• APAC stocks declined amid recent upside in yields and as participants digested a slowdown in Chinese trade data
• US equity futures remained weak; European equity futures are indicative of a softer open
• EU ambassadors met on Sunday and failed to agree on a Russian oil ban deal. Ambassadors will meet again on Monday or Tuesday
• In FX, DXY remained firm against G10s across the board; Antipodeans underperformed
• UK ministers are said to be preparing to take unilateral action to override parts of the Brexit NI protocol "within weeks", according to The Times
• Looking ahead, EZ Sentix, Fed’s Bostic, BoE’s Saunders; Earnings: Infineon, BioNTech

LOOKING AHEAD

• EZ Sentix, Speeches from Fed’s Bostic and BoE’s Saunders, Earnings from Infineon and BioNTech.
• Click here for the Week Ahead preview

US TRADE

• US stocks declined on Friday on what was a choppy session despite the slightly better than expected US jobs data.
• SPX -0.57% at 4,123, NDX -1.22% at 12,693, DJIA -0.30% at 32,899, R2K -1.77% at 1,838.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed’s Bullard (2022 voter) said even with financial markets tightening due to credible forward guidance, the Fed is still behind the curve in fighting inflation although noted that with the 2yr Treasury yield around 2.7%, the Fed is not as far behind the curve as critics suggest. Bullard also said that they should get to the right policy rate expeditiously and that they are now on the move, according to Reuters.
• Fed’s Waller (voter) said criticism of the Fed for being behind the curve ignores that it was making decisions in real-time and it would have raised rates sooner if they knew what they know now regarding labour market strength, according to Bloomberg.
• New York Governor Hochul announced she tested positive for COVID-19 and is asymptomatic, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY

• Ukrainian President Zelensky said 60 were killed in a bombed Ukrainian school, according to AFP News Agency.
• Ukrainian Deputy PM said all women, children and elderly have been evacuated from Azovstal. There were separate comments from Ukraine’s military command that Russia continued its assault on Mariupol’s Azovstal plant with the assistance of tank and artillery fire, while the Azov regiment deputy commander said they are not able to confirm that all civilians have been evacuated from the plant, according to Reuters.
• Russian Defence Ministry said it destroyed weapons and military equipment delivered from the US and western countries near the city of Soledar, while it destroyed Ukrainian aircraft at airfields in Artsyz, Odesa and Voznesensk regions using high-precision missiles, according to RIA and Reuters.
• Russian shells hit the Lysychansk oil refinery which damaged production facilities, according to Reuters citing the Luhansk regional Governor.

ENERGY/SANCTIONS/ASSISTANCE

• EU ambassadors met on Sunday and failed to agree on a Russian oil ban deal, according to BBC's Parker. Ambassadors will meet again on Monday or Tuesday - Politico suggests most likely Tuesday.
• G7 leaders’ statement said they will take measures to prohibit or otherwise prevent the provision of key measures which Russia depends on and they commit to cutting dependency on Russian energy including phasing out or banning the import of Russian oil. Furthermore, they will continue to take action against Russian banks connected to the global economy and elevate the campaign against financial elites and family members who support the war effort, according to Reuters.
• UK PM Johnson agreed with G7 leaders that the world must intensify economic pressure on Russian President Putin in any way possible and told leaders that the world must go further and faster to support Ukraine, according to PM Johnson’s office.
• UK government announced sanctions on an additional GBP 1.7bln of Russian and Belarusian goods, with the total value of products sanctioned since the war in Ukraine began now at over GBP 4bln, according to Sky News.
• UK MoD tweeted that UK Defence Secretary Wallace will say that Russian military leaders are as much to blame as Russian President Putin for the invasion of Ukraine and should face the consequences.
• EU's Borrell said the EU should seize Russian reserves to rebuild Ukraine, according to FT.
• German Chancellor Scholz said they support Ukraine in its battle against the aggressor and not doing so would mean surrendering in the face of brute force, while he added that fear of war coming to Germany must not paralyse them and that they will not do anything that hurts them more than Russia or anything that would drag NATO into a war, according to Reuters.
• Canadian PM Trudeau made a surprise visit to Irpin, Ukraine and announced new weapons and military equipment for Ukraine, as well as the removal of trade tariffs on all imports from Ukraine to Canada for the next year, while he also announced new sanctions on 40 Russian individuals and five entities he stated are complicit in Russia’s war in Ukraine, according to Reuters.
• US State Department announced new visa restrictions for Russian military officials and Russian-backed forces in Ukraine with visa restrictions imposed on 2,569 members of the Russian military and 13 Belarusian officials, according to Reuters. It was also reported that the US imposed sanctions on 33 Russian individuals, 22 companies and 69 ships, according to ITAR-TASS World News citing a press statement on Sunday.
• US banned Americans from providing accounting, corporate formation and management consulting to anyone in Russia, according to a senior administration official.
• Japanese PM Kishida said they will phase out Russian oil in steps and that there is no change to existing plans to restart the use of nuclear power, according to Reuters.

DIPLOMATIC/OTHER

• US First Lady Jill Biden made an unannounced visit to western Ukraine on Sunday and met the Ukrainian First Lady Olena Zelenska, according to The Guardian.
• US is sending a group of diplomats to the embassy in Kyiv to coincide with Victory in Europe Day, according to Reuters. The White House also said it is accelerating its plans to reopen the Kyiv embassy, according to Axios.

OTHER

• EU attempts a last-ditch effort to save the Iran nuclear deal with EU’s Foreign Policy chief Borrell said he was seeking a middle way to break the impasse, according to FT. It was also reported that EU’s Iran nuclear talks coordinator Mora will visit Iran on Tuesday, according to Nour News.
• North Korea fired an unidentified projectile off its east coast which was believed to have been an SLBM that landed outside of Japan’s Exclusive Economic Zone, according to Reuters.
• Japanese Defence Minister Kishi said North Korea’s missile launch is an unacceptable threat to the international community and it is possible for North Korea to complete preparations for a nuclear test as soon as this month, as well as take more provocative actions, according to Reuters.
• South Korean NIS chief said North Korea may conduct a nuclear test before US President Biden visits South Korea later this month, according to Yonhap.

APAC TRADE

EQUITIES

• APAC stocks declined amid recent upside in yields and as participants digested a slowdown in Chinese trade data.
• ASX 200 was dragged lower amid underperformance in the real estate and tech sectors.
• Nikkei 225 underperformed with a weaker currency and higher than expected wages doing little to offset the losses.
• Shanghai Comp was indecisive with initial pressure seen after reports of tighter COVID controls in China’s two largest cities and as Hong Kong remained closed for holiday, while the latest Chinese trade data was mostly better than expected but showed a significant slowdown in Exports amid the ongoing COVID-19 woes and curbs.
• US equity futures remained weak amid upside in yields and after US NFP jobs data kept the Fed on its course.
• European equity futures are indicative of a weaker open with Eurostoxx 50 -1.5% after the cash market closed lower by -1.8% on Friday.

FX

• DXY remained firmer and tested the 104.00 level after gains in yields and last week’s beat on US NFP jobs data.
• EUR/USD continued its retreat to near the 1.0500 handle despite recent comments from ECB’s Holzmann who suggested it would be appropriate to hike at least two or three times this year.
• GBP/USD declined amid the dollar strength and with focus on the political situation after the recent historic victory by Sinn Fein at the North Ireland Assembly Election, while the second-largest party, the DUP, threatens to block the formation of a new power-sharing executive until the Northern Ireland Brexit protocol is changed.
• USD/JPY continued to be fuelled by policy divergences and briefly reclaimed the 131.00 handle.
• Antipodeans were weaker with price action pressured by a decline in metal prices and the broad risk aversion.

FIXED INCOME

• 10yr UST futures marginally declined as the 10yr yield briefly rose above 3.15% to its highest since Nov. 2018.
• Bunds futures remained lacklustre but were off their lows with mild support at the 151.00 level.
• 10yr JGBs were subdued but attempted to nurse some of last Friday’s losses amid the BoJ presence in the market for more than JPY 1.2tln of JGBs with varying maturities on top of its fixed-rate operation for unlimited 10yr JGBs.

COMMODITIES

• Crude futures prices were choppy and initially declined after Saudi lowered oil prices to Asia and Europe, although later recovered amid the geopolitical climate and with the G7 committed to cutting dependency on Russian energy.
• Saudi Arabia lowered June Arab light oil prices to Asia to a premium of USD 4.40/bbl vs Oman/Dubai from a premium of USD 9.35/bbl, while it lowered the price to Europe to a premium of USD 2.10/bbl vs ICE brent from a premium of USD 4.60/bbl and kept the price premium to the US at USD 5.65/bbl vs ASCI, according to Reuters.
• Spot gold was lacklustre with price action contained as the greenback remained firm.
• Copper weakened amid the risk aversion and after China tightened/extended restrictions in Shanghai and Beijing.

CRYPTO

• Bitcoin extended on the declines during the weekend with prices beneath the 34,000 level.

NOTABLE HEADLINES

• China proposed new rules to bar minors from tipping live streamers and will require platforms to bar minors from live streaming services after 10:00pm local time, according to Reuters.
• Beijing-backed hardliner John Lee was chosen as Hong Kong’s next Chief Executive in an uncontested election, according to FT.
• BoJ Minutes from the March meeting stated that members agreed monetary easing measures have been exerting intended effects and that Japan's economy is likely to recover on rising external demand and accommodative monetary policy, while members said they will not hesitate to add easing if necessary.

DATA RECAP

• Chinese Trade Balance (CNY)(Apr) 325.1B vs. Exp. 339.5B (Prev. 300.6B)
• Chinese Exports YY (CNY)(Apr) 1.9% vs. Exp. 3.1% (Prev. 12.9%)
• Chinese Imports YY (CNY)(Apr) -2.0% vs. Exp. -3.3% (Prev. -1.7%)
• Chinese Trade Balance (USD)(Apr) 51.12B vs. Exp. 50.65B (Prev. 47.38B)
• Chinese Exports YY (USD)(Apr) 3.9% vs. Exp. 3.2% (Prev. 14.7%)
• Chinese Imports YY (USD)(Apr) 0.0% vs. Exp. -3.0% (Prev. -0.1%)

UK/EU

NOTABLE HEADLINES

• UK Justice Secretary Raab said they want to see stability in Northern Ireland with an executive formed and that they are focused on unlocking the problems with the Northern Ireland protocol, while he added that they cannot put off resolving the protocol and want to de-escalate the tensions regarding the protocol, according to Reuters.
• UK PM Johnson is poised to announce measures tomorrow designed to boost the economy and capitalise on Brexit. Plans will include removing EU laws from the statute book and cutting regulations for small businesses, alongside the scrapping of environmental restrictions in order to boost infrastructure projects, according to The Times.
• UK ministers are said to be preparing to take unilateral action to override parts of the Brexit NI protocol "within weeks", according to The Times.
• UK Foreign Secretary Truss is said to be facing opposition from Chancellor Sunak and Cabinet Office Minister Gove regarding her plans to rip up the Northern Ireland Protocol, according to The Telegraph citing sources.
• Irish Foreign Minister Coveney said that a partnership with Britain is needed and not threats to resolve the Brexit protocol issues, while he added that he does not think the Northern Ireland election result moves a referendum on a united Ireland closer, according to Reuters.
• Sinn Fein won the most seats in the Northern Ireland Assembly election last week which is the first time a nationalist party will have the largest number of seats at Stormont, according to the BBC.
• DUP is to seek a meeting with UK PM Johnson and will warn him that they will delay power-sharing in the Northern Ireland assembly if the Northern Ireland protocol is not changed, according to The Guardian.
• ECB’s Holzmann said it would be appropriate to take at least two or three steps on interest rates this year, according to the Salzburger Nachrichten newspaper.