• APAC stocks were cautious following the uninspiring lead from Wall St, where the major indices closed off their worst quarterly performance in two years and as the region digested weak data releases.
• European equities (Stoxx 600 +0.6%) opened marginally firmer before extending on gains after positive commentary from Russian Foreign Minister Lavrov.
• Russia's Foreign Minister Lavrov said Russia is preparing a response to Ukraine's proposals, says there has been movement forward
• US futures are modestly firmer with the ES up 0.5% with gains of a similar magnitude across major indices ahead of the March payrolls report.
• Greenback has regrouped in advance of NFP with the DXY straddling 98.500. Usd/Jpy bounced further from recent lows beyond near term resistance through to circa 122.75.
• Looking ahead, highlights include US Final Manufacturing PMIs, US Labour Market Report, ISM Manufacturing PMI, China-EU Summit, Speech from Fed's Evans.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Russian confirms that virtual discussions will take place with Ukraine later today, according to Tass.
• Russia's Foreign Minister Lavrov said Russia is preparing a response to Ukraine's proposals, says there has been movement forward. Lavrov says Russia has seen "much more understanding" of the situation in Crimea and Donbass from the Ukrainian side. Lavrov says peace talks with Ukraine need to continue.
• UK reportedly urged Ukraine not to back down and is concerned US, France and Germany will push Ukraine to “settle” and make significant concessions to Russia, according to The Times citing a government source.
• Mayor of Ukraine's Mariupol says Russian forces are not allowing humanitarian aid in; City is dangerous to try and exit.

DEFENCE/MILITARY

• Ukrainian President Zelensky said the situation in the south of Ukraine and the Donbas region remains extremely difficult, according to Reuters.
• Ukraine's envoy to Japan said the situation on the ground is turning better for Ukraine and they will soon be able to protect their skies with advanced military equipment set to be provided by the US and UK, according to Reuters.
• UK Ministry of Defence said Russia is redeploying forces from Georgia to reinforce its invasion of Ukraine.
• Governor of Belgorod in Russia near the border with Ukraine confirmed an oil depot fire was caused by a Ukrainian helicopter attack inside of Russia, according to ELINT News. The Kremlin later said the strike does not create comfortable conditions to continue peace talks.
• Governor of Ukraine's Northern Chernihiv region says Russian troops are withdrawing from the Chernihiv region.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Russia's Foreign Ministry said Russia will not ask the EU to end sanctions and has a sufficient margin of safety, according to RIA.
• US State Department called on any US citizens in Russia or Ukraine to leave immediately over concerns of being targeted specifically for arrest, according to Reuters.

OTHER

• Japan froze the assets of 4 additional Russian organisations, 3 Russians and 6 North Koreans for involvement in North Korea's weapons projects, according to Reuters.

EUROPEAN TRADE

EQUITIES

• European equities (Stoxx 600 +0.6%) opened marginally firmer before extending on gains after positive commentary from Russian Foreign Minister Lavrov. The Stoxx 600 set to close the week out with marginal gains of around 0.6% in what has been a choppy week for indices.
• Sectors in Europe are higher across the board with Retail, Banks and Autos top of the leaderboard.
• US futures are modestly firmer with the ES up 0.5% with gains of a similar magnitude across major indices ahead of the March payrolls report.
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FX

• Yen has relented as yields rebound and repatriation demand dries up - Usd/Jpy bounced further from recent lows beyond near term resistance through to circa 122.75.
• Greenback has regrouped in advance of NFP with the DXY straddling 98.500.
• Aussie outperforms as risk appetite picks up and 0.7500 continues to prove pivotal.
• Euro finds a base after marked month end reversal as hot inflation offset lukewarm manufacturing PMIs - Eur/Usd holding around 1.1050 after soaking up stops on a minor and brief half round number break.
• Yuan weaker after sub-50 Caixin Chinese manufacturing print, softer PBoC Cny midpoint fix and 7-day liquidity drain - Usd/Cnh above 6.3650.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0975 (430M),1.1000-05 (445M), 1.1050 (290M), 1.1085 (318M), 1.1100-10 (1.01BN), 1.1150 (372M), 1.1175 (292M), 1.1200 (265M)
• USD/JPY: 119.75-00 (787M), 121.50-60 (1.17BN), 121.67-70 (320M)
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FIXED INCOME

• Bunds are firmly if not comfortably back on the 158.00 handle compared to a low of 157.71 on Eurex
• Gilts are peering over 121.00 vs 120.55 and have been up to 121.19 for just a 4 tick loss on the day
• The 10 year note is hovering above 122-00 within 122-21+/121-28+ extremes awaiting NFP
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COMMODITIES

• WTI (+0.6%) and Brent (+0.8%) kicked the session off on the backfoot following yesterday’s SPR announcement by the Biden administration with WTI breaching it's weekly low printed on Tuesday at USD 98.44 with Brent so far unable to take out its weekly low of USD 102.19. Since then, crude benchmarks have attempted to claw back lost ground and sit in minor positive territory.
• White House Press Secretary Psaki said a gas tax holiday is not off the table, according to Reuters.
• US House Majority Leader Hoyer said oil companies should either produce on leases and drill wells or pay a fee for unused leases and idled wells, according to EIN News.
• Russian oil and gas condensate production slipped to 11.01mln BPD in March vs. 11.08mln BPD in February, according to Reuters sources
• Gazprom says refilling storage ahead of winter will be a challenge for the EU.
• Gazprom says it has begun sending requests of gas-for-rouble payment switch to clients today; sats it remains a responsible partner and continues to secure gas supplies
• Japan's Industry Minister said it is not clear whether the latest US decision to release oil will be done by the US alone or become part of an IEA-coordinated release, according to Reuters.
• It's been another uninspiring session for gold thus far with the yellow metal unable to break out of the USD 1900-50/oz range.
• Copper remains subdued following the cautious mood overnight and with Chinese Caixin Manufacturing PMI printing a 2-year low, whilst Dalian Iron Ore was able to settle near an 8-month high overnight.
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DATA RECAP

• EU HICP Flash YY (Mar) 7.5% vs. Exp. 6.6% (Prev. 5.9%)
• EU HICP-X F&E Flash YY (Mar) 3.2% vs. Exp. 3.3% (Prev. 2.9%)
• UK S&P GLBL/CIPS Manufacturing PMI FNL (Mar) 55.2 vs. Exp. 55.5 (Prev. 55.5)
• EU S&P Global Manufacturing Final PMI (Mar) 56.5 vs. Exp. 57.0 (Prev. 57.0)
• German S&P Global/BME Manufacturing PMI (Mar) 56.9 vs. Exp. 57.6 (Prev. 57.6)
• French S&P Global Manufacturing PMI (Mar) 54.7 vs. Exp. 54.8 (Prev. 54.8)
• Italian S&P Global Manufacturing PMI (Mar) 55.8 vs. Exp. 57.0 (Prev. 58.3)
• Spanish Manufacturing PMI (Mar) 54.2 vs. Exp. 55.5 (Prev. 56.9)

CRYPTO

• BTC is on the backfoot but maintaining USD 45k status for now.

APAC TRADE

EQUITIES

• APAC stocks were cautious following the uninspiring lead from Wall St, where the major indices closed off their worst quarterly performance in two years and as the region digested weak data releases.
• ASX 200 traded rangebound as pressure from losses in tech, industrials and financials was counterbalanced by resilience in the commodity-related sectors and upgrade to Australian PMI data.
• Nikkei 225 was subdued after mixed Tankan data in which the headline Large Manufacturing Index topped estimates, but Large Manufacturers and Non-Manufacturers' sentiment worsened for the first time in 7 quarters.
• Hang Seng and Shanghai Comp. were mixed with sentiment clouded after the PBoC drained liquidity and Chinese Caixin Manufacturing PMI slipped into contraction territory, although the mainland recovered amid the partial lifting of the lockdown in Shanghai and as Chinese press continued to advocate monetary easing.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 90bln net drain.
• PBoC set USD/CNY mid-point at 6.3509 vs exp. 6.3473 (prev. 6.3482).

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Mar) 48.1 vs Exp. 50.0 (Prev. 50.4)
• Japanese Tankan Large Manufacturing Index (Q1) 14 vs Exp. 12 (Prev. 18)
• Japanese Tankan Large Manufacturing Outlook (Q1) 9 vs Exp. 10 (Prev. 13)
• Japanese Tankan Large Non-Manufacturing Index (Q1) 9 vs Exp. 5 (Prev. 9)
• Japanese Tankan Large Non-Manufacturing Outlook (Q1) 7 vs Exp. 8 (Prev. 8)
• Japanese Tankan All Big Capex Est (Q1) 2.2% vs Exp. 4.0% (Prev. 9.3%)