• European bourses are lower across the board, Euro Stoxx 50 -1.4%, in a continuation of the APAC handover amid multiple fundamental narratives.
• Stateside, US futures are similarly hindered, ES -1.7%, with the NQ marginally lagging given renewed yield upside.
• Russian President Putin, in his Victory Day speech, says you are fighting for the security of Russia now; says NATO was creating threats at our borders.
• USD remains bid but is marginally off-best, peers hindered across the board; debt yields climb, US curve is steepening.
• Crude is curtailed on above price action, familiar drivers in focus while spot gold slips amid USD/yield dynamics.
• Looking ahead, highlights include speeches from Fed’s Bostic and BoE’s Saunders.

As of 11:00BST/06:00ET

LOOKING AHEAD

• Speeches from Fed’s Bostic and BoE’s Saunders.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Russian President Putin, in his Victory Day speech, says you are fighting for the security of Russia now; says NATO was creating threats at our borders; West did not listen to Russia and had other plans. Special Military Operation was needed and timely measure, the only right decision.
• Russian negotiator says peace talks with Ukraine have not stopped; they are being held remotely, via Ifx.
• 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.

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/ECONOMIC SANCTIONS & UPDATES

• 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.
• German Foreign Ministry spokesperson says discussions on a sixth sanctions package are advanced, could conclude soon, via Reuters.
• 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.

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.
• Iranian Foreign Ministry Spokesman says Nuclear Deal negotiations were continuing despite their suspension in Vienna, through the exchange of messages, via Al Jazeera.
• 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.

EUROPEAN TRADE

EQUITIES

• European bourses are lower across the board, Euro Stoxx 50 -1.4%, in a continuation of the APAC handover amid multiple fundamental narratives.
• Stateside, US futures are similarly hindered, ES -1.7%, with the NQ marginally lagging given yield upside; Fed speak remains in focus and inflation metrics are due for the region and China later in the week.
• European sectors feature Tech underperforming given yields and following Infineon earnings in-spite of them raising guidance again, defensive names are the relative outperformers.

Click here for more detail.

FX

• Buck continues bull run on combination of risk, further upside in Treasury yields and curve steepening plus other positive factors. DXY extends beyond 104.000 to test or take out multiple technical, key and psychological levels.
• Aussie and Kiwi underperform as high beta and commodity currencies, AUD/USD probes 0.7000 and NZD/USD hovers around 0.6350.
• Franc and Yen suffering more adverse consequences of carry; USD/CHF approached 0.9950 and USD/JPY climbs to new YTD high of circa. 131.35.
• Pound politically challenged after UK local elections and Sinn Fein success at Northern Ireland assembly, Cable under 1.2300 and closer to June 2020 base at 1.2252.
• Euro soft awaiting further talks on Russian oil embargo and following worse than forecast Eurozone Sentix index, EUR/USD in low 1.0500 area and briefly under.
• Loonie undermined by pullback in crude ahead of Canadian building permits, USD/CAD hits 1.2950 before paring back a bit.
• Yuan slides after mixed Chinese trade data and tighter COVID restrictions in two largest cities, USD/CNY settles above 6.7200 and USD/CNH over chart resistance towards 6.7800.

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Notable FX Expiries, NY Cut: Click here for more detail.

FIXED INCOME

• Bonds whippy and multi-directional with Bunds holding above par within 151.37-150.75 range, but Gilts and 10 year T-note mostly softer between 117.64-14 and 117-27/11 parameters.
• BTPs also weak awaiting mid-month Italian auction details.
• UST curve steeper before Quarterly Refunding and CPI data.
• UK debt eyeing a speech from one hawkish BoE dissenter as Saunders is scheduled later.

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COMMODITIES

• WTI and Brent are pressured amid broader risk sentiment though Russian President Putin's Victory Day speech was relatively uneventful.
• Currently, the benchmarks are lower by around USD 2.00/bbl; familiar catalysts incl. China-COVID, EU Russian oil import embargo, remain in focus among other drivers.
• 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.
• Saudi Energy Minister says the difference between crude prices and fuel mobility prices is around 60% due to refining capacity, via Reuters.
• Russian Deputy PM Novak says Russian oil output was up in early May vs April; situation with Russian oil has stabilised, via Ria; considering expanding capacity of oil-exporting ports.
• Spot gold is hindered amid USD and yield dynamics, moving further away from the 100DMA

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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.
• Click here for the US Early Morning note.

NOTABLE EUROPEAN 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.

CRYPTO

• Bitcoin came under noted pressure over the weekend and has continued to decline during the European session, dropping to a low just above the USD 33k mark.

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.

NOTABLE APAC 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.
• China’s Foreign Ministry said Mon that it is closely monitoring Chinese firm Xiaomi’s claim of coercion by Indian authorities, urging India to provide a fair, equitable and non-discriminatory business environment for Chinese firms, Global Times tweets.
• An earthquake has been felt in Taipei, Taiwan, according to a Reuters witness; subsequently, GFZ reports of a 6.1 magnitude earthquake. Additionally, a tsunami is not expected from the 6.8 magnitude earthquake detected near Okinawa, Japan, via NHK.
• Jilin, northern-China reported no new local COVID cases on Sunday, via Global Times; for the first time since early-March; additionally, Beijing city is to commence mass COVID testing during may 10th-12th in at least three districts.

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%); 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%); Imports YY (USD)(Apr) 0.0% vs. Exp. -3.0% (Prev. -0.1