• APAC stocks traded mostly higher following the gains in the US where growth stocks spearheaded a recovery.
• Russia and Ukraine could pause hostilities as part of a deal which would see Ukraine abandon its push for NATO membership, according to FT.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future up 0.8% after the cash market closed higher by 0.5% yesterday.
• DXY holds onto 99.0 status, EUR/USD remains on a 1.09 handle, USD/JPY retreated back below 124.00.
• Looking ahead, highlights include German GfK, Speeches from Fed's Williams, Bostic & Harker, ECB's Kazimir, 7yr supply from the US.

US TRADE

• US stocks finished positive as a growth/mega cap rally helped markets shrug off the initial choppy mood, while upcoming Russia-Ukraine talks and a decline in oil prices facilitated the risk appetite.
• S&P 500 +0.7% at 4,576, Nasdaq 100 +1.6% at 14,987, Dow Jones +0.3% at 34,956, Russell 2000 Flat at 2,078.

NOTABLE US HEADLINES

• US Economic Adviser Rouse said the US does not expect a food shortage and sees inflation to ease this year into next, according to Reuters.
• US Moderate Democrat Senator Manchin said he doesn't support taxing unrealised gains of the wealthy and opposes reversing fossil fuel tax benefits, according to Bloomberg.
• US House Budget Committee Chairman US official Yarmuth said Congress may need to raise the debt limit around October 1st, according to Reuters.
• US Senate voted 68-28 to pass the USD 52bln chips subsidy bill which paves the way for talks in an attempt to reach a compromise with the House, according to Reuters.
• US DoJ backs legislation targeting big tech such as Amazon (AMZN), Google (GOOG) and Apple (AAPL), according to WSJ

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Russia is no longer reportedly requesting Ukraine be “denazified” in ceasefire talks and is prepared to let Kyiv join the EU if it remains militarily non-aligned as part of ongoing ceasefire negotiations, according to FT citing sources. Furthermore, the two sides are reportedly discussing a pause in hostilities as part of a possible deal that would see Ukraine abandon its push for a NATO membership in exchange for security guarantees and the prospect to join the EU although a deal is not yet finalised, according to the FT sources.
• US President Biden said he is not walking anything back on comments about Russian President Putin and that he was expressing moral outrage but he does not think the comments complicate diplomacy and he is not concerned his remarks could escalate the conflict, according to Bloomberg.

DEFENCE/MILITARY

• Kremlin spokesman Peskov said Russia would use nuclear weapons only when there is a threat to the existence of the state, while Peskov added that comments by US President Biden on Russian President Putin remaining in power were quite alarming and a personal insult. Furthermore, Peskov said Russia will not send gas without payment and that Russian troops are only shelling military installations, not houses and apartments.
• UK Ministry of Defence tweeted that Russian private military organisation the Wagner Group has deployed to eastern Ukraine with the group expected to deploy more than 1,000 mercenaries including senior leaders of the group for combat operations.

ENERGY/ECONOMIC SANCTIONS

• Australia announced sanctions and travel bans on 14 Russians, while it was separately reported that Australia imposed sanctions on 39 Russians linked to the Magnitsky case, according to Sputnik.
• Japan widened the scope of Russian sanctions to include luxury items such as premium cars and precious stones, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher following the gains in the US where growth stocks spearheaded a recovery and with a decline in oil prices conducive for risk.
• ASX 200 was led by strength in tech and consumer stocks heading into the Budget announcement.
• Nikkei 225 gained with Japan to compile economic measures by the end of next month.
• Hang Seng and Shanghai Comp. traded mixed with the mainland index faltering amid the ongoing lockdown in Shanghai and despite the announcement of supportive measures by the local government.
• US equity futures plateaued following Monday's rebound.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future up 0.8% after the cash market closed higher by 0.5% yesterday.

FX

• DXY was rangebound near the 99.00 level after running out of steam on its approach towards YTD highs.
• EUR/USD eked marginal gains and eyes resistance near the 1.1000 handle.
• GBP/USD is off lows but remained lacklustre after recent comments from BoE Governor Bailey.
• USD/JPY continued to pull back overnight after Japanese Finance Minister Suzuki noted they will closely watch market moves to avoid negative JPY weakness.
• Antipodeans were lacklustre after the recent downside in commodities.

FIXED INCOME

• 10yr USTs traded subdued after yesterday's choppy mood but are off the prior day's lows after it found support at the 121.00 level, while the 2yr/10yr gap was at its narrowest in two years.
• Bunds remained pressured steadily prodded beneath the 158.00 level.
• 10yr JGBs were lacklustre despite the BoJ's two special operations today for unlimited JGBs and with prices not helped by a weaker 40yr auction as Japanese yields hit multi-year highs.

COMMODITIES

• WTI and Brent remained subdued after yesterday's 9% decline as the lockdown in Shanghai weighs on the demand outlook and with upcoming Ukraine-Russia meetings helping ease the geopolitical risk premia.
• UAE Energy Minister said they are not happy with higher prices but cannot oversupply the market, while he added that increasing production will only be in a measured way and through a consensus among OPEC+ members, according to Reuters.
• Spot gold traded flat and mirrored the uneventful price action in the greenback.
• Copper took a breather following its recent rebound.

CRYPTO

• Bitcoin saw mild gains overnight with prices back above the 47,000 level.
• Environmental groups are pushing for a reduction in Bitcoin's energy use, according to WSJ.

NOTABLE APAC HEADLINES

• PBoC injected CNY 150bln via 7-day reverse repos with the rate at 2.10% for a CNY 130bln net injection
• PBoC set USD/CNY mid-point at 6.3640 vs exp. 6.3601 (prev. 6.3732)
• Shanghai will implement large-scale VAT credits and refunds, as well as reduce or exempt rents for SMEs. Shanghai also announced to strengthen financial guarantee support for SMEs and eligible companies, while it is to offer CNY 140bln in tax savings to corporations this year, according to Reuters and Global Times.
• Japanese PM Kishida said the government ordered a stimulus compilation by the end of April and Economic Minister Yamagiwa said they will first prioritise providing prompt support by utilising emergency reserves, according to Reuters.
• Japanese Chief Cabinet Secretary Matsuno said currency market stability is important and that they need to watch recent moves closely, while Finance Minister Suzuki said they will closely watch market moves to avoid negative JPY weakness, according to Reuters.
• BoJ offered to buy an unlimited amount of 5yr-10yr JGBs at a fixed rate on two occasions today, according to Reuters.
• BoJ Summary of Opinions from the March meeting stated that rising inflation could pressure overseas economic growth and there were worries of the risk uncertainty regarding situation in Ukraine could weigh on Japan's economy. BoJ stated that CPI is likely to accelerate from April and may move around 2% for some time, while it also noted that they must maintain monetary easing as Japan is unlikely to see inflation continuously exceed 2%.

DATA RECAP

• Australian Retail Sales MM Final * (Feb) 1.8% vs. Exp. 1.0% (Prev. 1.8%)

EUROPE

NOTABLE EUROPEAN HEADLINES

• UK is interested in creating joint first ministers in Northern Ireland as part of an effort to improve the functioning of the devolved government, according to FT.
• ECB's Lane has warned that Europe "may have to get used to higher prices". He also expressed "major concern" over declines in consumer and confidence sentiment indices, according to Politico.