• Stateside, futures are bolstered though with gains marginally more contained vs European-peers going into today's inflation data, ES +1.0%
• Greenback grounded in advance of US CPI as Treasury yields recede and curve re-flattens, DXY slips further below 104.00 and sub-103.50 vs fresh 2022 peak at 104.190 on Monday.
• As such, peers across the board are making gains vs USD; antipodeans leading on base-metals and CHF a relative outperformer after Tuesday's pressure
• WTI and Brent are bolstered in excess of USD 3.00/bbl in a paring of recent losses alongside a positive turn in China's COVID situation.
• ECB's Lagarde says we have not yet precisely defined the notion of “some time”, but I have been very clear that this could mean a period of only a few weeks
• Looking ahead, highlights include US CPI, Speeches from Fed's Bostic, ECB's Schnabel. Supply from the US and President Biden.

As of 11:20BST/06:20ET

LOOKING AHEAD

• US CPI, Speeches from Fed's Bostic, ECB's Schnabel. Supply from the US.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY

• US House voted 368-57 to pass the USD 40bln Ukraine aid bill to send it to the Senate although the Senate may not vote on the plan until next week, according to Fox's Pergram.
• Leader of the pro-Russian Donetsk separatists says there are no more civilians in the Azovstal plant, the Donetsk forces hands are now no longer tied, via Tass.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Ukrainian gas transit system operator chief said Russian occupying forces started taking transit gas and sending it to pro-Russian separatist regions, according to Reuters.
• Ukraine's Naftogaz said Europe will not be impacted by a force majeure if Russia switches gas transit to a different route, but could fall by a third if Russia does not, according to Reuters.
• Head of Ukraine's state gas company says it cannot confirm the assertion from Russia that it is technically not possible to switch gas transfers from Sokhranivka entry point to Sudzha.
• Gazprom continues gas shipments through Ukraine, Wednesday's volume is 72mln cubic metres (95.8mln on Tuesday), via Reuters.
• EU Officials are reportedly considering offering Hungary financial compensation, in exchange for joining the EU plan to ban Russian oil imports, according to Politico; however, some nations are reluctant to do this, reportedly concerned over financing the compensation.
• Subsequently, Hungarian Foreign Minister says they have made it clear to the European Commission that they can only support oil sanctions if they are offered a solution to the problems it would create for Hungary. Adding, the only way it will agree to a Russian oil embargo is if it solely relates to maritime shipments, pipeline shipments should be fully exempted; this is the stance Hungary will maintain.
• EU Commission will, on Wednesday, outline its plan to assist Ukraine in avoiding the Russian Black Sea blockade of its ports, according to Politico; in order to boost crop exports.

OTHER

• South Korea President Yoon said the security situation is tense amid talk of a potential North Korean nuclear test, while Defence Minister Lee called for a stern response if North Korea provokes, according to Yonhap.
• Iran's IRGC targeted positions of "terrorist groups" with artillery fire in Erbil, Iraq, according to Tasnim.
• US Ambassador to Israel Nides confirms that Shireen Abu Akleh was an American citizen and calls for “a thorough investigation into the circumstances of her death”, via Walla News' Ravid.

EUROPEAN TRADE

CENTRAL BANKS

• ECB's Lagarde says we have not yet precisely defined the notion of “some time”, but I have been very clear that this could mean a period of only a few weeks. After the first rate hike, the normalisation process will be gradual. Judging by the incoming data, my expectation is that the (asset purchase programme) should be concluded early in the third quarter. Click here for analysis
• ECB's Muller says APP should end early July or a few weeks earlier; rate hike must not be far behind; appropriate for rates to be in positive territory by year-end, moves should be in 25bp increments. Rise in spreads is consistent with the changed ECB policy outlook; current policy is inappropriately easy, given high inflation.
• ECB's Elderson says they can start considering normalisation of the policy rate in July.
• ECB's Vasle says that inflation is becoming more broad-based and the policy response must follow the changed circumstances; supports further and faster action.
• Czech President Zeman has appointed Central Bank member Michl as the new governor, as expected; Czech President Zeman says does not wish to see a large decrease in interest rates but does not see a reason for additional increases.
• CBRT cuts its RRR for financing companies until May 13th, will be implemented at 0.00% until this point, according to the Official Gazette.

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.4%, with the exception of the SMI -0.2% given the performance of heavyweight Roche, -6.5%.
• Stateside, futures are bolstered though with gains marginally more contained going into today's inflation data, ES +1.0%
• China April vehicles sales -47.6% YY (-11.7% in March), according to the Industry Association; January-April -12.1% YY (prev. +51.8%). On Tuesday, CPCA says China sold 1.062mln passenger cars were sold in April which was -35.7% Y/Y.
• China's Auto Industry Association says the industry's development situation is gradually improving, firms are seeing May and June as the window to make up for lost sales and production.

Click here for more detail.

FX

• Greenback grounded in advance of US CPI as Treasury yields recede and curve re-flattens, DXY slips further below 104.00 and sub-103.50 vs fresh 2022 peak at 104.190 on Monday.
• Aussie rebounds with iron ore and other commodities, shrugging off a drop in consumer confidence along the way; AUD/USD back on 0.7000 handle, albeit just and AUD/NZD around 1.1050 even though Kiwi relieved with full NZ reopening at the end of July and NZD/USD rebounds towards 0.6350 in response.
• Franc and Yen appreciate the less bearish bond climate, Euro underpinned as ECB President Lagarde joins others in guiding towards July rate hike; USD/CHF sub-0.9000, USD/JPY under 130.00 and EUR/USD circa 1.0575 at best.
• Loonie and Nokkie boosted by crude recovery, Swedish Crown supported by sharp rise in 1 year CPIF money market expectations; USD/CAD below 1.3000 and closer to hefty option expiry interest at 1.2950 (1.9bln vs 1.7bln at the round number).
• Yuan on firmer footing after stronger than forecast Chinese inflation data, but Czech Koruna floored as President confirms appointment of a known dove to govern CNB; USD/CNH around 6.7400, EUR/CZK near 25.4000.

Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/CAD: 1.2765-70 (1.38BN), 1.2790 (1.12BN), 1.2950 (1.9 BN), 1.3000 (1.7 BN) Click here for more detail.

FIXED INCOME

• Latest recovery leg in debt lifts Bunds, Gilts and 10 year T-note to new WTD peaks, at 153.61, 119.69 and 119-09+ respectively.
• Solid covers at 10 year German and 7 year UK auctions given recent yield retreat, but some metrics show signs of investor reticence.
• Min focus ahead, US CPI data, but also USD 36bln T-note leg of refunding.

Click here for more detail.

COMMODITIES

• WTI and Brent are bolstered in excess of USD 3.00/bbl in a paring of recent losses alongside a positive turn in China's COVID situation.
• Currently, WTI Jun resides around USD 103/bbl (vs low USD 98.20/bbl) whilst Brent Jul trades around USD 105.50/bbl (vs low USD 101.30/bbl)
• US Energy Inventory Data (bbls): Crude +1.6mln (exp. -0.5mln), Gasoline +0.8mln (exp. -1.6mln), Distillates +0.7mln (exp. -1.3mln), Cushing +0.1mln.
• Libyan PM Bashagha announces the success of efforts to reopen the ports and oil fields in Libya, according to Sky News Arabia.
• Brazilian truck drivers are considering a strike from May 21st to stop a 9% rise in diesel prices by Petrobras, according to Estadão.
• Spot gold and silver are firmer and benefitting from the USD's continuing pullback to fresh WTD lows, albeit, the yellow metal is steady around USD 1850/oz pre-inflation.

Click here for more detail.

NOTABLE US HEADLINES

• US Senate confirmed Lisa Cook's nomination as a Fed Governor with VP Harris casting the tie-breaker vote, according to NY Times.
• US President Biden will speak on price increases on Wednesday at 14:15EDT/19:15BST.
• Click here for the US Early Morning note.

NOTABLE EUROPEAN HEADLINES

• National Institute of Economic and Social Research forecasts UK GDP to contract by 0.2% in Q3 and by 0.4% in Q4, while it lowered its UK 2022 GDP growth forecast to 3.5% from 4.8%, according to Reuters.
• UK Cabinet Minister Gove says, re. the Northern Ireland Protocol, that they will talk to the EU; but, nothing is off the table.

CRYPTO

• Bitcoin has stabilised somewhat above the USD 30k mark after the recent bout of stablecoin induced pressure.

APAC TRADE

EQUITIES

• APAC stocks traded mixed following the choppy performance on Wall Street.
• ASX 200 was subdued and briefly fell below the 7,000 level with sentiment dampened by weak Consumer Confidence data.
• Nikkei 225 swung between gains and losses with the biggest movers driven by recent earnings releases.
• Hang Seng and Shanghai Comp were both initially lacklustre as property developer Sunac faces its grace period deadline for a dollar bond interest payment and with participants digesting the latest firmer than expected CPI and PPI data from China, although Chinese markets then strengthened amid speculation of policy easing in Q2 and positive signs from the COVID situation in Shanghai.

NOTABLE APAC HEADLINES

• Shanghai's local government said there was basically no COVID community spread in 8 of 16 districts, according to Bloomberg.
• New Zealand PM Ardern confirmed New Zealand will fully reopen borders on July 31st which is two months earlier than initially planned, according to NZ Herald.
• South Korea will present an additional budget plan to parliament on Friday, while it was separately reported that President Yoon’s administration is to propose around KRW 35tln extra budget as it seeks to provide relief for pandemic-hit merchants, according to Yonhap.
• South Korea May 1st-10th Exports rose 28.7% Y/Y (prev. 3.0%), Imports rose 34.7% Y/Y (prev. 12.8%) and Trade Balance was at a provisional deficit of USD 3.72bln, according to Reuters.

DATA RECAP

• Chinese CPI YY (Apr) 2.1% vs. Exp. 1.8% (Prev. 1.5%); MM (Apr) 0.4% vs. Exp. 0.2% (Prev. 0.0%)
• Chinese PPI YY (Apr) 8% vs. Exp. 7.7% (Prev. 8.3%)
• Australian Westpac Consumer Confidence Index (May) 90.4 (Prev. 95.8); MM (May) -5.6% (Prev. -0.9%)