• European equities are firmer and earnings focused but US futures are softer and tentative overall going into US CPI
• USD is modestly firmer but contained with peers only marginally weaker ex-antipodeans and GBP unreactive to the latest EU-UK updates
• Core debt has consolidated somewhat going into CPI and Fed speak after which the 10yr outing will draw attention particularly if concession begins exerting influence once more
• Top Republican senators are said to be hoping the administration will make a counteroffer to their infrastructure counterproposal, Axios
• Looking ahead, highlights include, US inflation, DoEs, BoE's Bailey, Fed's Clarida, Bostic, Harker, supply from the US

CORONAVIRUS UPDATE

Brazilian health regulator Anvisa said it suspended the use of the AstraZeneca (AZN LN) COVID-19 vaccine in pregnant women after the death of a 35-year-old woman that was 23 weeks pregnant on May 10th due to a hemorrhagic stroke which was seen as possibly related to the vaccine although has not been informed of any other adverse events involving pregnant women. In relevant news, Canada's Ontario province was also reported to pause the first doses of AstraZeneca's COVID-19 vaccine amid blood clot concerns. (Newswires)

Pfizer (PFE) reportedly asked the UK regulator for approval of its COVID-19 vaccine for teenagers following the recent FDA approval for 12- to 15-year-olds. (Newswires)

Sinovac's (SVA) COVID-19 vaccine was found to be highly effective in a real-world study involving over 25k Indonesian health workers in which 100% were protected from death and 96% from hospitalization as early as 7 days after vaccination. (Newswires)

ASIA

Asian equity markets were subdued following the lacklustre performance in the US where the DJIA suffered its worst day in over two months and sentiment remained hampered by ongoing inflationary concerns ahead of the looming US CPI data, although losses in the Nasdaq were only marginal after the tech sector spent most the session nursing its recent underperformance. ASX 200 (-0.7%) traded negative with nearly all sectors on the backfoot aside from tech as it found some solace from the rebound in US counterparts, while a jump in CBA’s March quarter profits and the recent budget announcement including spending of AUD 589.3bln for next fiscal year did little to spur risk appetite. Nikkei 225 (-1.6%) failed to hold on to opening gains as focus centred on a deluge of earnings releases with Nissan among the biggest decliners with double-digit percentage losses after it reported another substantial FY net loss and guided it will remain in the red for its next FY results. Conversely, Sharp and SoftBank Corp were underpinned after posting improved results and Toyota clawed back initial losses and then some, following its earnings and a JPY 250bln share buyback announcement, while focus now turns to SoftBank Group which is reportedly set to post a record JPY 4.9tln fiscal year profit. Hang Seng (+0.7%) and Shanghai Comp. (+0.6) succeeded in shrugging off the losses in their regional peers with both indexes initially kept afloat following the recent PBoC Q1 Monetary Policy Implementation Report which stated the central bank will further guide real lending rates lower, while reports also noted that China’s Sinovac COVID-19 vaccine was found to be highly effective in a real-world study with 100% effectiveness against preventing deaths and the UN also upgraded its Chinese GDP growth forecast for this year to 8.2% from 7.2%. TAIEX (-4.3%) was today's biggest mover with intraday losses of 8% and selling exacerbated by reports that stricter COVID measures could be announced in the coming days and after the index slipped into correction territory. Finally, 10yr JGBs were subdued despite the mostly negative risk tone with prices constrained following the bear steepening stateside and amid the lack of BoJ presence in the market, while Australian government 10yr bond yields were also firmer after the recent budget announcement and with the RBA just purchasing semi-government bonds today.

PBoC injected CNY 10bln via 7-day reverse repos at rate of 2.20% for a CNY 10bln net daily injection. (Newswires) PBoC set USD/CNY mid-point at 6.4258 vs exp. 6.4306 (prev. 6.4254)

Chinese M2 Money Supply YY* (Apr) 8.1% vs. Exp. 9.3% (Prev. 9.4%); New Yuan Loans* (Apr) 1470B vs. Exp. 1600.0B (Prev. 2730.0B)

• Outstanding Loan Growth* (Apr) 12.3% vs. Exp. 12.5% (Prev. 12.6%)

BoJ refrained from purchasing stock ETFs on Wednesday. (Newswires)

Taiwan reportedly may continue to tighten COVID-19 restrictions in the coming days, while it was later reported that the Taiwan government fund is to discuss market support if required and Taiwan's Deputy Finance Minister also stated that they have not ruled out calling of the national stabilization fund to discuss the stock market. (Newswires)

Softbank (9984 JT) FY20/21 net profit JPY 4.99trl vs prev. JPY -0.96trl, pretax profit JPY 5.67trl vs exp. JPY 4.04trl; no decision made on future buybacks. (Newswires)

US

US President Biden will speak regarding COVID-19 today at 15:30EDT/20:30BST and the White House will have a briefing regarding the pipeline hack at 18:00EDT/23:00BST. (Newswires)

Top Republican senators are said to be hoping the administration will make a counteroffer to their infrastructure counterproposal when they meet with President Biden on Thursday. (Newswires/Axios)

US Senate voted to repeal the 'True Lender' banking rule issued during the prior administration with consumer advocates and Democrats stating that the rule would allow to bypass state usury laws and consumer protections. In other news, FBN's Gasparino suggested there was progress in reinstating the SALT deduction following pressure from NY business groups and congressional leaders vowing not to vote for Biden spending packages without reinstatement, while banks monitoring talks believe President Biden could compromise by raising the cap to USD 30K more now. (Newswires/Twitter)

US tariffs have prompted a sharp decline in Chinese imports and altered the types of goods purchased by Americans. (WSJ)

UK/EU

UK Brexit Minister Frost has cautioned that the Northern Ireland protocol will not be sustainable for long under its current form and the protocol is presenting significant challenges to business, calling on the EU to take a common sense approach to its implementation. (gov.uk)

France is looking to delay the MOU on EU market access for UK finance, according to reports. (Newswires)

UK GDP Prelim QQ (Q1) -1.5% vs. Exp. -1.6% (Prev. 1.3%); YY (Q1) -6.1% vs. Exp. -6.1% (Prev. -7.3%)

• GDP Estimate MM (Mar) 2.1% vs. Exp. 1.3% (Prev. 0.4%); YY (Mar) 1.4% vs. Exp. 1.0% (Prev. -7.8%)

European Commission raises 2021 EZ GDP growth forecast to 4.3% (prev. 3.8%) and 2022 forecast to 4.4% (prev. 3.8%); 2021 inflation 1.7% (prev. 1.4%), 2022 inflation 1.3% (prev. 1.3%)

GEOPOLITICAL

US President Biden is considering plans to dispatch a State Department official to join the de-escalation efforts regarding Israel and Hamas, Axios reports. Additionally, a large barrage of rockets were fired at Tel Aviv and various areas of Israel and Hamas said it was firing more than a hundred rockets at Tel Aviv and the Ben Gurion International Airport, while reports also noted that a rocket attack had hit an Israeli energy pipeline. Furthermore, the IDF later stated that key Hamas intelligence figures were neutralized by Israeli fighter jet strikes and there were comments from a UN official that Israel and Palestine are escalating towards a full scale war. (Axios/Newswires)

US track and field team cancels pre-Olympic training camp amid concerns over Japan's COVID situation. (Newswires)

EQUITIES

Major European bourses trade flat/directionless (Euro Stoxx 50 +0.1%) following a somewhat lukewarm cash open and directionless APAC session as traders bide time heading into US CPI, with the 10yr Note Auction also eyed as an inflation expectation gauge. US equity futures in contrast post modest losses in early European trade with some underperformance portrayed in the RTY (-1.2%) vs NQ (-0.6%) and ES/YM (-0.4%). The tone across markets has been one of caution and positioning rather than risk appetite/aversion as macro newsflow also remains scarce head of the main events. Back to Europe, the UK's FTSE (+0.6%) outpaces peers as its heavyweight mining names lift the index in tandem with gains across base metals, whilst broad-based modest gains are seen across Euro Zone bourses, featuring the SMI faring slightly better amid a firm healthcare sector. Basic resources and Healthcare are the top-performing sectors at the time of writing whilst Tech and Autos reside on the other end of the spectrum, and with no clear overarching theme as a deluge of European earnings cloud that picture. Earning-related movers today include the likes of Commerzbank (+7.9%), Bayer (+4.3%), Allianz (Unch), Merck (-0.3%), RWE (+1.6%), Deutsche Telekom (+2%), EDF (2.2%), Carrefour (-1.4%), and ABN AMRO (8.9%), with the latter also noting that net interest income was impacted by continued pressure on deposit margins and lower corporate loan volumes as the CIB non-core portfolio was wound down further. Elsewhere, Prosus (+2.5%) is firmer as it announced a voluntary offer to acquire 45.4% of Naspers shares. On completion, it is expected to more than double the Prosus free float’s effective economic interest in the group’s underlying assets, improving the stock’s liquidity. Finally, Flutter Entertainment (-3.0%) is lower as the CEO of FanDuels, the unit up for a spinoff, left his position.

Please see the Daily European Equity Opening News and the Additional European Equity News headlines for the morning's European earnings

FX

USD - It’s becoming a recurring pattern as the Dollar continues to lick wounds in wake of last Friday’s big NFP miss, but encounters heavy offers into upticks within the overall bear trend. Indeed, having survived a more sustained bout of downward pressure yesterday, the Buck has clawed back losses, and particularly vs high beta currencies and the commodity bloc that have outperformed on strength in underlying prices of late. However, the index has faded yet again from a higher recovery peak just shy of 90.500 and is hovering around 90.300 between 90.415-176 parameters vs Tuesday’s 90.359-89.979 range and 90.342-032 intraday band. So, from a technical perspective the latest rebound could be deemed relatively constructive, but US CPI looms and in similar vein to the aforementioned jobs data, market expectations are elevated to leave ample room for disappointment. Also ahead, another slew of Fed officials are scheduled to orate and the second leg of this week’s Quarterly Refunding comprises Usd 41 bn 10 year notes that may have more bearing for Treasuries than the inflation update.

NZD/AUD - As noted above, the Aussie and Kiwi are bearing the brunt of the Greenback revival, with Nzd/Usd retreating below 0.7250 and Aud/Usd relinquishing 0.7800+ status following a fairly downbeat assessment of the Australian Budget from S&P and CBA contending that additional spending will culminate in the country losing its AAA rating.

CAD - In contrast to its non-US Dollar counterparts and other major peers, the Loonie is on a firmer footing and back over 1.2100 amidst rebounding crude prices and significantly less risk aversion after heavy tech-led global stock market declines. Usd/Cad is currently hovering around 1.2085 and within striking distance of Tuesday’s new multi-year nadir circa 1.2078.

GBP/EUR/CHF/JPY - The Pound has managed to retain hold of the 1.4100 handle, and is consolidating near 1.4150 following a deluge of forecast-beating UK data, but more so due to the broad Buck fade, though Sterling has regained momentum against the Euro towards 0.8575 after the Eur/Gbp cross tested support/resistance into the psychological 0.8600 level and Eur/Usd waned around 1.2150. Elsewhere, the Franc is unwinding more of its outperformance and has been under 0.9150 vs the Greenback and sub-1.0980 against the Euro, while the Yen has retreated from 108.50+ highs to meander between 108.56-91 extremes.

SCANDI/EM - Some support for the Nok via Brent’s return to Usd 69/brl terrain and a buffer against weaker than forecast Norwegian GDP, while the Sek has drawn a degree of comfort from marginally firmer than anticipated Swedish CPIF prints. However, the Cnh is slipping amidst reports that Chinese exports to the US have fallen sharply due to higher tariffs, on top of weaker than expected new Yuan loans and M2 growth, while the Try is underperforming on renewed concerns about the CBRT’s ability to tackle inflation and broader Turkish economic, fiscal and diplomatic issues.

FIXED

It’s been stealthy rather than eye-catching or obvious in terms of a catalyst, but debt futures are still chipping away at declines that escalated on Tuesday and extended in some cases earlier today. Bunds just reached 169.71 for a 26 tick gain on the day and 37 tick turnaround from Eurex trough to peak (thus far), Gilts recently touched 128.00 from 127.80 at worst and yesterday’s 127.69 Liffe base and the 10 year T-note is just shy of a 132-17+ high vs 132-12+ overnight low that also matches Tuesday’s nadir. So, further short covering and consolidation as the clock ticks down to US CPI, supply and another packed Fed roster.

COMMODITIES

WTI and Brent front month futures experience another choppy European morning amid a distinct lack of fresh macro catalysts in the run-up to US inflation figures and the DoEs. WTI Jun rose to a peak of USD 65.99/bbl from a base of USD 64.98/bbl before trimming those, whilst its Brent counterpart saw similar action between its 68.18-69.26/bbl current intraday band. Prices remain underpinned to an extent by the situation regarding the Colonial Pipeline - with an end-week timeline touted for a reopening - although the US East Coast is expected to receive cargoes in the interim to ease some of the tightness caused by the outage. Meanwhile, the crude complex could also be pricing in some geopolitical premium amid the intensifying shelling in Israel-Gaza, although the conflict remains contained to the region for now with no major oil infrastructure in the vicinity. Moving on, yesterday saw the release of both the OPEC MOMR and EIA STEO followed today by the IEA OMR. the IEA and EIA both cut their 2021 forecasts whilst OPEC maintained their metric - with the former two citing India's COVID situation as a factor. IEA also maintained their forecast of a strong ramp-up in refining activity in the next four months, with refinery runs expected to peak in August. "While the market looks oversupplied in May, stock draws are set to resume from June, even with global oil supply on the rise...Under the current OPEC+ production scenario, supplies won’t rise fast enough to keep pace with the expected demand recovery.", the agency said. Finally, yesterday saw the release of the weekly Private Inventories with the headline posting a smaller-than-expected draw whilst the internals were mixed. Today's EIA headline crude inventories are forecast to draw 2.8mln bbls. Turning to metals, spot gold and silver are biding time within recent ranges ahead of the US CPI and 10yr Auction. Base metals are back on the grind with LME copper holding its head above USD 10,500/t amid the mounting inflation bets and EV demand prospect and EV demand prospect. Eyes are also on BHP's Chilean copper operations as union leaders are reportedly advising workers against the final offer, which could see strikes. Overnight, Chinese iron ore and steel futures ended the session near record highs, although analysts have been warning about the momentum behind prices, with SinoSteel suggesting the front-month contracts are heavily influenced by the Aussie-Sino spat.

US Private Energy Inventories (w/e May 7th): Crude -2.53mln (exp. -2.8mln), Cushing -1.21mln (exp. -0.45mln), Gasoline +5.64mln (exp. -0.6mln), Distillate -0.87mln (exp. -1.1mln). (Newswires)

IEA Monthly Oil Market Report: cuts 2021 oil demand outlook by 270k BPD to 5.4mln BPD amid lower Q1 demand in Europe and Americas. Maintains H2 2021 oil demand growth steady as vaccine campaigns expand, the recovery in demand is fragile amid surging cases in India and Thailand offset by positive trends in Europe and the US. (IEA)

Kuwait National Petroleum Company said some production units at the Mina Abdullah refinery stopped working although it noted that oil exports were not affected. (KUNA)