• US futures are lower across the board though the magnitude is less extreme vs Europe, ES -0.6%, Euro Stoxx 50 -2.5%
• DXY has climbed to a fresh YTD peak, amid broad FX pressure ex-JPY which is supported on haven premium
• As such, core debt has continued to lift with accompanying yields retreating further; US curve flattening pre-supply
• Crude is pressured but off lows following the Russian Kremlin on Finland's NATO bid and N. Korea firing a possible ballistic missile
• Looking ahead, highlights include US IJC & PPI, Banxico, OPEC OMR and Supply from the US

As of 11:15BST/06:15ET

LOOKING AHEAD

• US IJC & PPI, Banxico, OPEC OMR, Supply from the US.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY

• UK MoD tweeted that UK Defence Minister Wallace held bilateral talks with US Defense Secretary Austin at the Pentagon and discussed the next steps to help Ukraine defend itself against Russian military aggression, while they also discussed AUKUS and NATO.
• Japan and EU statement said that they demand Russia to immediately stop its aggression in Ukraine and they pledge continued broad support to Ukraine. Furthermore, they are concerned about the situation in the South and East China Seas, while they strongly condemn North Korean missile testing.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Transit demand for Russian gas through Ukraine fell to 53MCM on Thursday, according to Ifx; Ukraine's Gas operator says on May 11th Gazprom booked 72MCM but transited 73.4MCM via the Sudzha entry point.
• EU is set to assess if looser state aid rules for companies impacted by sanctions on Russia will be extended after December 31st of this year.

OTHER

• North Korea reportedly fired what could be a ballistic missile, according to the Japanese Coast Guard; reportedly fell outside Japan's EEZ.
• Russian Kremlin says attacks on the Russian region bordering Ukraine means that additional measures are needed to secure the security of regions; Finnish entry to NATO is definitely a threat to Russia; NATO expansion will not make the world or Europe more stable; Finland taking unfriendly steps is a subject for regret and reason for a symmetrical response; Russia is prepared to give a decisive response to any side which tries to get involved in Ukraine and hinder the special military operation.
• North Korea said it detected an outbreak of the stealth Omicron virus and its leader Kim ordered a nationwide lockdown, while South Korea is reportedly willing to provide humanitarian assistance to North Korea, according to Reuters and Newswires.

EUROPEAN TRADE

CENTRAL BANKS

• BoE's Ramsden sees more rate hikes ahead, amid upside inflation risk. MPR forecasts are not talking down the economy.
• ECB's Kazimir says he is ready to hike in July, via Twitter.
• Hungarian Central Bank Deputy Governor says average annual inflation in Hungary is likely to be between 9-10%; NBH is past the period of aggressive rate hikes.
• CNB has intervened in the FX market against depreciation of CZK.

EQUITIES

• European bourses are pressured as overnight risk sentiment reverberated into the region, in a continuation of the post-CPI Wall St. move; Euro Stoxx 50 -2.5%.
• US futures are lower across the board though the magnitude is less extreme, ES -0.6%; NQ fails to benefit from the yield pullback as participants focus on the normalisation's impact on tech.
• Walt Disney Co (DIS) - Q2 2022 (USD): Adj. EPS 1.08 (exp. 1.19), Revenue 19.25bln (exp. 20.03bln). Disney+ subscribers 137.7mln (exp. 134.4mln). ESPN+ subscribers 22.3mln (exp. 22.5mln) -5.0% in the pre-market

Click here for more detail.

FX

• DXY tops 104.500 to set new 2022 peak as risk aversion intensifies.
• Yen regains safe haven premium to buck broadly weak trend vs Dollar, USD/JPY sub-128.50 vs top just over 130.00.
• Aussie and Kiwi flounder as commodities tumble on demand dynamics'; AUD/USD under 0.6900 and NZD/USD below 0.6250.
• Euro and Sterling give up big figure levels with the Pound also undermined by worse than forecast UK data; EUR/USD down through 1.0500 then 1.0450, Cable beneath 1.2200 and eyeing 1.2150 next.
• Swedish Crown holds up in wake of stronger than expected CPI and CPIF metrics; EUR/SEK straddles 10.6000.
• Yuan crushed as PBoC and Chinese Government reaffirm commitment to provide economic support; USD/CNY 6.7900+, USD/CNH just shy of 6.8300.
• Forint falls as NBH Deputy Governor contends that aggressive tightening period is over and future hikes likely more incremental.
• HKMA picks up pace of intervention to defend HKD peg, CNB steps in to support CZK.

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

FIXED INCOME

• Debt revival gathers pace amidst risk-off positioning elsewhere.
• Bunds probe 155.00, Gilts reach 120.71 and 10 year T-note nudges 120-00.
• BTP supply encounters few demand issues, unlike second US Quarterly Refunding leg ahead of USD 22bln long bond auction.

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COMMODITIES

• WTI and Brent are pressured in what has been a grinding move lower during European hours; however, benchmarks were lifted amid Kremlin/N. Korea updates.
• Currently, the benchmarks are lower by around USD 1.50/bbl.
• IEA OMR: Revises down oil demand growth projections for 2022 by 70k BPD, amid China lockdowns and elevated prices. Overall decline of Russian supply by 1.6mln BPD in May and 2mln BPD in June; could expand to circa. 3mln BPD from July onwards. Click here for more detail.
• OPEC MOMR to be released at 13:00BST/08:00EDT.
• Indian refineries purchased 25-30mln barrels of Russian oil at a discount for delivery in May-June, according to Interfax.
• Spot gold/silver are pressured amid the USD's revival, but, the yellow metal remains in relatively contained parameters around USD 1850/oz.

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NOTABLE US HEADLINES

• Fed's Bullard (2022 voter, hawk) said the Fed has teed up 50bps hikes for future meetings and feels the goal should be about 3.5% on Fed Funds rate by year-end, while he added that 75bps is not his base case and April inflation data was "hot" but not far from what was expected, according to Reuters.
• Fed nominee Jefferson secured enough votes in the Senate for confirmation.
• US-China trade teams are maintaining normal communications, Global Times citing MOFCOM's spokesperson Jueting.
• Click here for the US Early Morning note.

NOTABLE EUROPEAN HEADLINES

• UK could announce tax cuts before the summer recess in end-July as ministers would have enough data on the next Ofgem energy price cap increase by then and would act rather than wait till August, according to Sky News' Sam Coates
• UK Foreign Secretary Truss spoke with European Commission VP Sefcovic; Sefcovic said there is no room to expand the EU negotiating mandate or introduce new proposals to reduce the overall level of trade friction. Truss said if the EU would not show the requisite flexibility to help solve those issues, then the UK would have no choice but to act.
• UK Foreign Secretary Truss is set to warn today that the EU has 72 hours to move on its position on the Northern Ireland protocol or the UK government will scrap the protocol, according to The Telegraph.
• UK Secretary of State for Northern Ireland Lewis says they want a negotiated solution with the EU, but EU VP Sefcovic's mandate needs to be expanded. If not, will have to take decisions/actions to protect the Good Friday Agreement.
• European Commission President von der Leyen said the Indo-Pacific is an area of tension and that the EU wants to take a more active role in the region, while she announced the launch of an EU-Japan digital partnership and said they will use their strategic relationship to strengthen and protect supply chains, according to Reuters.

NOTABLE EUROPEAN DATA

• UK GDP Estimate MM (Mar) -0.1% vs. Exp. 0.0% (Prev. 0.1%); YY (Mar) 6.4% vs. Exp. 6.8% (Prev. 9.5%); 3M/3M (Mar) 0.8% vs. Exp. 1.0% (Prev. 1.0%)
• UK GDP Prelim QQ (Q1) 0.8% vs. Exp. 1.0% (Prev. 1.3%); YY (Q1) 8.7% vs. Exp. 9.0% (Prev. 6.6%)
• Swedish CPIF YY (Apr) 6.4% vs. Exp. 6.2% (Prev. 6.1%); MM (Apr) 0.6% vs. Exp. 0.4% (Prev. 1.7%)
• Swedish CPIF Ex Energy YY (Apr) 4.5% vs. Exp. 4.5% (Prev. 4.1%); MM (Apr) 0.9% vs. Exp. 0.8% (Prev. 1.0%)

CRYPTO

• Bitcoin continues to falter, dropping to multiple fresh session lows within the European morning; currently, holding just above the USD 25k mark.

APAC TRADE

EQUITIES

• APAC stocks were pressured after the losses on Wall St where the major indices whipsawed in the aftermath of the firmer than expected CPI data and the DJIA posted a fifth consecutive losing streak.
• ASX 200 was lower amid heavy losses in tech and with financials subdued after flat earnings from Australia’s largest lender CBA.
• Nikkei 225 weakened with attention on earnings updates and with SoftBank amongst the worst performers ahead of its results later with the Co. anticipated to have suffered a record quarterly loss.
• Hang Seng and Shanghai Comp were subdued with early pressure from default concerns after developer Sunac China missed its grace period deadline and warned there was no assurance that the group will be able to meet financial obligations, although the mainland bourse recovered its earlier losses after further policy support pledges by Chinese authorities.
• SoftBank (9984 JT) - FY revenue JPY 6.2trln (prev. 5.6trln Y/Y). FY net profits -1.7trln (prev. +4.99trln)
• Foxconn (2317 TT) Q1 net profit TWD 29.45bln (exp. 29.76bln); sees Q2 revenue flat Y/Y, sees smart consumer electronics slightly declining Y/Y.

NOTABLE APAC HEADLINES

• PBoC Vice Governor Chen said the central bank will step up support for the real economy and that they have guided loan interest rates to decline, while Chen added the priority for the PBoC will be to support growth and will boost support for weak links and targeted areas, according to Reuters.
• China aims to implement existing policies to support the economy in H1 and also looks to incremental policies to support the economy, according to a senior party official cited by Reuters.
• Shanghai found two coronavirus cases outside of the quarantine lockdown zone, according to Bloomberg.
• China's Beijing official denies rumours of a city-wide lockdown and "quiet-mode management", via Reuters.
• Sunac China (1918 HK) missed payments due on October 2023 notes and said it missed payments on April 2023, October 2024 and April 2024 notes, while it added that there is no assurance group will be able to meet financial obligations when due or within the grace period citing liquidity constraints, according to Reuters.
• HKMA intervened in the FX market in which it purchased HKD to defend the peg for the first time since 2019, according to Bloomberg.
• BoJ Summary of Opinions from the April meeting stated a weak JPY is positive for the economy when the output gap is still big and trend inflation is very low and noted they must be vigilant to the chance of unexpected tail risk triggered by the Ukraine crisis. It was also stated that Japan's inflation ex-energy remains very low and the situation is different from the US and Europe, while a rise above 2% inflation won't be sustainable and it is hard to achieve the 2% target as the expected rise in inflation is driven by temporary factors. Furthermore, the BoJ must continue to support the economy with powerful monetary easing and it is inappropriate to change monetary policy for the purpose of controlling FX rates and with Ukraine adding to the downside risks for the Japanese economy.
• RBNZ said longer-term inflation expectations remain anchored close to or within the 1%-3% target and that the 1yr inflation expectations rose to a 32-year high, according to Reuters.

DATA RECAP

• New Zealand 1-year Inflation Forecast (Q2) Q1 4.88% (Prev. 4.4%); 2-year Inflation Forecast (Q2) Q1 3.29% (Prev. 3.27%)
• Australian Consumer Inflation Expectations (May) 5.0% (Prev. 5.2%)