First Call - Hedge Fund Telemetry

S&P futures down 0.12%, off worst levels. Index saw its five-week winning streak halted last week. Asian equities under pressure overnight. Japan down nearly 2%. China off more than 1%. European equities extending recent pullback. Treasuries narrowly mixed with curve steepening. Dollar firmer vs euro, but lagging on risk-sensitive yen cross. Turkish lira weakness still the big story in FX. Gold down 1%. WTI crude off 0.27%.
Risk-off theme in focus again with Turkey still in the crosshairs despite announcing several measures to stem lira weakness. Conflicting headlines on whether Turkey will release US pastor Brunson. Elsewhere on the macro front, political risk continues to weigh on Italian debt. Russia to sell more US assets. China’s banking regulator guided financial institutions to boost lending. Nothing particularly incremental on trade over the weekend.
Italian debt continues its run of recent underperformance, with 10-year yields moving back toward last week's peak at 3.10%. Risk-off tone is contributing to movement, though main influence is still Italian budget concerns. La Stampa reported that government has examined potential for speculative attacks, including different responses should it come to fruition. Article highlighted that if there is a downgrade in Italian debt by rating agencies between end of August and 10-Sep then it could be a disaster for government policy agenda. Said government has had contact with ECB over issue.
A few notable developments surrounding China. Banking regulator said it would guide financial institutions to boost lending to ensure real economy financing needs are met. WSJ discussed how banks revved up lending in July. Highlighted a 37% m/m jump in new lending for infrastructure projects. Elsewhere, Bloomberg noted PBoC said in its Q2 monetary policy report it will not use yuan as a tool to cope with trade tensions and other external issues. Also reiterated that it will not engage in "strong" economic stimulus and will continue to promote structural deleveraging.
FX notable Emerging Market movers:
TRY dn 7.05%, 1M implied vols up 26% to 60
ZAR dn 2.56%, 1M implied vols up 26% to 23
MXN dn 1.84%, 1M implied vols up 3% to 15 (was 19 in June for reference)
INR dn 1.46%, 1M implied vols up 18% to 6%

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