• European bourses are lower across the board (ex-FTSE 100), US futures are in negative terrirtory ahead of today’s US data deluge.
• Dollar is firmer vs G10 peers, GBP underperforms after BoE Governor Bailey said the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good.
• Bonds are on the backfoot, extending on the pressure seen post-ADP on Wednesday; Gilts outperform following the dovish-leaning Bailey comments.
• Crude oil is continuing the benefit from the geopolitical risk premium, XAU/base metals dip amid the stronger Dollar
• Looking ahead, US Services/Composite PMIs (Final), US Challenger Layoffs, IJC, Durable Goods (R), Factory Orders, ISM Services PMI, Speakers include Fed’s Bostic & Schmid, Supply from the US, Earnings from Constellation Brands.

• European bourses, Stoxx 600 (-0.7%), opened modestly in negative territory and continued to edge lower as the morning progressed, with indices now generally just off lows. The FTSE 100 (+0.2%) remains in positive territory after BoE Governor Bailey's dovishly-received comments.
• European sectors are negative across the board with Energy also turning red following a positive open. There is no clear theme or bias across European sectors. Autos and Parts once again lag. Basic Resources also resides as one of the losers amid the pullback in base metal prices.
• US Equity Futures (ES -0.4%, NQ -0.5%, RTY -0.7%) are softer across the board amid the broader risk-averse mood despite the lack of any fresh drivers during the session, but ahead of risk events including the weekly jobless claims and ISM Services PMI ahead of tomorrow's US jobs report.
• Barclays has upgraded the EU Autos & Parts sector to neutral from negative
• Click for the sessions European pre-market equity newsflow
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• USD is broadly stronger vs. peers with DXY up for a fourth consecutive session in a week that has been characterised by geopolitical tensions and comments from Fed Chair Powell guiding markets towards a step down to a 25bps rate cut next month. DXY is currently eyeing the 102.00 mark, and may take impetus from today's US busy data docket, with ISM Services likely the highlight.
• EUR is softer vs. the USD but to a lesser extent than most peers. ECB officials seemingly endorsing a rate cut later this month has definitely acted as a drag on the pair, with attention now on if the pair can hold above the 1.10 mark.
• GBP is the standout laggard across the majors following dovishly-received comments from BoE Governor Bailey; he said in an interview with The Guardian, the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good.
• JPY is softer vs. the USD after breaching the September peak for USD/JPY at 147.21 overnight. As a reminder, on Wednesday, PM Ishiba downplayed the likelihood of another immediate BoJ rate hike. USD/JPY currently stands at around 146.83.
• Both antipodes are struggling vs. the broadly firmer USD. After an indecisive session yesterday, AUD/USD has extended its move lower on a 0.68 handle.
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• USTs are extending on yesterday's downside that was triggered in part by Wednesday's strong ADP release in the run-up to Friday's NFP print. Today's US data docket is a busy one with ISM Services PMI the likely highlight. US 10yr yield is currently just above the 3.8% mark but below Wednesday's 3.817% peak.
• Bunds are lower in an extension of Wednesday's US-led price action, but it remains to be seen how long the downside can continue given the increasingly dovish tones seen out of the ECB with comments from hawk Schnabel helping to cement expectations of an increasingly dovish ECB. The German 10yr yield is back above the 2.1% after delving as low as 2.01% earlier in the week.
• Gilts the standout outlier across the fixed income space on account of dovish comments from BoE Governor Bailey who said the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be "good". The UK 10yr yield is currently holding just above the 4% mark.
• Spain sells EUR 4.54bln vs exp. EUR 4-5bln 2.50% 2027, 1.45% 2029 and 4.70% 2041 Bono and EUR 0.512bln vs exp. EUR 0.25-0.75bln 2.05% 2039 I/L.
• France sells EUR 11.98bln vs exp. EUR 10-12bln 1.25% 2034, 3.00% 2034, 3.00% 2049, and 3.25% 2055 OAT.
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• Crude is firmer intraday in a continuation of the upside seen since the recent geopolitical escalation. Updates from the region has been light thus far, as markets still await Israel's response which will reportedly be "harsh". Brent Dec briefly rose above USD 75/bbl to trade in a current USD 74.46-75.11/bbl parameter.
• Softer trade across precious metals as the firmer Dollar and lack of fresh geopolitical escalations (as we await Israel's response) allow traders to book some profits before scheduled risk events such as the US jobless claims and ISM Services PMIs.
• Base metals are softer across the board against the backdrop of a risk-averse mood across the market. Newsflow has been light this morning but the angst surrounding a wider geopolitical escalation in the Middle East remains. As a reminder, Chinese markets were closed overnight as they observe their Golden Week Holiday.
• Kinder Morgan (KMI) reports a mechanical failure on gasoline pipeline repaired at Sacramento County, California; pipeline is shutdown, personnel is on route to the site to get eyes on assessment.
• Kazakhstan's 400k BPD Kashagan repairs reportedly postponed, now due to start on Oct 7th, according to Ifax.
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NOTABLE DATA RECAP

• EU Producer Prices YY (Aug) -2.3% vs. Exp. -2.4% (Prev. -2.1%, Rev. -2.2%); Producer Prices MM (Aug) 0.6% vs. Exp. 0.3% (Prev. 0.8%, Rev. 0.7%)
• EU HCOB Composite Final PMI (Sep) 49.6 vs. Exp. 48.9 (Prev. 48.9); HCOB Services Final PMI (Sep) 51.4 vs. Exp. 50.5 (Prev. 50.5)
• UK S&P Global PMI Composite Output (Sep) 52.6 vs. Exp. 52.9 (Prev. 52.9); Global Service PMI (Sep) 52.4 vs. Exp. 52.8 (Prev. 52.8)
• Spanish Services PMI (Sep) 57.0 vs. Exp. 54.0 (Prev. 54.6)
• German HCOB Services PMI (Sep) 50.6 vs. Exp. 50.6 (Prev. 50.6); HCOB Composite Final PMI (Sep) 47.5 vs. Exp. 47.2 (Prev. 47.2)
• French HCOB Composite PMI (Sep) 48.6 vs. Exp. 47.4 (Prev. 47.4); HCOB Services PMI (Sep) 49.6 vs. Exp. 48.3 (Prev. 48.3)Italian HCOB Composite PMI (Sep) 49.7 (Prev. 50.8); HCOB Services PMI (Sep) 50.5 vs. Exp. 51.0 (Prev. 51.4)
• Swedish PMI Services (Sep) 49.1 (Prev. 52.9, Rev. 52.4)
• Swiss CPI MM (Sep) -0.3% vs. Exp. -0.1% (Prev. 0.0%); CPI YY (Sep) 0.8% vs. Exp. 1.1% (Prev. 1.1%)
• Turkish CPI MM (Sep) 2.97% vs. Exp. 2.2% (Prev. 2.47%)

NOTABLE EUROPEAN HEADLINES

• BoE Governor Bailey said the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good, in an interview with The Guardian.
• UK PM Starmer conceded during his first visit to Brussels that his "reset" with the EU won't be easy, according to AFP.
• Riksbank's Jansson said the bank is not too worried about a consumption driven uptick in inflation as a result of rate cuts. Need to see an economic recovery if inflation is not undershoot. Would be good for the economy if fundamental factors were reflected in the value of the crown.
• BoE Monthly Decision Maker Panel data (September 2024). Expectations for CPI inflation a year ahead declined by 0.1 percentage point to 2.6% in the three months to September. The corresponding measure for three-year ahead CPI inflation expectations was also 2.6% in the three months to September, and 0.1 percentage points lower than in the three months to August. Expected year-ahead wage growth remained unchanged at 4.1% on a three-month moving-average basis in September.

MIDDLE EAST

• IDF orders another 25 villages evacuated in southern Lebanon, according to ELINT News
• "An Israeli infantry group and vehicles retreat beyond the Blue Line after infiltrating towards the town of Maroun al-Ras", according to Al Jazeera
• "Private sources for Sky News Arabia: A positive atmosphere prevailed in the meeting in Doha between Abbas and Hamas leaders", according to Sky News Arabia.
• Israeli Military said it assassinated head of Hamas government Rawhi Mushtaha in Gaza strip.
• Hezbollah said it confronted an attempt by Israeli forces to advance at Lebanese border's Fatima Gate.
• "US sources say Washington is ready to sell F-15s to Ankara", according to journalist Soylu; "Sources say if Turkey finally returns to F-35 program, Ankara might be involved in production line", "Turkey’s F-16 deal is still being finalised".
• Pro-Iranian factions target an international coalition base in north-eastern Syria, via Sky News Arabia.
• Israel conducted raids on 3 sites in the neighbourhoods of Mouawad, Al-Amrikan and Zaghloul in Beirut. It was also reported that an Israeli strike hit central Beirut, while a building targeted by the Israeli raid in Bachoura reportedly housed the office of Beirut's Hezbollah deputy Amin Sherri.
• Israeli army called on residents of several buildings in Haret Hreik, Burj al-Barajneh and Hadath West in the southern suburbs of Beirut to evacuate and a Sky News Arabia correspondent reported a new series of Israeli raids targeting the suburbs of Beirut.
• Israeli Home Front announced sirens sounded in several areas of the Golan and that sirens sounded in Shlomi in the western Galilee in northern Israel. Furthermore, Israeli media reported that 4 marches launched from Yemen exploded at a low altitude in the airspace of Tel Aviv, according to Asharq News.
• Clashes were reported between Hezbollah and Israeli soldiers on the outskirts of Aitaroun, southern Lebanon, according to an Al-Arabiya correspondent.
• Israeli press cited an official who stated that the response to Iran may include more than one option and not necessarily through airstrikes. The official added it is not certain that Washington will agree with them but it knows that they have to respond, while they should not go too far in our response although it will be much stronger than the response to the April attack.
• Israeli official cited by Yedioth Ahronoth said there are no limits to the response to Iran, according to Al Arabiya.
• Iran’s President vowed a stronger response if Israel retaliates.

• Bitcoin is on the backfoot and holds just above USD 60.6k; Ethereum is incrementally above USD 2.3k, and underperforms vs BTC.

• APAC stocks traded mixed amid the backdrop of several holiday closures and ongoing geopolitical tensions, while Hong Kong participants booked profits.
• ASX 200 lacked direction alongside varied data releases including downward PMI revisions and mixed trade figures.
• Nikkei 225 outperformed on the back of a weaker currency after yesterday's dovish-leaning remarks from Japanese PM Ishiba who said they are not in an environment for an additional rate hike following a meeting with BoJ Governor Ueda, while Ueda said the BoJ will adjust the degree of monetary easing if the outlook is realised, but will take careful steps to determine that as it takes time.
• Hang Seng suffered heavy losses amid profit taking and in a possible sign that the China stimulus euphoria has finally worn out.

NOTABLE ASIA-PAC HEADLINES

• BoJ Board Member Noguchi said they must patiently maintain loose monetary conditions and it will take a considerable time for the public to shift to a mindset where inflation can sustainably hit 2%, while he believes the consumption uptrend is likely to become clearer and noted the cost pressure from wage hikes is gradually being reflected in service price rises. Furthermore, he said the BoJ will likely gradually adjust the degree of monetary support while cautiously examining whether inflation stably hits 2%, accompanied by wage gains, as well as noted that the BoJ can spend time and move cautiously, in reducing its balance sheet. Does not comment of PM Ishiba's remarks on monetary policy; expects BoJ to adjust degree of monetary policy if economy moves in line with forecast, even at a very slow pace. "personally feel we need to proceed very carefully in adjusting degree of monetary support". "Need to scrutinise whether consumers' sentiment will shift to one where they can swallow price hikes.". "As Governor Ueda has said, we have time to scrutinise economic developments, before contemplating rate hike.". "The current financial environment is sufficiently easy." "Japan’s economy can withstand if the JPY becomes stronger gradually.". "Will not deny there is room to adjust the degree of monetary support further.". "Given it is hard to come up with a concrete estimate on the neutral rate, the BoJ must check the impact of the past rate hike before carefully proceeding with the next one.". "The one-sided, sharp JPY fall seen in July has subsided.". "The upside inflation risk from a weak JPY has subsided."
• Japanese PM Kishida is to direct a compilation of economic package on Friday, according to Kyodo.
• Japan's Finance Minister Kato has affirmed the government, BoJ will continue to coordinate closely; also said he wants to watch the FX market with a sense of urgency including speculative moves. "We will communicate thoroughly with markets". Will aim to exit deflation soon, working closely with BoJ.
• Japan's Economy Minister Akazawa said in broad terms, policy rate of 0.25% is an accommodative state. "We are moving towards monetary policy normalisation but existing deflation is a top priority". "We must not cool down the economy".

DATA RECAP

• Australian Trade Balance (AUD)(Aug) 5.6B vs. Exp. 5.5B (Prev. 6.0B)
• Australian Goods/Services Exports MM (Aug) -0.2% (Prev. 0.7%)
• Australian Goods/Services Imports MM (Aug) -0.2% (Prev. -0.8%)
• Australian Judo Bank Services PMI Final (Sep) 50.5 (Prev. 50.6)
• Australian Judo Bank Composite PMI Final (Sep) 49.6 (Prev. 49.8)

• APAC stocks traded mixed amid the backdrop of several holiday closures and ongoing geopolitical tensions, while Hong Kong participants booked profits.
• Fed's Barkin (2024 voter) said he sees two 25bps cuts this year as "a reasonable path" if the economy evolves as expected.
• BoE Governor Bailey said the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good, in an interview with The Guardian.
• Israeli security cabinet decided to implement a harsh response to the Iranian attack and the response to Iran will be cruel but it will not lead to a regional war.
• European equity futures are indicative of a negative cash open with the Euro Stoxx 50 future -0.5% after the cash market closed higher by 0.2% on Wednesday.
• Looking ahead, highlights include EZ/UK/US Services/Composite PMIs (Final), Swiss CPI, EZ Producer Prices, US Challenger Layoffs, IJC, Durable Goods (R), Factory Orders, ISM Services PMI, BoE Decision Maker Panel (Sept), Speakers include Fed’s Bostic & Schmid, Supply from Spain, France & US, Earnings from Constellation Brands & Tesco.

• Click for the Newsquawk Week Ahead.

• US stocks were ultimately flat with only marginal gains seen in the major indices and slight outperformance in the Nasdaq after tech was supported by the upside in NVDA which rebounded from the prior day's losses and was helped by positive commentary from JPM.
• The energy sector was the biggest gainer on the account of higher crude prices as geopolitical tensions remained high with participants eyeing the Israeli response to Iran, although most sectors finished in the red, while the Dollar was bid and Treasuries were pressured following stronger-than-expected ADP jobs data.
• SPX +0.01% at 5,710, NDX +0.15% at 19,803, DJIA +0.09% at 41,197, RUT -0.09% at 2,195
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (2024 voter) said a 50bp cut in September was warranted because rates were out of sync with the decline in inflation and the unemployment rate near its sustainable level. Barkin said the Fed cannot declare the inflation battle is over and expects a little further drop in core PCE until next year, as well as noted that 50bps of cuts shown as the median Fed policy projection for the rest of 2024 would also take a little bit of the edge off rates. Furthermore, Barkin commented that the "last mile" of inflation may still take longer than expected and is worried price pressures could get "stuck" next year, while he sees two 25bps cuts this year as "a reasonable path" if the economy evolves as expected.

• APAC stocks traded mixed amid the backdrop of several holiday closures and ongoing geopolitical tensions, while Hong Kong participants booked profits.
• ASX 200 lacked direction alongside varied data releases including downward PMI revisions and mixed trade figures.
• Nikkei 225 outperformed on the back of a weaker currency after yesterday's dovish-leaning remarks from Japanese PM Ishiba who said they are not in an environment for an additional rate hike following a meeting with BoJ Governor Ueda, while Ueda said the BoJ will adjust the degree of monetary easing if the outlook is realised, but will take careful steps to determine that as it takes time.
• Hang Seng suffered heavy losses amid profit taking and in a possible sign that the China stimulus euphoria has finally worn out.
• US equity futures were lacklustre after the prior day's choppy performance and as several key data releases loom.
• European equity futures are indicative of a negative cash open with the Euro Stoxx 50 future -0.5% after the cash market closed higher by 0.2% on Wednesday.

• DXY held on to the prior day's gains after benefitting from strong ADP jobs data which topped the forecast range, although trade was quiet overnight and participants now await upcoming Fed speakers and data releases including more jobs-related metrics ahead of Friday's NFP report.
• EUR/USD languished near this week's trough after giving way to the firmer dollar and was unresponsive to a slew of ECB rhetoric.
• GBP/USD was uninspired for most of the session before seeing late weakness on comments from BoE Governor Bailey who noted the central bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good, in an interview with The Guardian.
• USD/JPY extended on gains and briefly climbed above the 147.00 level owing to the recent dovish comments from Japanese PM Ishiba who suggested Japan was not ready for an additional rate hike after meeting with BoJ Governor Ueda.
• Antipodeans marginally softened overnight amid the mixed risk appetite in the region and varied data releases.

• 10yr UST futures remained lacklustre after yesterday's decline which was triggered by the stronger-than-expected ADP Jobs data, while the attention for the US turns to more releases including ISM Non-Manufacturing, Factory Orders, Initial Jobless Claims and Challenger Job Cuts.
• Bund futures were restrained following recent selling pressure but with downside stemmed by support near the 135.00 level.
• 10yr JGB futures traded on both sides of the 145.00 level and partially clawed back early losses after mixed results from the 10yr JGB auction.

• Crude futures were higher in which WTI rebounded from support at the USD 70/bbl level after recent two-way price action owing to the heightened geopolitical tensions in the Middle East and bearish crude inventory data.
• OPEC refuted a recent WSJ report about Saudi Arabia saying oil may drop to USD 50/bbl if OPEC+ flouts output curbs, in which it stated that the story's claims are "wholly inaccurate and misleading".
• Spot gold struggled for direction after the prior day's choppy performance and with the upside restricted by a firmer dollar.
• Copper futures were subdued and faded some of the recent advances amid the mixed risk appetite.

• Bitcoin steadily gained overnight after an early reclaim of the USD 61,000 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ Board Member Noguchi said they must patiently maintain loose monetary conditions and it will take a considerable time for the public to shift to a mindset where inflation can sustainably hit 2%, while he believes the consumption uptrend is likely to become clearer and noted the cost pressure from wage hikes is gradually being reflected in service price rises. Furthermore, he said the BoJ will likely gradually adjust the degree of monetary support while cautiously examining whether inflation stably hits 2%, accompanied by wage gains, as well as noted that the BoJ can spend time and move cautiously, in reducing its balance sheet.

DATA RECAP

• Australian Trade Balance (AUD)(Aug) 5.6B vs. Exp. 5.5B (Prev. 6.0B)
• Australian Goods/Services Exports MM (Aug) -0.2% (Prev. 0.7%)
• Australian Goods/Services Imports MM (Aug) -0.2% (Prev. -0.8%)
• Australian Judo Bank Services PMI Final (Sep) 50.5 (Prev. 50.6)
• Australian Judo Bank Composite PMI Final (Sep) 49.6 (Prev. 49.8)

MIDDLE EAST

• Israel conducted raids on 3 sites in the neighbourhoods of Mouawad, Al-Amrikan and Zaghloul in Beirut. It was also reported that an Israeli strike hit central Beirut, while a building targeted by the Israeli raid in Bachoura reportedly housed the office of Beirut's Hezbollah deputy Amin Sherri.
• Israeli army called on residents of several buildings in Haret Hreik, Burj al-Barajneh and Hadath West in the southern suburbs of Beirut to evacuate and a Sky News Arabia correspondent reported a new series of Israeli raids targeting the suburbs of Beirut.
• Israeli Home Front announced sirens sounded in several areas of the Golan and that sirens sounded in Shlomi in the western Galilee in northern Israel. Furthermore, Israeli media reported that 4 marches launched from Yemen exploded at a low altitude in the airspace of Tel Aviv, according to Asharq News.
• Clashes were reported between Hezbollah and Israeli soldiers on the outskirts of Aitaroun, southern Lebanon, according to an Al-Arabiya correspondent.
• Israeli security cabinet decided to implement a harsh response to the Iranian attack and the response to Iran will be cruel but it will not lead to a regional war. It was also reported that a senior Israeli official said Israel is going to respond independently to the Iranian attack and wants to coordinate its plans with the US because of the strategic implications of the situation, according to Axios' Ravid. However, it was separately reported that Tel Aviv has not yet made a decision on how to respond to Iran's attack and does not currently plan to strike Iranian nuclear facilities, according to Israeli officials cited by NYT.
• Israeli press cited an official who stated that the response to Iran may include more than one option and not necessarily through airstrikes. The official added it is not certain that Washington will agree with them but it knows that they have to respond, while they should not go too far in our response although it will be much stronger than the response to the April attack.
• Israeli official cited by Yedioth Ahronoth said there are no limits to the response to Iran, according to Al Arabiya.
• Iran’s President vowed a stronger response if Israel retaliates.
• Iran's UN Envoy told the Security Council that Israel is pushing the region to the edge of an unprecedented catastrophe.
• Iran announced that airports in the western half of the country, including Tehran and Mehrabad, are closed until Thursday except for emergency and certain other flights, according to aviation security specialist Osprey Flight Solutions via WSJ. It was later reported that a spokesperson for Iran's Civil Aviation Organization said that airlines will be permitted to resume flight operations starting at 05:00 AM on Thursday (02:30BST/21:30EDT).
• US President Biden said there are going to be some sanctions imposed on Iran and that he does not support an attack on Iran's nuclear sites.
• US Deputy Secretary of State Kurt Campbell said it is not just Israel that is thinking about response options to the Iran attack and that the US is too.
• Israel reportedly conducted a strike on a residential building in Syria's Damascus resulting in injuries, according to state TV. It was also reported that Nasrallah's son-in-law Hassan Jaafar Qasir was killed in the Israeli raid on Mezzeh neighbourhood in Damascus, according to Sky News Arabia. It was also later reported that Israeli military targeted sites in western Syria coastal cities.
• Syrian and Russian air defences reportedly dealt with hostile targets over the sea in the west of the country, according to Al Jazeera.

NOTABLE HEADLINES

• BoE Governor Bailey said the bank could be a "bit more aggressive" in cutting rates provided the news that inflation continues to be good, in an interview with The Guardian.
• UK PM Starmer conceded during his first visit to Brussels that his "reset" with the EU won't be easy, according to AFP.
• ECB's Centeno said inflation has converged closely to the ECB's target and Euro-area inflation has been well anchored.
• ECB's de Guindos said the fight against inflation "is not totally over" and need to watch services inflation, while he added that services could be the main barrier to lower inflation and all options are open for the October rate decision.
• ECB's Schnabel said the ECB cannot ignore headwinds to growth, but at the same time, monetary policy cannot resolve structural issues, while she added that a return to the 2% target in a timely manner is becoming more likely.
• ECB's Vasle said they cannot exclude or commit to a rate cut in October and there will be more cuts but will depend on the data, while he added that inflation's downward trend is sustainable and will continue.

• European bourses are generally on a firmer footing whilst US futures are modestly lower with slight underperformance in the RTY
• Dollar is flat unable to continue the prior day’s geopolitical-indued gains, JPY underperforms with USD/JPY around 144.25
• USTs are flat and Bunds give back some of its recent strength, Gilts follow peers and took another leg lower following an auction
• Crude continues to benefit from the geopolitical risk premium, XAU slips off best levels whilst base metals gain
• Looking ahead, ADP National Employment, NBP Policy Announcement; OPEC+ JMMC Meeting, Speakers including ECB’s Elderson, Schnabel, Fed’s Hammack, Musalem, Bowman & Barkin. Earnings from Conagra & Levis.

• European bourses, Stoxx 600 (+0.1%) opened on a tentative footing, however, sentiment gradually improved as the morning progressed, with indices now generally in positive territory to varying degrees. In recent trade, bourses have edged slightly off best levels.
• European sectors are mixed; Energy tops the pile, propped up by the geopolitical-induced strength in oil prices; a factor which has weighed on Travel & Leisure names. Consumer Products is also towards the top of the pile, assisted by gains in Luxury amid continued optimism surrounding China on its return from Holiday.
• US Equity Futures (ES -0.2%, NQ -0.2%, RTY -0.6%) are modestly lower across the board, continuing the weakness seen in the prior session with slight underperformance in the RTY.
• Click for the sessions European pre-market equity newsflow
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• The rally in the USD has paused for breath with DXY unable to advance above yesterday's 101.39 peak. Wednesday's price action was driven by geopolitics and if the situation in the Middle-East escalates, this could have some bearing on today's price action; looking at US-specifically, ADP National Employment will be in full focus ahead of the NFP on Friday.
• EUR/USD has moved back onto a 1.10 handle in the wake of Tuesday's USD rally. For EUR-specifically, ECB's Kazaks put his weight behind a likely rate cut this month. The Single-Currency is currently flat and trades within a 1.1055-82 range.
• After starting the week above the 1.34 mark, Cable now sits on a 1.32 handle with heavy losses yesterday triggered by the haven bid into the USD. For now, GBP/USD is holding above Tuesday's 1.3237 low and the 21DMA at 1.3233.
• JPY is struggling vs. the USD following yesterday's indecisive session which drew a safe haven bid into both the USD and JPY. USD/JPY is currently tucked within Tuesday's 142.97-144.53 range.
• Antipodeans are both slightly firmer vs. the USD in an attempt to claw back yesterday's losses. AUD/USD has returned to a 0.68 handle after topping out on Monday at a fresh YTD peak at 0.6942.
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• USTs are essentially flat/incrementally lower and holding at a 114-18+ base, having faded from Tuesday’s geopolitically-driven 115-00 peak. Today's docket is packed with ADP National Employment alongside Fed speak from Barkin, Bowman, Hammack & Musalem.
• Bunds are in the red, with yields firmer across the board in Europe after the marked dovish action seen on Tuesday in the European morning and then extended in the afternoon/evening on geopols. As it stands, Bunds at a low of 135.37, fading from the 136.00 mark and above yesterday’s 136.20 peak. OATs underperform marginally, with the OAT-Bund 10yr yield spread just shy of the 80bps mark. President Macron is due to speak from 14:15BST onwards.
• Gilts are directionally in-fitting with peers which are pulling back from a combination of dovish ECB pricing and geopolitical premia. At a 98.36 trough following the Gilt auction, owning to the softer b/c and wider yield tail vs the prior outing.
• UK sells GBP 4bln 4.125% 2029 Gilt: b/c 2.93x (prev. 3.29x), average yield 3.880% (prev. 3.811%) & tail 1.2bps (prev. 0.9bps).
• Germany sells EUR 3.704bln vs exp. EUR 4.5bln 2.60% 2034 Bund: b/c 2.0x (prev. 2.1x), average yield 2.08% (prev. 2.11%), retention 17.69% (prev. 18.04%)
• Click for a detailed summary

• Crude is firmer intraday, and holding onto the gains seen yesterday and overnight amid the geopolitical risk premium woven into prices after Iran attacked Israel. Brent Dec resides in a USD 74.24-75.55/bbl parameter.
• Mixed trade across precious metals with upside seen in spot silver and spot palladium whilst spot gold remains subdued since early European trade following recent geopolitically-induced gains. XAU currently resides in a USD 2,644.58-2,662.88/oz range.
• Base metals are mostly firmer in European trade despite the cautious risk tone, but with some potential continued tailwinds from the Chinese stimulus efforts. 3M LME copper reclaimed USD 10k/t to the upside.
• Saudi Energy Minister reportedly warns of USD 50/bbl oil as OPEC+ members flout production curbs, according to WSJ sources; interpreted as a threat Saudi is willing to launch a price war to keep market share if other countries do not abide. Saudi reportedly singled out Iraq which overproduced by 400k BPD in August.
• US Private inventory data (bbls): Crude -1.5mln (exp. -1.3mln), Distillate -2.7mln (exp. -1.5mln), Gasoline +0.9mln (exp. -0.1mln) Cushing +0.7mln.
• Click for a detailed summary

NOTABLE DATA RECAP

• French Budget Balance (Aug) EUR -171.91B (Prev. -156.91B)
• Italian Unemployment Rate (Aug) 6.2% vs. Exp. 6.6% (Prev. 6.5%, Rev. 6.4%)
• EU Unemployment Rate (Aug) 6.4% vs. Exp. 6.4% (Prev. 6.4%)

NOTABLE EUROPEAN HEADLINES

• Citi expects the ECB to cut by 25bps in October and December and through the beginning of 2025, to reach a deposit rate of 1.50% by September 2025.
• UBS expects the ECB to cut at the October, December, January, March, April & June meetings for a total of 150bps.
• ECB's de Guindos says "Broadly speaking, the problems we are discussing today derive from the incompleteness of the Economic and Monetary Union" adds "risks to growth remain tilted to the downside".
• ECB's Lane slide deck "Expectations and Monetary Policy"
• German engineering orders +7% Y/Y in August (Domestic -7%; Orders +13%); Jun-Aug -3% Y/Y (Domestic -6%, Foreign Orders -1%), according to VDMA.

NOTABLE US HEADLINES

• US Democratic VP candidate Walz said in the VP debate that they will continue to support Israel in defending itself and that former President Trump created the largest trade deficit between the US and China, while Walz admitted to misstating the timing of his visit to China in 1989.
• US Republican VP candidate Vance said in the VP debate that Harris's economic policies do not meet the interests of American workers and stated that Trump's economic policy focuses on the return of industry to the US.

MIDDLE EAST - EUROPEAN SESSION

• Israeli PM Netanyahu "is expected to hold a limited security consultation in the afternoon with several senior ministers and defense chiefs to continue discussing the response to the Iranian attack", according to Axios' Ravid citing sources.
• Israeli military says regular infantry and armoured units are joining the ground operation in Lebanon.
• Yemeni Houthis says they targeted military posts deep inside Israel with "Quds 5" rockets, according to a statement; will not hesitate in broadening operations against Israel. Continuous US and UK support to Israel will put their interests under fire.
• Lebanon's Hezbollah says it targeted areas north of Haifa City in Israel, with a large missile salvo.
• "Atomic Energy Organization of Iran: Nuclear facilities have been secured against any attacks", according to Cairo News.
• "After Israel security cabinet meet: Israel is expected to respond 'harsh' against Iran, with the possibility of targeting strategic sites in Iran"; according Kann's Stein.
• "Lebanese media: Israeli army advances towards a Lebanese army checkpoint in Al-Adaisseh, southern Lebanon", according to Sky News Arabia

MIDDLE EAST - APAC SESSION

• Iranian state television reported that Tehran confirmed it fired 200 missiles in its attack on Israel, according to Sky News Arabia.
• Iran's armed forces said if Israel responds to the Iranian attack it will be met with vast destruction of its infrastructure and if Israel's backers directly intervene against Tehran, their interests and bases in the region will face Iran's strong attack.
• Iran's Foreign Minister commented on X that Iran exercised self-defence under Article 51 of the UN Charter and Iran's action is concluded unless the Israeli regime decides to invite further retaliation, while he said Israel's enablers now have a heightened responsibility to rein in the warmongers in Tel Aviv. Iran's Foreign Minister also commented that there is a possibility that the confrontation with Israel will continue in the coming days and forces are on standby, as well as noted that Iran told the US not to get involved following the missile attack on Israel and warned that any new action by Israel or its supporters will face a more severe response.
• Israel’s Home Front Command lifted restrictions on Israelis after the end of Iranian missile attacks and said it will defend the citizens of Israel and respond to Iranian missiles at the right time and place, according to Sky News Arabia. Israel's Home Front Command also said it eased restrictions on large gatherings in much of Israel including Tel Aviv and Jerusalem areas.
• Israeli PM Netanyahu said Iran made a big mistake tonight and they will pay for it, while he added that the Iranian missile attack on Israel failed.
• Israel's UN envoy said Israel will act and Iran will soon feel the consequences of their actions with the response to be painful.
• Israeli officials cited by Axios said Israel will launch a strong response within days to the major Iranian attack which could target oil production facilities inside Iran, according to Reuters and Al Jazeera.
• Israeli military said it conducted strikes on Hezbollah targets in Beirut and it issued warnings to residents of the Chiyah neighbourhood and Hadath al-Gharb in the southern suburbs of Beirut, while a correspondent reported eight Israeli raids on southern suburbs of Beirut in about two hours.
• Hezbollah said it struck Israeli artillery in Beit Hille with rockets, according to Al Jazeera. Hezbollah separately announced that it confronted an Israeli force infiltrating the Lebanese town of Adaisseh and forced it to retreat, while the Israeli army also reported heavy fighting with Hezbollah operatives in southern Lebanon.

• Bitcoin is slightly firmer, finding its footing following on from the weakness seen in the prior session after Iran's attack on Israel.

• APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel.
• ASX 200 was rangebound as gains in the commodity-related industries offset the losses in the tech and consumer sectors.
• Nikkei 225 slumped at the open and retreated beneath the 38,000 level after the prior day's currency strength.
• Hang Seng resumed its China stimulus-spurred rally on return from the holiday with notable strength in tech and property.

NOTABLE ASIA-PAC HEADLINES

• Japan's new Economy Minister Akazawa said a complete exit from deflation is the top priority and he wants the BoJ to share their view that an exit from deflation is the top priority, while he commented that the BoJ should be careful about raising rates as it takes time to fully exit deflation. Akazawa also stated that it is not necessarily correct that PM Ishiba is positive about further rate hikes and that Ishiba's comment on the need for monetary policy normalisation has various conditions attached.
• BoJ Governor Ueda says "Japan's economy is recovering moderately albeit with some weak signs"; "trend inflation, likely below 2%, is likely to accelerate"; says markets remain unstable. "Uncertainty surrounding Japan's economy prices remain high", "We must be vigilant to impact of markets, FX moves, an their effect on Japan's economy", "We must scrutinise market moves with a high sense of urgency for the time being".
• Japan's Finance Minister Kato says Japan is seeing signs of recovery; "We will strengthen this trend, aiming for higher growth via higher wages and investment". "Hope that BoJ will take the appropriate policy to achieve 2% inflation target, while taking into account financial situations". "Expect thorough communication with market when asked about BoJ monetary policy".

DATA RECAP

• South Korean CPI MM (Sep) 0.1% vs. Exp. 0.3% (Prev. 0.4%); YY (Sep) 1.6% vs. Exp. 1.9% (Prev. 2.0%)

• APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel.
• Israeli officials cited by Axios said Israel will launch a strong response within days, which could target oil production facilities inside Iran.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.4% after the cash market closed lower by 0.9% on Tuesday.
• DXY is steady above the 101 mark, EUR/USD remains sub-1.11, USD/JPY briefly rose above 144.
• Looking ahead, highlights include EZ Unemployment Rate, ADP National Employment, NBP Policy Announcement, OPEC+ JMMC Meeting, ECB’s de Guindos, Lane, Elderson, Schnabel, Fed’s Hammack, Musalem, Bowman & Barkin. Supply from UK & Germany

• US stocks were pressured with risk-appetite spooked after a significant escalation of Middle Eastern tensions in which Iran launched an attack on Israel in what was 'double the size' of the April attack and said they targeted three Israeli military bases. The moves on Tuesday began alongside the cash equity open after Axios' Ravid reported that the "US has indications that Iran intends to carry out a ballistic missile attack against Israel in the immediate future", and then extended to extremes once the attack was carried out, although some of the declines were pared after Israel lifted restrictions on their population and signalled the end of the Iranian attack.
• SPX -0.93% at 5,709, NDX -1.43% at 19,773, DJIA -0.41% at 42,157, RUT -1.48% at 2,197.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Democratic VP candidate Walz said in the VP debate that they will continue to support Israel in defending itself and that former President Trump created the largest trade deficit between the US and China, while Walz admitted to misstating the timing of his visit to China in 1989.
• US Republican VP candidate Vance said in the VP debate that Harris's economic policies do not meet the interests of American workers and stated that Trump's economic policy focuses on the return of industry to the US.

• APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel.
• ASX 200 was rangebound as gains in the commodity-related industries offset the losses in the tech and consumer sectors.
• Nikkei 225 slumped at the open and retreated beneath the 38,000 level after the prior day's currency strength.
• Hang Seng resumed its China stimulus-spurred rally on return from the holiday with notable strength in tech and property.
• US equity futures (ES -0.2%) were uneventful with price action contained amid the geopolitical headwinds.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.4% after the cash market closed lower by 0.9% on Tuesday.

• DXY traded rangebound and remained above the 101.00 level after climbing yesterday on a haven bid.
• EUR/USD was uneventful and languished beneath the 1.1100 handle after posting a third consecutive daily loss.
• GBP/USD lacked direction after slipping to sub-1.3300 with very little in the way of pertinent events for the UK scheduled today.
• USD/JPY gradually edged higher and briefly reclaimed the 144.00 status as the yen faded some of the recent haven flows.
• Antipodeans rebounded overnight amid commodity gains and as the stock rally in Hong Kong pointed to a continuation of the China-related momentum.
• SNB's Chairman Schlegel said Swiss inflation was only driven by services and the reason for last week's interest rate cut was reduced inflationary pressure. Schlegel said without an interest rate cut, inflation forecasts would have been slower, while he added that they cannot rule out negative rates at the moment and that the SNB ruling nothing out.

• 10yr UST futures took a breather following yesterday's advances as the Iranian strike on Israel spurred a flight to quality.
• Bund futures mildly pulled back from the recent peak with price action quiet overnight ahead of ECB speakers and Bund supply.
• 10yr JGB futures initially tracked the prior day's gains in global peers but with upside capped by a lack of key data and with resistance around the 145.00 level.

• Crude futures remained underpinned by the escalation in the Middle East following Iran's strikes on Israel and after private sector inventories showed a slightly larger-than-expected drawdown in headline crude stockpiles, while participants now await the JMMC meeting and the latest DoE inventory report.
• US Private inventory data (bbls): Crude -1.5mln (exp. -1.3mln), Distillate -2.7mln (exp. -1.5mln), Gasoline +0.9mln (exp. -0.1mln) Cushing +0.7mln.
• Spot gold traded indecisively but retained most of the prior day's spoils after benefitting from a haven bid.
• Copper futures edged higher despite the mixed risk appetite with tailwinds amid the resumption of trade in Hong Kong where stocks rallied to suggest the China stimulus euphoria remained intact.

• Bitcoin steadily advanced during the session after reclaiming the USD 61,000 level.

NOTABLE ASIA-PAC HEADLINES

• Japan's new Economy Minister Akazawa said a complete exit from deflation is the top priority and he wants the BoJ to share their view that an exit from deflation is the top priority, while he commented that the BoJ should be careful about raising rates as it takes time to fully exit deflation. Akazawa also stated that it is not necessarily correct that PM Ishiba is positive about further rate hikes and that Ishiba's comment on the need for monetary policy normalisation has various conditions attached.

DATA RECAP

• South Korean CPI MM (Sep) 0.1% vs. Exp. 0.3% (Prev. 0.4%)
• South Korean CPI YY (Sep) 1.6% vs. Exp. 1.9% (Prev. 2.0%)

MIDDLE EAST

• IRGC announced they launched missiles towards Israel and warned that Israel will be targeted once more if it retaliates, while the missile launches are in retaliation for the killing of Hamas Chief Haniyeh, Hezbollah Chief Nasrallah and IRGC Commander Nilforousha. Iran's Revolutionary Guards also said they targeted three Israeli military bases in a missile attack and used hypersonic 'Fattah' missiles in the Israeli attack, according to state TV.
• Israeli army radio reported nearly 200 missiles were launched into Israel from Iran and the Israeli military said approximately 10mln civilians were targets of Iranian projectiles. The Israeli Red Cross cited by Kann News said no one was reportedly injured in the Iranian missile strike against Israel although a Jordanian government spokesman said there were 3 minor injuries from the Iranian missiles, while a Palestinian man was reportedly killed by shrapnel.
• Iranian news agency Fars said 80% of the rockets hit their targets in Israel, while IRGC said 90% of its missiles successfully hit targets in Israel. It was separately reported that Iranian missiles were intercepted as they flew over Jordanian airspace towards Jerusalem and Israeli air defences downed dozens of Iranian missiles that flew over Southern Syria.
• White House said US President Biden directed the US military to aid Israel's defence against Iranian attacks and shoot down missiles targeting Israel.
• US National Security Adviser Sullivan said Iran launched nearly 200 missiles towards targets in Israel and the Iranian attack was not effective as a result of Israeli air defences and US cooperation, while he added this is a significant escalation by Iran.
• Iranian state television reported that Tehran confirmed it fired 200 missiles in its attack on Israel, according to Sky News Arabia.
• Iran's President said on X that Iran does not seek war but will face any threat firmly.
• Iran's armed forces said if Israel responds to the Iranian attack it will be met with vast destruction of its infrastructure and if Israel's backers directly intervene against Tehran, their interests and bases in the region will face Iran's strong attack.
• Iran's Foreign Minister commented on X that Iran exercised self-defence under Article 51 of the UN Charter and Iran's action is concluded unless the Israeli regime decides to invite further retaliation, while he said Israel's enablers now have a heightened responsibility to rein in the warmongers in Tel Aviv. Iran's Foreign Minister also commented that there is a possibility that the confrontation with Israel will continue in the coming days and forces are on standby, as well as noted that Iran told the US not to get involved following the missile attack on Israel and warned that any new action by Israel or its supporters will face a more severe response.
• Iran's UN mission described the attack on Israel as legal, rational, and a legitimate response, while it warned if Israel 'dare to respond or commit further acts of malevolence, a subsequent and crushing response will ensue'. Iran's UN mission also said that no prior notice was given to the US of Iran's attack on Israel but a serious warning was issued afterwards.
• Iranian order to launch missiles at Israel was made by supreme leader Khamenei, according to a senior Iranian official via Reuters.
• Israel’s Home Front Command lifted restrictions on Israelis after the end of Iranian missile attacks and said it will defend the citizens of Israel and respond to Iranian missiles at the right time and place, according to Sky News Arabia. Israel's Home Front Command also said it eased restrictions on large gatherings in much of Israel including Tel Aviv and Jerusalem areas.
• Israeli PM Netanyahu said Iran made a big mistake tonight and they will pay for it, while he added that the Iranian missile attack on Israel failed.
• Israel's UN envoy said Israel will act and Iran will soon feel the consequences of their actions with the response to be painful.
• Israeli officials cited by Axios said Israel will launch a strong response within days to the major Iranian attack which could target oil production facilities inside Iran, according to Reuters and Al Jazeera.
• Israel warned Iran before today's attack that they would respond to any hit on Israeli territory, according to WSJ.
• Israeli Defence Minister Gallant spoke with US Defence Secretary Austin in which they discussed a joint preparation to repel the Iranian attack. Furthermore, Austin said they discussed 'severe consequences' for Iran in the event Iran chooses to launch a direct military attack against Israel.
• IDF spokesman told reporters that the Israeli Air Force continues to operate at full capacity and will also continue to strike powerfully in the Middle East on Tuesday night, as has been the case for the past year", according to Times of Israel.
• Israeli military sources said their air force will be operating in various places in the Middle East on Tuesday night, according to Sky News Arabia. Furthermore, the Israeli military called on residents to evacuate new areas in the southern suburbs of Lebanon's Beirut, while reports also noted a series of Israeli raids on southern Lebanon.
• Israeli military said it conducted strikes on Hezbollah targets in Beirut and it issued warnings to residents of the Chiyah neighbourhood and Hadath al-Gharb in the southern suburbs of Beirut, while a correspondent reported eight Israeli raids on southern suburbs of Beirut in about two hours.
• Hezbollah said it struck Israeli artillery in Beit Hille with rockets, according to Al Jazeera. Hezbollah separately announced that it confronted an Israeli force infiltrating the Lebanese town of Adaisseh and forced it to retreat, while the Israeli army also reported heavy fighting with Hezbollah operatives in southern Lebanon.
• Israeli military announced the assassination of Muhammad Jaafar Qasir on Tuesday who is the commander in charge of weapons transfer from Iran and its affiliates to Hezbollah.
• Explosions were reported near the Ain al-Assad base in Anbar, Iraq, according to Sky News Arabia citing sources. In relevant news, the Iraqi resistance group said US bases in Iraq will be a target if the US joins in the response to Iran or uses Iraqi airspace.

NOTABLE HEADLINES

• ECB's Kazaks said he very much agrees with market pricing on the ECB's October interest rate decision and said the ECB has a clear-cut case for cutting rates at the October meeting as the EZ economy may face a tipping point.

• Equities are mixed ahead of US ISM Manufacturing and JOLTS data; RTY marginally underperforms
• Dollar is firmer continuing the gains seen post-Powell on Monday, EUR was fairly unreactive to EZ Manufacturing PMIs/HICP
• USTs are firmer and back to pre-Powell levels, Bunds also gain but were unmoved by the EZ PMIs which were revised modestly higher but the overall growth narrative remains weak
• Crude continues to slip, XAU gains and base metals are mixed
• Looking ahead, US, Canadian Manufacturing PMIs, US ISM Manufacturing PMI, JOLTS Job Openings, Speakers including ECB’s Schnabel, BoE’s Pill, Fed’s Bostic, Cook & Barkin, Earnings from Paychex, Nike, Lamb Weston

• European bourses, Stoxx 600 (+0.2%) began the session around flat, but quickly dipped lower as sentiment took a hit early in the morning; a move which has since stabilised. As it stands, indices in Europe are mixed and trade very modestly on either side of the unchanged mark. EZ Manufacturing PMI/HICP figures passed through with little impact on price action.
• European sectors hold a slight positive bias, but with the breadth of the market fairly narrow. Tech takes the top spot alongside strength in Travel & Leisure. Energy is found at the foot of the pile, given the continued weakness in oil prices.
• US Equity Futures (ES -0.1%, NQ U/C RTY -0.3%) are mixed, with slight underperformance in the economy-linked RTY as traders continue to digest remarks from Fed Chair Powell who pushed back against another oversized cut in 2024.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news
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• DXY is building on the gains seen yesterday that were driven by comments from Fed Chair Powell. DXY has briefly made its way onto a 101 handle, topping out at 101.04.
• EUR/USD is on the backfoot vs. the USD as the post-Powell USD buying has dragged the pair lower. Today's in-line EZ HICP metrics provided little follow-through into the EUR given soft regional prints ahead of the release.
• GBP is softer vs. the broadly firmer USD as Cable extends its move further south of the 1.34 mark, taking out its 10DMA at 1.3338 in the process.
• After a soft start to the session, which looked to be a continued fall out from the post-Powell USD buying, JPY has been able to regain some poise vs. the USD after the pair topped out at 144.53.
• AUD/USD is currently straddling the 0.69 mark after yesterday's Powell-induced selling pressure dragged the pair away from its 0.6942 YTD peak. For now, the pair is holding above yesterday's low at 0.6894 with Retail Sales overnight offering some support. NZD/USD is holding just above the 0.63 mark
• BNZ forecasts a 50bps at the October RBNZ policy announcement.
• Click for a detailed summary
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• USTs are firmer and back to pre-Powell levels after the marked bear-flattening the Chair induced on Monday evening. USTs to a 114-21 peak, approaching Monday’s best which itself is a tick below Friday’s 114-25 peak. Docket ahead is headlined by Final Manufacturing and then, more pertinently, the ISM Manufacturing PMI before remarks from Barkin, Bostic & Cook.
• EGBs are firmer, lifted by the Final PMIs as while there were modest upward revisions the overall growth-narrative remains weak and factors in favour of the doves who are considering an October cut; EZ CPI printed largely in-line, and had no impact. Bunds to a 135.72 peak, which has eclipsed the August 135.66 best for a new contract high.
• Gilts are at a 99.15 peak with supply strong but spurring no move ahead of remarks from Chief Economist Pill this afternoon. BoE's Greene spoke overnight and noted that she is attentive to any sign that firms could begin passing on higher costs if consumption rebounds strongly. Today’s Manufacturing PMI data for the UK was unrevised.
• UK sells GBP 2.25bln 4.75% 2043 Gilt: b/c 3.27x (prev. 3.37x), average yield 4.421% (prev. 4.372%) & tail 0.1bps (prev. 0.2bps)
• Germany sells EUR 3.301bln vs exp. EUR 4bln 2.50% 2029 Bobl: b/c 1.9x (prev. 2.2x), average yield 1.9% (prev. 2.17%) & retention 17.48% (prev. 16.25%)
• Click for a detailed summary

• Subdued trade in the crude complex as the China optimism loses steam (against the backdrop of a cautious risk tone) and with the complex largely ignoring recent geopolitical developments. Do note, Libyan supply is slated to resume today after the dispute between eastern and western factions was settled. Brent'Dec sits just off today's trough, with the range for today is USD 69.91-71.97/bbl parameter.
• Precious metals are modestly firmer despite the stronger Dollar but amidst the backdrop of escalating geopolitics. XAU sits in a current USD 2,633.31-2,647.51/oz parameter.
• Base metals are somewhat muted/mixed as the complex takes a breather from the recent China-induced gains and in the run-up to risk events including ISM Manufacturing today and NFP on Friday. As a reminder, Chinese markets will be away for the rest of the week amid Golden Week Holiday.
• US buys 6mln bbls of oil for SPR with 1.5mln bbls of oil per month for delivery from February to May 2025, according to the Energy Department.
• Chevron (CVX) reports unplanned flaring at its 290k BPD El Segundo California refinery, according to a community alert.
• BofA retain their bullish call on gold and see yellow metal hitting USD 3000/oz next year. Copper at USD 12,000/t or USD 5.44/lb in 2026
• Click for a detailed summary

NOTABLE DATA RECAP

• EU HICP-X F&E Flash YY (Sep) 2.7% vs. Exp. 2.7% (Prev. 2.8%); HICP-X F,E,A&T Flash YY (Sep) 2.70% vs. Exp. 2.80% (Prev. 2.80%); HICP Flash YY (Sep) 1.8% vs. Exp. 1.8% (Prev. 2.2%); Services Y/Y 4.0% vs. prev. 4.1%
• UK BRC Retail Shop Price Index YY (Sep) -0.6% vs Exp. -0.3% (Prev. -0.3%)
• Spanish HCOB Manufacturing PMI (Sep) 53.0 vs. Exp. 50.2 (Prev. 50.5)
• Swiss Manufacturing PMI (Sep) 49.9 vs. Exp. 47.8 (Prev. 49).
• Italian HCOB Manufacturing PMI (Sep) 48.3 vs. Exp. 49 (Prev. 49.4)
• French HCOB Manufacturing PMI (Sep) 44.6 vs. Exp. 44 (Prev. 44)
• German HCOB Manufacturing PMI (Sep) 40.6 vs. Exp. 40.3 (Prev. 40.3)
• EU HCOB Manufacturing Final PMI (Sep) 45.0 vs. Exp. 44.8 (Prev. 44.8)
• UK S&P Global Manufacturing PMI (Sep) 51.5 vs. Exp. 51.5 (Prev. 51.5)

NOTABLE EUROPEAN HEADLINES

• Deutsche Bank now expects an ECB cut in October and believes a 50bps move in December could be a close call if recent weaker growth and inflation trends continue.
• ECB's de Guindos says expectations surveys are an important part of the toolkit available to central banks for their policy analysis.
• ECB's Rehn sees EZ inflation stabilising at 2% during 2025; direction of monetary policy is clear - rate cuts have begun; stance is becoming less restrictive; pace and scale of cuts decided meeting-by-meeting. Draghi report is a necessary wake-up call about Europe's low growth and will provide good bases for next commission work programme. EZ growth could be weaker than forecast. In his view, there are now more reasons to justify a rate cut in October; recent weakening of EZ growth outlook also tips the scale in direction of an October cut
• ECB's Nagel says that future purchases of government bonds by the European Central Bank should be reserved for special cases, according to Bloomberg.
• French PM Barnier is planning to announce additional tax increases of EUR 15-18bln in an attempt to gain back control of the nation's finances, according to Le Parisien. To speak at 14:00BST/09:00ET
• Riksbank minutes (September meeting): Thedeen said; "The fact that we explicitly state in the draft report that we may make cuts in larger steps is a clear indication that, given the favourable inflation outlook, this is now part of our gradual monetary policy strategy". "Krona remains undervalued and our inflation forecast is based on the assumption of a gradual appreciation of the exchange rate". Click for full details.

NOTABLE US HEADLINES

• Port of Houston Authority said in the event of a work stoppage, Port Houston container terminal gates will be closed beginning October 1st. It was reported shortly after that the United States Maritime Alliance said USMX and ILA exchanged counter offers around wages, while it is hopeful to fully resume collective bargaining around other outstanding issues in an effort to reach an agreement. However, the union later rejected the latest USMX Ports contract offer which it called unacceptable, according to a Reuters source.

MIDDLE EAST - EUROPEAN MORNING

• "Al-Arabiya correspondent: Lebanese army deployed in the Bekaa", according to Al Arabiya.
• "Israel Broadcasting Corporation quoting an Israeli official: The scale of ground operations in Lebanon could change", according to Sky News Arabia.
• Israel Security Official says Israeli ground operation is limited, and a wider operation targeting Beirut is "not on the table"; no clashes with Hezbollah reported yet on the ground.
• "Al-Arabiya sources: The Israeli army plans to incursion into Lebanon from 1 to 2 km in the first phase", according to Al Arabiya

MIDDLE EAST

• Israeli military said it began limited, localised and targeted raids against Hezbollah targets in the border area of southern Lebanon, while it said the targets are located in villages near the border and pose an immediate threat to northern Israeli communities. Furthermore, Axios reported that officials also confirmed that the Israeli ground operation in southern Lebanon has started.
• An Israeli strike was reported on a building in Ain Al-Hilweh Palestinian Camp near Lebanon's Sidon and Lebanese sources noted an Israeli raid targeted the house of Major General Munir Al-Maqdah inside the Ain al-Hilweh camp, according to Sky News Arabia.
• Israel informed Washington it is planning a limited ground operation in Lebanon that could start imminently, according to the Washington Post. Furthermore, a senior US official told Fox that Israel will launch a "limited" ground incursion into South Lebanon, while the official added that an incursion is imminent and will be smaller in scale than in 2006 and last a shorter period of time.
• Israeli Security Cabinet approved the war’s next phase and ministers slammed US leaks about ground operations, according to Times of Israel.
• Hezbollah said it is countering Israeli ground military movements and it targeted Israeli troop movements across from Lebanese border towns.
• Israel's Channel 12 reported that about 10 rockets were fired from Lebanon and landed in open areas in Miskaf in northern Israel, according to Sky News Arabia. It was separately reported that the IDF said it monitored the launch of 3 rockets from Lebanon towards Safed and it intercepted two rockets while the other landed in an open area, according to Al Jazeera.
• Syrian state media reported that explosions were heard over Syria's capital Damascus with Syrian air defences intercepting hostile targets.
• Yemen's Houthis said they will escalate military operations in response to Israeli attacks.
• Media outlets close to the Houthis noted talk about the Houthis launching a ballistic missile towards Tel Aviv, according to Sky News Arabia. Israel's Channel 12 reported shortly after that residents in central Israel heard an explosion in the Tel Aviv area.
• A military base hosting US forces near Iraq's Baghdad International Airport was targeted by a rocket attack.
• Yemeni Houthi spokesperson says group targeted Israeli military posts in Tel Aviv and Eilat with drones.

OTHER

• Russia's Deputy Foreign Minister says Russia are ready for a long confrontation with the US; They send all necessary warnings.
• North Korea criticised the US deployment of nuclear assets in South Korea with a US B-1B bomber potentially to participate in a planned military parade on Tuesday.

• Bitcoin is essentially flat and holds just beneath USD 64k.

• APAC stocks began the new quarter mixed amid a slew of data releases and several key market closures with markets in Mainland China, Hong Kong and South Korea closed, while participants also reflected on Fed chair Powell's recent comments and Israel's ground offensive in Lebanon.
• ASX 200 was pressured as underperformance in the mining, materials and financial sectors overshadowed the resilience in tech and defensives, while data releases were mixed as Retail Sales topped forecasts but Building Approvals showed a sharper-than-feared contraction.
• Nikkei 225 rallied after the recent heavy selling with the recovery facilitated by a weaker currency amid mixed Tankan data and varied BoJ opinions.

NOTABLE ASIA-PAC HEADLINES

• BoJ Summary of Opinions from the September meeting stated that a member said there is no change to the stance of adjusting the degree of monetary support if the economy and prices move in line with forecast although they must be vigilant to factors behind still unstable markets, while there was an opinion from a member that there is no need to raise rates when markets are unstable because they are not behind the curve on inflation and a member also said that given economic and market uncertainties, it is undesirable to make further changes to policy rate in a way that give markets impression they are moving to full-fledged policy tightening. Furthermore, a member said there is no change to the view that the BoJ must raise rates without waiting too long, but the rate hike must not be purpose in itself, while a member also thought that the rate path should move policy rate to 1.0% in the latter half of fiscal 2025 at earliest.
• Japan's newly appointed Finance Minister Kato says he has been instructed to promote a growth-orientated economy driven by wage increases and investment, via Jiji.
• Japan's newly appointed Economy Minister Akazawa says he wants the BoJ to decide on future rate hikes carefully; Taking Japan completely out of deflation is the top priority.

DATA RECAP

• Japanese Tankan Large Manufacturing Index (Q3) 13.0 vs. Exp. 13.0 (Prev. 13.0); Outlook (Q3) 14.0 vs. Exp. 12.0 (Prev. 14.0)
• Japanese Tankan Large Non-Manufacturing Index (Q3) 34.0 vs. Exp. 32.0 (Prev. 33.0); Outlook (Q3) 28.0 vs. Exp. 30.0 (Prev. 27.0)
• Japanese Tankan Large All Industry Capex Estimate (Q3) 10.6% vs. Exp. 11.9% (Prev. 11.1%)
• Japanese Unemployment Rate (Aug) 2.5% vs. Exp. 2.6% (Prev. 2.7%)
• Australian Building Approvals (Aug) -6.1% vs. Exp. -4.3% (Prev. 10.4%, Rev. 11.0%)
• Australian Retail Sales MM (Aug F) 0.7% vs. Exp. 0.4% (Prev. 0.0%)
• New Zealand Building Consents (Aug) -5.3% (Prev. 26.2%, Rev. 26.4%)

• APAC stocks began the new quarter mixed amid a slew of data releases and several key market closures with Mainland China, Hong Kong and South Korea closed
• Fed Chair Powell hinted at a return to 25bp rate cuts and noted that the Fed is not in a rush to cut rates quickly.
• Israeli military said it began limited, localised and targeted raids against Hezbollah targets in the border area of southern Lebanon.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.2% after the cash market closed lower by 1.3% on Monday.
• DXY is steady and holding onto yesterday's gains, JPY remains pressured vs. peers, EUR/USD sits on a 1.11 handle.
• Looking ahead, highlights include final EZ, US, Canadian Manufacturing PMIs, EZ HICP, US ISM Manufacturing PMI, JOLTS Job Openings, Riksbank Minutes, ECB’s de Guindos, Rehn & Schnabel, BoE’s Pill, Fed’s Bostic, Cook & Barkin, Supply from UK & Germany, Earnings from Paychex and Nike

• US stocks were choppy and ultimately closed slightly firmer on month/quarter end in which the S&P 500 led the gains and the majority of sectors closed in green with outperformance in Energy, Communication Services, and Real Estate, while Materials, Consumer Discretionary and Staples underperformed. The highlight of the session was comments from Fed Chair Powell who hinted at a return to 25bp rate cuts after the 50bp move in September as he noted that the Fed is not in a rush to cut rates quickly and if the economy evolves as expected, that would mean two rate cuts by year-end for a total of 50bps, implying 25bp in November and December. As such, the downplaying of another oversized 50bp cut saw stocks and bonds tumble while the Dollar rallied.
• SPX +0.42% at 5,762, NDX +0.26% at 20,061, DJIA +0.04% at 42,330, RUT +0.24% at 2,230.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Chair Powell said policy will move over time towards a more neutral stance if the economy evolves broadly as expected, while he added that risks are two-sided and decisions will be meeting-by-meeting. Powell said the Fed is not in a hurry to cut rates quickly and will be guided by data, as well as noted that the rate cut process will play out 'over some time' with no need to go fast. Furthermore, he said the Fed will take everything into account in the November rate decision and if the economy evolves as expected that would mean two more cuts this year for a total of 50bps.
• Fed's Bostic (2024 voter) said he is open to another 50bp rate cut if the labour market shows unexpected weakness and stated the baseline case is for an 'orderly' easing with inflation expected to continue slowing and job market to hold up. Furthermore, he pencilled in just a single further 25bp rate cut this year beyond the 50bps in September and said his baseline outlook through the end of 2025 would see a policy rate of between 3.00-3.25% (vs Fed median of 3.40%).
• Fed's Goolsbee (2025 voter) is worried about a possible continued port shutdown and said the Fed is cutting rates because the economy has normalised, according to a Fox Business News interview. Goolsbee sees 'cautionary' indicators on the job market and said the Fed cannot wait for the job market to weaken before acting, while he added the most important thing about rate cuts is the process of easing, as well as noted there will be a lot of rate cuts and inflation is coming in close to target.
• Port of Houston Authority said in the event of a work stoppage, Port Houston container terminal gates will be closed beginning October 1st. It was reported shortly after that the United States Maritime Alliance said USMX and ILA exchanged counter offers around wages, while it is hopeful to fully resume collective bargaining around other outstanding issues in an effort to reach an agreement. However, the union later rejected the latest USMX Ports contract offer which it called unacceptable, according to a Reuters source.

• APAC stocks began the new quarter mixed amid a slew of data releases and several key market closures with markets in Mainland China, Hong Kong and South Korea closed, while participants also reflected on Fed chair Powell's recent comments and Israel's ground offensive in Lebanon.
• ASX 200 was pressured as underperformance in the mining, materials and financial sectors overshadowed the resilience in tech and defensives, while data releases were mixed as Retail Sales topped forecasts but Building Approvals showed a sharper-than-feared contraction.
• Nikkei 225 rallied after the recent heavy selling with the recovery facilitated by a weaker currency amid mixed Tankan data and varied BoJ opinions.
• US equity futures (ES -0.1%) traded little changed after the prior day's choppy performance and recent Fed speak, while participants now look towards ISM data.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.2% after the cash market closed lower by 1.3% on Monday.

• DXY trades steadily and holding on to recent spoils which were facilitated by remarks from Fed Chair Powell who noted the Fed is not in a hurry to cut rates quickly and if the economy evolves as expected, that would mean two more cuts this year for a total of 50bps, implying 25bps moves in November and December.
• EUR/USD attempted to recoup some lost ground after its slip from the 1.1200 level although the rebound was limited as EU CPI data looms.
• GBP/USD was rangebound after yesterday's indecision and downward Q2 GDP revisions, while UK BRC shop prices fell by the most in 3 years.
• USD/JPY extended its gradual recovery from the post-LDP vote slump as the BoJ Summary of Opinions suggested some views against hiking.
• Antipodeans were mixed with AUD/USD briefly supported following better-than-expected Retail Sales although the upside was limited by disappointing Building Approvals, while NZD/USD trickled lower following a contraction in Building Approvals and with BNZ forecasting a 50bps cut at next week's RBNZ meeting.

• 10yr UST futures nursed some losses after having bear flattened amid Fed Chair Powell's comments who leaned back against another oversized rate cut in 2024.
• Bund futures continued to oscillate around the 135.00 level with price action contained ahead of EU CPI and German Bobl supply.
• 10yr JGB futures eked slight gains in rangebound trade after mixed Tankan data and the BoJ's Summary of Opinions from the September meeting where there were some views suggesting caution in raising rates amid uncertainties.

• Crude futures were little changed following the prior day's indecision and despite the geopolitical escalation in which Israel began a ground offensive in Lebanon, with prices contained as Libya's halted oil output is expected to commence today.
• US buys 6mln bbls of oil for SPR with 1.5mln bbls of oil per month for delivery from February to May 2025, according to the Energy Department.
• Russia doesn't rule out extending the OPEC+ agreement beyond 2025 if the market situation requires it, according to TASS citing Russian Deputy PM Novak. It was also stated that OPEC+ countries are purposefully temporarily ceding oil market share to prevent shortages that could be 5 years from now.
• Spot gold attempted to nurse some of the prior day's losses after suffering alongside the recent dollar strength.
• Copper futures lacked direction with demand lacklustre after yesterday's price swings and amid a week-long absence of its largest buyer.

• Bitcoin mildly gained overnight and traded both sides of the 63,500 level before eventually extending northward.

NOTABLE ASIA-PAC HEADLINES

• BoJ Summary of Opinions from the September meeting stated that a member said there is no change to the stance of adjusting the degree of monetary support if the economy and prices move in line with forecast although they must be vigilant to factors behind still unstable markets, while there was an opinion from a member that there is no need to raise rates when markets are unstable because they are not behind the curve on inflation and a member also said that given economic and market uncertainties, it is undesirable to make further changes to policy rate in a way that give markets impression they are moving to full-fledged policy tightening. Furthermore, a member said there is no change to the view that the BoJ must raise rates without waiting too long, but the rate hike must not be purpose in itself, while a member also thought that the rate path should move policy rate to 1.0% in the latter half of fiscal 2025 at earliest.

DATA RECAP

• Japanese Tankan Large Manufacturing Index (Q3) 13.0 vs. Exp. 13.0 (Prev. 13.0)
• Japanese Tankan Large Manufacturing Outlook (Q3) 14.0 vs. Exp. 12.0 (Prev. 14.0)
• Japanese Tankan Large Non-Manufacturing Index (Q3) 34.0 vs. Exp. 32.0 (Prev. 33.0)
• Japanese Tankan Large Non-Manufacturing Outlook (Q3) 28.0 vs. Exp. 30.0 (Prev. 27.0)
• Japanese Tankan Large All Industry Capex Estimate (Q3) 10.6% vs. Exp. 11.9% (Prev. 11.1%)
• Japanese Unemployment Rate (Aug) 2.5% vs. Exp. 2.6% (Prev. 2.7%)
• Australian Building Approvals (Aug) -6.1% vs. Exp. -4.3% (Prev. 10.4%, Rev. 11.0%)
• Australian Retail Sales MM (Aug F) 0.7% vs. Exp. 0.4% (Prev. 0.0%)

MIDDLE EAST

• Israel conducted artillery shelling on southern Lebanese towns in preparation for the launch of the ground operation, while the ground offensive is expected to start from the eastern sector in southern Lebanon, according to Sky News Arabia citing their correspondent. There were reports shortly after that Israeli tanks infiltrated the village of Rmeish in southern Lebanon, according to Al Arabiya citing a correspondent.
• Israeli military said it began limited, localised and targeted raids against Hezbollah targets in the border area of southern Lebanon, while it said the targets are located in villages near the border and pose an immediate threat to northern Israeli communities. Furthermore, Axios reported that officials also confirmed that the Israeli ground operation in southern Lebanon has started.
• Israeli military warned residents in Beirut suburbs to evacuate due to imminent strikes on Hezbollah targets, while a large blast was heard after warnings of an Israeli strike on Beirut's southern suburbs, according to a Reuters witness.
• An Israeli strike was reported on a building in Ain Al-Hilweh Palestinian Camp near Lebanon's Sidon and Lebanese sources noted an Israeli raid targeted the house of Major General Munir Al-Maqdah inside the Ain al-Hilweh camp, according to Sky News Arabia.
• Israeli officials earlier said they were preparing for a limited group operation in villages in southern Lebanon, according to Al Arabiya. It was also reported that Israel informed Washington it is planning a limited ground operation in Lebanon that could start imminently, according to the Washington Post. Furthermore, a senior US official told Fox that Israel will launch a "limited" ground incursion into South Lebanon, while the official added that an incursion is imminent and will be smaller in scale than in 2006 and last a shorter period of time.
• Israeli Security Cabinet approved the war’s next phase and ministers slammed US leaks about ground operations, according to Times of Israel.
• Israel was reportedly preparing for a significant expansion of the war including an "exchange of blows" with Iran soon, according to Israel's Channel 13 correspondent Moriah Ashraf via Telegram.
• Hezbollah said it is countering Israeli ground military movements and it targeted Israeli troop movements across from Lebanese border towns.
• Hezbollah has not asked for any help from Iran but they are at their side, according to Reuters citing Hezbollah lawmaker Hassan Fadlallah.
• Israel's Channel 12 reported that about 10 rockets were fired from Lebanon and landed in open areas in Miskaf in northern Israel, according to Sky News Arabia. It was separately reported that the IDF said it monitored the launch of 3 rockets from Lebanon towards Safed and it intercepted two rockets while the other landed in an open area, according to Al Jazeera.
• Lebanese troops pulled back to 5km north of the border, according to Reuters citing Lebanese security sources.
• Syrian state media reported that explosions were heard over Syria's capital Damascus with Syrian air defences intercepting hostile targets.
• Yemen's Houthis said they will escalate military operations in response to Israeli attacks.
• Media outlets close to the Houthis noted talk about the Houthis launching a ballistic missile towards Tel Aviv, according to Sky News Arabia. Israel's Channel 12 reported shortly after that residents in central Israel heard an explosion in the Tel Aviv area.
• A military base hosting US forces near Iraq's Baghdad International Airport was targeted by a rocket attack.
• The Pentagon said the US is to send a 'few thousand' additional troops to the Middle East to boost security and defend Israel if needed, according to AP.

OTHER

• North Korea criticised the US deployment of nuclear assets in South Korea with a US B-1B bomber potentially to participate in a planned military parade on Tuesday.

DATA RECAP

• UK BRC Retail Shop Price Index YY (Sep) -0.6% vs Exp. -0.3% (Prev. -0.3%)
• French PM Barnier is planning to announce additional tax increases of EUR 15-18bln in an attempt to gain back control of the nation's finances, according to Le Parisien.

• 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 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
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• 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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• 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

• 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.
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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.

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.

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

• 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.

• 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 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.

• 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.

• 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.

• 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.

• 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%)

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.

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 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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• 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.
• Click for a detailed summary
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• 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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• 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.

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.

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

• 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.

• Click for the Newsquawk Week Ahead.

• 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 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.

• 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).

• 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.

• 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.

• 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%)

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.

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.