• APAC stocks were unable to benefit from the late rally on Wall St. and traded mixed amid key market closures.
• RBA hiked rates by 25bps to 0.35% (exp. 15bps hike). RBA said it will require a further lift in interest rates during the period ahead.
• European equity futures are indicative of a firmer open with Eurostoxx 50 +1.2% after the cash market closed lower by 1.8% yesterday.
• DXY is relatively flat vs. peers, AUD the clear outperformer post-RBA rate hike.
• Looking ahead, highlights include German Unemployment, EZ PPI & Unemployment, US Factory Orders and New Zealand Unemployment, Speech from ECB's Lagarde
• Earnings from AMD, Pfizer, Starbucks, BP, BNP Paribas, Deutsche Post and Uniper, Holidays in China and Japan.

US TRADE

• US stocks finished the day firmer with a late tailwind, led by the Nasdaq, taking the indices into the black after the S&P 500 printed a fresh YTD low of 4,062 earlier on.
• SPX +0.59% at 4,156, NDX +1.72% at 13,075, DJIA +0.26% at 33,063, R2K +1.06% at 1,881.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury said Q2 borrowing estimate assumes end-of-June cash balance of USD 800bln (prev. 700bln) and expects to pay down USD 26bln in net marketable debt in April to June 2022 period which is down from the prior estimate of USD 66bln issuance, while it noted the decrease in the borrowing estimate is primarily due to an increase in receipts, according to Reuters.
• USTR's Tai said all tools to tackle price surges are on the table such as potential tariff reductions, although they must keep an eye on medium-term goals, according to Reuters.
• US DoE is to spend USD 3bln under the infrastructure law to support battery manufacturing, processing and recycling, while energy department funding will not fund new mines but focus on extracted materials, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY/ASSISTANCE

• Senior US defence official said the US sees "minimal at best" progress by Russia in Donbas over the past several days and that Russian forces are showing aversion to risk, while the official added that Russians pushed 40km east of Kharkiv, according to Reuters. Furthermore, a US senior defence official also said the US has no indications that Russia is planning an imminent invasion of Moldova.
• US Senate Majority Leader Schumer said he hopes the Senate can start addressing President Biden's USD 33bln Ukraine aid request as soon as next week, while he added that an agreement on Ukraine funding might be reached very soon, according to Reuters.
• UK PM Johnson is to address Ukraine's parliament and announce a new USD 375mln defence package, according to Sputnik.

ENERGY/SANCTIONS/DIPLOMATIC

• EU Energy Commissioner Simson said paying in Roubles for energy through the Russian conversion scheme is a breach of sanctions. Simson also said the level of gas storage in the EU is over 32% of capacity and rising, while she added they need to update gas preparedness plans, according to Reuters.
• French Energy Minister talked about a European consensus to activate sanctions against Russia and not pay roubles, according to Sky News Arabia.
• Hungary will not vote for EU measures that endanger the security of its oil or gas supply, according to the Foreign Minister via RTL TV.
• US Embassy in Kyiv tweeted that the US Charge d'Affaires Kristina Kvien returned to Ukraine for the first time since the beginning of the war.

SOVEREIGN/FUND/OTHER

• MSCI said in the light of its treatment of recent sanctions targeting Russian oil companies it has decided to suspend MSCI Russia 10/40 index effective May 6th, while it is unlikely that the Russia 10/40 Index will have enough securities in the near future and the index will be discontinued as part of the May index review, according to Reuters.

OTHER

• White House Press Secretary Psaki said the US supports any decision by Finland to apply for NATO membership, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded mixed and lacked direction amid key market closures and looming risk events.
• ASX 200 was subdued heading into the RBA meeting and was pressured after the central bank delivered a larger than expected hike to the Cash Rate Target which was lifted by 25bps to 0.35%.
• Hang Seng initially declined on return from an extended weekend amid heavy losses in tech including Alibaba on speculation its founder Jack Ma could be the individual mentioned in Chinese press surnamed Ma who was subjected to compulsory measures for collusion with anti-China hostile forces However, sources later denied that the person was Jack Ma which helped pare some of the losses, while the announcement of looser COVID restrictions in Hong Kong from May 19th also provided encouragement.
• US equity futures are marginally higher after a late Nasdaq-led surge on Wall St helped a turnaround across all major indices and saw the SPX recover from a YTD low.
• European equity futures are indicative of a firmer open with Eurostoxx 50 +1.1% after the cash market closed lower by 1.8% yesterday.

FX

• DXY stalled overnight as yields took a breather from recent advances in which the 10yr yield briefly rose above 3.0% for the first time since 2018, but with the pullback limited as the FOMC draws near.
• EUR/USD found some reprieve from yesterday’s losses and climbed back above the 1.0500 handle.
• GBP/USD reclaimed the 1.2500 status with FX trade set to pick up as London reopens.
• USD/JPY was indecisive amid the tentative mood and three-day absence of Tokyo participants.
• Antipodeans gained with AUD/USD the outperformer heading into the RBA rate decision and was briefly boosted after the central bank delivered a greater than expected hike of 25bps.

FIXED INCOME

• 10yr UST futures nursed some losses as yields took a break from the advances that briefly lifted the US 10yr yield to above 3% for the first time since 2018.
• Bunds eked marginal gains but with upside limited after recent indecision and mixed European data.

COMMODITIES

• Crude futures were flat after yesterday's intraday rebound, while it was suggested a compromise could be sought on a Russian oil embargo such as an exemption for the likes of Hungary and Slovakia.
• Spot gold was subdued after recent selling which was induced by USD strength and gains in yields.
• Copper nursed some losses and was helped by the late improvement of risk appetite in the US.

CRYPTO

• Bitcoin traded indecisively with price action choppy on both sides of the 38,500 level.

NOTABLE HEADLINES

• RBA hiked rates by 25bps to 0.35% (exp. 15bps hike). RBA said it is committed to doing what is necessary to ensure that inflation in Australia returns to target over time and the Board judged now was the right time to begin withdrawing some of the extraordinary monetary support, while it will require a further lift in interest rates during the period ahead. RBA Board will continue to closely observe incoming information and evolving balance of risks as it determines the timing and extent of future interest rate increases. Furthermore, it is not currently planning to sell government bonds purchased during the pandemic and does not plan to reinvest the proceeds of maturing government bonds.
• Hong Kong Chief Executive Lam said they will reopen bars in the second phase of easing COVID-19 restrictions on May 19th, according to Bloomberg.
• BoK said a 4% CPI level may persist for a while and that managing inflation expectations stability is important, while South Korean Finance Minister Hong said inflationary pressures are anticipated to persist for a while, led by energy and food prices, according to Reuters.

DATA RECAP

• South Korean CPI MM (Apr) 0.7% vs. Exp. 0.4% (Prev. 0.7%)
• South Korean CPI YY (Apr) 4.8% vs. Exp. 4.4% (Prev. 4.1%)

UK/EU

NOTABLE HEADLINES

• UK government is set to abandon its plan to empower a new tech regulator, according to FT.
• Italy raised the windfall tax on energy firms' profits to 25% from 10% and approved a EUR 14bln aid package focused on energy relief, according to Bloomberg.