• APAC stocks mostly shrugged off the weak lead from the US and rebounded from a two-day losing streak.
• Fed's Bullard (2022 voter) said the Fed must put the brakes on economic activity to address surging prices.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.2% after the cash market closed lower by 0.2% yesterday.
• DXY is contained on a 100 handle, USD/JPY remains above 125 and NZD lags post-RBNZ rate hike.
• RBNZ opted for a more aggressive hike of 50bps whilst remaining comfortable with its previous outlook on the OCR.
• Looking ahead, highlights include UK CPI, US PPI, New Zealand Manufacturing PMI, BoC Policy Announcement, IEA OMR, Supply from US, Germany & Italy, Earnings from BlackRock, Delta Air Lines, JPMorgan & Tesco.

US TRADE

• US stocks finished mostly lower after failing to sustain the initial post-CPI dovish market reaction.
• SPX -0.33% at 4,398, NDX -0.36% at 13,940, DJIA -0.26% at 34,220, R2K +0.38% at 1,986.

Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Brainard (voter) said the commodities price shock is driving topline inflation and she is most focused on core inflation for assessing the path of monetary policy. Brainard added they are to decide on balance sheet reduction in May which could see reductions as soon as June, while she dodged the question on 50bps and said the Fed will move towards neutral expeditiously, according to Reuters.
• Fed's Bullard (2022 voter) said it is fantasy to think that modest rate hikes will tame inflation and that the Fed must put the brakes on economic activity to address surging prices, according to FT.
• Fed's Barkin (2024 voter) said the Fed will do what it must to address high inflation and the extent the Fed will need to hike won't be clear until they get closer to the destination, while he added that they should move rates rapidly to neutral then tighten further if needed and thinks hiking rates beyond neutral will be part of the process.
• Fed Discount Rate Minutes stated that 10 of 12 regional Fed banks voted for a 0.25% discount rate hike, while Dallas and New York Fed directors voted for a 0.50% discount rate hike, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Ukrainian President Zelensky proposed swapping pro-Russian politician Medvedchuk for Ukrainian prisoners of war, according to Reuters.
• Ukraine's negotiator said talks about external security guarantees for Ukraine were continuing on Tuesday in an online format, according to Reuters.
• Kyiv said ongoing negotiations with Russia to end the war are 'extremely difficult', according to AFP.

DEFENCE/MILITARY

• US President Biden said it will be up to lawyers to determine if Russia's actions in Ukraine qualify as genocide but added it seems like genocide to him and that the evidence is mounting, according to Reuters.
• US President Biden's administration is expected to announce at least USD 750mln in additional weapons for Ukraine and deliberations continue on a mix of weapons, which could evolve, according to Reuters.
• US Department of Defense invited the top eight US arms manufacturers to a meeting Wednesday to discuss weapons for Ukraine, according to Reuters sources. US DoD also said China and Russia are seeking weapons to hit US satellites and that China is seen increasing intelligence and surveillance satellites.
• US Pentagon said it has not seen anything to confirm the report of Russian military equipment being sent to the border with Finland, according to Reuters.
• US Secretary of State Blinken said the US is not in a position to confirm anything regarding reports of chemical weapons usage in Ukraine, according to Reuters.
• Ukrainian President Zelensky said it is not possible to draw 100% firm conclusions about whether Russia used chemical weapons in Mariupol and that it is not possible to conduct a full investigation in a besieged city, according to Reuters.
• Ukraine's Governor of Donetsk region said shelling in the region is happening round the clock and the situation is difficult, while Russia is in the final stage of regrouping its forces and evacuations continue, according to Reuters.
• Chechen leader Kadyrov said over 1,000 Ukrainian marines surrendered in Mariupol, according to Sputnik.

ENERGY/SANCTIONS

• US President Biden said Americans' ability to pay for gasoline should not hinge on whether a dictator declares war and "commits genocide" halfway across the world. President Biden also proposed a sustainable aviation fuel tax, while he noted they need to address the challenge of rising prices in the US and he is doing everything in his power to reduce costs, according to Reuters.
• Russian Energy Minister said Moscow is ready to sell oil and oil products to friendly countries in any price range and that oil prices in the range of USD 80-150/bbl are in principle possible, while he added the task is not to guess how much prices will be but to ensure industry functions, according to Interfax citing Izvestia.
• Top oil merchant Vitol said it will stop trading Russian crude, according to Bloomberg.

OTHER

• Iran's Supreme Leader Khamenei said talks to revive the nuclear deal 'are going well', according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks mostly shrugged off the weak lead from the US and rebounded from a two-day losing streak.
• ASX 200 was kept afloat by the commodity-related sectors including energy after WTI crude futures climbed back above USD 100/bbl landmark and with Australia's government providing funding for domestic refiners.
• Nikkei 225 outperformed currency weakness and with the index unfazed by disappointing Machinery Orders.
• Hang Seng and Shanghai Comp lagged on COVID woes despite China testing an easing of quarantine rules in eight cities, as infections continued to spread with a fresh record of daily cases in Shanghai, while Sunac's missed coupon payment, further inclusions to the US HFCAA list and mixed trade data added to the cautious mood.
• US equity futures clawed back yesterday's losses in tandem with the mostly improved risk appetite in Asia.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.2% after the cash market closed lower by 0.2% yesterday.

FX

• DXY was uneventful and took a breather from the whipsawing seen in the aftermath of the mixed CPI data.
• EUR/USD attempted to nurse some of the losses after yesterday's failed incursion into 1.0900 territory.
• GBP/USD was rangebound and traded both sides of 1.3000 after the recent mixed jobs and wages data.
• USD/JPY remained above 125.00 despite Japan’s Finance Minister reiterating the importance of FX stability.
• Antipodeans were mixed with NZD initially boosted after the RBNZ opted for a more aggressive hike of 50bps, although the gains were retraced as the central bank remained comfortable with its previous outlook on the OCR which suggested that today's more aggressive move was just front-loading and that its view for the destination of rates remained unchanged.
• CBRT Governor told exporters that the Turkish central bank is mulling raising the level of forex revenues they must sell to it to 40% from 25%, according to Reuters sources.

FIXED INCOME

• 10yr UST futures partially unwound the prior day’s dovish reaction to the mixed CPI data, which had marginally eased some of the aggressive terminal Fed hike pricing, with prices not helped by the poor US 10yr auction.
• Bund futures were softer overnight with price action stuck around the 155.00 level.
• 10yr JGBs just about remained afloat after pulling back from resistance near 149.50 and with downside stemmed amid the BoJ’s presence in the market for over JPY 1tln of JGBs.

COMMODITIES

• Crude futures initially extended on yesterday's 7% gains but lost steam as WTI hit resistance at USD 102/bbl.
• US Private Energy Inventory Data (bbls): Crude +7.8mln (exp. +0.9mln), Cushing +0.4mln, Gasoline -5.1mln (exp. -0.4mln), Distillate -5.0mln (exp. -0.5mln).
• EIA STEO sees US crude output to rise 820k BPD to 12.01mln BPD in 2022 (prev. saw a rise of 850k BPD M/M) and to rise 940k BPD to 12.95mln in 2023 (prev. saw a rise of 960k BPD), according to Reuters.
• Transcontinental Gas Pipeline Co. said it experienced an unplanned outage near station 90 in Marengo County, Alabama and the outage may need Transco to restrict non-primary transportation services moving South to North through station 90, according to Reuters.
• Spot gold traded rangebound overnight in tandem with an uneventful dollar.
• Copper prices gained amid the mostly constructive risk tone in Asia.

CRYPTO

• Bitcoin prices were rangebound overnight around the USD 40,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a net neutral daily position.
• PBoC set USD/CNY mid-point at 6.3752 vs exp. 6.3748 (prev. 6.3795)
• China is testing an easing of quarantine rules for eight cities including Shanghai and Guangzhou, according to Caixin.
• RBNZ hiked the OCR by 50bps to 1.50% (exp. 25bps increase) and said it will remain focused on ensuring that current high consumer price inflation does not become embedded into longer-term inflation expectations. RBNZ said it remains comfortable with the outlook on the OCR as outlined in the February MPS and that moving the OCR to a more neutral stance sooner reduces the risk of rising inflation expectations, while the Committee agreed that their policy 'path of least regrets' is to increase the OCR by more now rather than later and noted that further increases in the OCR are needed in order to meet their mandate, according to Reuters.

DATA RECAP

• Chinese Trade Balance USD* (Mar) 47.38B vs. Exp. 22.4B (Prev. 115.95B)
• Chinese Exports YY* (Mar) 14.7% vs. Exp. 13.0% (Prev. 16.3%)
• Chinese Imports YY* (Mar) -0.1% vs. Exp. 8.0% (Prev. 15.5%)
• Chinese Trade Balance (CNY)(Mar) 300.6B (Prev. 194.4B)
• Chinese Exports YY (CNY)(Mar) 12.9% vs. Exp. 12.4% (Prev. 4.1%)
• Chinese Imports YY (CNY)(Mar) -1.7% vs. Exp. 6.3% (Prev. 8.3%)
• Japanese Machinery Orders MM (Feb) -9.8% vs. Exp. -1.5% (Prev. -2.0%)
• Japanese Machinery Orders YY (Feb) 4.3% vs. Exp. 14.5% (Prev. 5.1%)
• Australian Westpac Consumer Sentiment Index (Apr) 95.8 (Prev. 96.6)
• Australian Westpac Consumer Sentiment MM (Apr) -0.9% (Prev. -4.2%)

EUROPE

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Sunak reportedly contemplated resigning and wrote a resignation letter after being fined by police for attending PM Johnson's lockdown party, but then settled on an apology, according to The Times.