US stocks were mostly lower amid weak data, while futures are pressured on Fitch's US rating downgrade - Newsquawk Asia-Pac Market Open

• US stocks were mostly lower with mild underperformance in the cyclical-focused Russell 2000 following weak economic releases in which ISM Manufacturing disappointed and JOLTS data printed beneath expectations, although the Dow bucked the trend and posted marginal gains after a very strong report from Caterpillar (CAT).
• USD was firmer alongside the rising yield environment in which the 10yr yield rose back above 4% and the 30yr yield printed fresh YTD highs, while weaker-than-expected economic releases including ISM Manufacturing PMI and JOLTS data failed to derail the momentum in the greenback amid the risk-averse mood.
• Fitch cut US AAA rating to AA+; Outlook revised to Stable from Watch Negative.
• Highlights include New Zealand Employment & Wage Data, Australian AIG Manufacturing & Construction Indexes, South Korean CPI, BoJ Minutes from the June Meeting, Supply from Australia.

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LOOKING AHEAD

• Highlights include New Zealand Employment & Wage Data, Australian AIG Manufacturing & Construction Indexes, South Korean CPI, BoJ Minutes from the June Meeting, Supply from Australia.

US TRADE

• US stocks were mostly lower with mild underperformance in the cyclical-focused Russell 2000 following weak economic releases in which ISM Manufacturing disappointed and JOLTS data printed beneath expectations, although the Dow bucked the trend and posted marginal gains after a very strong report from Caterpillar (CAT).
• SPX -0.27% at 4,576, NDX -0.25% at 15,718, DJIA +0.20% at 35,630, RUT -0.45% at 1,994.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fitch cut US AAA rating to AA+; Outlook revised to Stable from Watch Negative.
• Fed's Goolsbee (voter) said JOLTS data looks consistent with a strong labour market moving to a more balanced phase and recent FOMC decisions have been "close calls" for him.
• Fed's Bostic (non-voter) said he would have "grudgingly" voted for a rate hike in July and if the economy evolves as he expects, would be comfortable advocating for no rate hike in September but noted that if progress on inflation unexpectedly stalls, he would be comfortable contemplating a rate hike. Bostic also commented they are in a phase where there is some risk of over-tightening and said the Fed should be cautious, patient and resolute, while he added there is still considerable momentum in the economy and data is consistent with 'orderly slowdown'.
• Apollo is leading the bankruptcy loan deal for trucking firm Yellow (YELL), according to Bloomberg.

DATA RECAP

• US S&P Global Manufacturing PMI Final (Jul) 49.0 (Prev. 49.0)
• US ISM Manufacturing PMI (Jul) 46.4 vs. Exp. 46.8 (Prev. 46.0)
• US ISM Manufacturing Prices Paid (Jul) 42.6 vs. Exp. 42.8 (Prev. 41.8)
• US ISM Manufacturing Employment Index (Jul) 44.4 vs. Exp. 48.0 (Prev. 48.1)
• US ISM Manufacturing New Orders (Jul) 47.3 (Prev. 45.6)
• US Construction Spending MM (Jun) 0.5% vs. Exp. 0.6% (Prev. 0.9%)
• US JOLTS Job Openings (Jun) 9.582M vs. Exp. 9.61M (Prev. 9.824M)

FIXED INCOME

• US Treasuries bear-steepened into Wednesday's refunding announcement despite the soft ISM and JOLTS data.

FX

• USD was firmer alongside the rising yield environment in which the 10yr yield rose back above 4% and the 30yr yield printed fresh YTD highs, while weaker-than-expected economic releases including ISM Manufacturing PMI and JOLTS data failed to derail the momentum in the greenback amid the risk-averse mood.
• EUR remained lacklustre amid the dollar strength and recent failure to sustain the 1.1000 handle.
• GBP was pressured from early on alongside the underperformance seen in its cyclical peers.
• JPY weakened as the upside in US yields underpinned USD/JPY further above 143.00.

COMMODITIES

• Crude was lower early in the session following growth concerns but moved off lows as risk sentiment improved somewhat while it was also reported that Mexico shut its largest oil-export terminal on Sunday.
• US Energy Inventory Data (bbls): Crude -15.4mln (exp. -1.4mln), Gasoline -1.7mln (exp. -1.3mln), Distillate -0.5mln (exp. +0.1mln), Cushing -1.8mln
• Iraq's July oil exports reached 106.8mln bbls (prev. 100.1mln in June) and oil exports averaged 3.4mln BPD.
• Bloomberg OPEC survey stated OPEC crude output plunged by the most in three years in July in which it fell by 900k BPD to average 27.79mln BPD.

GEOPOLITICAL

• Russia said it thwarted a Ukrainian drone attack on civilian transport vessels in the Black Sea, according to IFX.
• Polish Defence Ministry said it is deploying additional troops along the border with Belarus after 2 helicopters violated airspace, according to BNO News.
• US Pentagon offers accounting on replacing weapons sent to Ukraine, while it was reported that Lockheed Martin (LMT) reaped USD 2.3bln so far restocking the Pentagon, according to Bloomberg.

ASIA-PAC

NOTABLE HEADLINES

• PBoC is to support the stable and healthy development of the real estate market and is to effectively prevent and fend off financial risks in key areas. PBoC will continue to improve financial services and the management level, maintain a stable operation of the foreign exchange market, as well as strengthen and improve the provision of foreign exchange policy. Furthermore, it will continue to implement prudent monetary policy, maintain reasonable and sufficient liquidity, and promote a steady and moderate decline in the comprehensive financing cost of enterprises and credit interest rate of residents.
• Chinese authorities issued a notice to promote financing for small and medium-sized enterprises, according to Reuters sources.
• China’s FX regulator said they have maintained policy continuity and consistency all the time, while the Yuan exchange rate expectation is stable and the regulatory department will continue to push forward reforms to facilitate cross-border trades and investments. It was also reported that China’s FX regulator gave 'window guidance' to some commercial banks, asking them to reduce or delay USD purchases in recent weeks, while the informal instruction was meant to slow the pace of yuan depreciation, according to Reuters sources.
• US invited Chinese Foreign Minister Wang Yi to meet with US Secretary of State Blinken in Washington.
• BoK Minutes noted one member commented that hikes help households and businesses reduce debt and refrain from reckless investment, while a member suggested the possibility of further tightening should be retained.

EU/UK

NOTABLE HEADLINES

• BoE appointed Sarah Breeden as Deputy Governor to replace Cunliffe effective on 1st November 2023.

DATA RECAP

• UK Manufacturing PMI (Jul F) 45.3 vs. Exp. 45.0 (Prev. 45.0)
• EU Manufacturing PMI (Jul F) 42.7 vs. Exp. 42.7 (Prev. 42.7)
• EU Unemployment Rate (Jun) 6.4% vs. Exp. 6.5% (Prev. 6.5%)
• German Manufacturing PMI (Jul) 38.8 vs. Exp. 38.8 (Prev. 38.8)
• German Unemployment Change (Jul) -4.0k vs. Exp. 20.0k (Prev. 28.0k)
• German Unemployment Rate SA (Jul) 5.6% vs. Exp. 5.7% (Prev. 5.7%)