• European bourses are pressured following overnight losses though US futures are comparatively less pressured; Euro Stoxx 50 -1.5%, ES -0.3%
• DXY remains bid at fresh session highs but still sub-91.00 with peers modestly pressured overall as GBP and Antipodeans lag
• USTs have been oscillating the U/C mark for much of the morning though the 10yr yield retains 1.70% with EGB action more pronounced and yields extending to key levels
• Colonial Pipeline has announced that it is to restart operations; could take several days for operations to return to normal
• Looking ahead, highlights include US IJC, PPI, Banxico rate decision, BoE's Cunliffe, Bailey, Fed's Barkin, Waller, Bullard, supply from the US, earnings from Disney

CORONAVIRUS UPDATE

CDC Director stated that they now recommend the Pfizer (PFE) / BioNTech (BNTX) COVID-19 vaccine to be used in 12- to 15-year-old adolescent population and has adopted the CDC's ACIP recommendation that endorsed the safety effectiveness of the vaccine for the age group. (Newswires)

An Oxford Vaccine Group study found that mixing doses of the AstraZeneca (AZN LN) and Pfizer (PFE) vaccines was likely to result to more fatigue and headaches. (Newswires)

ASIA

Asian equity markets were pressured following on from the losses in the US as US CPI printed its highest reading since 2009 which spurred a rise in yields and extension of the losses across the major indices with both the S&P 500 and DJIA posting their worst 3-day performance in over 6 months. ASX 200 (-0.9%) traded negatively with the index weighed on by underperformance in tech and weakness in property names although the downside for the local benchmark was stemmed by strength in healthcare after reports that Australia agreed to purchase a total 25mln doses of the Moderna (MRNA) COVID-19 vaccine through to next year and the Health Minister also noted they are in discussions with Moderna to locally manufacture its vaccine. Nikkei 225 (-2.5%) spearheaded the declines in the region once again as earnings releases failed to lift the mood with SoftBank investors disappointed by the lack of extension to the share buyback program and after the Co. announced it is to self-finance its Vision Fund to cut big investor pay-outs but would also expose the group to heavy losses in the event of a major downturn. Hang Seng (-1.8%) and Shanghai Comp. (-1.0%) conformed to the subdued picture across the region with risk appetite not helped after further criticism from the US regarding human rights abuses by China including in the annual International Religious Freedom Report, and after the latest Chinese lending and financing data also fell short of estimates, while the TAIEX (-1.4%) briefly recouped early losses after local reports stated that Taiwan sees a smaller chance of raising the COVID-19 alert although the recovery was only brief. Finally, 10yr JGBs were lower amid spillover selling from the vicious treasury sell-off that was triggered by the highest US inflation reading in more than a decade and after a decent US 10yr auction did little to help claw back losses. Nonetheless, Asia-Pac yields were relatively stable overnight following mixed results at the 30yr JGB auction and with Aussie yields unmoved by the RBA’s regular QE purchases.

Taiwanese government says it is to begin rotational energy blackouts in some areas this afternoon as it does not have enough electricity capacity in its grid; Tainan Science Park says there has been no impact from the domestic power outage on chip producers such as TSMC and UMC. (Newswires)

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.4612 vs exp. 6.4592 (prev. 6.4258)

US Secretary of State Blinken that China continues to commit genocide and that it criminalizes religious expression, while he also announced sanctions on a Communist Party official for gross violation of human rights. (SCMP)

China's MOFCOM denies reports that it is considering replacing Vice Premier Liu He as their top economic envoy with the US. (Newswires)

US

USTR Tai reportedly came under pressure during Senate negotiations aimed at involving the US in the TPP and was said to have faced a backlash for her support for COVID vaccine patent wavers. (SCMP)

UK/EU

BoE's Haldane stated it is realistic to expect double-digit growth for the UK a year from now and that inflation is likely to be above 2% target by year-end, but noted there are still some large risks including from the virus or debts accumulated during lockdown that could derail the recovery and suggested that now is the time to start tightening the tap to avert the risk of an inflationary flood. (Newswires/Daily Mail)

• UK RICS Housing Survey (Apr) 75 vs. Exp. 62.0 (Prev. 59.0, Rev. 62)

GEOPOLITICAL

Israel vowed to increase its campaign against Hamas in which PM Netanyahu said "we'll hit them where they've never dreamt possible" and that the operations were just the beginning. Furthermore, the Israeli Army said around 1,500 rockets were fired at Israel from Gaza this week and Israel diverted an incoming flight from Ben Gurion Airport to Southern Ramon Airport amid rocket attacks from Gaza. Most recently, Israel Chief of Staff Kohavi says additional troops have been redeployed to the border ahead of potential ground operations which are to be reviewed later today, via Conflict News. (Newswires/RIA/Twitter)

The US has deployed Hornet aircraft to Saudi Arabia, as part of a dynamic force employment to enhance their ability to deter aggression. (Twitter)

EQUITIES

Bourses across Europe trade with losses, albeit off worst levels (Euro Stoxx 50 -1.5%) as the region plays catch-up to the stock rout on Wall Street which continued into APAC trade amid the US CPI-exacerbated inflation concerns, whilst the intensifying conflict in Israel/Gaza adds to the soured mood. Traders will be keeping a keen eye on the US Jobless Claims later today for any nuances that could pressure the Fed alongside the PPI print. US equity futures have re-joined the sell-off after some overnight consolidation, with the NQ, YM, RTY, and ES printing below yesterday's respective lows as the US 10yr yield remains close to yesterday's highs. Back to Europe, with Scandi and Swiss markets away in observance of Ascension Day, the remaining bourses largely see broad-based losses with the DAX cash and futures below 15k and FTSE 100 (-2.0%) the narrow laggard as losses in its mining giants weigh. The Basic Resources sector is the clear laggard as copper and iron ore prices see a sizeable pullback following their recent bull runs. Overall, sectors portray a more defensive tone and a "risk-off" mood, with Staples, Utilities, and Healthcare all faring slightly better than their counterparts, although the Healthcare sector also sees giants Roche and Novartis out of action due to the public holiday. In terms of individual movers, Burberry (-8.0%) resides at the foot of the Stoxx 600 despite reinstating its dividend and reporting a sales rebound as focus turns to the Chinese market in the months ahead amid the Burberry boycott in light of comments made over China's human rights policy. Prudential (-5.5%) accelerated losses after announcing an intent to raise USD 2.5-3bln in equity. To the upside meanwhile, Telefonica (+2.7%) is one of the top large-cap performers following an earnings beat across the board.

JP Morgan (JPM) reportedly plans to issue credit cards to individuals with no credit scores, with the scheme expected to be launched at some point this year, according to sources. (WSJ)

FX

USD - Choppy trade and some consolidation in the aftermath of Wednesday’s blow-out US CPI data, with the DXY also succumbing to a bit of resistance and offers into 91.000 as several key technical levels straddle the round number, including the 21 DMA (90.932), 100 DMA (91.062) and 21 WMA (91.087). However, this was relatively short-lived and after pause for breath in wake of its swift and sizeable rise from 90.153 to 90.798 yesterday, the index and Greenback in general are advancing again as Treasury and other debt yields remain elevated and the Buck retains a firm underlying bid on risk-off premium given the ongoing slump in global stock markets on ramped up reflation vibes. Moreover, several big option expiries could keep the Dollar underpinned vs major peers and the DXY aloft within a higher 90.909-587 range. Ahead, jobless claims, PPI, the final leg of Quarterly Refunding and yet more Fed commentary.

CHF/JPY/NZD - The Franc, Yen and Kiwi are holding up a bit better than their G10 counterparts in the face of renewed Greenback strength and a fair degree of spread convergence between Swiss, Japanese and NZ bonds vs USTs is providing a buffer. Accordingly, Usd/Chf remains capped just under 0.9100, Usd/Jpy has faded around 109.79 and Nzd/Usd is back above 0.7150 following a brief dip below.

EUR/AUD - Both looking susceptible to steeper depreciation vs their US rival, with the Euro only just recovering from a stop-chase through the 21 DMA (1.2064) in time to avoid more sell orders sitting at or beneath 1.2050. Nevertheless, Eur/Usd also faces heavy and layered option expiry interest from the round number above to 1.2150, including 1.3 bn at 1.2100, 1 bn from 1.2115-35 and the same size between 1.2140-50. Meanwhile, the Aussie is trying to keep tabs on the 0.7700 handle with the aid of 1 bn expiries starting from 0.7690 and ending at the strike after declining alongside copper and other base metals overnight, but will have to do very well to reclaim more lost ground given expiries beyond 0.7750 (at 0.7760-65 and 0.7790-95 in 1 bn apiece) and the fact that the half round number was not pierced earlier.

GBP/CAD - Sterling is rotating around 1.4050 after finally losing sight of 1.4100 in the post-US inflation data fallout, awaiting independent impetus and direction via BoE speakers, while the Loonie has retraced from fresh 8 year or so midweek peaks in tandem with a retracement in crude prices between 1.2104-57 parameters and also looking for Central Bank inspiration via BoC Governor Macklem.

SCANDI/EM - The Nok has recoiled further from 10.0000+ highs vs the Eur amidst the pronounced downturn in risk sentiment and aforementioned pull-back in oil, but the Try’s demise is even more eye-catching in stark contrast to recuperative gains elsewhere as rising US and overall price pressures merely accentuate the problem for Turkey in terms of battling to get sky high CPI back down to target, or even under control. Hence, the Lira has tested support at 8.5000 again.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1950-65 (3.7BLN), 1.1975-80 (700M), 1.2000 (410M), 1.2045-50 (681M), 1.2100 (1.3BLN), 1.2115-35 (1BLN), 1.2140-50 (1BLN), 1.2150 (711M), 1.2170 (2BLN)
• USD/CHF: 0.9095 (1.1BLN)
• EUR/CHF: 1.1000 (759M), 1.1040 (1.1BLN)
• AUD/USD: 0.7690-0.7700 (1BLN), 0.7760-65 (1BLN), 0.7780 (695M), 0.7790-95 (1BLN)
• USD/JPY: 108.90-109.00 (1.6BLN), 109.50 (688M), 110.00-05 (500M)

FIXED

Aside from the early revival, bonds have been on a slippery slope with only tame and fleeting periods of recovery and sideways price movement before bears resurface. Hence, Bunds and Gilts have extended losses to 35 ticks each at 168.59 and 126.86 on Eurex and Liffe respectively to push corresponding 10 year yields up towards and/or just through potentially key levels (sentimentally if not quite technical). Indeed, the German cash benchmark is now probing -10 bp and its UK equivalent is approaching 95 bp even though US Treasuries appear to be holding in the run up to jobless claims, PPI and the 30 year auction plus another array of Fed speakers.

COMMODITIES

WTI and Brent front month futures see hefty losses in early European trade with the complex subdued as the Colonial Pipeline premium unwinds, whilst the soured tone across markets exacerbate losses. WTI Jun sees itself on either side of USD 64.50/bbl (vs high 65.81/bbl) while Brent July dipped blow USD 68/bbl (vs high USD 69.04/bbl). That being said, the geopolitical landscape remains heated amid the intensifying Israeli/Gaza conflict whereby the US sided with the former and Russia with the latter, meanwhile, Israel is poised to ramp up its military offensive with a ground invasion of Gaza later today according to reports. Furthermore, separate reports suggested that Houthi-led rebels have carried out "a large joint offensive operation" against Saudi, with Aramco facilities among the targets. Elsewhere, the JCPOA has taken somewhat of a backseat at the moment given the market focus on the inflation narrative and geopolitics in the Middle East, although officials did note that negotiations will have to pick up the pace to reach a deal within weeks. Over to metals, spot gold and silver remain suppressed by post CPI yields and the Buck, with the former around USD 1,815/oz (vs high 1,822/oz) whilst spot silver dipped below USD 27/oz (vs high USD 27.24/oz). In terms of base metals, copper and iron ore futures eased following the recent bull run, with LME copper back below USD 10,500/t as the soured risk tone caps upside.

US Energy Secretary Granholm announced that Colonial Pipeline were to restart the pipeline yesterday, while the Colonial Pipeline stated that following the restart, it will take several days for fuel delivery to return to normal and that some markets served by the pipeline may continue to experience intermittent service interruptions during the start-up. In relevant news, Colonial Pipeline earlier stated that it had no plans to pay a ransom to decrypt the data file and it was separately reported that the hacking group DarkSide claimed responsibility for three more attacks on global companies situated in the US, UK and Brazil although it did not name which companies, according to sources. (CNBC)

US President Biden suggested there will be good news regarding the Colonial Pipeline in the next 24 hours and that they have lifted restrictions on fuel transportation, while President Biden will deliver remarks on the Colonial Pipeline today at 11:50EDT/16:50BST. Furthermore, he signed an executive order to improve federal cyber security capabilities and digital security standards for the private sector in which the order requires providers that sell to the government to report breaches and it also establishes a cyber incident review board. (Newswires)

Yemen's Houthi's launched 12 ballistic missiles and drones towards Saudi Aramco, Najran airport and other targets in the area. (Newswires)