which, Bloomberg suggested Iran will try to transfer thousands of fighters to the border areas between Lebanon and Syria. Brent Dec trades in 71.24-72.79/bbl confines.
• Subdued trade in the precious metals complex despite the escalating geopolitical tensions, but still within contained parameters thus far in the run-up to risk events this week including Fed Chair Powell, ISM PMIs, and the US jobs reports. XAU resides within an USD 2,647.33-2,666.05/oz range.
• Base metals are firmer but off best levels as the optimism from Chinese stimulus is somewhat hampered by a broader cautious tone across markets.
• Russian Deputy PM Novak said Middle East geopolitical risks are already priced in, and global oil prices will not fluctuate significantly, via Ria
• BSEE estimated about 3% (prev. 12%) of oil production and 1% (prev. 6%) of natural gas production in the Gulf of Mexico was shut-in on Sunday. It was also reported that the death toll from Helene reached 89 and North Carolina’s Governor said that almost 464k customers in the state remain without power.
• Click for a detailed summary

NOTABLE DATA RECAP

• German Baden-Wurttemberg State CPI MM (Sep) 0.1% (Prev. -0.3%); Baden-Wurttemberg State CPI YY (Sep) 1.4% (Prev. 1.5%)
• German Hesse State CPI YY (Sep) 1.2% (Prev. 1.5%); Hesse State CPI MM (Sep) 0.0% (Prev. -0.1%)
• German Saxony State CPI MM (Sep) 0.2% (Prev. -0.2%); Saxony State CPI YY (Sep) 2.4% (Prev. 2.6%)
• German North Rhine-Westphalia State CPI YY (Sep) 1.5% (Prev. 1.7%)
• German Bavaria State CPI MM (Sep) 0.1% (Prev. -0.1%); German Bavaria State CPI YY (Sep) 1.9% (Prev. 2.1%)
• German Brandenburg State CPI MM (Sep) 0.0% (Prev. -0.2%); Brandenburg State CPI YY (Sep) 1.4% (Prev. 1.7%)
• German Import Prices YY (Aug) 0.2% vs. Exp. 0.3% (Prev. 0.9%); Import Prices MM (Aug) -0.4% vs. Exp. -0.3% (Prev. -0.4%)
• UK GDP YY (Q2) 0.7% vs. Exp. 0.9% (Prev. 0.9%); GDP QQ (Q2) 0.5% vs. Exp. 0.6% (Prev. 0.6%)
• UK Business Invest QQ (Q2) 1.4% (Prev. -0.1%, Rev. 0.6%); Business invest YY (Q2) 0.2% (Prev. -1.1%, Rev. -1.8%)
• UK Nationwide house price YY (Sep) 3.2% vs. Exp. 2.7% (Prev. 2.4%); Nationwide house price MM (Sep) 0.7% vs. Exp. 0.2% (Prev. -0.2%)
• UK Current Acc GBP (Q2) -28.397B vs. Exp. -33.0B (Prev. -20.995B, Rev. -13.76B)
• UK Mortgage Lending (Aug) 2.861B GB vs. Exp. 2.8B GB (Prev. 2.786B GB, Rev. 2.796B GB) Mortgage Approvals (Aug) 64.858k vs. Exp. 64.0k (Prev. 61.985k, Rev. 62.496k); BOE Consumer Credit (Aug) 1.295B GB vs. Exp. 1.4B GB (Prev. 1.215B GB, Rev. 1.231B GB); M4 Money Supply (Aug) -0.1% (Prev. 0.3%)
• Swedish Retail Sales MM (Aug) 0.4% (Prev. 0.5%) Swedish Retail Sales YY (Aug) 0.5% (Prev. -0.5%)
• Swiss KOF Indicator (Sep) 105.5 vs. Exp. 101.0 (Prev. 101.6, Rev. 105.0)
• Italian Flash Trd Bal Non-EU (Aug) 2.69B (Prev. 6.04B)
• Italian Consumer Price Prelim MM (Sep) -0.2% vs. Exp. -0.1% (Prev. 0.2%); CPI (EU Norm) Prelim MM (Sep) 1.2% vs. Exp. 1.2% (Prev. -0.2%); CPI (EU Norm) Prelim YY (Sep) 0.8% vs. Exp. 1.0% (Prev. 1.2%); Consumer Price Prelim YY (Sep) 0.7% vs. Exp. 0.8% (Prev. 1.1%)

NOTABLE EUROPEAN HEADLINES

• Germany is reportedly poised to abandon forecasts for economic growth this year, according to Bloomberg sources; Germany forecasts economic stagnation this year at most
• Former UK PM Sunak urged for the Tories to unite behind who succeeds him as party leader and warned that the party risks marginalisation if divisions persist, according to FT.
• Far-right Freedom Party of Austria was projected to be first in the Austrian parliamentary election with 29.3%, while the ruling conservatives are seen at 25.3% and social democrats at 20%. Furthermore, Austria’s Chancellor and conservative leader Nehammer conceded that his party failed to catch up with the far-right freedom party in the election and said talks between the parties are important once the final election result is in, while the far-right party leader Kickl said they are ready to lead a government.
• ECB's Stournaras said that based on the most recent data for inflation and the real economy, he finds it reasonable to proceed with a 25bps cut in October, or risk inflation falling below target, according to an FT interview.
• EU is to continue China EV talks even after final vote on its proposal to impose final import tariffs on Chinese EVs, via Reuters citing sources.

GEOPOLITICS

MIDDLE EAST - EUROPEAN MORNING

• "Israeli Walla website: The Israeli army completes its preparations for the ground incursion into south Lebanon", according to Sky News Arabia.
• "Iran will try to transfer thousands of fighters to the border areas between Lebanon and Syria", via Al Jazeera citing Bloomberg.
• "Iranian Foreign Ministry said we will not send forces to help Hezbollah", via Al Arabiya.
• "Reports of explosions in the Syrian capital, Damascus", via Sky News Arabia
• Hezbollah Deputy chief said will confront any possibility and are ready if Israel decides to enter by land; Hezbollah forces are ready for a ground incursion; confident Israel will not achieve its aims

MIDDLE EAST

• "Israeli special forces have been carrying out small, targeted raids into southern Lebanon, gathering intelligence and probing ahead of a possible ground incursion that could come as soon as this week," according to WSJ sources
• Israel conducted strikes on Lebanon’s capital of Beirut on Friday and targeted the headquarters of Hezbollah which killed Hezbollah leader Nasrallah.
• Israeli military said it struck dozens of Hezbollah terror targets in Lebanon including launchers that were aimed at Israeli territory, while it also announced that it killed senior Hezbollah figure Nabil Kaouk and the commander of Hezbollah’s southern front Ali Karaki.
• Israeli Walla website reports that Israeli forces are concentrated on the northern front and preparing for a ground invasion of Lebanon.
• Israeli military said sirens sounded in an area of Jerusalem following a launch from Lebanon towards Israeli territory on Saturday and reports noted that Hezbollah launched a new rocket attack on Israel after announcing the death of its leader and said the group is to continue its battle against Israel.
• Israeli military announced sirens sounded after a missile was fired from Yemen which was intercepted and Yemen’s Houthis said they fired a ballistic missile at Israel’s Ben Gurion Airport upon Israeli PM Netanyahu’s arrival, while it was also reported that the Israeli military conducted strikes on Houthi targets in Yemen on Sunday including a power plant and sea import used to import oil.
• Israeli army said it bombed dozens of rocket launchers and Hezbollah weapons storage buildings in eastern Bekaa, while the Popular Front for the Liberation of Palestine said three of its leaders were killed in an Israeli strike on Beirut.
• Israeli PM Netanyahu said on Saturday that Hezbollah’s Nasrallah was the main engine of Iran’s axis of evil and Nasrallah’s elimination was a necessary step towards changing the balance of power in the Middle East, while he added that their work is not done and there are challenging days ahead.
• Israel’s Defence Minister was reported to be holding talks on the expansion of IDF activities in the northern arena.
• Israel warned Lebanese air control that it would use force if an Iranian plane landed at Beirut Airport, while the Lebanese Transport Ministry asked the Iranian plane to stay away from Lebanese airspace and the plane obliged.
• Lebanon’s caretaker PM said that they have no option but the diplomatic option, while the Lebanese Information Minister said following a cabinet meeting that diplomatic efforts for a ceasefire are continuing. It was also reported that the head of the Lebanese government crisis cell said around 1mln Lebanese people have been displaced by Israel attacks.
• Lebanon’s top Christian cleric said Lebanon’s patriarch calls for diplomacy because war means all sides lose, while the top Christian cleric added that Nasrallah’s killing opened a wound in the hearts of the Lebanese and that the international community must work to stop the cycle of war, killing and destruction.
• Iran’s Supreme Leader Khamenei announced five days of mourning over the death of Hezbollah leader Nasrallah and said that Nasrallah’s blood will not go unavenged.
• Iran's President Pezeshkian said Lebanese fighters should not be left alone so that Israel does not attack countries of the axis of resistance one after the other.
• Iran’s Foreign Minister Araqchi said the killing of the IRGC deputy commander Nilforoushan in Lebanon will not go unanswered, according to a statement.
• Iran called for a UN Security Council meeting on Israel’s actions in Lebanon and across the region, while it warned against any attack on its diplomatic premises and representatives. Furthermore, it was stated that Iran will not hesitate to exercise its inherent rights under international law to take every measure in the defence of its vital national and security interests, according to Iran’s UN mission.
• Iran’s parliament speaker Qalibaf said the resistance will continue confronting Israel with the help of Iran, according to state media.
• US President Biden said it is time for a ceasefire now and replied that they are responding when asked if the US would respond to missile attacks on US warships in the Red Sea. It was also reported that President Biden is reviewing the status of the US military force posture in the region and directed continued diplomatic efforts to coordinate with allies and partners and de-escalate the ongoing conflicts.
• US Defense Secretary Austin spoke with Israeli Defence Minister Gallant and expressed support for Israel’s right to defend itself against Iranian-backed terrorist groups, while Austin stressed the US is determined to prevent Iran and Iranian-backed partners and proxies from exploiting the situation or expanding conflict.
• US is to reinforce defensive air support capabilities in the coming days in the Middle East and Defense Secretary Austin has put other US forces on a heightened readiness to deploy. US also ordered the departure of certain US Embassy direct hire employees and their eligible family members from Lebanon.
• US Central Command said it conducted targeted strikes in Syria which killed 37 terrorist operatives including senior leaders of ISIS and Hurras Al-Din.
• China’s Foreign Ministry said China opposes any violation of Lebanon’s sovereignty and urges the parties concerned, especially Israel, to immediately cool the situation.

OTHER

• UAE condemned a 'heinous attack' on UAE's mission in Sudan's Khartoum and said the attack was carried out by a Sudanese military aircraft.
• Russian forces took control over the settlement of Makiivka in eastern Ukraine’s Luhansk region, according to IFX.
• Russia’s Kremlin said amendments to Russia’s nuclear doctrine have been prepared and will now be formalised, according to RIA.
• Russian PM Mishustin will visit Iran on Monday and will meet with the Iranian President.
• China’s Foreign Minister Wang told the UN General Assembly that China is not throwing oil on fire or exploiting the situation for selfish gain by promoting Ukraine peace talks, while he also stated that the complete reunification of China will be achieved and that Taiwan will eventually return to the embrace of the motherland.
• North Korea said the US’s USD 8bln military aid to Ukraine is an incredible mistake, while it added that Ukrainian President Zelensky who called Pyongyang an accomplice in the Ukraine war is waging reckless political provocation, according to KCNA.
• South Korea’s Foreign Minister Cho said Russia is engaging in illegal arms trade with North Korea.

CRYPTO

• Bitcoin is softer and holds just above USD 64k; Ethereum posts losses to a similar magnitude.

APAC TRADE

• APAC stocks were mixed heading into month-end amid the backdrop of recent geopolitical escalation and as participants digested a slew of data releases, as well as China's latest support efforts and Japan's leadership transition.
• ASX 200 was led by outperformance in the commodity-related sectors as oil and metal prices benefitted from geopolitics and China's policy announcements.
• Nikkei 225 suffered heavy losses amid a firmer JPY following Ishiba's victory against Abe protege Takaichi in the LDP leadership race, while the data releases from Japan were mixed with a steeper-than-expected drop in Industrial Production but Retail Sales topped forecasts.
• Hang Seng and Shanghai Comp rallied ahead of National Day Golden Week holiday closures despite mixed PMI data from China with advances led by strength in property developers after the PBoC instructed banks to lower interest rates on existing mortgages and lower downpayments, while some Chinese cities also eased home purchase restrictions. Furthermore, the mainland index is on course for its largest gain since 2015 and is set for a bull market after China's latest policy announcements and the PBoC's Monetary Policy Committee quarterly meeting where it pledged several supportive efforts.

NOTABLE ASIA-PAC HEADLINES

• PBoC’s Monetary Policy Committee held its third-quarter meeting and stated that China’s economy still faces challenges such as insufficient demand and weak social expectations, while it added that it must accurately and effectively implement prudent monetary policy, as well as pay more attention to counter-cyclical adjustments. PBoC said it must focus on expanding domestic demand, boosting confidence and promoting a sustained recovery in the economy. Furthermore, it is to maintain a reasonable abundance in liquidity, guide reasonable credit growth, support banks to supplement capital, support the reduction of interest rates on existing mortgages and promote the stable and healthy development of the real estate market, according to Reuters,
• PBoC said all commercial banks must in batches lower interest rates on all existing mortgages by October 31st to no less than 30bps below the PBoC’s Loan Prime Rate, while it said the adjusted mortgage rates in some Chinese cities including Beijing, Shanghai and Shenzhen must not be less than the floor of their existing rates. Furthermore, Guangzhou city announced to lift all restrictions on home purchases, while Shanghai and Shenzhen announced to ease restrictions on home purchases by non-local buyers and cut the minimum downpayment ratio to no less than 15%, according to Reuters.
• PBoC injected CNY 182bln via 7-day reverse repos on Sunday with the rate lowered to 1.50% (prev. 1.70%) and injected CNY 212.1bln via 7-day reverse repos on Monday with the rate kept at 1.50%.
• China's MOFCOM said it will further improve policy targetedness and effectiveness, as well as improve the consumption structure and focus on fostering new consumption business, while it will promote the steady growth of foreign trade business.
• China’s Finance Ministry said state-owned firms’ August YTD profits fell 2.1% Y/Y.
• Japan’s Finance Minister post is likely to go to former Chief Cabinet Secretary Kato and the Foreign Minister position is likely to go to former Defence Minister Iwaya, while the Defence Minister post in the new cabinet is likely to go to former Defence Minister General Nakatani, according to Japanese press. It was also reported that newly elected ruling LDP leader Ishiba is considering a plan to conduct a Lower House election on October 27th.
• Japanese ruling LDP executive said incoming PM Ishiba proposed lower house election to be held on October 27th and to dissolve parliament October 9th

DATA RECAP

• Chinese NBS Manufacturing PMI (Sep) 49.8 vs. Exp. 49.5 (Prev. 49.1)
• Chinese NBS Non-Manufacturing PMI (Sep) 50.0 vs. Exp. 50.4 (Prev. 50.3)
• Chinese NBS Composite PMI (Sep) 50.4 (Prev. 50.1)
• Chinese Caixin Manufacturing PMI (Sep) 49.3 vs. Exp. 50.5 (Prev. 50.4)
• Chinese Caixin Services PMI (Sep) 50.3 vs. Exp. 51.6 (Prev. 51.6)
• Chinese Caixin Composite PMI (Sep) 50.3 (Prev. 51.2)
• Japanese Industrial Production MM (Aug P) -3.3% vs. Exp. -0.9% (Prev. 3.1%)
• Japanese Retail Sales YY (Aug) 2.8% vs. Exp. 2.3% (Prev. 2.6%, Rev. 2.7%)
• New Zealand ANZ Business Confidence (Sep) 60.9% (Prev. 50.6%)
• New Zealand ANZ Activity Outlook (Sep) 45.3% (Prev. 37.1%)

• APAC stocks were mixed heading into month-end amid the backdrop of recent geopolitical escalation and as participants digested a slew of data releases.
• Chinese PMI data was overall mixed but included a contraction in both official and Caixin Manufacturing PMIs.
• Reports suggest that Israeli forces are concentrated on the northern front and preparing for a ground invasion of Lebanon.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.1% after the cash market closed higher by 0.7% on Friday.
• DXY is marginally softer, antipodeans lead across the majors, EUR/USD remains on a 1.11 handle, Cable is sub-1.34.
• Looking ahead, highlights include UK GDP, German Import Prices & Retail Sales, German State/Nationwide CPI, Italian CPI, Chicago PMI, Speakers including ECB President Lagarde, Fed Chair Powell, Bowman, BoE’s Greene.

SNAPSHOTUS TRADEEQUITIES

• US stocks finished mixed on Friday following PCE data which printed either in-line or softer-than-expected with a slowdown seen in the PCE Y/Y figure but was accompanied by a slight acceleration in Core PCE Y/Y. In terms of the major indices, the Nasdaq 100 was the underperformer as the tech sector was pressured by losses in Nvidia (NVDA)(-2.1%) after China urged local companies to stay away from its AI chips, although sectors closed predominantly in the green with Energy leading the advances as the crude complex was underpinned by the geopolitical risk premium after Israel bombed Hezbollah's HQ in Beirut.
• SPX -0.13% at 5,738, NDX -0.53% at 20,009, DJIA +0.33% at 42,313, RUT +0.67% at 2,225.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bowman (Voter) said on Friday that the data points to continued economic strength.
• Fed's Musalem (Non-voter) said on Friday that the Fed should lower interest rates 'gradually', while he added the US economy could react "very vigorously" to looser financial conditions, stoking demand and prolonging the Fed's mission to beat inflation back to 2%, according to FT.

APAC TRADEEQUITIES

• APAC stocks were mixed heading into month-end amid the backdrop of recent geopolitical escalation and as participants digested a slew of data releases, as well as China's latest support efforts and Japan's leadership transition.
• ASX 200 was led by outperformance in the commodity-related sectors as oil and metal prices benefitted from geopolitics and China's policy announcements.
• Nikkei 225 suffered heavy losses amid a firmer JPY following Ishiba's victory against Abe protege Takaichi in the LDP leadership race, while the data releases from Japan were mixed with a steeper-than-expected drop in Industrial Production but Retail Sales topped forecasts.
• Hang Seng and Shanghai Comp rallied ahead of National Day Golden Week holiday closures despite mixed PMI data from China with advances led by strength in property developers after the PBoC instructed banks to lower interest rates on existing mortgages and lower downpayments, while some Chinese cities also eased home purchase restrictions. Furthermore, the mainland index is on course for its largest gain since 2015 and is set for a bull market after China's latest policy announcements and the PBoC's Monetary Policy Committee quarterly meeting where it pledged several supportive efforts.
• US equity futures (ES U/C) were contained and largely ignored the various moving parts driving the mixed price action in Asia.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.1% after the cash market closed higher by 0.7% on Friday.

FX

• DXY traded sideways amid a lack of pertinent catalysts from the US to start the week and as participants awaited the upcoming Fed speakers due later including Fed Chair Powell and dissenter Bowman, while ISM data and the latest NFP jobs report are also scheduled this week.
• EUR/USD lacked direction ahead of several inflation data releases from across the bloc, while there was some political uncertainty following the Austrian elections after the far-right FPO was projected to have finished first with 29.1% of the votes.
• GBP/USD conformed to the uneventful picture across the FX space amid light relevant newsflow and as final UK GDP data for Q2 looms.
• USD/JPY struggled to find composure after slumping on Friday in the aftermath of the LDP leadership election result but with the recovery severely limited after mixed Japanese Industrial Production and Retail Sales data.
• Antipodeans saw early upward momentum on the back of China's latest policy support announcements and easing of home purchase restrictions, but then briefly faded some of the gains following the mixed Chinese PMI data which showed a contraction in factory activity.

FIXED INCOME

• 10yr UST futures traded lacklustre and took a breather after gaining on Friday alongside the ultimately mixed PCE data.
• Bund futures remained afloat but with the upside capped by resistance around the 135.00 level and as German inflation data looms.
• 10yr JGB futures languished near Friday's worst levels after slumping in reaction to the LDP leadership result with prices also not helped by weaker results at the latest 2yr JGB auction.

COMMODITIES

• Crude futures were mildly underpinned amid the heightened geopolitical tensions after Israel's strikes on Beirut which killed Hezbollah leader Nasrallah, while it also widened its assault on Iran-backed militants and struck targets in Yemen. However, the upside was capped after WTI stalled at resistance at the USD 69.00/bbl level and amid mixed Chinese PMI data including the contraction in both official and Caixin Manufacturing PMIs.
• BSEE estimated about 3% (prev. 12%) of oil production and 1% (prev. 6%) of natural gas production in the Gulf of Mexico was shut-in on Sunday. It was also reported that the death toll from Helene reached 89 and North Carolina’s Governor said that almost 464k customers in the state remain without power.
• Spot gold failed to sustain early gains with price action jittery but contained within Friday's parameters.
• Copper futures were underpinned and iron ore futures in both China and Singapore saw early double-digit gains after China's continued support efforts and the easing of homebuying restrictions by some key cities.

CRYPTO

• Bitcoin was gradually pressured overnight and retreated to beneath the USD 65,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC’s Monetary Policy Committee held its third-quarter meeting and stated that China’s economy still faces challenges such as insufficient demand and weak social expectations, while it added that it must accurately and effectively implement prudent monetary policy, as well as pay more attention to counter-cyclical adjustments. PBoC said it must focus on expanding domestic demand, boosting confidence and promoting a sustained recovery in the economy. Furthermore, it is to maintain a reasonable abundance in liquidity, guide reasonable credit growth, support banks to supplement capital, support the reduction of interest rates on existing mortgages and promote the stable and healthy development of the real estate market, according to Reuters,
• PBoC said all commercial banks must in batches lower interest rates on all existing mortgages by October 31st to no less than 30bps below the PBoC’s Loan Prime Rate, while it said the adjusted mortgage rates in some Chinese cities including Beijing, Shanghai and Shenzhen must not be less than the floor of their existing rates. Furthermore, Guangzhou city announced to lift all restrictions on home purchases, while Shanghai and Shenzhen announced to ease restrictions on home purchases by non-local buyers and cut the minimum downpayment ratio to no less than 15%, according to Reuters.
• PBoC injected CNY 182bln via 7-day reverse repos on Sunday with the rate lowered to 1.50% (prev. 1.70%) and injected CNY 212.1bln via 7-day reverse repos on Monday with the rate kept at 1.50%.
• China's MOFCOM said it will further improve policy targetedness and effectiveness, as well as improve the consumption structure and focus on fostering new consumption business, while it will promote the steady growth of foreign trade business.
• China’s Finance Ministry said state-owned firms’ August YTD profits fell 2.1% Y/Y.
• Japan’s Finance Minister post is likely to go to former Chief Cabinet Secretary Kato and the Foreign Minister position is likely to go to former Defence Minister Iwaya, while the Defence Minister post in the new cabinet is likely to go to former Defence Minister General Nakatani, according to Japanese press. It was also reported that newly elected ruling LDP leader Ishiba is considering a plan to conduct a Lower House election on October 27th.

DATA RECAP

• Chinese NBS Manufacturing PMI (Sep) 49.8 vs. Exp. 49.5 (Prev. 49.1)
• Chinese NBS Non-Manufacturing PMI (Sep) 50.0 vs. Exp. 50.4 (Prev. 50.3)
• Chinese NBS Composite PMI (Sep) 50.4 (Prev. 50.1)
• Chinese Caixin Manufacturing PMI (Sep) 49.3 vs. Exp. 50.5 (Prev. 50.4)
• Chinese Caixin Services PMI (Sep) 50.3 vs. Exp. 51.6 (Prev. 51.6)
• Chinese Caixin Composite PMI (Sep) 50.3 (Prev. 51.2)
• Japanese Industrial Production MM (Aug P) -3.3% vs. Exp. -0.9% (Prev. 3.1%)
• Japanese Retail Sales YY (Aug) 2.8% vs. Exp. 2.3% (Prev. 2.6%, Rev. 2.7%)
• New Zealand ANZ Business Confidence (Sep) 60.9% (Prev. 50.6%)
• New Zealand ANZ Activity Outlook (Sep) 45.3% (Prev. 37.1%)

GEOPOLITICS

MIDDLE EAST

• Israel conducted strikes on Lebanon’s capital of Beirut on Friday and targeted the headquarters of Hezbollah which killed Hezbollah leader Nasrallah.
• Israeli military said it struck dozens of Hezbollah terror targets in Lebanon including launchers that were aimed at Israeli territory, while it also announced that it killed senior Hezbollah figure Nabil Kaouk and the commander of Hezbollah’s southern front Ali Karaki.
• Israeli Walla website reports that Israeli forces are concentrated on the northern front and preparing for a ground invasion of Lebanon.
• Israeli military said sirens sounded in an area of Jerusalem following a launch from Lebanon towards Israeli territory on Saturday and reports noted that Hezbollah launched a new rocket attack on Israel after announcing the death of its leader and said the group is to continue its battle against Israel.
• Israeli military announced sirens sounded after a missile was fired from Yemen which was intercepted and Yemen’s Houthis said they fired a ballistic missile at Israel’s Ben Gurion Airport upon Israeli PM Netanyahu’s arrival, while it was also reported that the Israeli military conducted strikes on Houthi targets in Yemen on Sunday including a power plant and sea import used to import oil.
• Israeli army said it bombed dozens of rocket launchers and Hezbollah weapons storage buildings in eastern Bekaa, while the Popular Front for the Liberation of Palestine said three of its leaders were killed in an Israeli strike on Beirut.
• Israeli PM Netanyahu said on Saturday that Hezbollah’s Nasrallah was the main engine of Iran’s axis of evil and Nasrallah’s elimination was a necessary step towards changing the balance of power in the Middle East, while he added that their work is not done and there are challenging days ahead.
• Israel’s Defence Minister was reported to be holding talks on the expansion of IDF activities in the northern arena.
• Israel warned Lebanese air control that it would use force if an Iranian plane landed at Beirut Airport, while the Lebanese Transport Ministry asked the Iranian plane to stay away from Lebanese airspace and the plane obliged.
• Lebanon’s caretaker PM said that they have no option but the diplomatic option, while the Lebanese Information Minister said following a cabinet meeting that diplomatic efforts for a ceasefire are continuing. It was also reported that the head of the Lebanese government crisis cell said around 1mln Lebanese people have been displaced by Israel attacks.
• Lebanon’s top Christian cleric said Lebanon’s patriarch calls for diplomacy because war means all sides lose, while the top Christian cleric added that Nasrallah’s killing opened a wound in the hearts of the Lebanese and that the international community must work to stop the cycle of war, killing and destruction.
• Iran’s Supreme Leader Khamenei announced five days of mourning over the death of Hezbollah leader Nasrallah and said that Nasrallah’s blood will not go unavenged.
• Iran's President Pezeshkian said Lebanese fighters should not be left alone so that Israel does not attack countries of the axis of resistance one after the other.
• Iran’s Foreign Minister Araqchi said the killing of the IRGC deputy commander Nilforoushan in Lebanon will not go unanswered, according to a statement.
• Iran called for a UN Security Council meeting on Israel’s actions in Lebanon and across the region, while it warned against any attack on its diplomatic premises and representatives. Furthermore, it was stated that Iran will not hesitate to exercise its inherent rights under international law to take every measure in the defence of its vital national and security interests, according to Iran’s UN mission.
• Iran’s parliament speaker Qalibaf said the resistance will continue confronting Israel with the help of Iran, according to state media.
• US President Biden said it is time for a ceasefire now and replied that they are responding when asked if the US would respond to missile attacks on US warships in the Red Sea. It was also reported that President Biden is reviewing the status of the US military force posture in the region and directed continued diplomatic efforts to coordinate with allies and partners and de-escalate the ongoing conflicts.
• US Defense Secretary Austin spoke with Israeli Defence Minister Gallant and expressed support for Israel’s right to defend itself against Iranian-backed terrorist groups, while Austin stressed the US is determined to prevent Iran and Iranian-backed partners and proxies from exploiting the situation or expanding conflict.
• US is to reinforce defensive air support capabilities in the coming days in the Middle East and Defense Secretary Austin has put other US forces on a heightened readiness to deploy. US also ordered the departure of certain US Embassy direct hire employees and their eligible family members from Lebanon.
• US Central Command said it conducted targeted strikes in Syria which killed 37 terrorist operatives including senior leaders of ISIS and Hurras Al-Din.
• China’s Foreign Ministry said China opposes any violation of Lebanon’s sovereignty and urges the parties concerned, especially Israel, to immediately cool the situation.

OTHER

• UAE condemned a 'heinous attack' on UAE's mission in Sudan's Khartoum and said the attack was carried out by a Sudanese military aircraft.
• Russian forces took control over the settlement of Makiivka in eastern Ukraine’s Luhansk region, according to IFX.
• Russia’s Kremlin said amendments to Russia’s nuclear doctrine have been prepared and will now be formalised, according to RIA.
• Russian PM Mishustin will visit Iran on Monday and will meet with the Iranian President.
• China’s Foreign Minister Wang told the UN General Assembly that China is not throwing oil on fire or exploiting the situation for selfish gain by promoting Ukraine peace talks, while he also stated that the complete reunification of China will be achieved and that Taiwan will eventually return to the embrace of the motherland.
• North Korea said the US’s USD 8bln military aid to Ukraine is an incredible mistake, while it added that Ukrainian President Zelensky who called Pyongyang an accomplice in the Ukraine war is waging reckless political provocation, according to KCNA.
• South Korea’s Foreign Minister Cho said Russia is engaging in illegal arms trade with North Korea.

EU/UK

NOTABLE HEADLINES

• Former UK PM Sunak urged for the Tories to unite behind who succeeds him as party leader and warned that the party risks marginalisation if divisions persist, according to FT.
• Far-right Freedom Party of Austria was projected to be first in the Austrian parliamentary election with 29.3%, while the ruling conservatives are seen at 25.3% and social democrats at 20%. Furthermore, Austria’s Chancellor and conservative leader Nehammer conceded that his party failed to catch up with the far-right freedom party in the election and said talks between the parties are important once the final election result is in, while the far-right party leader Kickl said they are ready to lead a government.
• ECB's Stournaras said that based on the most recent data for inflation and the real economy, he finds it reasonable to proceed with a 25bps cut in October, or risk inflation falling below target, according to an FT interview.

• European bourses are very modestly firmer, whilst US equity futures are mixed ahead of US PCE
• Dollar is stronger vs peers, but losing vs JPY after hawkish candidate Ishiba won the Japanese LDP leadership race to become the next Japanese PM
• Bunds outperform following softer-than-expected inflation metrics out of Spain & France; figures which led to further dovish repricing for the ECB’s October meeting
• Crude oil is modestly firmer with the geopolitical landscape remaining tense, precious metals are subdued whilst base metals are mixed
• Looking ahead, US PCE, UoM Sentiment (Final), Fed’s Collins, Kugler & Bowman

EUROPEAN TRADEEQUITIES

• European bourses, Stoxx 600 (+0.2%) are modestly firmer, with the mood somewhat tentative ahead of US PCE. The gains across indices are relatively broad-based and range from +0.1% to +0.4%. Sub-forecast inflation metrics from France and Spain did little to the equity complex despite a more dovish shift in ECB market pricing.
• European sectors are mixed; China-exposed sectors (Luxury, Basic Resources) initially outperformed, but Basic Resources has slowly drifted towards the middle of the pack. Banks and Insurance are at the foot of the pile.
• US equity futures (ES -0.1%, NQ -0.3%, YM -0.1% RTY U/C) are mixed, with the RTY holding modest gains whilst peers remains subdued ahead of the US PCE.
• Click for the sessions European pre-market equity newsflow
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FX

• USD is stronger vs. peers with the exception of the JPY (see below). US macro focus today will be on the August PCE numbers. For now, DXY remains stuck on a 100 handle within a 100.45-88 trading band.
• EUR is softer vs. the USD following soft inflation metrics from France and Spain ahead of next week's EZ-wide print. EUR/USD has been as low as 1.1125 which near-enough matches yesterday's low.
• GBP is on the backfoot vs. the USD, giving back some of the gains seen during yesterday's risk-on session. Cable is currently tucked within yesterday's 1.3312-1.3434 range.
• An eventful session for the JPY amid the LDP leadership race whereby initial indications pointed towards a potential victory for dovish candidate Takaichi and subsequently saw USD/JPY soar towards an overnight peak at 146.49. However, Ishiba's victory in the run-off sparked a hawkish reaction in the JPY and dragged USD/JPY to a 142.80 base; lowest level since September 20th.
• Both Antipodes are softer vs. the USD and giving back some of yesterday's gains. AUD/USD has slipped back onto a 0.68 handle after venturing as high as 0.6904 yesterday.
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FIXED INCOME

• USTs are firmer but to a lesser extent than peers given that price action on the other side of the Atlantic is more a by-product of EZ-specific events. From a US perspective, attention will be on the August PCE data. The 10yr yield is currently tucked within yesterday's 3.754-3.821% range.
• Bunds are on a firmer footing, lifted by the lower-than-expected inflation metrics out of Spain and France; figures which has sparked some dovish repricing seen for the ECB's October meeting. The German 10yr yield has printed a new low for the week at 2.11%.
• Gilts are being swept up by the broader bullish moves seen across global counterparts. Fresh UK-specific drivers have been lacking during today's session. The UK 10yr yield is now back below the 4% mark at 3.98%.
• Italy sells EUR 7bln vs exp. EUR 5.75-7bln 3.00% 2029, 3.85% 2035, 3.00% 2029 BTP & EUR 1.75bln vs exp. EUR 1.25-1.75bln 2030 CCTeu
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COMMODITIES

• Upward bias in crude prices this morning following the firm APAC performance amid the Chinese stimulus announced earlier in the week, whilst the geopolitical landscape remains tense. Brent sits in a USD 70.99-72.14/bbl range.
• Subdued trade across precious metals following the prior day's volatility, with traders awaiting the US PCE data. XAU resides in a USD 2,661-2,672.23/oz range.
• Mixed trade across base metals as the complex takes a breather from the rally seen after China unveiled its stimulus bazooka on Tuesday, although base metals hold onto a bulk of its recent gains ahead of US PCE.
• BSEE reported that 25% (prev. 29%) of oil production and 20% (prev. 17%) of natgas production in the Gulf of Mexico is shut (prev. 17%) in response to Hurricane Helene (prev. 29%).
• NHC said hurricane Helene is accelerating North-Northeast through Georgia
• Click for a detailed summary

NOTABLE DATA RECAP

• French CPI Prelim MM NSA (Sep) -1.2% vs. Exp. -0.70% (Prev. 0.50%); CPI Prelim YY NSA (Sep) 1.2% vs. Exp. 1.60% (Prev. 1.80%); Producer Prices YY (Aug) -6.3% (Prev. -5.40%) Consumer Spending MM (Aug) 0.2% vs. Exp. -0.10% (Prev. 0.30%) CPI (EU Norm) Prelim YY (Sep) 1.5% vs. Exp. 2.0% (Prev. 2.2%) Consumer Spending MM (Aug) 0.2% vs. Exp. -0.1% (Prev. 0.3%, Rev. 0.2%) Producer Prices MM (Aug) 0.2% (Prev. 0.2%, Rev. 0.3%).
• Spanish HICP Flash MM (Sep) -0.10% vs. Exp. 0.00% (Prev. 0.00%); CPI MM Flash NSA (Sep) -0.60% vs. Exp. -0.10% (Prev. 0.00%); CPI YY Flash NSA (Sep) 1.50% vs. Exp. 1.90% (Prev. 2.30%); core 2.40% vs. Exp. 2.80% (Prev. 2.70%); HICP Flash YY (Sep) 1.7% vs. Exp. 1.9% (Prev. 2.4%); Spanish GDP Final QQ (Q2) 0.8% vs. Exp. 0.8% (Prev. 0.8%); GDP YY (Q2) 3.1% vs. Exp. 2.9% (Prev. 2.9%); GDP Final QQ (Q2) 0.8% vs. Exp. 0.8% (Prev. 0.8%).
• German Unemployment Rate SA (Sep) 6.0% vs. Exp. 6.0% (Prev. 6.0%); Unemployment Chg SA (Sep) 17.0k vs. Exp. 12.0k (Prev. 2.0k); Unemployment Total SA (Sep) 2.823M (Prev. 2.801M); Unemployment Total NSA (Sep) 2.806M (Prev. 2.872M).
• Italian Industrial Sales YY WDA (Jul) -4.7% (Prev. -3.7%); Industrial Sales MM SA (Jul) -0.4% (Prev. 0.1%)
• EU Industrial Sentiment (Sep) -10.9 vs. Exp. -9.9 (Prev. -9.7, Rev. -9.9); Services Sentiment (Sep) 6.7 vs. Exp. 5.9 (Prev. 6.3, Rev. 6.4); Economic Sentiment (Sep) 96.2 vs. Exp. 96.5 (Prev. 96.6, Rev. 96.5); Selling Price Expec (Sep) 6.2 (Prev. 6.1, Rev. 6.2); Cons Infl Expec (Sep) 10.9 (Prev. 11.3)

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Reeves is prepared to water down the planned Budget tax raid on 'non-doms' amid fears it may fail to raise any money, according to people familiar with the matter cited by FT.
• BNP now sees the ECB cutting interest rates by 25bps in October.
• ECB Consumer Expectations Survey (Aug): See inflation in next 12 months at 2.7% (prev. 2.8%); 3y ahead sees 2.3% (prev. 2.4%)

NOTABLE US HEADLINES

• Fed's Cook (voter) said she wholeheartedly supported the 50bps rate cut and on the path of policy, will look carefully at the data, outlook and balance of risks. Cook said normalisation of the economy, particularly of inflation, is quite welcome and the labour market is solid but has cooled noticeably and it may become more difficult for some to find employment. Furthermore, she sees significant easing in inflationary pressure, as well as noted that upside risks to inflation have diminished and downside risks to employment have increased.
• NY Fed's Perli said there is plenty of room to further reduce the Fed's balance sheet and noted the pressures in the repo market do not currently appear to be close to the point of affecting the federal funds rate, according to Reuters.
• US President Biden signed the three-month government funding bill on Thursday to avert an imminent shutdown.

GEOPOLITICS

MIDDLE EAST

• "Jordanian army announces the downing of a drone that tried to infiltrate Jordanian territory in the southern military region", according to Sky News Arabia
• "IRNA: Iran's foreign minister said Tehran will not remain idle towards all-out war in Lebanon", according to Al Arabiya.
• "Syrian News Agency: 5 soldiers were killed in an Israeli aggression targeting a military site on the Syrian-Lebanese border", according to Al Jazeera
• "An informed source for Sky News Arabia: The truce initiative has not yet been rejected and the effort continues to reach a truce for 21 days", according to Sky News Arabia.
• Israeli PM Netanyahu said he had a meeting on Thursday to discuss the US ceasefire initiative and that they will continue these discussions in the coming days, according to Reuters.
• Lebanese Parliament Speaker Nabih Berri told L'Orient Le Jour newspaper that Israeli PM Netanyahu lies to everyone and retracted his approval of the initiative, while Berri said that they adhere to the revival of the demand for a ceasefire in Gaza as in Lebanon.
• US and Israeli officials held talks on Lebanon in New York on Thursday and discussions continued for a 21-day ceasefire, according to the White House. It was later reported that Secretary of State Blinken and Israeli Minister of Strategic Affairs Dermer emphasised the need for a ceasefire and Blinken underscored that further escalation of the conflict will only make that objective more difficult.
• French President Macron said the US has to increase pressure on Israeli PM Netanyahu to agree to the 21-day ceasefire, while he added Israel cannot invade Lebanon today and it would be a huge mistake, according to an interview with CBC
• Former US President Trump responded that he would do that when asked if he would make a deal with Iran if he is elected, while he also commented that the war in the Middle East has to end.
• Israeli Walla website stated the Israeli army attacked 1,600 targets in Lebanon during the past day, according to Al Jazeera.
• Israeli Air Force Chief said they will stop any arms transfer by Iran to Hezbollah and are preparing to assist troops in ground operations against Hezbollah.
• Israeli army said missiles were fired from Yemen and the interceptor was launched, while it added that the 'Arrow' aerial defence system made a successful interception.

OTHER

• Former US President Trump said he will meet with Ukrainian President Zelensky on Friday and that he has some disagreements with Zelensky, while he responded "We'll see what happens" when asked if Ukraine should hand over some land to Russia to end the war.
• Romanian Defence Ministry said it is possible one Russian drone from the overnight attack on Ukraine entered Romanian air space for under three minutes.

CRYPTO

• Bitcoin edges higher and climbs above USD 65.5k, benefiting from the positive risk tone seen in recent sessions.

APAC TRADE

• APAC stocks followed suit to the gains on Wall St where sentiment was underpinned and the S&P 500 extended on record highs owing to China's policy support and strong US data, while Chinese stimulus remained the main driving force overnight.
• ASX 200 was rangebound with strength in mining, materials and resources was counterbalanced by losses in defensives, while consumer stocks were also pressured with Star Entertainment shares down by more than 40% after its recent substantial FY loss.
• Nikkei 225 rallied at the open and climbed above the 39,000 level owing to a weaker currency. The index then pared the majority of its early gains as the JPY nursed some of its losses and with participants awaiting the LDP leadership vote, but then caught a second wind in late trade as dovish LPD candidate Takaichi is said to face Ishiba in Japan's LDP runoff.
• Hang Seng and Shanghai Comp rallied again owing to China's stimulus drive with China to issue USD 284bln of sovereign debt as part of fresh fiscal stimulus, while the securities regulator also issued guidance to promote long-term capital entering the market. Furthermore, the PBoC announced its 50bps RRR cut took effect today and set the 7-day reverse repo rate at 1.50% vs prev. 1.70%, as previously guided earlier this week.

NOTABLE ASIA-PAC HEADLINES

• PBoC announced its 50bps RRR cut took effect from today and said the weighted average RRR for financial institutions was now at 6.6% after the new cut, while it set the 7-day reverse repo rate at 1.50% vs prev. 1.70%, as previously guided earlier this week and injected CNY 278bln via 14-day reverse repos with the rate lowered to 1.65% from 1.85%.
• Shanghai and Shenzhen to lift key remaining home purchases curbs to boost market; to remove curbs on non-local residents residents from buying homes; to scrap limits on number of homes Chinese can buy, via Reuters citing sources. Expected to announce the changes in the coming weeks. Capital Beijing considers limiting similar restrictions expect in key districts.
• China's PBoC said the impact of the recently announced incremental interest rate policy on banks' net interest margins remains neutral overall.
• Chinese Aug Services Trade deficit USD 21.3bln; Jan-Aug Services Trade Deficit USD 164.9bln, according FX regulator

Japanese LDP Leadership Election:

• Ex-Defense Minister Ishiba (hawkish candidate) wins Japan's ruling party leadership election and to become the nation's next Prime Minister, Ishiba received 215 votes (208 majority), Takaichi (dovish candidate) received 194 votes
• Japan Economic Security Minister Takaichi gets 181 votes in ruling party leadership race and will face off Ishiba in Japan LDP runoff. Ex-Defence Minister Ishiba gets 154 votes in LDP leadership race, both short of a majority, according to Reuters. Run-off results expected around 07:00BST. Note: Takaichi is an advocate for BoJ easing, and she had previously noted that the BoJ hiked rates too soon.
• Incoming Japanese PM Ishiba says he aims to accelerate Kishida's new capitalism pledge; "we must ensure to exit from deflation"; plans to hold lower house election at an early timing. There is a time lag for wage growth to exceed inflation; must scrutinise what will be the most effective step to cushion the blow from rising inflation.

DATA RECAP

• Chinese Industrial Profit YTD YY (Aug) 0.5% (Prev. 3.6%)
• Chinese Industrial Profits YY (Aug) -17.8% Y/Y (prev. 4.1%)
• Tokyo CPI YY (Sep) 2.2% vs. Exp. 2.2% (Prev. 2.6%)
• Tokyo CPI Ex. Fresh Food YY (Sep) 2.0% vs. Exp. 2.0% (Prev. 2.4%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Sep) 1.6% vs. Exp. 1.6% (Prev. 1.6%)

• APAC stocks followed suit to the gains on Wall St; Chinese stimulus remained the main driving force overnight.
• Nikkei 225 and USD/JPY upside were seen as dovish LPD candidate Takaichi is said to face Ishiba in Japan's LDP runoff.
• Fed's Cook (voter) said upside risks to inflation have diminished and downside risks to employment have increased.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.3% after the cash market closed higher by 2.4% on Thursday.
• Looking ahead, highlights include French & Spanish CPI, German Unemployment Rate, EZ Sentiment, UoM Sentiment (Final), Speakers including ECB’s Lane & Cipollone, Fed’s Collins, Kugler & Bowman, and Supply from Italy.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

US TRADEEQUITIES

• US stocks finished higher in which the S&P 500 notched another record close with early momentum seen following China's continued stimulus efforts and with tailwinds from recent encouraging data releases, although the major indices were off their intraday highs amid lingering geopolitical concerns after Israel rejected the 21-day ceasefire proposal and continued its strikes on Lebanon.
• SPX +0.4% at 5,745, NDX +0.7% at 20,115, DJIA +0.6% at 42,175, RUT +0.6% at 2,210.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Cook (voter) said she wholeheartedly supported the 50bps rate cut and on the path of policy, will look carefully at the data, outlook and balance of risks. Cook said normalisation of the economy, particularly of inflation, is quite welcome and the labour market is solid but has cooled noticeably and it may become more difficult for some to find employment. Furthermore, she sees significant easing in inflationary pressure, as well as noted that upside risks to inflation have diminished and downside risks to employment have increased.
• NY Fed's Perli said there is plenty of room to further reduce the Fed's balance sheet and noted the pressures in the repo market do not currently appear to be close to the point of affecting the federal funds rate, according to Reuters.
• US President Biden signed the three-month government funding bill on Thursday to avert an imminent shutdown.

APAC TRADEEQUITIES

• APAC stocks followed suit to the gains on Wall St where sentiment was underpinned and the S&P 500 extended on record highs owing to China's policy support and strong US data, while Chinese stimulus remained the main driving force overnight.
• ASX 200 was rangebound with strength in mining, materials and resources was counterbalanced by losses in defensives, while consumer stocks were also pressured with Star Entertainment shares down by more than 40% after its recent substantial FY loss.
• Nikkei 225 rallied at the open and climbed above the 39,000 level owing to a weaker currency. The index then pared the majority of its early gains as the JPY nursed some of its losses and with participants awaiting the LDP leadership vote, but then caught a second wind in late trade as dovish LPD candidate Takaichi is said to face Ishiba in Japan's LDP runoff.
• Hang Seng and Shanghai Comp rallied again owing to China's stimulus drive with China to issue USD 284bln of sovereign debt as part of fresh fiscal stimulus, while the securities regulator also issued guidance to promote long-term capital entering the market. Furthermore, the PBoC announced its 50bps RRR cut took effect today and set the 7-day reverse repo rate at 1.50% vs prev. 1.70%, as previously guided earlier this week.
• US equity futures were uninspired amid a lack of fresh pertinent drivers and as markets braced for the looming PCE data.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.3% after the cash market closed higher by 2.4% on Thursday.

FX

• DXY attempted to claw back some lost ground after suffering yesterday against its major peers despite recent encouraging data releases from the US. Furthermore, the recent slew of scheduled Fed speakers proved to be a damp squib as many refrained from commenting on monetary policy or the economy, while the focus for the dollar now shifts to the Fed's preferred inflation metric.
• EUR/USD marginally eased back overnight but retains a firm footing at the 1.1100 territory.
• GBP/USD partially faded some of yesterday's advances and trickled beneath the 1.3400 level.
• USD/JPY continued its upward momentum but then hit resistance around 145.50 which it later revisited and breached. Further upside in the pair was seen after dovish LPD candidate Takaichi is said to face Ishiba in Japan's LDP runoff.
• Antipodeans softened overnight after the prior day's rally with headwinds from a weaker CNH post-China rate cuts.
• Mexican Central Bank cut its interest rate by 25bps to 10.50% vs. Exp. 10.50% (Prev. 10.75%) through a 4-1 vote in favour of the 25bps cut (prev. 3-2), while it stated that looking ahead, the Board expects the inflationary environment will allow further reference rate adjustments (prev. said may allow).

FIXED INCOME

• 10yr UST futures traded lacklustre after slipping yesterday owing to firm US data releases.
• Bund futures were uneventful as trade calmed down following the recent whipsawing.
• 10yr JGB futures kept afloat but lacked conviction after Tokyo CPI data matched estimates and ahead of the LDP leadership election result, but rose in late trade as dovish LPD candidate Takaichi is said to face Ishiba in Japan's LDP runoff.

COMMODITIES

• Crude futures remained constrained after this week's selling despite the positive risk tone and Israel's rejection of a ceasefire proposal.
• BSEE reported that 25% (prev. 29%) of oil production and 20% (prev. 17%) of natgas production in the Gulf of Mexico is shut (prev. 17%) in response to Hurricane Helene.
• Spot gold was rangebound after the recent roster of Fed speakers proved to be anticlimactic, while the focus turns to PCE data.
• Copper futures were little changed and took a breather after the recent stimulus-spurred advances.

CRYPTO

• Bitcoin traded indecisively and briefly dipped beneath the USD 65,000 level before staging a mild recovery.

NOTABLE ASIA-PAC HEADLINES

• Japan Economic Security Minister Takaichi gets 181 votes in ruling party leadership race and will face off Ishiba in Japan LDP runoff. Ex-Defence Minister Ishiba gets 154 votes in LDP leadership race, both short of a majority, according to Reuters. Run-off results expected around 07:00BST. Note: Takaichi is an advocate for BoJ easing, and she had previously noted that the BoJ hiked rates too soon.
• PBoC announced its 50bps RRR cut took effect from today and said the weighted average RRR for financial institutions was now at 6.6% after the new cut, while it set the 7-day reverse repo rate at 1.50% vs prev. 1.70%, as previously guided earlier this week and injected CNY 278bln via 14-day reverse repos with the rate lowered to 1.65% from 1.85%.

DATA RECAP

• Chinese Industrial Profit YTD YY (Aug) 0.5% (Prev. 3.6%)
• Chinese Industrial Profits YY (Aug) -17.8% Y/Y (prev. 4.1%)
• Tokyo CPI YY (Sep) 2.2% vs. Exp. 2.2% (Prev. 2.6%)
• Tokyo CPI Ex. Fresh Food YY (Sep) 2.0% vs. Exp. 2.0% (Prev. 2.4%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Sep) 1.6% vs. Exp. 1.6% (Prev. 1.6%)

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu said he had a meeting on Thursday to discuss the US ceasefire initiative and that they will continue these discussions in the coming days, according to Reuters.
• Lebanese Parliament Speaker Nabih Berri told L'Orient Le Jour newspaper that Israeli PM Netanyahu lies to everyone and retracted his approval of the initiative, while Berri said that they adhere to the revival of the demand for a ceasefire in Gaza as in Lebanon.
• US and Israeli officials held talks on Lebanon in New York on Thursday and discussions continued for a 21-day ceasefire, according to the White House. It was later reported that Secretary of State Blinken and Israeli Minister of Strategic Affairs Dermer emphasised the need for a ceasefire and Blinken underscored that further escalation of the conflict will only make that objective more difficult.
• French President Macron said the US has to increase pressure on Israeli PM Netanyahu to agree to the 21-day ceasefire, while he added Israel cannot invade Lebanon today and it would be a huge mistake, according to an interview with CBC
• Former US President Trump responded that he would do that when asked if he would make a deal with Iran if he is elected, while he also commented that the war in the Middle East has to end.
• Israeli Walla website stated the Israeli army attacked 1,600 targets in Lebanon during the past day, according to Al Jazeera.
• Israeli Air Force Chief said they will stop any arms transfer by Iran to Hezbollah and are preparing to assist troops in ground operations against Hezbollah.
• Israeli army said missiles were fired from Yemen and the interceptor was launched, while it added that the 'Arrow' aerial defence system made a successful interception.

OTHER

• US President Biden said he will strengthen Ukraine's position in future negotiations by expediting funding during his term and will deal with Ukraine's future defence needs.
• US VP Harris said her support for Ukraine is unwavering and must stand for international order and norms, while she added if they allow aggressors to take land with impunity, Russian President Putin could set his sights on Poland, the Baltic states and NATO allies.
• Former US President Trump said he will meet with Ukrainian President Zelensky on Friday and that he has some disagreements with Zelensky, while he responded "We'll see what happens" when asked if Ukraine should hand over some land to Russia to end the war.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves is prepared to water down the planned Budget tax raid on 'non-doms' amid fears it may fail to raise any money, according to people familiar with the matter cited by FT.

• Equities are entirely in the green, with optimism lifted amid Chinese stimulus efforts; MU +15% pre-market after strong earnings and solid guidance
• Dollar is softer, Antipodeans benefit from the risk-tone but weighs on the JPY
• USTs are flat, EGBs benefit on reports that ECB doves are pushing for an October cut and amid reports surrounding France’s fiscal situation
• Crude tumbles on constructive geopolitical updates, XAU and base metals benefit from the softer Dollar and positive risk tone
• "Senior US officials have said that they expect a ceasefire deal to be implemented "in the coming hours" along Israel-Lebanon border", according to Walla News' Elster
• Looking ahead, US Durable Goods, GDP Final (Q2), Core PCE (Q2), IJC, Banxico Policy Announcement, Speakers including ECB’s Lagarde, de Guindos & Schnabel, Fed’s Powell, Williams, Collins, Kugler, Bowman, Barr, Kashkari & Cook, Supply from the US

EUROPEAN TRADEEQUITIES

• European bourses, Stoxx600 (+1.2%) are entirely in the green, with sentiment lifted from further Chinese stimulus efforts. Price action today has only really moved upwards, initially opening on a strong footing and gradually edging higher as the morning progressed.
• European sectors hold a strong positive bias; Consumer Products tops the pile, benefiting from significant strength in the Luxury sector amid further Chinese stimulus efforts; Basic Resources and Tech also gain. Energy is by far the clear underperformer, dragged down by losses in the crude complex.
• US Equity Futures (ES +0.8%, NQ +1.4%, RTY +0.9%) are entirely in the green, taking impetus from a strong European session, with sentiment lifted by further Chinese stimulus efforts; the tech-heavy NQ outperforms, owing to very strong Micron (+15% pre-market) results where it beat on top- and bottom-lines and provided solid guidance.
• Click for the sessions European pre-market equity newsflow
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FX

• USD is broadly negative vs. peers (ex-JPY) in today's risk-on environment. DXY is currently towards the top end of yesterday's 100.22-99 range.
• EUR/USD is hovering just above yesterday's 1.1121 low that was printed alongside a resurgence in the USD which dragged the pair back from its 1.1214 YTD high. EUR/USD saw a very modest dovish reaction to Reuters reporting that ECB's October rate decision is now "wide-open" on account of recent soft data, which stands in contrast to sources after the Sept.
• Cable is attempting to claw back some of yesterday's lost ground which saw the pair dragged lower from its multi-year peak at 1.3429.
• JPY struggling vs. the USD once again with the pair rising as high as 145.20 during today's session. The next upside target comes via the 4th September high at 145.55.
• Both antipodes are at the top of the G10 leaderboard and enjoying the current risk-on environment. AUD/USD remains supported by the general positivity surrounding China after this week's stimulus efforts by officials.
• EUR/CHF immediately fell from 0.9492 to 0.9436 following the SNB's decision to cut rates by 25bps to 1.00%. A move which partially pared as the statement made clear that they are willing to intervene in the FX market as necessary and pointed to additional cuts being possible.
• PBoC set USD/CNY mid-point at 7.0354 vs exp. 7.0367 (prev. 7.0202).
• Click for a detailed summary

FIXED INCOME

• USTs are contained with no follow through to the European-related updates. A particularly packed US agenda with 7yr supply (follows mixed 2yr & 5yr thus far) and numerous data points (quarterly PCE/GDP & weekly Claims) but the focal point is the speaker schedule with Fed’s Powell and Williams. USTs are holding within narrow 114-15+ to 114-19 bounds.
• Bunds spent the first part of the session in proximity to the unchanged mark and generally unreactive to today's geopolitical updates. Bunds saw some very modest upside to reports that ECB doves were pushing for an October cut, taking it to an initial 134.71 peak. Thereafter, further impetus was driven by reports around France’s fiscal situation, which contributed to the bid in Bunds to a 134.78 peak.
• OATs were lifted out of modest losses following the aforementioned ECB sources and then once again on reports that France will be requesting the EU for a two-year extension. OAT-Bund 10yr yield spread has widened above 80bps to its highest since early August
• Gilts are slightly softer with no real follow through to the above ECB sources and UK specifics somewhat light. Holding around the 98.55 opening mark, briefly dipped to a fresh WTD base of 98.41.
• Click for a detailed summary

COMMODITIES

• Hefty losses in the crude complex this morning emanated from an unwind of risk premium from constructive geopolitical updates, in which reports suggested that senior US officials anticipate a ceasefire deal along the Israel-Lebanon border "in the coming hours". Benchmarks as low as USD 67.16/bbl and USD 70.72/bbl for WTI and Brent respectively.
• Precious metals are buoyed by the softer Dollar but spot gold sees the shallowest gains (+0.5%) vs silver (+1.0%) and palladium (+2.4%), potentially amid the constructive geopoltical updates.
• Base metals are firmer across the board amid the softer Dollar and risk-on mood across the market, with sentiment also seeing continued tailwinds from China's stimulus bazooka. 3M LME copper trades towards the top of a 9,781.00-9,922.50/t range.
• Saudi Arabia is reportedly prepared to abandon its unofficial USD 100 crude target in order to regain market share, via FT citing sources; add, in a sign that Saudi is resigned to a period of lower oil prices. Sources add that Saudi is committed to bringing back production as planned on 1st December. Reportedly unwilling to continue surrendering market share to other producers.
• Russia's Deputy Energy Minister Sorokin says Russia see oil production costs increasing as "Oil will be harder to extract".
• BP (BP/ LN) said it secured offshore facilities and removed some non-essential personnel from Argos, Atlantis, Mad Dog, Na Kika, and Thunder Horse platforms, while it is working toward safely ramping up production across its Gulf of Mexico portfolio.
• Citi forecasts Brent at USD 74/bbl in Q4-2024; sees overall fundamental supply and demand bearishness winning out over time, with a forecast for USD 60/bbl for 2025.
• Iraq's August total oil exports at 105.8mln barrels. according to the oil ministry cited by Reuters
• Click for a detailed summary

NOTABLE DATA RECAP

• Swedish Overall Sentiment (Sep) 94.9 (Prev. 94.7); Manufacturing Confidence (Sep) 94.2 (Prev. 97.1); Total Industry Sentiment (Sep) 96.5 (Prev. 95.0); Consumer Confidence SA (Sep) 99.5 (Prev. 96.3)
• Spanish Retail Sales YY (Aug) 2.3% (Prev. 1.0%, Rev. 1.1%)
• Italian Consumer Confidence (Sep) 98.3 vs. Exp. 97.0 (Prev. 96.1); Mfg Business Confidence (Sep) 86.7 vs. Exp. 87.1 (Prev. 87.1, Rev. 87.0)
• EU Money-M3 Annual Grwth (Aug) 2.9% vs. Exp. 2.6% (Prev. 2.3%); Loans to Non-Fin (Aug) 0.8% (Prev. 0.6%); Loans to Households (Aug) 0.6% (Prev. 0.5%)

NOTABLE EUROPEAN HEADLINES

• SNB cuts its Policy Rate by 25bps as expected to 1.00%; prepared to intervene in the FX market as necessary; Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.; Click for more details.
• SNB outgoing Chairman Jordan says inflationary pressure has decrease significantly in Switzerland; strong CHF, lower oil, and electricity prices contributed to lower inflation forecasts; downside risk to inflation higher than upside risk. Further rate cuts may be necessary int in the coming quarters. Swiss economic growth will be "rather modest" in coming quarters. Says he sees no risk of deflation; further rate cuts "might" be necessary to ensure price stability (post-meeting press conference).
• SNB Vice-Chair Schlegel says measures to expand provision of liquidity for Swiss banks will further strengthen the sector. Comments on possible further rate cuts not unconditional, bank will examine the situation in December
• German Economic Institutes forecast inflation to go down to 2.2% this year from 5.9% last year; cuts 2024 forecast, sees economy shrinking by 0.1% in 2024 (prev. forecast +0.1%).
• "Hearing France will ask Brussels for a two year delay in reaching its 3% of GDP deficit target i.e. 2029 instead of 2027. Speculation rife in French press today", Eurasia Group's Rahman
• UK car manufacturing output fell 8.4% Y/Y to 41,271 units in August, according to SMMT.
• Swedish NIER think tank forecasts 2024 Swedish GDP +0.7% (vs +0.7% in August forecast).
• ECB rate decision is "wide-open", according to Reuters sources; fight for a cut following weak data. Doves are pointing towards recent soft business survey data and weak German sentiment metrics. Hawks are arguing for a pause.

NOTABLE US HEADLINES

• Fed's Kugler (2024 voter) said she strongly supported the Fed's 50bps interest rate cut and will support additional rate cuts going forward if progress on inflation continues as she expects. Kugler added they are at a place where they do not want the labour market to weaken further and it makes sense to shift attention to the employment mandate, as well as noted that they are making very good progress towards inflation goals but they are not at 2% yet. Furthermore, she said with disinflation, they need to cut even just to keep where they are in terms of restrictiveness and it makes sense to cut rates to remove some restrictiveness.
• US House voted 341-82 to pass a stopgap government funding bill and the US Senate also voted 78-18 to pass the bill that would fund the government until December 20th.
• New York City Mayor Adams was indicted following a federal corruption probe and believes he will be charged by the federal government with crimes but added that if charges are filed, they will be entirely false and based on lies, while he won't resign if he has to face charges.

GEOPOLITICS

MIDDLE EAST - EU SESSION UPDATES

• "Senior US officials have said that they expect a ceasefire deal to be implemented "in the coming hours" along Israel-Lebanon border", according to Walla News' Elster.
• "US official says Israel and Lebanon expected to decide "within hours" whether to support the truce", via Sky News Arabia; echoed by Cairo sources thereafter.
• Kann's Stein reports a statement from Israeli PM Netanyahu's coalition members, Smotrich, Ben Gvir and ministers from the Likud party, saying that they "oppose the ceasefire". Furthermore, opposition leader Lapid says the ceasefire should be accepted for only seven days. Lapid adds that even a minor violation of the ceasefire would result in the return of Israel to the attack "with all its strength and throughout Lebanon".
• Source in Israeli PM Netanyahu's says "There is a green light for a ceasefire in order to start negotiations", via Al Jazeera.
• "There are ideas and discussions, but there is no result so far", "The discussions are not only related to Lebanon, but include Gaza", according to Sky News Arabia sources.
• "Israel's Channel 12: Netanyahu ordered the Israeli army to ease attacks in Lebanon against the backdrop of ceasefire talks", according to Al Jazeera.
• "Israel's Channel 12 quoting government sources: Israel sets terms for truce and estimates that Nasrallah [Secretary-general of Hezbollah] will not agree to them", according to Al Jazeera.
• Qatar foreign ministry spokesperson says not aware of direct link between 21-day Lebanon ceasefire proposal and the Gaza ceasefire proposal; there is not yet a formal mediation track working towards a ceasefire in Lebanon.
• Israeli Prime Minister's Office says "the news about a ceasefire are incorrect. This is an American-French proposal, to which the prime minister did not even respond.", via Amichai Stein on X.
• Israeli PM Netanyahu says he has instructed military to keep "fighting at full power".
• "Israeli Foreign Minister: There will be no ceasefire in the north", according to Sky News Arabia.
• "Lebanese PM denies signing ceasefire agreement after meeting with Blinken and Hochstein", according to Al Arabiya.

MIDDLE EAST - APAC UPDATES

• US, France and partners proposed an immediate 21-day ceasefire across the Lebanon-Israel border and called for a ceasefire in Gaza. US President Biden and French President Macron said it is time for a settlement on the Israel-Lebanon border that ensures safety and security to enable civilians to return to their homes and they have worked together in recent days on a joint call for a temporary ceasefire to give diplomacy a chance to succeed. Furthermore, they called for broad endorsement and immediate support from the governments of Israel and Lebanon, while the statement was endorsed by the US, Australia, Canada, EU, France, Germany, Italy, Japan, Saudi Arabia, UAE, and Qatar.
• Israel and Hezbollah communicated details of the US-France proposal and will announce their response soon, while The Washington Post cited US officials stating that Hezbollah will not directly sign the ceasefire agreement.
• US President Biden said an all-out war is possible in the Middle East, but there is also a possibility of a settlement and said there needs to be a two-state solution, according to an ABC interview.
• French Foreign Minister told the Security Council that the situation in Lebanon may reach the point of no return and that Lebanon which is already considerably weakened, will not be able to be restored after a war between Israel and Hezbollah. Furthermore, he said war is not inevitable and there is no alternative to diplomacy. The Foreign Minister also noted that important progress was recently made on a temporary ceasefire in Lebanon and efforts will continue.
• Israeli source said they are approaching a crossroads to make decisive decisions that will determine where the war is heading and noted that talks on the north aim to provide an opportunity for a settlement that prevents a major war, according to Israeli press.
• Israeli press Hayom cited an Israeli source stating there is no prospect of reaching a ceasefire at least in the next few days.
• Israeli UN envoy said Israel would prefer a diplomatic solution in Lebanon and if diplomacy fails, then Israel will use all means at its disposal. The envoy added that diplomacy will be better for Israel and Lebanese people, as well as noted that Israeli PM Netanyahu will arrive on Thursday and address the UN General Assembly on Friday while Israel's UN envoy also commented that Iran is the spider at the centre of the web of violence and there can be no peace in the region until we dismantle this threat.
• Iran's Foreign Minister said the region is on the brink of a full-scale catastrophe and Israel has crossed all red lines, while he added that the UN Security Council must intervene to restore peace and security. Furthermore, he said that Israeli leaders must understand their crimes won't go unpunished and Iran will not remain indifferent in case of a full-scale war in Lebanon.
• UN Secretary-General Guterres told the Security Council that 'hell is breaking loose' in Lebanon and diplomatic efforts have intensified to achieve a temporary ceasefire to allow for aid deliveries and pave the way for more durable peace. Guterres stated all parties must immediately return to a cessation of hostilities, while an all-out war must be avoided at all costs and that Lebanon cannot become another Gaza.
• Lebanon's PM told the Security Council that Israel is violating their sovereignty, while Lebanon's PM responded 'hopefully yes' when asked if a ceasefire can be reached soon, according to Reuters.

OTHER

• US is reportedly preparing USD 8bln in arms aid packages for Ukrainian President Zelensky's visit, according to sources via Reuters. It was later reported that President Biden's administration announced USD 375mln for Ukraine defence aid which includes HIMARS, Javelin missiles and TOW missiles, according to the White House and State Department.
• Russian President Putin proposed to update Russia's nuclear strategy and said that a number of clarifications have been proposed with regard to the definition of conditions for the use of nuclear weapons. The proposal stated that aggression against Russia by any non-nuclear state, but with participation or support of a nuclear state, is proposed to be considered as their joint attack on the Russian federation, while Russia reserves the right to use nuclear weapons in case of aggression against Russia and Belarus.
• China's Foreign Minister said in meeting with EU's top official that China is committed to de-escalating the situation in Ukraine and China will not give up efforts to strive for peace in Ukraine.
• South Korea's National Intelligence Service said North Korea possesses enough plutonium and uranium to make at least double-digit nuclear weapons, while it added that North Korea could possibly conduct a 7th nuclear test, according to Yonhap.
• Russia's Kremlin says changes to Russian nuclear policy in the document on state nuclear deterrence have now been formulated; changes should be considered a signal to "unfriendly" countries. Will subsequently make a decision on whether or not to publish nuclear documents. There are two documents on nuclear policy. Signal to the west is that there are consequences if Western countries participate in an attack on Russia with various means.

CRYPTO

• Bitcoin is slightly firmer and holds around 63.5k whilst Ethereum gains to a larger magnitude, climbing above USD 2.6k.

APAC TRADE

• APAC stocks shrugged off the subdued handover from Wall St and the recent geopolitical escalation, as some 'progress' was said to be made regarding a temporary ceasefire proposal and a 21-day ceasefire was proposed by US and France, while China benefitted again from stimulus.
• ASX 200 saw gains across all sectors, while the RBA's FSR noted Australia's financial system is resilient and risks are contained.
• Nikkei 225 outperformed as exporters benefitted from recent currency weakness, while stale BoJ minutes did little to shift the dial.
• Hang Seng and Shanghai Comp extended on the recent rally owing to policy support after China's State Council issued guidelines for promoting high-quality employment and with China to give rare one-off cash handouts to people in extreme poverty ahead of the National Day holiday, while it was also reported that China was weighing injecting USD 142bln of capital into top banks.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo held meeting on Sept 26, and said they will lower the reserve requirement ratio and implement forceful interest rate cuts, according to Reuters. China's Politburo said it will ensure necessary fiscal spending, will make efforts to stop the falls in the property market and stabilize it.
• China weighs injecting USD 142bln of capital into top banks, according to Bloomberg.
• China's MOFCOM launched an anti-discriminatory investigation against Canada's restrictive measures including additional tariffs on China's EVs, steel and aluminium products, according to Reuters.
• BoJ July Minutes from the July 30th-31st meeting noted that members shared the view over a need for vigilance to risk of an inflation overshoot, while many said it was appropriate to raise rates to 0.25% and adjust the degree of monetary support. A few members also said it was appropriate to gradually adjust very low rates now to avoid being forced to hike rates rapidly later.
• RBA Financial Stability Review stated the Australian Financial System is resilient and risks are contained, while it noted that risks include stress in China's financial sector and the lack of significant response from Beijing.
• China to issue USD 284bln of sovereign debt as part of fresh fiscal stimulus, according to Reuters sources; some of the fiscal support measures could be unveiled as early as this week.

• APAC stocks shrugged off the subdued handover from Wall St and the recent geopolitical escalation, as some 'progress' was said to be made regarding a temporary ceasefire proposal and a 21-day ceasefire was proposed by US and France, while China benefitted again from stimulus.
• "Senior US officials have said that they expect a ceasefire deal to be implemented "in the coming hours" along Israel-Lebanon border", according to Walla News' Elster.
• China Politburo held meeting on Sept 26, and said they will lower the reserve requirement ratio and implement forceful interest rate cuts, according to Reuters.
• Fed's Kugler (2024 voter) said she strongly supported the Fed's 50bps interest rate cut and will support additional rate cuts going forward if progress on inflation continues as she expects.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.7% after the cash market closed lower by 0.5% on Wednesday.
• Looking ahead, highlights include German GfK Consumer Sentiment, US Durable Goods, GDP Final (Q2), Core PCE (Q2), IJC, SNB & Banxico Policy Announcements, Speakers including SNB's Jordan, ECB’s Elderson, Lagarde, de Guindos & Schnabel, Fed’s Powell, Williams, Collins, Kugler, Bowman, Barr, Kashkari & Cook, Supply from the US, Earnings from JD Sports, H&M, Costco & Jabil.

SNAPSHOTLOOKING AHEAD

• Highlights include German GfK Consumer Sentiment, US Durable Goods, GDP Final (Q2), Core PCE (Q2), IJC, SNB & Banxico Policy Announcements, Speakers including SNB's Jordan, ECB’s Elderson, Lagarde, de Guindos & Schnabel, Fed’s Powell, Williams, Collins, Kugler, Bowman, Barr, Kashkari & Cook, Supply from the US, Earnings from JD Sports, H&M, Costco & Jabil.
• Click for the Newsquawk Week Ahead.

US TRADEEQUITIES

• US stocks ultimately closed mixed but with a negative bias and sectors were predominantly in the red with Energy, Health Care and Materials the underperformers while Utilities and Tech were the only sectors in the green on a day dominated by geopolitical-related headlines. After-hours, Micron (MU) shares soared 14.8% post-earnings.
• There were heightened concerns regarding a potential ground invasion of Lebanon after an Israeli army chief told troops that Israel had been striking all day to prepare the ground for possible entry. Nonetheless, it was also reported that the US was leading a new effort to end hostilities and Israeli PM Netanyahu gave the green light to discuss with the US side the cessation of attacks with Lebanon to give a chance for negotiations, although Netanyahu also said that any truce negotiations will be under fire and they will continue to strike Hezbollah, while a US official noted that it is still uncertain whether Israeli PM Netanyahu and Hezbollah's Nasrallah are willing to agree to a cessation of fighting.
• SPX -0.19% at 5,722, NDX +0.14% at 19,973, DJIA -0.70% at 41,915, RUT -1.19% at 2,197.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kugler (2024 voter) said she strongly supported the Fed's 50bps interest rate cut and will support additional rate cuts going forward if progress on inflation continues as she expects. Kugler added they are at a place where they do not want the labour market to weaken further and it makes sense to shift attention to the employment mandate, as well as noted that they are making very good progress towards inflation goals but they are not at 2% yet. Furthermore, she said with disinflation, they need to cut even just to keep where they are in terms of restrictiveness and it makes sense to cut rates to remove some restrictiveness.
• US House voted 341-82 to pass a stopgap government funding bill and the US Senate also voted 78-18 to pass the bill that would fund the government until December 20th.
• Agriculture and food groups urged the White House to intervene to block a potential US East Coast and Gulf Coast ports labour disruption.
• New York City Mayor Adams was indicted following a federal corruption probe and believes he will be charged by the federal government with crimes but added that if charges are filed, they will be entirely false and based on lies, while he won't resign if he has to face charges.

APAC TRADEEQUITIES

• APAC stocks shrugged off the subdued handover from Wall St and the recent geopolitical escalation, as some 'progress' was said to be made regarding a temporary ceasefire proposal and a 21-day ceasefire was proposed by US and France, while China benefitted again from stimulus.
• ASX 200 saw gains across all sectors, while the RBA's FSR noted Australia's financial system is resilient and risks are contained.
• Nikkei 225 outperformed as exporters benefitted from recent currency weakness, while stale BoJ minutes did little to shift the dial.
• Hang Seng and Shanghai Comp extended on the recent rally owing to policy support after China's State Council issued guidelines for promoting high-quality employment and with China to give rare one-off cash handouts to people in extreme poverty ahead of the National Day holiday, while it was also reported that China was weighing injecting USD 142bln of capital into top banks.
• US equity futures were supported alongside the gains in Asia but with the upside capped ahead of an abundance of Fed rhetoric.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.7% after the cash market closed lower by 0.5% on Wednesday.

FX

• DXY took a breather after yesterday's resurgence whereby it reverted to just shy of the 101.00 level as geopolitical concerns spurred haven appeal, while participants now await a myriad of speakers culminating with Fed Chair Powell and NY Fed President Williams.
• EUR/USD saw some slight reprieve following its slip from resistance at the 1.1200 territory, although the rebound was only marginal with comments from ECB officials also scheduled today including Lagarde, de Guindos, Elderson & Schnabel.
• GBP/USD attempted to nurse some of the prior day's losses after it found support just north of the 1.3300 level.
• USD/JPY marginally edged higher and retained a firm footing in the 144.00 territory after ascending on the recent dollar strength.
• Antipodeans recouped some lost ground with the help of the positive risk environment and ongoing China optimism.
• PBoC set USD/CNY mid-point at 7.0354 vs exp. 7.0367 (prev. 7.0202).

FIXED INCOME

• 10yr UST futures remained subdued after trickling lower yesterday amid corporate supply and a mixed 5yr auction, while demand was restrained ahead of a slew of central bank commentary and data releases, as well as a 7yr auction.
• Bund futures price action was lacklustre after recently pulling back from resistance at the 135.00 level.
• 10yr JGB futures tracked recent losses in global peers and failed to benefit from improved results of the 40yr JGB auction, while outdated BoJ minutes from the July meeting had little effect on prices.

COMMODITIES

• Crude futures languished near the prior day's lows after retreating despite bullish crude inventories and geopolitical escalation in the Middle East, while desks attributed the selling to Libyan tensions easing.
• BSEE said 29% of oil production and 17% of nat gas production at the Gulf of Mexico is shut in due to Hurricane Helene.
• BP (BP/ LN) said it secured offshore facilities and removed some non-essential personnel from Argos, Atlantis, Mad Dog, Na Kika, and Thunder Horse platforms, while it is working toward safely ramping up production across its Gulf of Mexico portfolio.
• Representatives from Libya’s eastern and western administrations are said to have agreed to nominate Naji Issa as interim central bank governor, while it was also reported that Libya’s legislative bodies signed an agreement on procedures, criteria and timelines for appointing the central bank governor, deputy and board of directors.
• Spot gold traded rangebound ahead of a busy schedule of Fed speakers and data releases.
• Copper futures were indecisive despite the predominantly constructive mood and ongoing China stimulus optimism.

CRYPTO

• Bitcoin marginally strengthened overnight after rebounding from an initial dip beneath the USD 63,000 level.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo held meeting on Sept 26, and said they will lower the reserve requirement ratio and implement forceful interest rate cuts, according to Reuters. China's Politburo said it will ensure necessary fiscal spending, will make efforts to stop the falls in the property market and stabilize it.
• China weighs injecting USD 142bln of capital into top banks, according to Bloomberg.
• China's MOFCOM launched an anti-discriminatory investigation against Canada's restrictive measures including additional tariffs on China's EVs, steel and aluminium products, according to Reuters.
• BoJ July Minutes from the July 30th-31st meeting noted that members shared the view over a need for vigilance to risk of an inflation overshoot, while many said it was appropriate to raise rates to 0.25% and adjust the degree of monetary support. A few members also said it was appropriate to gradually adjust very low rates now to avoid being forced to hike rates rapidly later.
• RBA Financial Stability Review stated the Australian Financial System is resilient and risks are contained, while it noted that risks include stress in China's financial sector and the lack of significant response from Beijing.

GEOPOLITICS

MIDDLE EAST

• US, France and partners proposed an immediate 21-day ceasefire across the Lebanon-Israel border and called for a ceasefire in Gaza. US President Biden and French President Macron said it is time for a settlement on the Israel-Lebanon border that ensures safety and security to enable civilians to return to their homes and they have worked together in recent days on a joint call for a temporary ceasefire to give diplomacy a chance to succeed. Furthermore, they called for broad endorsement and immediate support from the governments of Israel and Lebanon, while the statement was endorsed by the US, Australia, Canada, EU, France, Germany, Italy, Japan, Saudi Arabia, UAE, and Qatar.
• "Senior US officials have said that they expect a ceasefire deal to be implemented "in the coming hours" along Israel-Lebanon border", according to Walla News' Elster.
• Israel and Hezbollah communicated details of the US-France proposal and will announce their response soon, while The Washington Post cited US officials stating that Hezbollah will not directly sign the ceasefire agreement.
• US President Biden said an all-out war is possible in the Middle East, but there is also a possibility of a settlement and said there needs to be a two-state solution, according to an ABC interview.
• US-led talks for a potential de-escalation of the Israel-Hezbollah flare-up with an eye to a possible ceasefire saw “significant progress” and reached “a serious and advanced stage”, according to Lebanese news site LBCI reports citing sources.
• French Foreign Minister told the Security Council that the situation in Lebanon may reach the point of no return and that Lebanon which is already considerably weakened, will not be able to be restored after a war between Israel and Hezbollah. Furthermore, he said war is not inevitable and there is no alternative to diplomacy. The Foreign Minister also noted that important progress was recently made on a temporary ceasefire in Lebanon and efforts will continue.
• Israeli PM Netanyahu said they are delivering blows to Hezbollah that it could never imagine and doing that with force and by being clever. Netanyahu also said that he cannot give details on what they are doing, but they are determined to bring the citizens of the north home.
• Israeli PM Netanyahu gave the green light to discuss with the US side the cessation of attacks with Lebanon to give a chance for negotiations, according to Sky News Arabia citing a correspondent. It was separately reported that Netanyahu said any truce negotiations will be under fire and that they will continue to strike Hezbollah, according to Al Arabiya.
• Israeli officials said they are ready for efforts and proposals, but the chances of reaching an agreement are slim, according to Al Jazeera citing Israel's Channel 13. It was earlier reported that Israel’s cabinet members would discuss authorising PM Netanyahu and Defence Minister Galant to approve ground exercises in Lebanon, according to Al Jazeera citing sources.
• Israeli source said they are approaching a crossroads to make decisive decisions that will determine where the war is heading and noted that talks on the north aim to provide an opportunity for a settlement that prevents a major war, according to Israeli press.
• US Department of Defense believes Israel is not in a position to launch a ground invasion now and would need to move more troops into place, but it also thinks such an attack could come together in a matter of several days, according to WSJ sources.
• Israeli press Hayom cited an Israeli source stating there is no prospect of reaching a ceasefire at least in the next few days.
• Israeli UN envoy said Israel would prefer a diplomatic solution in Lebanon and if diplomacy fails, then Israel will use all means at its disposal. The envoy added that diplomacy will be better for Israel and Lebanese people, as well as noted that Israeli PM Netanyahu will arrive on Thursday and address the UN General Assembly on Friday while Israel's UN envoy also commented that Iran is the spider at the centre of the web of violence and there can be no peace in the region until we dismantle this threat.
• Iran's Foreign Minister said the region is on the brink of a full-scale catastrophe and Israel has crossed all red lines, while he added that the UN Security Council must intervene to restore peace and security. Furthermore, he said that Israeli leaders must understand their crimes won't go unpunished and Iran will not remain indifferent in case of a full-scale war in Lebanon.
• UN Secretary-General Guterres told the Security Council that 'hell is breaking loose' in Lebanon and diplomatic efforts have intensified to achieve a temporary ceasefire to allow for aid deliveries and pave the way for more durable peace. Guterres stated all parties must immediately return to a cessation of hostilities, while an all-out war must be avoided at all costs and that Lebanon cannot become another Gaza.
• Lebanon's PM told the Security Council that Israel is violating their sovereignty, while Lebanon's PM responded 'hopefully yes' when asked if a ceasefire can be reached soon, according to Reuters.
• Dozens of US troops have been deployed to Cyprus amid sharply escalating tensions between Israel and Hezbollah, and are preparing for a range of contingencies, according to CNN citing sources.
• Islamic resistance in Iraq said it targeted Israel's Eilat with drones. It was also reported that the IDF said they are following up on threats from Iraq and gathering information and will do what is necessary, according to Asharq News.
• White House's Kirby said there is no indication Iran is interested in an all-out war in the region, according to a Fox News interview.
• US Treasury sanctioned over a dozen entities and vessels for their involvement in transporting Iranian oil to Syria and East Asia, according to Asharq News.

OTHER

• US is reportedly preparing USD 8bln in arms aid packages for Ukrainian President Zelensky's visit, according to sources via Reuters. It was later reported that President Biden's administration announced USD 375mln for Ukraine defence aid which includes HIMARS, Javelin missiles and TOW missiles, according to the White House and State Department.
• Russian President Putin proposed to update Russia's nuclear strategy and said that a number of clarifications have been proposed with regard to the definition of conditions for the use of nuclear weapons. The proposal stated that aggression against Russia by any non-nuclear state, but with participation or support of a nuclear state, is proposed to be considered as their joint attack on the Russian federation, while Russia reserves the right to use nuclear weapons in case of aggression against Russia and Belarus.
• China's Foreign Minister said in meeting with EU's top official that China is committed to de-escalating the situation in Ukraine and China will not give up efforts to strive for peace in Ukraine.
• South Korea's National Intelligence Service said North Korea possesses enough plutonium and uranium to make at least double-digit nuclear weapons, while it added that North Korea could possibly conduct a 7th nuclear test, according to Yonhap.

EU/UK

NOTABLE HEADLINES

• UK car manufacturing output fell 8.4% Y/Y to 41,271 units in August, according to SMMT.

• Equity futures are generally modestly lower, giving back some of the prior day’s gains
• G10s are flat/lower against the Dollar to varying degrees, JPY underperforms with USD/JPY up to a 144.25 peak
• USTs are essentially flat, Gilts dip lower following a weak auction which also weighed on Bunds
• Crude is modestly lower, XAU is flat and base metals take a breather from the China stimulus-related gains on Tuesday
• Looking ahead, Highlights include US Building Permits, CNB Policy Announcement, Speakers including Fed's Kugler, Supply from the US, Earnings from Micron.

EUROPEAN TRADEEQUITIES

• European bourses, Stoxx 600 (-0.2%) are almost entirely in the red (ex-SMI), with indices taking a breather/giving back some of the hefty gains seen in the prior session.
• European sectors are mixed vs initially holding a negative bias at the open. Healthcare tops the index alongside Travel & Leisure; the latter benefiting from gains in Air France (+7%) following a double broker upgrade at JP Morgan. Tech lags, hampered by losses in SAP (-3.5%) amid a US probe.
• US Equity Futures (ES -0.2%, NQ -0.3%, RTY -0.1%) are modestly lower across the board, with slight underperformance in the NQ following on from the gains seen in the prior session.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
• Click for a detailed summary

FX

• USD is firmer and attempting to recoup some lost ground vs. peers after the selling pressure seen in the wake of Tuesday's US Consumer Confidence data. DXY has climbed above the 100.50 level and is towards session highs.
• EUR is flat vs. the USD and continuing to eye a test of 1.12 after yesterday's Consumer Confidence-led dollar weakness. EUR/USD has been as high as 1.1198 today. If 1.12 is breached, the YTD high rests just above at 1.1201.
• Cable has pulled back a touch after its recent run of gains which saw the pair trade on a 1.34 handle for the first time since March 2022. Comments from BoE's Greene this morning have underlined the cautious stance being taken by the MPC relative to some of its peers within the G10 space; commentary which sparked little move in the GBP.
• JPY is on the backfoot vs. the USD and the laggard across the majors, trimming yesterday's gains vs. the greenback. Fresh fundamentals have been lacking for Japan ahead of the LDP leadership race on Friday. For now, the pair is contained within its recent 140-145 trading band.
• AUD a touch softer vs. the USD following soft inflation metrics overnight which put Y/Y CPI within the RBA's target band on a headline basis (core remains above the top end). AUD/USD Printed another YTD high overnight, breaching the 0.69 mark for the first time since Feb 2023.
• SEK saw some fleeting weakness vs. the EUR following the Riksbank's decision to cut rates by 25bps (as expected) whilst signalling that the policy rate could be cut at two remaining meetings this year. Furthermore, the statement noted that a 50bps cut is possible at one of those two meetings.
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FIXED INCOME

• USTs are flat/very slightly lower ahead of 5yr supply later today. Treasuries saw very modest pressure following a poor Gilt auction; a move more pronounced in Bunds/Gilts.
• Bunds are under modest pressure and held around Tuesday's best at 135.01 for most of the morning, but took another leg lower after the the dire UK auction; Bunds fell to a 134.68 trough ahead of the German auction, which passed without issue.
• Gilts were flat and unreactive to commentary from BoE's Greene who outlined her preference for a gradual approach to removing policy restrictiveness. Following the Gilt auction, which had a lower b/c and much wider tail, Gilt Dec'24 futures fell from 99.23 to 99.15 before extending to a 98.99 low.
• UK sells GBP 3.75bln 4.00% 2031 Gilt: b/c 2.98x (prev. 3.29x), average yield 3.814% (prev. 4.074%), tail 1.6bps (prev. 1.9bps).
• Italy sells EUR 2.75bln vs exp. EUR 2.25-2.75bln 3.10% 2026 BTP Short Term & EUR 2.5bln vs exp. EUR 2-2.5bln 1.50% 2029 & 2.40% 2039 BTPei Auctions.
• Germany sells EUR 2.424bln vs exp. EUR 3bln 2.40% 2030 Bund: b/c 2.4x (prev. 2.2x), average yield 2.0% (prev. 2.25%) & retention 19.2% (prev. 17.6%)
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COMMODITIES

• Crude is slightly subdued following the gains seen in the prior session, spurred on by the Chinese stimulus efforts but was unable to benefit from the draws in private sector inventory data. Brent'Nov sits at the foot of a USD 74.73-75.35/bbl parameter.
• Precious metals hold a downward bias with losses of some 1% seen in spot silver and spot palladium, whilst spot gold trades sideways amid a lack of drivers but cushioned by the increasingly tense geopolitical landscape. XAU eked another fresh all-time-high overnight at USD 2,670.60/oz (vs low 2,651.41/oz).
• Base metals are marginally softer as they take a breather from yesterday's surge. 3M LME copper trades closer to the bottom of a USD 9,755.50-9,924.00/t range.
• US Private Energy Inventory (bbls): Crude -4.3mln (exp. -1.4mln), Distillate -1.1mln (exp. -1.6mln), Gasoline -3.4mln (exp. -0.02mln), Cushing -0.0mln.
• NHC said a storm surge and hurricane warnings were issued for the Gulf Coast of Florida, while it added that Helene's large size will likely cause an extensive area to be affected by the storm's hazards.
• Kazakhstan's energy ministry says Kashagan oil field (400k BPD) to suspend operations for 38 days for maintenance.
• NHC says Helene strengthening as the centre approaches the north-eastern coast of the Yucatan Peninsula, new tropical storm watches and warnings for portions of the US.
• OECD World Economic Outlook: 2024 World growth upgraded by 0.1ppt, EZ, US, China unchanged vs prior; 2025 World forecast unchanged, EZ and US downgraded by 0.2ppt, China unchanged. Click for details
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NOTABLE DATA RECAP

• French Consumer Confidence (Sep) 95.0 vs. Exp. 92.0 (Prev. 92.0, Rev. 93)

NOTABLE EUROPEAN HEADLINES

• ECB's Villeroy says cannot allow France's situation regarding deficit to last; must deal with debt problem as spread widens. Not realistic for France to bring deficit down below 3% level within a three-year timeframe.
• BoE's Greene says it is appropriate to take a gradual approach to removing restrictiveness. Greene outlines three cases in the economy and subsequent risks. In the first case, the global shocks that drove up inflation continue to fade, and the persistence of inflationary pressures dissipates with a less restrictive stance of monetary policy than in other cases. In the second, a period of economic slack is required to bring inflation sustainably to target in the medium-term. In the third, structural changes in the economy that impact wage- and price-setting require monetary policy to remain tighter for longer. Says, like many others on the MPC, she does not fit squarely in any of these cases. However, at the moment, she places the greatest probability on being in the second case. Wage growth has also fallen but remains above what our suite of models can explain. Says that a lot of the latest decline in UK services inflation is in the more volatile components; cannot get the ticker tape out yet. Remains concerned about wage pass-through to inflation. May be seeing some impact from UK economic policy uncertainty, causing business to stay on the sidelines.
• Riksbank cuts its Rate by 25bps as expected to 3.25% (prev. 3.50%); policy rate may also be cut at two remaining meetings this year, with a 50bps cut possible at one of those meetings; rate expected to be cut at a clearly faster pace than before. Click for more details.
• HSBC now see the ECB cutting rates at every meeting, starting from October, according to Bloomberg

NOTABLE US HEADLINES

• US House Foreign Affairs Committee recommended contempt of Congress charges against Secretary of State Blinken, for failing to appear at a hearing regarding the Biden administration’s handling of the 2021 withdrawal from Afghanistan.

GEOPOLITICS

MIDDLE EAST

• "Israeli strikes on Lebanon expanded to reach the Keserwan and Chouf areas in Mount Lebanon", according to Sky News Arabia
• Israeli Defence Minister Gallant said they have more strikes ready against Hezbollah, while he added that they must continue until they achieve their goal and ensure the safe return of Israel's northern residents to their homes.
• Israel conducted a strike on Jiyyeh which is south of Lebanon's capital Beirut, according to security sources cited by Reuters.
• Sirens sounded in Tel Aviv and its surrounding area, as well as in central Israel, while explosions were heard in the sky of Tel Aviv caused by the interception of rockets, according to Sky News Arabia. Furthermore, Israel's military said after Tel Aviv sirens were activated a missile was detected crossing from Lebanon and was intercepted.
• Iran-backed Iraqi militia claimed responsibility for overnight drone attacks on Golan, according to Times of Israel.
• Hezbollah confirmed its senior commander Ibrahim Qubaisi was killed in an Israeli strike on Beirut, while it was separately reported that Hezbollah said it targeted Israel's Atlit navy base south of Haifa with drones.
• Hezbollah urged Iran in recent days to launch an attack against Israel as fighting between the Lebanese militant group and the Israeli military dramatically escalated, but Iran has so far refrained, according to Axios.
• Lebanon's Foreign Minister said US President Biden's UN speech was not strong and not promising, while the official added that the US is the only country that can really make a difference in the Middle East, as well as noted that Lebanon itself cannot end the fighting and needs US help despite disappointments of the past.
• Iran's President Pezeshkian said the international community must immediately stop the violence and work to reach a permanent ceasefire in Gaza, while he added Tehran is ready to work with parties to the 2015 Nuclear Act pact to resolve the standoff and is ready to improve ties with the world.
• Iran's President Pezeshkian met with French President Macron in what is described as a good meeting in which they discussed Gaza and a nuclear deal. Iran's President said he expects a group of countries to meet on the nuclear deal, while Macron warned Iran's President about Tehran's continued support for Russia's war in Ukraine.
• IAEA chief Grossi said he sees a willingness from Iranian officials to re-engage in a more meaningful way, while he will visit Tehran in the coming weeks and is aiming for October. Grossi said Iran is continuing the development of its nuclear programme at a regular pace and any future nuclear talks will be different from the 2015 nuclear deal with a bigger role for the IAEA expected. Furthermore, he noted the need to start preparing now for possible future negotiations between the West and Iran.
• Iran is brokering secret talks to send Russian anti-ship missiles to Yemen's Houthis, according to Reuters citing sources. The report noted that experts said this would increase the Houthis to strike Red Sea commercial shipping and raise the threat to US and allied warships, while experts also stated that Houthis could use the missiles on land to threaten Saudi Arabia.
• "Israel Broadcasting Corporation: Israeli preparations for a possible ground operation in Lebanon", according to Sky News Arabia.
• Israeli Military says a drone crossing into Israeli territory from Syria was intercepted by IDF fighter jets south of the Sea of Galilee.

OTHER

• China's PLA rocket force successfully launched an intercontinental ballistic missile with a simulated warhead in international waters in the Pacific Ocean with the launch said to be routine and part of the rocket force's annual training, according to Xinhua. China notified relevant countries ahead of the missile launch, while China's Defence Ministry said the launch was not directed at any country or target and was in line with international laws and practices.
• Former US President Trump was briefed by US intelligence officials regarding threats from Iran to assassinate him, according to his campaign.

CRYPTO

• Bitcoin is slightly softer and holds just beneath USD 64k.

APAC TRADE

• APAC stocks were mostly positive as Chinese markets continued to rally following the stimulus boost.
• ASX 200 was rangebound with strength in mining and materials offsetting the underperformance in financials and tech, while the latest monthly CPI data from Australia matched estimates and slowed to a 3-year low although core inflation remained above the 2%-3% target.
• Nikkei 225 swung between gains and losses and traded both sides of the 38,000 level with little fresh catalysts, while Services PPI data was firmer than expected but slowed from the prior month's revised print.
• Hang Seng and Shanghai Comp rallied amid ongoing optimism following the stimulus announcements, while the PBoC also conducted an MLF operation with the rate cut by 30bps to 2.00% which it had flagged during Tuesday's press briefing.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted a CNY 300bln 1-year MLF operation with the rate lowered to 2.00% from 2.30%.
• US hopes to discuss fentanyl with China at the APEC Summit in November.

DATA RECAP

• Japanese Services PPI (Aug) 2.70% vs. Exp. 2.60% (Prev. 2.80%)
• Australian Weighted CPI YY (Aug) 2.7% vs. Exp. 2.7% (Prev. 3.5%)
• Australian Trimmed Mean CPI YY (Aug) 3.40% (Prev. 3.80%)

• APAC stocks were mostly positive as Chinese markets continued to rally following the stimulus boost.
• Australian monthly CPI matched estimates and slowed to a 3-year low, although core inflation remained above the 2%-3% target.
• European equity futures are indicative of a lower cash open with the Euro Stoxx 50 future -0.3% after the cash market closed up by 1.1% on Tuesday.
• USD is broadly flat vs. peers, EUR/USD is eyeing 1.12 to the upside, Cable has pulled back onto a 1.34 handle.
• Israeli Defence Minister Gallant said they have more strikes ready against Hezbollah; added they must continue until they achieve their goal.
• Looking ahead, highlights include US Building Permits, Riksbank & CNB Policy Announcements, Speakers including BoE’s Greene, Riksbank's Thedeen & Fed's Kugler, Supply from UK, Italy, Germany & US.

SNAPSHOTUS TRADEEQUITIES

• US stocks ultimately finished with mild gains after reversing the early downside that was spurred by disappointing US Consumer Confidence data, while the sectors were mixed with outperformance in materials following China's recent stimulus efforts and financials lagged with Visa pressured as it faces a DoJ antitrust suit. The data release also saw Treasuries reverse their initial risk-on losses and triggered selling in the dollar.
• SPX +0.25% at 5,733, NDX +0.47% at 19,945, DJIA +0.20% at 42,208, RUT +0.17% at 2,224
• Click here for a detailed summary.

NOTABLE HEADLINES

• US House Foreign Affairs Committee recommended contempt of Congress charges against Secretary of State Blinken, for failing to appear at a hearing regarding the Biden administration’s handling of the 2021 withdrawal from Afghanistan.

APAC TRADEEQUITIES

• APAC stocks were mostly positive as Chinese markets continued to rally following the stimulus boost.
• ASX 200 was rangebound with strength in mining and materials offsetting the underperformance in financials and tech, while the latest monthly CPI data from Australia matched estimates and slowed to a 3-year low although core inflation remained above the 2%-3% target.
• Nikkei 225 swung between gains and losses and traded both sides of the 38,000 level with little fresh catalysts, while Services PPI data was firmer than expected but slowed from the prior month's revised print.
• Hang Seng and Shanghai Comp rallied amid ongoing optimism following the stimulus announcements, while the PBoC also conducted an MLF operation with the rate cut by 30bps to 2.00% which it had flagged during Tuesday's press briefing.
• US equity futures (ES -0.1%) marginally softened after the prior day's choppy mood and with little in the way of key risk events scheduled today.
• European equity futures are indicative of a lower cash open with the Euro Stoxx 50 future -0.3% after the cash market closed up by 1.1% on Tuesday.

FX

• DXY saw some respite from the prior day's selling pressure that was triggered by weak US Consumer Confidence.
• EUR/USD held on to recent spoils and edged closer towards the 1.1200 territory following the dollar's recent demise.
• GBP/USD sat near its best levels in around two and a half years after returning to 1.3400 territory.
• USD/JPY marginally rebounded after yesterday's whipsawing and brief dip beneath the 143.00 level.
• Antipodeans took a breather after climbing yesterday alongside commodity gains and Chinese stimulus.
• BoC Governor Macklem said with the continued progress they have seen on inflation, it is reasonable to expect further rate cuts.

FIXED INCOME

• 10yr UST futures traded rangebound near the prior day's best levels after rebounding due to weak US Consumer Confidence data.
• Bund futures were contained after recently hitting resistance around the 135.00 level and with a Bund issuance scheduled later.
• 10yr JGB futures were indecisive and tested support near 145.00 following somewhat ambiguous Services PPI data.

COMMODITIES

• Crude futures were lacklustre after yesterday's fluctuations and failed to benefit from the draws in private sector inventory data.
• US Private Energy Inventory (bbls): Crude -4.3mln (exp. -1.4mln), Distillate -1.1mln (exp. -1.6mln), Gasoline -3.4mln (exp. -0.02mln), Cushing -0.0mln.
• BSEE reported that 16% of oil production and 11% of gas production in the US Gulf of Mexico is shut in response to tropical storm Helene. It was separately reported that theNHC said a storm surge and hurricane warnings were issued for the Gulf Coast of Florida, while it added that Helene's large size will likely cause an extensive area to be affected by the storm's hazards.
• Shell (SHEL LN) is monitoring tropical storm Helene for potential impacts to its assets and operations in the Gulf of Mexico and noted with a shift in the forecast track of the storm, they are beginning the process of restoring production at their Stones platform. Co. added that production at Appomattox continues to be curtailed and a completed removal of non-essential personnel from Appomattox as well as assets in the Mars corridor, have safely paused some of their drilling operations, while there are currently no other impacts on their production across the Gulf of Mexico.
• OPEC's 2024 World Oil Outlook stated that global primary energy demand is to increase by 24% to 2050, driven by the non-OECD, with the numbers suggesting it will lift from 301 mboe/d in 2023 to 374 mboe/d in 2050.
• Spot gold mildly extended on fresh record levels again in the aftermath of the recent dollar weakness.
• Copper futures remained underpinned amid the continued China stimulus euphoria.

CRYPTO

• Bitcoin was indecisive and eked mild gains around the USD 64,500 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted a CNY 300bln 1-year MLF operation with the rate lowered to 2.00% from 2.30%.
• US hopes to discuss fentanyl with China at the APEC Summit in November.

DATA RECAP

• Japanese Services PPI (Aug) 2.70% vs. Exp. 2.60% (Prev. 2.80%)
• Australian Weighted CPI YY (Aug) 2.7% vs. Exp. 2.7% (Prev. 3.5%)
• Australian Trimmed Mean CPI YY (Aug) 3.40% (Prev. 3.80%)

GEOPOLITICS

MIDDLE EAST

• Israeli Defence Minister Gallant said they have more strikes ready against Hezbollah, while he added that they must continue until they achieve their goal and ensure the safe return of Israel's northern residents to their homes.
• Israel conducted a strike on Jiyyeh which is south of Lebanon's capital Beirut, according to security sources cited by Reuters.
• Sirens sounded in Tel Aviv and its surrounding area, as well as in central Israel, while explosions were heard in the sky of Tel Aviv caused by the interception of rockets, according to Sky News Arabia. Furthermore, Israel's military said after Tel Aviv sirens were activated a missile was detected crossing from Lebanon and was intercepted.
• Iran-backed Iraqi militia claimed responsibility for overnight drone attacks on Golan, according to Times of Israel.
• Hezbollah confirmed its senior commander Ibrahim Qubaisi was killed in an Israeli strike on Beirut, while it was separately reported that Hezbollah said it targeted Israel's Atlit navy base south of Haifa with drones.
• Hezbollah urged Iran in recent days to launch an attack against Israel as fighting between the Lebanese militant group and the Israeli military dramatically escalated, but Iran has so far refrained, according to Axios.
• Lebanon's Foreign Minister said US President Biden's UN speech was not strong and not promising, while the official added that the US is the only country that can really make a difference in the Middle East, as well as noted that Lebanon itself cannot end the fighting and needs US help despite disappointments of the past.
• Syrian air defences confronted suspected Israeli missiles that were launched towards targets in the port city of Tartous, according to Reuters sources citing the Syrian Army.
• Iran's President Pezeshkian said the international community must immediately stop the violence and work to reach a permanent ceasefire in Gaza, while he added Tehran is ready to work with parties to the 2015 Nuclear Act pact to resolve the standoff and is ready to improve ties with the world.
• Iran's President Pezeshkian met with French President Macron in what is described as a good meeting in which they discussed Gaza and a nuclear deal. Iran's President said he expects a group of countries to meet on the nuclear deal, while Macron warned Iran's President about Tehran's continued support for Russia's war in Ukraine.
• IAEA chief Grossi said he sees a willingness from Iranian officials to re-engage in a more meaningful way, while he will visit Tehran in the coming weeks and is aiming for October. Grossi said Iran is continuing the development of its nuclear programme at a regular pace and any future nuclear talks will be different from the 2015 nuclear deal with a bigger role for the IAEA expected. Furthermore, he noted the need to start preparing now for possible future negotiations between the West and Iran.
• Iran is brokering secret talks to send Russian anti-ship missiles to Yemen's Houthis, according to Reuters citing sources. The report noted that experts said this would increase the Houthis to strike Red Sea commercial shipping and raise the threat to US and allied warships, while experts also stated that Houthis could use the missiles on land to threaten Saudi Arabia.

OTHER

• China's PLA rocket force successfully launched an intercontinental ballistic missile with a simulated warhead in international waters in the Pacific Ocean with the launch said to be routine and part of the rocket force's annual training, according to Xinhua. China notified relevant countries ahead of the missile launch, while China's Defence Ministry said the launch was not directed at any country or target and was in line with international laws and practices.
• Former US President Trump was briefed by US intelligence officials regarding threats from Iran to assassinate him, according to his campaign.

EU/UK

NOTABLE HEADLINES

• ECB's Knot said the ECB is likely to continue to gradually reduce interest rates at least through the first half of 2025 but noted that rates are unlikely to return to extremely low levels and will likely end up between 2-3%.
• ECB's Nagel said they assume the German economy will slowly pick up some momentum again and what is certain is that some of these factors holding it back such as weakening growth in Germany, are only temporary. Nagel stated that the main factors behind Germany's weak growth in recent years were the energy crisis, weak foreign demand and high inflation, while he added that tight monetary policy is dampening the economy.

• European bourses are entirely in the green, with US futures also modestly firmer with sentiment lifted after China’s flurry of stimulus efforts
• PBoC Governor Pan announced to cut RRR by 50bps which will provide CNY 1tln worth of long-term capital and cut the 7-day reverse repo rate by 20bps to 1.50%, while he said they will guide LPRs lower and reduce the mortgage rate for existing mortgages
• Dollar is softer, EUR gains despite poor German Ifo data & JPY underperforms; AUD fails to benefit from the Chinese stimulus efforts and despite a hawkish hold, but with Governor Bullock noting that a hike was not discussed at the meeting
• Bonds hold a bearish bias given the risk tone; Bunds were unreactive to the German Ifo
• Crude and base metals are firmer benefiting from the raft of Chinese stimulus announcements
• Looking ahead, US Richmond Fed Index, NBH Policy Announcement, Speakers including Fed's Bowman & BoC's Macklem, Supply from the US, Earnings from Autozone

EUROPEAN TRADEEQUITIES

• European bourses, Stoxx 600 (+0.9%) began the session on a very strong footing, taking impetus from a strong APAC session overnight, which was sparked by a flurry of Chinese stimulus efforts. As it stands, European indices are firmer across the board and near session highs.
• European sectors hold a strong positive bias, with the best performers in Europe largely a beneficiary of the aforementioned Chinese stimulus efforts; Basic Resources, Consumer Products (particularly Luxury) and Tech all top the pile. Real Estate and Utilities are found towards the foot of the pile.
• US Equity Futures (ES +0.2% NQ +0.4% RTY +0.2%) are modestly firmer across the board, taking impetus from a strong European session which has digested and benefited from China’s stimulus bazooka.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
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FX

• USD is showing a mixed performance vs. peers in the current risk environment; stronger vs. JPY and CHF but softer vs. EUR, CAD, GBP. DXY is currently contained within yesterday's 100.71-101.22.
• EUR is able to gain against the USD despite more dismal data from Germany which saw a miss across the board on IFO metrics. EUR/USD has been able to hold above the 1.11 mark throughout the session and has climbed as high as 1.1139 but is yet to challenge Monday's 1.1167 peak.
• Cable has once again eked out another marginal YTD high, this time at 1.3375. There hasn't been anything fresh during today's session to drive the move and instead looks to be more a continuation of the current trend. UK PM Starmer is to speak at the UK Labour Party Conference at 14:00BST.
• JPY is struggling alongside the current pro-risk sentiment seen overnight in China and in Europe. Ueda spoke earlier but comments did not look particularly dovish and in-fact could be seen as slightly more hawkish vs his prior comments. USD/JPY has been able to eclipse last week's 144.49 peak with focus now on a test of the 145 mark.
• AUD/USD is unable to benefit from the Chinese stimulus efforts with greater attention on events at the RBA. The Bank delivered what was seen as another hawkish hold. However, AUD/USD was subsequently dragged lower by comments from the RBA Governor stating that, unlike the prior meeting, the board did not discuss a rate hike.
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FIXED INCOME

• USTs are weighed on by the broader risk tone and down to a 114-13+ base. Support comes in at Monday’s 114-11+ trough before the figure. Fed's Bowman and US 2yr supply.
• Bunds are softer below 134.50 but still clear of Monday’s 134.02 base, potentially weighed on by somewhat hawkish remarks from Ueda (vs his post-policy announcement speech) and the strengthening risk tone more generally given substantial Chinese stimulus overnight. Poor German Ifo data spurred no real reaction in the complex.
• Gilts are pressured and moving in-line with peers; BoE's Bailey spoke earlier, but added little. Gilts initially opened higher by 13 ticks but have since faded and lost the 99 handle to a 98.73 trough.
• UK sells GBP 1.5bln 0.75% 2033 I/L Gilt: b/c 3.17x (prev. 2.94x) and real yield 0.486% (prev. 0.462%).
• Germany sells EUR 3.708bln vs exp. EUR 4.5bln 2.70% 2026 Schatz: b/c 2.4x (prev. 2.5x), average yield 2.14% (prev. 2.41%) and retention 17.6% (prev. 16.93%).
• Click for a detailed summary

COMMODITIES

• A firm session thus far for the crude complex amid the overnight raft of Chinese stimulus announced which takes some sting out of the Chinese demand woes which has plagued the crude markets for much of this year and amid the heightened geopolitical environment in Lebanon/Israel.
• Upward bias across precious metals but to varying degrees. Spot gold sees the shallowest gains, potentially amid less demand for havens in a risk-on environment. XAU overnight printed yet another fresh All-time-high at USD 2,640.18/oz (vs low 2,622.68/oz).
• Base metals are higher across the board as the raft of Chinese stimulus announced overnight boosts demand prospects for the sector. 3M LME copper topped USD 9,700/t.
• BP (BP/ LN) cut oil and gas production at two US Gulf of Mexico platforms and curtailed output at two others, while it is removing non-essential staff from five US Gulf of Mexico platforms ahead of a predicted hurricane.
• Chevron (CVX) announced it was evacuating non-essential personnel from all Gulf of Mexico platforms including Anchor, Big Foot, Blind Faith, Jack/St. Malo, Petronius and Tahiti.
• NHC says Hurricane John is just inland over southern Mexico. Life-threatening winds, storm surges and flash flooding continues in the warning area; more recently, John has been downgraded to a tropical storm, moving north-westward; life threatening flash flooding to continue along southern Mexican coast for the next few days
• Ukrainian President Zelensky said he held talks with Japanese PM Kishida on energy supplies in light of Russian attacks.
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CENTRAL BANKS

• RBA kept its Cash Rate Target unchanged at 4.35%, as expected, while it reiterated that the Board remains resolute in its determination to return inflation to the target and is not ruling anything in or out. RBA also repeated that inflation remains above target and is proving persistent, as well as stated that returning inflation to target is the priority. Furthermore, it said inflation is still some way above the midpoint of the 2–3% target range and the Board will rely upon the data and the evolving assessment of risks to guide its decisions.
  • RBA Governor Bullock says recent data has not materially affected policy outlook; reiterates rates to remain on hold for the time being; Did not explicitly consider a rate hike at the meeting (vs "board did consider a rate rise" at August's meeting). Headline CPI could come within 2-3% band. The message is that the board does not see rate cuts in the near term.
  • BoJ Governor Ueda says appropriate to increase rates if trend inflation heighten in line with our forecast. Will raise interest rate if economy and price move in line with forecasts shown in quarterly outlook report. Uncertainty surrounding the economy and prices is high. BoJ must conduct monetary policy in a timely and appropriate fashion without having a pre-set schedule, taking into account various uncertainties. Will watch with strong sense of urgency of US and overseas economic outlook, still unstable market developments. One-sided JPY falls have been reversed since August, and rise in import prices moderating. Can afford to spend time scrutinising market moves and overseas developments behind market developments. Must prevent a return to deflation.
  • BoE's Bailey says inflation has come down a long way, still have to get it sustainably to target and their is an unbalanced mix of components currently, via KentOnline; adds, encouraged the path for inflation is downward.

NOTABLE DATA RECAP

• German Ifo Expectations New (Sep) 86.3 vs. Exp. 86.3 (Prev. 86.8); Ifo Business Climate New (Sep) 85.4 vs. Exp. 86.0 (Prev. 86.6); Ifo Current Conditions New (Sep) 84.4 vs. Exp. 86.1 (Prev. 86.5, Revised 86.4); IFO's Fuest says "We can't exclude that the German economy is shrinking this year".

NOTABLE EUROPEAN HEADLINES

• ECB President Lagarde says the ECB is almost at the 2% target, wants to make sure they reach the target and remain there, according to comments on The Daily Show.
• ECB's Muller says "it's reasonable to expect more cuts if outlook holds".
• UK PM Starmer is to argue that tough decisions are needed for the UK national renewal and say in his speech on Tuesday that there are no easy answers, according to FT. It was also reported by Huffington Post that PM Starmer is to warn of more pain to come as he pledges a new Britain.
• French Finance Minister Armand says they are working on the latest estimates for the 2024 budget deficit, aiming to be able to present "something credible".

NOTABLE US HEADLINES

• China's Commerce Ministry is to launch an investigation into US PVH Group (PVH) for suspected violations of market trading principals regarding Xinjiang related products

GEOPOLITICS

MIDDLE EAST

• IDF Radio, citing military sources, say "We have a long way ahead and we are still at the beginning", via Al Arabiya.
• "Senior Israeli official says a ground operation in Lebanon could be considered if political track does not lead to the return of the Israeli residents to the north", according journalist Soylu.
• Hamas armed wing said field commander Mahmoud Al-Nader was killed in an Israeli strike on southern Lebanon on Monday.
• US President Biden and UAE's leader said after their meeting that a two-state solution is the only framework for resolving the conflict, while it was also reported that the UAE expressed deep concern over Israeli attacks on southern Lebanon.
• US State Department senior official said the US has been working hard in recent days to find a diplomatic solution to the spike in fighting between Israel and Hezbollah, while the key focus for Secretary of State Blinken's discussion with allies is on finding an off-ramp to prevent further escalation and the US has some "concrete ideas" that it is going to be discussing to prevent escalation in the region.
• US Deputy Treasury Secretary told the Bank of Israel Governor of US concern about threats by some within the Israeli government to sever correspondent banking relationships between Israeli and Palestinian banks, while the Deputy Treasury Secretary insisted these relationships should be extended for at least a year and stressed these relations would be critical to preventing an economic crisis in the West Bank.
• EU's Borrell said the escalation in Lebanon is extremely worrying and that they are almost in a full-fledged war, while he added that they are still working to stop escalation in Lebanon but the worst expectations are becoming reality.
• Iran’s President said US policies support and encourage Israel in its open war and Washington's actions contradict its words, while Iran reaffirms that an open regional war will not be in the interest of anyone in the region and the world. Furthermore, he said Iran has sufficient capacity to strike Israel and their response will be at the right time and in the appropriate way, while he added that Israel's assassination of Haniyeh will not be without a response and their reply is coming.
• Iran’s President said at the UN Summit of the Future that Tehran aspires to “a world free of nuclear weapons and a Middle East free of weapons of mass destruction, without any preconditions”, according to journalist Abas Aslani via X.
• Iran's Foreign Minister denied statements attributed to Iran's President about a willingness to reduce tensions with Israel, while the Foreign Minister added that Israel will receive a response to attacks in due course, according to Al-Arabiya.
• "The response to the new air force airstrikes in Lebanon would not only come from Lebanon, but from other resistance axes such as Yemen", according to Houthi sources cited by Lebanese newspaper Al-Akhbar.

OTHER

• Ukrainian President Zelensky said Ukraine's war with Russia is 'closer to the end' and separately commented that US decisive action now could hasten an end to Russian aggression next year, according to ABC News and Reuters.
• EU's Borrell said it is clear that Russia has been receiving new weapons in particular, missiles from Iran, while he added that G7 will hold talks about providing long-range missiles to Ukraine to strike Russian territory.
• Venezuela's highest court approved an arrest warrant for Argentine President Milei who is a vocal critic and ideological rival of Venezuelan President Maduro, according to AFP News Agency. Argentine Justice requests international arrest of Venezuelan President Maduro for alleged human rights violations

CRYPTO

• Bitcoin takes a breather after its recent advances, and holds just avove USD 63k.

APAC TRADE

• APAC stocks traded mostly higher following gains on Wall St. and China's various stimulus measures.
• ASX 200 was subdued amid the RBA rate decision where the central bank unsurprisingly opted for a hawkish hold.
• Nikkei 225 gapped above the 38,000 level as it played catch up on its return from the long weekend.
• Hang Seng and Shanghai Comp were boosted after the PBoC, NDRC and NRFA press briefing where PBoC Governor Pan announced a cut in the RRR by 50bps and the 7-day reverse repo rate by 20bps to 1.50%, while it will reduce the MLF rate and guide the LPR lower. Furthermore, support measures were also announced for the property industry and China will create new tools to support the stable development of the stock market, as well as allow funds and brokers to tap PBoC funds to buy stock.

CHINA STIMULUS

• PBoC Governor Pan announced to cut RRR by 50bps which will provide CNY 1tln worth of long-term capital and cut the 7-day reverse repo rate by 20bps to 1.50%, while he said they will guide LPRs lower and reduce the mortgage rate for existing mortgages in which the average reduction in the interest rate of existing mortgages will be about 0.5 percentage points. PBoC also lowered downpayments for second homes to 15% from 25% and will no longer distinguish between down payments for first and second homes which will be unified at 15%. Pan said they must support the steady recovery of prices in the economy and must coordinate monetary policy and fiscal policy, while he added the financial weighted reserve ratio for large banks will be reduced to 8% after the RRR cut and they might further cut RRR by year-end. Furthermore, he stated the MLF rate will be lowered by 0.3ppts and LPR will be lowered by 0.2-0.25ppts.
  • China Securities Regulatory Commission Chairman said they will issue guidance for medium-term and long-term funds to enter the market and will issue measures to promote mergers, acquisitions and reorganisations. China will also release six new measures to support M&A soon and allow funds and brokers to tap PBoC funds to buy stock, while China reportedly plans at least CNY 500bln of liquidity to support stocks and is studying setting up a stock stabilisation plan.
  • China NFRA head said China is to increase core tier-1 capital of the country's six largest commercial banks and will broaden the amount and proportion of equity investment restrictions, as well as establish a mechanism for coordinating financing of micro and small enterprises.
  • Click for full Newsquawk Analysis

NOTABLE ASIA-PAC HEADLINES

• Former US President Trump said regarding his tariff plans that he doesn't need Congress and would have the right to impose them himself, according to Washington Post's Stein.
• BoJ Governor Ueda says it is desirable for FX to move stability reflecting fundamentals; global market remains somewhat unstable; must watch market developments with strong sense of urgency for the time being. Says the unwinding of short-term speculative JPY positions, which were partially behind the August rout, have likely run their course. Says he wants scrutinise each month's service price data in gauging development in underlying inflation. BoJ natural rate of interest was among the factors taken into account when setting policy. Does not comment on short-term FX fluctuations.

• APAC stocks traded mostly higher following gains on Wall St. and China's various stimulus measures.
• PBoC cut the RRR and 7-day reverse repo rate, whilst also announcing measures for the property sector and stock market.
• RBA kept its Cash Rate Target unchanged at 4.35%, as expected, while it reiterated that it is not ruling anything in or out.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.5% after the cash market closed higher by 0.3% on Monday.
• Looking ahead, highlights include German Ifo, US Richmond Fed Index, NBH Policy Announcement, Speakers including Fed's Bowman & BoC's Macklem, Supply from UK, Germany & US.

SNAPSHOTUS TRADEEQUITIES

• US stocks were choppy and the major indices eked mild gains to notch fresh record closes for the S&P 500 and the DJIA, although the small-cap Russell 2000 lagged as attention centred on a slew of weak PMI data releases from Europe, while the US figures were mixed and accompanied by inflationary commentary within the report. As such, the US release spurred two-way price action in T-Notes which ultimately settled flat ahead of supply this week, as well as a plethora of Fed speak on Thursday and key US PCE data on Friday.
• SPX +0.29% at 5,718, NDX +0.31% at 19,852, DJIA +0.15% at 42,125, RUT -0.34% at 2,220.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US intelligence official said foreign actors are using AI to influence the outcome of the US presidential election and that Russia has generated the most AI content to influence the US presidential election whereby the content is consistent with the broader Russian effort to boost Republican candidate Trump over Democrat Harris, while the US has not yet seen China using AI for any specific operations targeting US election outcomes.

APAC TRADEEQUITIES

• APAC stocks traded mostly higher following gains on Wall St. and China's various stimulus measures.
• ASX 200 was subdued amid the RBA rate decision where the central bank unsurprisingly opted for a hawkish hold.
• Nikkei 225 gapped above the 38,000 level as it played catch up on its return from the long weekend.
• Hang Seng and Shanghai Comp were boosted after the PBoC, NDRC and NRFA press briefing where PBoC Governor Pan announced a cut in the RRR by 50bps and the 7-day reverse repo rate by 20bps to 1.50%, while it will reduce the MLF rate and guide the LPR lower. Furthermore, support measures were also announced for the property industry and China will create new tools to support the stable development of the stock market, as well as allow funds and brokers to tap PBoC funds to buy stock.
• US equity futures (ES U/C) were lacklustre and largely ignored China's support efforts.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.5% after the cash market closed higher by 0.3% on Monday.

FX

• DXY lacked firm direction after failing to sustain the prior day's initial momentum with headwinds amid dovish Fed rhetoric.
• EUR/USD remained subdued and retested the 1.1100 level to the downside after the bloc's recent dismal PMI releases.
• GBP/USD traded sideways after yesterday's gains which coincided with the momentum in activity currencies.
• USD/JPY was choppy following the recent indecision and as comments from BoJ Governor Ueda loom.
• Antipodeans were contained amid a quiet data calendar but with mild support seen after the RBA kept rates unchanged and stuck to a hawkish tone.

FIXED INCOME

• 10yr UST futures were lacklustre after recent price swings owing to somewhat mixed US PMI data which included inflationary comments and with mostly dovish rhetoric from Fed officials who left the door open for further large interest rate cuts.
• Bund futures held on the prior day's gains but remained below the 135.00 territory ahead of German Ifo data and a Schatz auction.
• 10yr JGB futures were underpinned on return from the long weekend as a report noted that San-in Godo Bank, which operates in Japan's least populated area, is planning to return to government bonds after being stung by Fed hikes which could have major ramifications if its peers follow suit.

COMMODITIES

• Crude futures gradually gained amid heightened geopolitical tensions and China stimulus.
• BP (BP/ LN) cut oil and gas production at two US Gulf of Mexico platforms and curtailed output at two others, while it is removing non-essential staff from five US Gulf of Mexico platforms ahead of a predicted hurricane.
• Chevron (CVX) announced it was evacuating non-essential personnel from all Gulf of Mexico platforms including Anchor, Big Foot, Blind Faith, Jack/St. Malo, Petronius and Tahiti.
• Shell (SHEL LN) said it was monitoring tropical disturbance 35 for potential impacts to its assets and operations in the Gulf of Mexico where it has shut in production at its Stones asset and curtailed output at Appomattox.
• Russia sees oil and gas revenue shrinking for the next three years and is considering lifting an extra output tax on Gazprom in 2025, according to Bloomberg.
• Ukrainian President Zelensky said he held talks with Japanese PM Kishida on energy supplies in light of Russian attacks.
• Spot gold was little changed and retested all-time highs after the recent dovish rhetoric from some Fed officials.
• Copper futures were higher alongside the mostly positive risk appetite and China's policy support measures.

CRYPTO

• Bitcoin marginally declined and briefly dipped beneath the USD 63,000 level before recouping some of the losses.

NOTABLE ASIA-PAC HEADLINES

• PBoC Governor Pan announced to cut RRR by 50bps which will provide CNY 1tln worth of long-term capital and cut the 7-day reverse repo rate by 20bps to 1.50%, while he said they will guide LPRs lower and reduce the mortgage rate for existing mortgages in which the average reduction in the interest rate of existing mortgages will be about 0.5 percentage points. PBoC also lowered downpayments for second homes to 15% from 25% and will no longer distinguish between down payments for first and second homes which will be unified at 15%. Pan said they must support the steady recovery of prices in the economy and must coordinate monetary policy and fiscal policy, while he added the financial weighted reserve ratio for large banks will be reduced to 8% after the RRR cut and they might further cut RRR by year-end. Furthermore, he stated the MLF rate will be lowered by 0.3ppts and LPR will be lowered by 0.2-0.25ppts.
• China Securities Regulatory Commission Chairman said they will issue guidance for medium-term and long-term funds to enter the market and will issue measures to promote mergers, acquisitions and reorganisations. China will also release six new measures to support M&A soon and allow funds and brokers to tap PBoC funds to buy stock, while China reportedly plans at least CNY 500bln of liquidity to support stocks and is studying setting up a stock stabilisation plan.
• China NFRA head said China is to increase core tier-1 capital of the country's six largest commercial banks and will broaden the amount and proportion of equity investment restrictions, as well as establish a mechanism for coordinating financing of micro and small enterprises.
• Former US President Trump said he will call Chinese President Xi if elected to discuss the Phase One deal and added that China is not living up to the agreement. It was separately reported that Trump said regarding his tariff plans that he doesn't need Congress and would have the right to impose them himself, according to Washington Post's Stein.
• Germany's Economy Minister said a big part of the auto market problem lies in demand from China and it does not seem that this problem will be solved soon.
• RBA kept its Cash Rate Target unchanged at 4.35%, as expected, while it reiterated that the Board remains resolute in its determination to return inflation to the target and is not ruling anything in or out. RBA also repeated that inflation remains above target and is proving persistent, as well as stated that returning inflation to target is the priority. Furthermore, it said inflation is still some way above the midpoint of the 2–3% target range and the Board will rely upon the data and the evolving assessment of risks to guide its decisions.
• BoJ Governor Ueda says appropriate to increase rates if trend inflation heighten in line with our forecast. Will raise interest rate if economy and price move in line with forecasts shown in quarterly outlook report. Uncertainty surrounding the economy and prices is high. BoJ must conduct monetary policy in a timely and appropriate fashion without having a pre-set schedule, taking into account various uncertainties. Will watch with strong sense of urgency of US and overseas economic outlook, still unstable market developments. One-sided JPY falls have been reversed since August, and rise in import prices moderating. Can afford to spend time scrutinising market moves and overseas developments behind market developments. Must prevent a return to deflation.

GEOPOLITICS

MIDDLE EAST

• Israeli army chief said they launched a proactive offensive targeting combat infrastructure and are preparing for the next phases, while the Lebanese health ministry said the death toll from Monday’s IDF airstrikes rose to 492 with 1,645 wounded.
• Hamas armed wing said field commander Mahmoud Al-Nader was killed in an Israeli strike on southern Lebanon on Monday.
• It was initially reported that senior Hezbollah Leader Ali Karaki was reportedly killed in the latest raid in southern Beirut suburbs. However, a report later stated that Ali Karaki was injured during the targeting in Beirut but did not die, according to Al-Arabiya citing sources. Hezbollah also confirmed that its senior leader Ali Karaki was safe after the targeted Israeli strike on him in Beirut.
• US will reportedly send additional troops to the Middle East amid escalation, according to AP.
• US President Biden and UAE's leader said after their meeting that a two-state solution is the only framework for resolving the conflict, while it was also reported that the UAE expressed deep concern over Israeli attacks on southern Lebanon.
• US State Department senior official said the US has been working hard in recent days to find a diplomatic solution to the spike in fighting between Israel and Hezbollah, while the key focus for Secretary of State Blinken's discussion with allies is on finding an off-ramp to prevent further escalation and the US has some "concrete ideas" that it is going to be discussing to prevent escalation in the region.
• US Deputy Treasury Secretary told the Bank of Israel Governor of US concern about threats by some within the Israeli government to sever correspondent banking relationships between Israeli and Palestinian banks, while the Deputy Treasury Secretary insisted these relationships should be extended for at least a year and stressed these relations would be critical to preventing an economic crisis in the West Bank.
• EU's Borrell said the escalation in Lebanon is extremely worrying and that they are almost in a full-fledged war, while he added that they are still working to stop escalation in Lebanon but the worst expectations are becoming reality.
• Iran’s President said US policies support and encourage Israel in its open war and Washington's actions contradict its words, while Iran reaffirms that an open regional war will not be in the interest of anyone in the region and the world. Furthermore, he said Iran has sufficient capacity to strike Israel and their response will be at the right time and in the appropriate way, while he added that Israel's assassination of Haniyeh will not be without a response and their reply is coming.
• Iran’s President said at the UN Summit of the Future that Tehran aspires to “a world free of nuclear weapons and a Middle East free of weapons of mass destruction, without any preconditions”, according to journalist Abas Aslani via X.
• Iran's Foreign Minister denied statements attributed to Iran's President about a willingness to reduce tensions with Israel, while the Foreign Minister added that Israel will receive a response to attacks in due course, according to Al-Arabiya.

OTHER

• Ukrainian President Zelensky said Ukraine's war with Russia is 'closer to the end' and separately commented that US decisive action now could hasten an end to Russian aggression next year, according to ABC News and Reuters.
• EU's Borrell said it is clear that Russia has been receiving new weapons in particular, missiles from Iran, while he added that G7 will hold talks about providing long-range missiles to Ukraine to strike Russian territory.
• Venezuela's highest court approved an arrest warrant for Argentine President Milei who is a vocal critic and ideological rival of Venezuelan President Maduro, according to AFP News Agency. Argentine Justice requests international arrest of Venezuelan President Maduro for alleged human rights violations

EU/UK

NOTABLE HEADLINES

• UK PM Starmer is to argue that tough decisions are needed for the UK national renewal and say in his speech on Tuesday that there are no easy answers, according to FT. It was also reported by Huffington Post that PM Starmer is to warn of more pain to come as he pledges a new Britain.
• UK Chancellor Reeves is considering changing how the government’s fiscal rules are calculated to allow billions of pounds more in capital spending, according to The Guardian citing government sources.