• Equity bourses/futures have come under further pressure after a tepid APAC handover, as the NQ underperforms amid renewed yield advances pre-FOMC Minutes
• However, while ES has lost the 4500 mark it is yet to test/breach the 200-DMA at 4484
• Geopolitical updates have been thin and primarily focused around Russian sanctions
• Albeit, such updates have been sufficient to provide WTI and Brent with an underlying bid
• DXY has taken some respite after recent gains while yields continue to climb and Bunds approach cycle lows
• Looking ahead, highlights include FOMC Minutes & ECB’s Lane

As of 11:15BST/06:15ET

LOOKING AHEAD

• FOMC Minutes, ECB's Lane, Fed's Harker
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Ukraine Deputy PM says 11 humanitarian corridors agreed for Wednesday, but people trying to leave Mariupol must use own vehicles.
• Russian Kremlin says that work is continuing when questioned on when the next round of peace discussions with Ukraine would take place; progress not as fact as they would like.

DEFENCE/MILITARY

• The US will send an additional USD 100mln in Javelin anti-tank missiles to Ukraine, according to NBC sources. The amount was confirmed by Secretary of State Blinken.
• Military sources cited by The Times suggested the UK plans to develop its own hypersonic missile, the plan would be accelerated by the AUKUS pact.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• White House said sanctions expected to be announced on Wednesday related to Russia; aim is to make Russia choose between default and drain remaining Dollar reserves, according to Reuters.
• Russia's Sberbank is among banks being considered for tightened sanctions by US President Biden's administration, according to Reuters.
• Russia Deputy Chair of Security Council Medvedev says Moscow will fight Western attempts to expropriate Russian property overseas with lawsuits; will wage legal war in US, Europe, and international courts.
• Head of Ukraine gas transit operator says three main gas pipelines have suffered damage during the war, and two gas distribution stations have been destroyed, via Reuters.
• German Finance Minister Lindner says an immediate withdrawal from Russian oil and gas is not possible, via Reuters.
• Hungarian Foreign Minister Szijjarto says they are preparing to pay for Russian gas using RUB.

OTHER

• China's UN Envoy, in response to US/UK/Aus hypersonic weapons deal, warned against "things which may lead other parts of world into crisis" like Ukraine, via Reuters.
• EU's Foreign Affairs Chief Borrell said last week's EU-China summit was a "dialogue of the deaf", according to SCMP.

EUROPEAN TRADE

EQUITIES

• European bourses deteriorated further from a tepid cash open, in-fitting with the Wall St./APAC handover, Euro Stoxx 50 -1.6%
• Such downside was exacerbated by weak Construction PMIs and as yields continue to make further advances ahead of ECB's Lane & FOMC Minutes
• As such, the NQ -1.0% is the morning's laggard, though price action thus far has seen the ES give-up 4500 ahead of the 200-DMA at 4484.
• Click here for more detail.

FX

• Dollar fades fast following rapid rise to fresh 2022 high post-hawkish Fed Brainard and pre-FOMC minutes - DXY reaches 99.759 before retreat to sub 99.500.
• Swedish Krona outperforms after latest comments from Riksbank member Floden upping the ante for a near term repo rise, EUR/SEK capped below 10.3000.
• Franc lags as yield and policy divergence weigh and EUR/CHF cross rebounds in a fashion that suggests official intervention, USD/CHF tests 0.9350 and EUR/CHF close to 1.0200 vs sub-1.0150 at one stage.
• Euro and Pound take advantage of Buck pull back and some chart support to recoup losses, EUR/USD and Cable back on 1.0900 and 1.3100 handles after dip through 1.0895 Fib and 1.3050.
• Yen reverses more repatriation gains as BoJ maintains YCC, USD/JPY hovering beneath 124.05 peak.
• Click here for more detail.

FIXED INCOME

• US Treasuries extend post-Brainard collapse with little let-up ahead of FOMC minutes as the 10 year T-note sits just off a 120-07+ low and yield tops 2.6%.
• EU bonds slide in catch-up trade with Bunds closing in on cycle lows below 157.00 and Gilts retesting bids into 120.00.
• EZ periphery debt continues to underperform amidst syndications and French Presidential election jitters, with Italian BTPs near 135.00 and OATs close to 148.50.
• Italy sold EUR 2.1bln in three BTP bonds that were sold to bond specialists.
• Click here for more detail.

COMMODITIES

• WTI and Brent are firmer, shrugging off the tepid tone and benefitting from geopolitical premia. amid ongoing sanction announcements/discussions
• However, the benchmarks are once again in relatively thin ranges of circa. USD 3.00/bbl at present.
• US Private Energy Inventory Data (bbls): Crude +1.08mln (exp. -2.1mln), Cushing +1.791mln, Gasoline -0.543mln (exp. +0.1mln), Distillate +0.593mln (exp. -0.8mln).
• Gas flows via Yamal-Europe pipeline resume eastward, according to Gascade data, according to Reuters; however, subsequently reported that such flows have stopped.
• Spot gold/silver are modestly firmer, benefitting from the general risk tone and as the USD takes a breather from recent advances.
• Click here for more detail.

CENTRAL BANKS

• ECB's Wunsch said the inflation target is essentially met and expects the deposit rate to be raised to zero by year end. He said the ECB's rate could rise to 1.5-2% in the longer term, but caveat that even within the ECB there has been no discussion about raising interest rates, according to Reuters.
• ECB's Panetta says they would not hesitate to tighten policy if supply shocks fed into domestic inflation, not seeking any de-anchoring of inflation expectations. Asking the ECB to bring down high inflation in the near-term would be extremely costly.
• RBA's Deputy Governor Bullock notes Australian labour market is tight, was seeing some response in wages, with unemployment at 4.0%. Expects some revision upward in inflation forecasts; are now seeing more underlying inflation pressures.
• Riksbank's Floden says inflation will be much higher in the coming year than predicted in February. We must raise the policy rate much earlier than previously planned. Evident we must reassess and substantial adj. monetary policy plans.

DATA RECAP

• German Industrial Orders MM (Feb) -2.2% vs. Exp. -0.2% (Prev. 1.8%, Rev. 2.3%)
• EU S&P Global Construction PMI (Mar) 52.8 (Prev. 56.3); German S&P Global Construction PMI (Mar) 50.9 (Prev. 54.9)
• French S&P Global Construction PMI (Mar) 48.4 (Prev. 50); Italian S&P Global Construction PMI (Mar) 62.9 (Prev. 68.5)

NOTABLE US HEADLINES

CRYPTO

• Crypto markets experienced sudden selling pressure overnight with Bitcoin losing USD 45k, a level it has acquired a foothold on during the European session.

APAC TRADE

EQUITIES

• APAC stocks traded lower across the board following the losses on Wall Street; Mainland China returned from its long-weekend.
• ASX 200 conformed to the downbeat tone which isn’t helped by the RBA’s hawkish hold yesterday
• Nikkei 225 saw most of its construction and machinery-related names with losses.
• KOSPI was pressured by its large tech exposure.
• Hang Seng was also weighed on by its tech exposure as yields continued to rise overnight.
• Shanghai Comp returned for the first time this week following its domestic holiday and saw less pronounced losses, with the Real Estate sector feeling relief from reports that over 60 Chinese cities ease policies on housing purchases to support the market.

NOTABLE APAC HEADLINES

• China's Shanghai City says it will remain in lockdown until city-wide mass COVID testing (due to start Apr 6) is complete; results will be used to assess whether an extension to the lockdown is needed.
• China's Shanghai city reports 16,766 new asymptomatic COVID cases for April 4th (vs 13,086 for April 4th).
• Over 60 Chinese cities ease policies on housing purchases to support market, according to Global Times.
• PBoC set USD/CNY mid-point at 6.3799 vs exp. 6.3793 (prev. 6.3509 on Friday).
• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 440bln net drain

DATA RECAP

• Chinese Caixin Services PMI (Mar) 42 (Exp. 49.7, Prev. 50.2); Composite 43.9 (Prev. 50.1).

Click here for the US Early Morning note.

US Democratic Senator Sinema has told donors a path to revival for Build Back Better is unlikely, according to Axios.

JetBlue (JBLU) reportedly bids USD 3.6bln or USD 33/shr to acquire Spirit Airlines (SAVE), according to NYT.