• European equities feel some reprieve following the prior session’s selloff; Euro Stoxx 50 +1.2%; US futures similarly bolstered.
• USD retains a firm bid with peers mixed across the board; JPY outpaces while USD/CHF nears parity.
• Core debt continues to bounce after an early breather, action was intensified post-Bobl/Gilt supply.
• Crude benchmarks are pressured, but yet to approach overnight lows, with fundamentals focused on familiar themes.
• EU Commission is reportedly planning new debt for Ukraine, estimated at EUR 15bln, to be discussed May 18th-20th
• Looking ahead, highlights include Chinese M2, Speeches from Fed's Williams, Waller, Bostic, Barkin, Kashkari, Mester, ECB's de Guindos & BoE's Saunders, Supply from the US. Earnings from Norwegian Cruise Line & Warner Music.

As of 11:20BST/06:20ET

LOOKING AHEAD

• Chinese M2, Speeches from Fed's Williams, Waller, Bostic, Barkin, Kashkari, Mester, ECB's de Guindos & BoE's Saunders, Supply from the US. Earnings from Norwegian Cruise Line & Warner Music.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• French President Macron said Ukraine could wait decades for EU membership, according to Axios.
• US called for an emergency meeting of the UN Security Council to discuss North Korea's missile launch, according to Yonhap. It was later reported that the UN Security Council will meet on Wednesday.

DEFENCE/MILITARY

• US Secretary of State Blinken and Defense Secretary Austin urged the US Congress to pass the Ukraine bill before May 19th, according to Reuters.
• US Pentagon spokesman Kirby said Ukrainians are being moved to Russia and taken to "camps" against their will, according to The Telegraph.
• European Commission is reportedly planning to issue new EU debt to cover Ukraine’s short-term financing needs over the next three months estimated at EUR 15bln, according to Politico citing sources.
• Subsequently, European Commission is said to be mulling a new joint EU debt of EUR 10-15bln over the next three months to aid with the financing for Ukraine, according to Reuters sources; could be based on SURE. To be discussed May 18th-20th.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Measures are being made in case Russia takes unilateral action and they are discussing how measures could see it take control of the Rosneft-operated PCK refinery in Schwedt which is a major refinery for its Russian oil imports, while officials said they are reaching the limit of sanctions that can be imposed without triggering an economic spiral.
• Japan announced new sanctions on Russia including freezing assets of individuals and groups with Russian PM Mishustin among those affected by Japan's asset freeze, while Japan is to introduce a ban on exports of cutting-edge goods to Russia as part of sanctions, according to Reuters.
• EU Commission President von der Leyen will do her announced call with Hungarian PM Orban and neighbouring heads-of-state re. oil coordination mechanism, via WSJ's Norman citing sources; due to occur this morning.
• EU's time pressure for the Russian oil embargo is "artificial", according to Hungary cited by Bloomberg.

OTHER

• US called for an emergency meeting of the UN Security Council to discuss North Korea's missile launch, according to Yonhap.
• China's Foreign Ministry says the US is trying to "hollow out" the one-China principle, in reference to the US State Department website changing its wording of US-Taiwan ties.
• IAEA's Grossi says they are still hopeful for an Iranian nuclear deal in a reasonable timeframe, though the window of opportunity could close at any time. Iran has not been forthcoming about information around its nuclear activities. Adding, he is very concerned about undeclared nuclear activity in Iran.

EUROPEAN TRADE

EQUITIES

• European equities feel some reprieve following the prior session’s selloff; Euro Stoxx 50 +1.2%.
• Relatively broad-based gains are seen across the majors with some mild underperformance in the FTSE 100.
• Sectors show some of the more defensive sectors at the bottom of the bunch – alongside energy – whilst Construction, Autos, Banks, and Industrial Goods reside as the current winners.
• US equity futures are firmer across the board, ES +1.0%, with the NQ narrowly outpacing peers after underperforming yesterday.

Click here for more detail.

FX

• The Dollar retains a firm underlying bid ahead of another slew of Fed speakers; risk sentiment remains fluid and fragile.
• The Swiss Franc has hit a fresh 2022 peak vs the Greenback; USD/JPY is consolidating around 130.00.
• EUR/USD was unfazed by mixed German ZEW data but later lost ground under 1.0550.
• Cable rotates either side of 1.2350 awaiting Brexit/N. Ireland news, further political fallout and more comments from BoE hawk Saunders.
• Crude and commodity FX have gleaned a degree of traction from partial recoveries or stabilisation in underlying prices.
• CBRT and regulator have asked banks to undertake FX transactions with corporate clients between 10:00-16:00, when the market is liquid, via Reuters citing bankers.

Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/CAD: 1.2900-10 (480M), 1.2935 (3.34BN) Click here for more detail.

FIXED INCOME

• Core benchmarks bounce further after a brief breather early on, with little in way of fresh fundamentals behind the upside.
• Initial highs were faded pre-UK/German issuance; once this cleared, Bunds and Gilts lifted to 152.50+ and 119.00+ peaks.
• Stateside, USTs are bolstered but far from best, with the curve re-flattening into today's 3yr sale and yet more Fed speak.

Click here for more detail.

COMMODITIES

• Crude futures have come under renewed pressure in recent trade after seeing some gains in the European morning.
• The initial downside coincided with the mixed Germany ZEW reports alongside the downbeat commentary from Hungary regarding an imminent oil ban; albeit, benchmarks are off overnight USD 100.44/bbl and USD 103.19/bbl respective lows.
• Saudi Energy Minister says it is "mind-boggling" why focus is on high oil prices and not on gasoline, diesel or others. World needs to wake up to an existing reality that it is running out of energy capacity at all levels, via Reuters.
• UAE Energy Minister says oil prices could double or triple in "chaotic" market.
• US officials reportedly asked Brazil's Petrobras in March to boost output, but it the oil Co. said it could not, according to Reuters sources.
• China's Shenghong Petrochemical has started a trial operation at its (320k BPD) greenfield refining complex in east China, according to Reuters sources.
• Germany is said to be shifting away from plans for a strategic national coal reserve, according sources cited by Reuters.
• Spot gold holds onto mild gains as DXY pulled back from the fresh YTD highs set yesterday.
• LME futures post mild gains following yesterday’s downside with the market still looking somewhat fragile.

Click here for more detail.

NOTABLE US HEADLINES

• US Federal Reserve Financial Stability Report said uncertainty over economic outlook has increased since November and that the Russian invasion and persistent inflation were identified as top financial risks by survey respondents. Furthermore, Fed's Brainard (voter) said businesses and households appear to have resources to cover debt burdens, which is an important aspect of resilience in a rising interest-rate environment. Brainard also said large price spikes and margin calls in commodities from Russia's Ukraine war highlight the potential for contagion to large financial institutions, while the Fed is working with regulators to better understand the exposures of commodity market participants.
• US NFIB Business Optimism Index (Apr) 93.2 (Prev. 93.2).
• Click here for the US Early Morning note.

NOTABLE EUROPEAN HEADLINES

• UK Foreign Secretary Truss is reportedly set to ditch the Northern Ireland protocol after giving up on EU talks, according to The Times.
• UK MP Malthouse suggests that Chancellor Sunak is looking at bringing forward an emergency budget, via Times' Swinford; Sunak and PM Johnson are monitoring and deciding whether/how they should move.
• Barclaycard UK April consumer spending rose 19.1% vs April 2019 which is the largest increase since October, although inflation impacted retail and hospitality, according to Reuters.

NOTABLE EUROPEAN DATA

• German ZEW Economic Sentiment (May) -34.3 vs. Exp. -42.0 (Prev. -41.0); Current Conditions (May) -36.5 vs. Exp. -35.0 (Prev. -30.8)
• EU ZEW Survey Expectations (May) -29.5 (Prev. -43.0)

CRYPTO

• Bitcoin has reclaimed the USD 30k handle, but is yet to make a concerted move higher.

APAC TRADE

EQUITIES

• APAC stocks were mostly negative after the resumed sell-off on Wall St where the S&P 500 slipped beneath the 4,000 level for the first time since March 2021.
• ASX 200 briefly gave up the 7,000 status with notable underperformance in the energy and mining-related sectors.
• Nikkei 225 slumped from the open although moved off its lows as participants digested stronger than expected Household Spending data and after BoJ's Uchida dismissed the prospects of a tweak to the BoJ’s 50bps yield target band.
• Hang Seng and Shanghai Comp both initially joined in on the selling with heavy losses in the tech sector contributing to the underperformance in Hong Kong on return from the extended weekend, although the downside in the mainland was later reversed after the recent policy support efforts by China’s MIIT and CBIRC.

NOTABLE APAC HEADLINES

• BoJ senior official Uchida said there is no plan to tweak the 50bps band set around the BoJ's 10yr JGB yield target and it was suggested that widening the band is undesirable as it would effectively be a rate hike, according to Reuters.
• South Korean President Yoon said Korea and other countries are experiencing unemployment and low growth, while the door for dialogue will remain open to resolving North Korean threats and they will present an audacious plan to strengthen the North Korean economy if it genuinely embarks on the process of denuclearisation, according to Reuters.
• Chinese CPCA says China sold 1.062mln passenger cars were sold in April which was -35.7% Y/Y; Tesla (TSLA) produced 10,757 (vs. March 65,814) Chinese-made vehicles in April. Exported 0 vehicles in April.

DATA RECAP

• Australian Retail Trade (Q1) 1.2% vs. Exp. 1.0% (Prev. 8.2%)
• Australian NAB Business Confidence (Apr) 10 (Prev. 16.0); Conditions (Apr) 20 (Prev. 18.0, Rev. 15)
• Japanese All Household Spending MM (Mar) 4.1% vs. Exp. 2.6% (Prev. -2.8%); YY (Mar) -2.3% vs. Exp. -2.8% (Prev. 1.1%)