• APAC stocks were positive but with gains capped after the uninspiring lead from Wall St; SPX -0.34%, NDX -1.16%.
• EU's Borrell said difficulties remain regarding the required unanimity on the proposed oil ban.
• European equity futures are indicative of a higher open with Eurostoxx 50 +0.9% after the cash market closed down 0.5% yesterday.
• DXY is contained on a 104 handle, JPY lags in G10 FX, AUD leads post-RBA minutes.
• Looking ahead, highlights include UK Unemployment, EZ GDP (2nd), US Retail Sales, Industrial Production & Business Inventories, Speakers from Fed’s Powell, Bullard, Harker, Mester, Evans, Kashkari & ECB’s Lagarde, Supply from UK & Germany.

US TRADE

• US stocks finished mostly lower in what was a choppy start to the week with late pressure heading into the close and underperformance in the Nasdaq.
• SPX -0.34% at 4,010, NDX -1.16% at 12,243, DJIA +0.08% at 32,223, RUT -0.31% at 1,784.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• US is reportedly to extend the COVID public health emergency beyond July, according to Bloomberg.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukraine's Deputy Defence Minister said an operation was launched to rescue trapped soldiers at the Azovstal steel plant in which 53 seriously wounded soldiers were evacuated to Novoazovsk and 211 were taken to Olenivka, according to Sky News Breaking.
• EU's Borrell said there was no agreement yet on the sixth package of sanctions against Russia and difficulties remain regarding the required unanimity on the proposed oil ban, according to Reuters.
• UN Secretary-General Guterres is pursuing a high stakes deal with Russia, Turkey and other nations to open up Ukrainian food exports to world markets to prevent a global food shortage, according to WSJ citing sources.

OTHER

• US will take steps to revise Cuba policy including relaxing some travel, migration and remittances restrictions, according to administration officials cited by Reuters.

APAC TRADE

EQUITIES

• APAC stocks were positive but with gains capped after the uninspiring lead from Wall St and growth concerns.
• ASX 200 was kept afloat by strength in the commodity-related sectors after recent gains in underlying prices.
• Nikkei 225 traded marginally higher with Japan seeking to pass an extra budget by month-end and will begin permitting entry to a small number of tourists.
• Hang Seng and Shanghai Comp were both firmer with tech spearheading the outperformance in Hong Kong amid hopes of an easing of the crackdown on the sector, while the mainland lagged amid economic concerns and despite Shanghai reporting no cases outside of quarantine for a 3rd consecutive day.
• US equity futures eked mild gains as the risk appetite mildly improved during Asia trade; ES +0.4%
• European equity futures are indicative of a higher open with Eurostoxx 50 +0.9% after the cash market closed down 0.5% yesterday.

FX

• DXY was rangebound after the prior day’s losses but remains on a 104 handle, while the focus in the US shifts to the roster of Fed speakers, as well as Industrial Production and Retail Sales data.
• EUR/USD was uneventful after recent momentum was stalled by resistance at 1.0450 but with the pullback limited. The latest Reuters poll showed respondents were unanimous in their view of an ECB deposit rate increase in July.
• GBP/USD held above 1.2300 after a slew of BoE rhetoric emphasised inflationary concerns including from Governor Bailey who said he was not happy about the inflation outlook and that it was a bad situation to be in.
• USD/JPY was initially choppy but eventually kept afloat after BoJ Deputy Governor Amamiya echoed the central bank’s ultra-dovish stance.
• Antipodeans traded higher with AUD lifted after the RBA Minutes noted a 40bps hike was among the options the central bank considered earlier this month.

FIXED INCOME

• 10yr UST futures declined as the improved risk tone led to a reversal of the prior day’s gains which were spurred by mounting growth concerns.
• Bunds were subdued and marginally extended on the pullback from the 154.00 level.
• 10yr JGBs lacked direction with the BoJ only present in the markets under its fixed-rate operations and for treasury discount bills.

COMMODITIES

• Crude futures were marginally lower and took a breather from the recent advances after WTI and Brent prices hit resistance at the USD 115/bbl level.
• Kuwait Oil Company said that production and export operations were not affected by bad weather, according to Reuters.
• US total shale regions oil production for June is seen up about 143,000 BPD at 8.762mln BPD (prev. 131,000 BPD rise in May) and is set to rise to the highest since March 2020, according to the EIA.
• Iran set June Iranian light crude price to Asia at Oman/Dubai + USD 4.25/bbl, according to a Reuters source.
• Spot gold traded rangebound with the precious metal contained by a steady greenback.
• Copper prices gained amid the mild improvement in risk appetite overnight.

CRYPTO

• Bitcoin gained overnight amid the improved risk tone and climbed back above the 30,000 level.

NOTABLE HEADLINES

• China's state planner said China's economy faces increasing downward pressure, while it will step up support for manufacturing companies, contact-intensive services, small companies and home businesses, according to Reuters.
• Senior Chinese officials are to meet with tech industry chiefs today amid talk of crackdown easing, according to Nikkei. It was later reported that China's top political consultative body began a conference on promoting the sustainable and healthy development of the digital economy, according to state media.
• Hong Kong Chief Executive Carrie Lam said they will proceed with the planned COVID curbs easing on May 19th, according to Bloomberg.
• BoJ Deputy Governor Amamiya said it is important to continue current powerful easing to firmly support the economy and that long-term interest rates have been stable since the adoption of fixed-rate operations, while he added that if monetary easing is reduced now, it would make the 2% price goal an even more distant target, according to Reuters.
• Japan is to permit small groups of tourists to visit this month as a trial ahead of its border reopening, according to Japan Times.
• RBA May meeting minutes stated the board considered three options for the size of the rate increase which were 15bps, 25bps and 40bps in which a 15bps hike was not the preferred option as policy was very stimulatory and it was highly probable that further rate increases would be required, while 15bps would have been inconsistent with the historical practice of changing the Cash Rate in 25bps increments. The minutes also stated that an argument for a 40bps hike could be made given the upside risks to inflation and the very low level of interest rates, while they would have the opportunity to review the setting of rates again within a relatively short period of time and members agreed further rate hikes would likely be required to ensure inflation returns to the target.

DATA RECAP

• Singapore Non-Oil Exports MM (Apr) -3.3% vs. Exp. -1.3% (Prev. -2.3%)
• Singapore Non-Oil Exports YY (Apr) 6.4% vs. Exp. 6.7% (Prev. 7.7%)

UK/EU

NOTABLE HEADLINES

• BoE Deputy Governor Ramsden said they are seeing the start of inflation concerns influencing wage bargaining, according to Reuters.
• UK PM Johnson said a legislative solution is needed on the table in parallel to talks on the Northern Ireland Protocol and said none of the Northern Ireland parties like it, according to Reuters.
• UK Foreign Secretary Truss is to declare her intention to bring forward legislation that rips up parts of the post-Brexit trade deal on Northern Ireland, according to LBC.
• Irish Foreign Minister Coveney said their message to the UK is let's get back to work and solutions are possible, while he added the EU Commission needs a partner that can bring solutions forward, but Britain has not seriously engaged, according to Reuters.
• European Council President Michel said the only way forward on the Northern Ireland protocol is engagement between the EU and the UK, while he added that any unilateral action by the UK is clearly not welcome, according to Reuters.
• ECB is expected to raise the deposit rate in July according to 39 out of 39 respondents in a Reuters survey, while 26 out of 48 economists see the deposit rate at 0% in Q3 and 21 out of 48 see the deposit rate at 0.25% in Q4.