• APAC stocks were mostly positive following a predominantly soft close in the US; Nasdaq 100 -0.3%.
• Fed Chair Powell said if the FOMC needs to raise the Fed Funds Rate by more than 25bps at a meeting or meetings, they will do so.
• Ukrainian President Zelenskiy said he’s prepared to discuss a commitment from Ukraine not to seek NATO membership in exchange for a ceasefire.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future down 0.3% after the cash market closed lower by 0.5% yesterday.
• DXY is firmer post-Powell with the US 10yr yield north of 2.3%; USD/JPY breached 120.00.
• Looking ahead, highlights include NBH Policy Announcement, Speeches from Fed's Williams, Daly & Mester, ECB's Lagarde, Lane, de Guindos & Panetta, Supply from Germany.

US TRADE

• US stocks finished mainly negative albeit off lows with sentiment pressured as yields spiked higher amid rising oil prices and hawkish Fed rhetoric, while Russia also downplayed progress in peace talks.
• S&P 500 Unch. at 4,461, Nasdaq 100 -0.3% at 14,376, DJIA -0.6% at 34,553, Russell 2000 -0.9% at 2,065.

NOTABLE US HEADLINES

• Fed Chair Powell said if they need to raise the Fed Funds Rate by more than 25bps at a meeting or meetings, they will do so, and that the balance sheet reduction could come as soon as May but no decision has been made. Powell also stated if they determine that they need to tighten beyond common measures of neutral and into a more restrictive stance, they will do that as well, while he added that risk is rising that an extended period of high inflation could push longer-term expectations uncomfortably higher and the Fed needs to move expeditiously to combat that. Furthermore, Powell said he does not have a test for what would trigger a 50bps hike and reiterated they will move quicker if needed.
• Goldman Sachs now expects the Fed to hike by 50bps at the May and June meetings, as well as announce the start of the balance sheet reduction in May, while it also sees four 25bps hikes in H2 but added that the Ukraine war and tight financial conditions are risks to the rate call.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Ukrainian President Zelenskiy said a meeting with Russian President Putin is vital to determine Russia's position on ending the war, according to Interfax. President Zelensky also said that he’s prepared to discuss a commitment from Ukraine not to seek NATO membership in exchange for a ceasefire, withdrawal of Russian troops and a guarantee of Ukraine’s security, according to AP.
• White House said European leaders discussed conducting calls on a regular basis and discussed Russia's "brutal" tactics in Ukraine during their call on Monday, while the US wants to hear China condemn Russia's actions.
• UN General Assembly's special session on Ukraine will resume on Wednesday after a relevant request, according to Sputnik.

DEFENCE/MILITARY

• US President Biden said Ukraine is fighting valiantly and using equipment from the US, while he added Russian President Putin's back is against the wall and he is talking about new false flags such as biological weapons. President Biden also suggested this is a clear sign that President Putin is considering both biological and chemical weapons, while he added that Russia may be planning a cyber attack against the US.
• UK Ministry of Defence said Russia claimed it fired a number of hypersonic missiles against Ukrainian targets and that its claims of using the developmental Kinzhal are highly likely intended to detract from lack of progress on the ground campaign.
• Ukrainian forces announced the recapture of the Makarev area west of Kyiv, according to Sky News Arabia.
• Ukrainian TV Channel PRM noted that Ukraine’s ambassador to Warsaw said Poland understands all the threats from Russia and is preparing for a possible attack by the state, although the ambassador has not yet confirmed or denied the statement, according to Twitter and Daily Sabah.
• Russian military said 67 vessels from 15 countries remain blocked at Ukrainian ports due to mines, according to Russian press Tass.

ENERGY/ECONOMIC SANCTIONS

• Support for an EU-wide ban on the purchase of Russian oil is growing inside the bloc, according to diplomats cited by WSJ, although the report added that an agreement on any ban is far from locked in yet.
• US President Biden's senior aides believe that Russia is suffering a dramatic decline in oil sales that stands to deprive the Kremlin of a key source of government revenue, according to WaPo citing sources.
• EU's Borrell said the EU is ready to take further restrictive measures against Russia and that sanctions cannot come at an unaffordable cost to the EU, while leaders are to discuss what sanctions are possible.
• French Foreign Minister Le Drian and US Secretary of State Blinken agreed to continue strengthening sanctions against Russia and on the need to enhance the security of Ukraine's nuclear facilities.

FUND/SOVEREIGN ACTION

• Russia's coupon payment on sovereign bonds maturing in 2029 was processed by JPMorgan which worked with the US Treasury Department on necessary approvals, according to Reuters sources.
• S&P said it will withdraw ratings on all Russian entities.

OTHER

• US State Department said the US is prepared to make "difficult decisions" to return Iran's nuclear programme to its JCPOA limits, while it noted that an agreement is neither imminent nor is it certain on a return to the Iran deal and that the US is preparing equally for scenarios with and without a mutual return to the full implementation of the JCPOA.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive with the region shrugging off the higher yields and oil advances.
• ASX 200 was led higher by strength in the commodity-related sectors including energy after further gains in oil.
• Nikkei 225 gained as exporters benefitted from a weaker currency and amid stimulus speculation.
• Hang Seng and Shanghai Comp. traded higher with outperformance among the blue-chip tech stocks including Alibaba after it boosted its share buyback to USD 25bln from USD 15bln and with oil majors underpinned.
• US equity futures were lacklustre overnight with price action rangebound.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future down 0.3% after the cash market closed lower by 0.5% yesterday.

FX

• DXY continued to strengthen following a jump in yields and the hawkish tone from Fed Chair Powell.
• EUR/USD was subdued after declining beneath its 200-Hour moving average and the 1.1000 handle
• GBP/USD continued its pullback overnight with short term resistance at 1.3150 and its nearby 100-Hour MA.
• USD/JPY climbed above 120.00 for the first time since February 2016.
• Antipodeans were rangebound with price action not helped by the soft consumer sentiment data.

FIXED INCOME

• 10yr USTs extended on the prior day’s lows after the front and belly led yesterday’s acute selling of the Treasury curve as oil prices rallied and after hawkish comments from Fed Chair Powell.
• Bunds retreated further below 160.00 with futures down around 2 points so far this week.
• 10yr JGBs gapped beneath 150.00 on spillover selling, with the 10yr yield at 0.22% and nearing the BoJ’s cap.

COMMODITIES

• WTI and Brent extended on yesterday's firm gains as support increases for an EU-wide ban on Russian oil. Albeit, opposition from some member states remains.
• Spot gold was rangebound with price action contained by a firmer greenback
• Copper prices were choppy overnight and failed to benefit from the mostly constructive risk tone.

CRYPTO

• Bitcoin gained overnight in which prices briefly reclaimed the USD 43,000 level.

NOTABLE EUROPEAN HEADLINES

• ECB's Rehn said the ECB should normalise policy without hurting growth and rate hikes from the ECB would depend on economic developments.

NOTABLE APAC HEADLINES

• PBoC injected CNY 20bln via 7-day reverse repos with the rate at 2.10% for a CNY 10bln net injection.
• PBoC set USD/CNY mid-point at 6.3664 vs exp. 6.3635 (prev. 6.3677)
• US State Department is taking action against Chinese officials for involvement in repression of ethnic and religious minority groups with the US imposing visa restrictions on Chinese officials, according to Reuters.
• Japan was reported to be eyeing additional stimulus valued over JPY 10tln, according to Sankei, although Chief Cabinet Secretary Matsuno later stated they are not thinking about an economic stimulus package now.

DATA RECAP

• New Zealand Westpac Consumer Confidence (Q1) 91.2 (Prev. 99.1)