• European bourses are mixed with US futures similarly contained, ES +0.1, amid limited newsflow and with a thin docket ahead.
• Russian Chief Negotiator said Russia's position on Crimea and Donbas remains unchanged, a draft peace agreement is not ready and talks will resume on Monday
• DXY continues to grind higher as EUR lags amid yield pressure as EGBs bounce, though GBP/Gilts await BoE speak via dovish-dissenter Cunliffe
• WTI and Brent are choppy but contained awaiting Ukraine-Russia progress; Kremlin has no information on the continuation of talks
• Fed’s Williams says balance sheet reduction could begin as soon as May.
• Looking ahead, highlights include US Factory Orders & BoE’s Cunliffe

As of 10:45BST/05:45ET

LOOKING AHEAD

• US Factory Orders & BoE’s Cunliffe
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Russian Chief Negotiator said Russia's position on Crimea and Donbas remains unchanged, a draft peace agreement is not ready and talks will resume on Monday, via Reuters.
• Russian Foreign Ministry spokesperson said Kyiv is attempting to disrupt peace talks.
• SGH Macro Advisors, in a note dated April 1st, suggested it is their understand that Russian Foreign Minister Lavrov conveyed to his Chinese counterpart that “there is still a long way to be walked” to sign a peace treaty between Russia and Ukraine under conditions that are “mutually acceptable”, although a great progress has been made. Lavrov added that Russia does not rule out settlement in Roubles for other commodities if hostility continues from the West. Commodities such as oil, wheat, fertilizer, lumber, and uranium could be affected.
• Russia has requested a US Security Council Meeting to discuss "provocation of Ukrainian radicals", according to Reuters citing Ria.
• Russia's Kremlin repeated that the special military operation in Ukraine will achieve all of its aims, via Reuters.
• US Secretary of State Blinken will travel to Belgium on April 5-7th for a NATO meeting, according to the State Department.
• Russian Kremlin says it has no information re. the continuation of Russia-Ukraine talks, declines to comment on how Bucha allegations will impact discussions; wants and demands the Bucha issue is discussed at an international level, categorically rejects any accusations.

DEFENCE/MILITARY

• Russia has revised its Ukraine war strategy to focus on trying to take control of the Donbas and other regions in eastern Ukraine with a target date of early May, according to several US officials cited by CNN.
• Poland’s Ruling Party leader said Poland would be open to deploying US nuclear weapons in Poland, according to the Jerusalem Post.
• There have been reports via Western media of continued civilian killings by Russia in several cities, particularly in Bucha.
• NATO Secretary General Stoltenberg said what we see in Ukraine is not a real withdrawal by Russian troops, via Reuters.
• Ukraine's 368.5k BPD Kremenchuk oil refinery was completely destroyed during a Russian attack, according to the regional governor.
• Explosions were heard in Ukraine's city of Odessa, according to a Reuters witness and in the city of Kherson, according to a local media.
• Ukrainian authorities of Luhansk says that Russian forces are preparing to launch an attack on the region after mobilising fighters and vehicles.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Russian government spokesperson Peskov said Russia could demand RUB payments for other goods. He added that payment for gas supplies in Russian Roubles will be made from the end of the second half of April, or even early May, according to Reuters.
• EU ambassadors are expected to discuss fresh Russian sanctions on Wednesday, according to FT sources.
• UK PM Johnson said UK is stepping up military support for Ukraine and sanctions on Russia, according to Reuters.
• German Chancellor Scholz said the West will agree on further Russian sanctions in the coming days, according to Reuters.
• EU must discuss import ban on Russian gas deliveries, according to the German Defence Ministry cited by Reuters.
• US Department of Commerce on Friday added 120 Russian and Belarusian entities, largely comprised of companies linked to the military, via Reuters.
• Latvia, Estonia and Lithuania stopped imports of Russian gas from April 1st, according to the FT.
• Physical gas flows on the Yamal-Europe pipeline at Mallnow, Germany have dropped to zero, via Reuters citing operator data. Elsewhere, Gazprom does not intend to hold spot gas sales sessions at its electronic sales platform this week.
• German Economy Minister Habeck says they are working hard to limit dependence on Russian oil, also with reference to the Rosneft refinery in Schwedt.

OTHER

• A Chinese diplomat, following talks with EU, said China cannot change the EU and the EU cannot change China. China said it is not deliberately circumventing Russian sanctions, via Reuters.
• North Korea continues to develop chemical and biological weapons which together with its nuclear and ballistic missile capabilities pose a serious threat to South Korea and other US allies, according to Yonhap citing US officials on Friday.
• A two-month truce has been announced by the warring sides in Yemen, according to The Guardian.
• Iranian Foreign Ministry spokesperson Khatibzadeh says they are ready to continue discussions with Saudi Arabia, calling on them to show willingness to resolve the outstanding issues, via Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed, Euro Stoxx 50 +0.2%, failing to derive firm direction after initial opening gains faded in limited newsflow.
• Sectors, are mixed as well with Roche and Bayer lifting Health Care and the former aiding the SMI while Banking names lag modestly.
• Stateside, US futures are similarly indifferent with a thin docket ahead.
• Spanish PM Sanchez says they are to spend EUR 11bn on the semi-conductor and micro-chip industry, via Reuters.
• Click here for more detail.

FX

• Greenback grinds higher amidst more Fed officials flagging half point hikes post-US jobs data and pre- factory orders, DXY forms 98.500+ base.
• Aussie outperforms ahead of AIG construction index, final PMIs and RBA policy meeting that might see rate guidance turn more plausible than patient; AUD/USD pivots 0.7500 and AUD/NZD solid on the 1.0800 handle.
• Euro underperforms as EGB yields retreat, Russia/Ukraine angst persists and option expiry interest exerts downside pressure, EUR/USD drifts down from 1.1050+ towards 1.1000 and 1bln rolling off between the round number and 1.1010.
• Forint underpinned following resounding win by Hungarian PM Orban, but Lira undermined by further increases in Turkish CPI and PPI.
• S&P said Turkey long-term LC rating lowered to 'B+' from 'BB-'; FC rating affirmed at 'B+'; outlook remains negative.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0975 (485M), 1.1000-10 (1.1BN), 1.1100 (765M)
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FIXED INCOME

• Bunds bounce firmly on a mix of safe-haven demand, short covering and stop-driven price action as tech levels are breached through 159.00 vs 158.12 at the Eurex low, including a Fib at 159.03 and last Thursday's 159.05 session best.
• Gilts tag along awaiting comments from dovish BoE dissenter Cunliffe with the 10 year bond hovering towards the top of a 122.01-121.31 range vs its 121.19 prior Liffe close.
• US Treasuries remain sub-par and the curve re-steepens amidst more Fed backing for 50 bp hikes post-NFP and pre-US factory orders,10 year T-note soft between 121-27/122-08+ parameters.
• Click here for more detail.

COMMODITIES

• WTI and Brent are choppy within a relatively contained USD 2.0/bbl range, as we await updates on the Russia-Ukraine talks set to resume on Monday.
• Currently, the benchmarks are holding within USD 98.00-100.70/bbl and USD 102.90-105.80/bbl parameters respectively.
• Reports on Saturday suggested Gazprom has stopped deliveries of Russian gas to Germany via the Yamal-Europe pipeline. It was then reported Gazprom has booked to pump gas through the Polish section of the Yamal-Europe pipeline on Sunday night to Monday, according to Interfax.
• Goldman Sachs upgrades its 2023 oil price forecast to USD 115/bbl (prev. 110/bbl); still forecast end-year oil at USD 125/bbl.
• "A UN-brokered two-month ceasefire in Yemen was broadly holding on its first full day with oil shipments reaching the port of Hodeida", according to The Guardian.
• The Russian Energy Ministry has delayed the publication of March oil output numbers amid technical issues, according to reports.
• Azerbaijan plans to supply 9.5bcm of gas to Italy, according to Interfax.
• Indian State has cancelled bids by Adani Enterprises to supply imported coal as prices that were quoted were too high, according to a government official cited by Reuters.
• Spot gold/silver are firmer, deriving modest impetus from the deterioration in sentiment seen around the European cash open, metals towards top-end of respective ranges.
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CENTRAL BANKS

• Fed's Williams (voter) expects a combination of rate hikes and balance sheet reduction to help ease inflation back to 4% this year and closer to 2% in 2024. Williams said balance sheet reduction could begin as soon as May. He added that there are no plans to use the balance sheet for Yield Curve Control, via Reuters. Williams also noted that the USD has proven itself as a safe haven. Williams also suggested that we have not yet seen global risk sentiment much impacted by the Ukraine war.
• Fed's Daly (2024 voter) said the case for 50bps rate hike in May has grown, according to the FT. She added she is more confident that adjusting early would be appropriate.
• ECB's Schnabel said the ECB plans to raise interest rates some time after winding down its bond purchase programme Q3 2022, via Reuters.

DATA RECAP

• German Trade Balance, EUR, SA (Feb) 11.5B vs. Exp. 9.6B (Prev. 9.4B, Rev. 8.8B)
• EU Sentix Index (Apr) -18.0 vs. Exp. -9.2 (Prev. -7.0)
• Turkish CPI MM (Mar) 5.46% vs. Exp. 5.77% (Prev. 4.81%); YY (Mar) 61.14% vs. Exp. 61.6% (Prev. 54.44%)

NOTABLE EUROPEAN HEADLINES

• Hungarian opposition leader has accepted defeat in elections, with PM Orban declaring victory.
• UK government is said to be mulling permanent replacements to programmes that helped banks lend to firms during the pandemic; the scheme is expected to focus on small and medium-sized firms. Sources added focus is on growth of UK business, via FT.
• German BDB, banking lobby, calls on the ECB to end net asset purchases soon and to send an initial signal on interest rates. Sees German growth of 2% in 2022, are considerable risks.

NOTABLE US HEADLINES

• Tesla (TSLA): Q1 deliveries 310.4k (prev. 308.6k Q/Q; exp. 309-315k).
• JP Morgan (JPM CEO) Dimon says the bank could lose around USD 1bln over time from its exposure to Russia. Stock buybacks will be lower over the next year or so due to mandates capital increases and acquisitions. Acquisitions will increase incremental investment expenses by USD 700mln in 2022.

CRYPTO

• Bitcoin is little changed but errs towards the lower-end of the sessions parameters at USD 45760 vs USD 47439, at best.

APAC TRADE

EQUITIES

• APAC stocks initially traded mixed but later turned mostly higher.
• ASX 200 saw early outperformance as mining names surged, with rising EV sales also boosting some Russia-related metals.
• Nikkei 225 traded flat with a downside bias throughout the session.
• Hang Seng outperformed and was bolstered at the open by Chinese dual-listed stocks, with the tech sector the main beneficiary of the weekend Audit news, whilst gains compounded after HK Chief Executive Lam said she will not seek a second term.
• China on Saturday proposed revising confidentiality rules involving offshore listings, removing a legal hurdle to cooperation on audit oversight while putting the onus on Chinese companies to protect state secrets, via Reuters.
• Mainland China was closed due to a domestic holiday.

NOTABLE APAC HEADLINES

• The Chinese army is sending over 2,000 medical personnel to Shanghai to aid with its COVID outbreak, according to CCTV.
• Hong Kong Chief Executive Lam will not seek re-election, according to NK01.
• South Korea's former PM Han Duck-Soo has been nominated as PM. He said the country needs to take more efforts to curb rising household debt, financial imbalances, and to maintain a trade surplus, according to Reuters.
• Pakistani PM Khan's cabinet has been dissolved and fresh elections will be held in 90 days, according to Reuters.
• Sri Lanka's government imposed a curfew amid the rising domestic unrest, via Reuters.