• APAC stocks were mixed as momentum waned due to China's COVID woes and record Beijing infections
• Australian Labor Party leader Albanese was elected as Australia’s PM and was sworn in on Monday
• Russian negotiator Medinsky said Russia is ready to continue stalled peace talks with Ukraine
• European equity futures are indicative of a firmer open with Eurostoxx 50 +1% after the cash market closed higher by 0.5% on Friday
• DXY was subdued beneath 103, antipodeans lead in G10 FX, EUR/USD sits on a 1.05 handle
• Looking ahead, highlights include German Ifo Survey, Speeches from ECB’s Villeroy & Fed’s Bostic, Supply from EU & Belgium

US TRADE

• US stocks had a turbulent session on Friday in which both the S&P 500 and the DJIA returned towards the unchanged mark after a ramp into the close, aided by a chunky MOC buy-side imbalance but still registered a 7th and 8th consecutive weekly loss which was the longest for the DJIA in almost a century.
• SPX +0.04% at 3,902, NDX -0.34% at 11,835, DJIA +0.02% at 31,260, RUT -0.17% at 1,774.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• White House COVID coordinator Jha said people should be wearing masks in a crowded indoor place and he expects an FDA decision on Moderna’s (MRNA) COVID vaccine for children under 5 years old in a few weeks, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS/ASSISTANCE

• Russian negotiator Medinsky said Russia is ready to continue stalled peace talks with Ukraine and said that Russia has never refused talks, according to Associated Press.
• US and several countries walked out on the APEC trade ministers’ meeting in Bangkok to protest the Russian invasion of Ukraine, according to Reuters.
• UK PM Johnson spoke with Ukrainian President Zelensky and discussed Russian President Putin’s blockade of Odessa, while PM Johnson resolved to redouble efforts to provide vital food and humanitarian aid to Ukraine, as well as ensure the country is able to export to the world, according to Reuters.

MILITARY/NATO/DIPLOMATIC

• Polish President Duda told the Ukrainian parliament that Kyiv did not fall to Russians and will not fall to Russians, while Duda added that Ukraine showed the world that it can resist Russia and he will not rest until Ukraine becomes a member of the EU, according to Reuters.
• US Secretary of State Blinken and France’s new Minister of Europe and Foreign Affairs Colonna discussed NATO and how to support Sweden and Finland’s application for membership into the alliance, while they also agreed on the importance of continuing support for Ukraine and maintaining the significant costs on Russian President Putin for the invasion of Ukraine, according to Reuters.
• Turkish President Erdogan told NATO Secretary General Stoltenberg that Ankara won’t accept Finland and Sweden’s membership unless they cooperate over terrorism and other issues, according to Reuters.
• Turkish President Erdogan conducted a call with Swedish PM Andersson in which he told her that Sweden’s support for terrorist organisations to stop and that the arms embargo towards Turkey should be lifted, while Turkey expects concrete steps on concerns regarding PKK and others. It was also reported that Finnish President Niinisto said he had an open and direct call with Turkish President Erdogan in which he told Erdogan that as NATO allies, they will commit to each other’s security and the relationship between their countries will grow stronger, according to Reuters.
• US Pentagon is reportedly weighing deploying special forces to guard the embassy in Kyiv, according to WSJ.

ENERGY/SANCTIONS/ECONOMIC

• EU Parliament Vice President Barley said the remaining 26 EU member states should launch a Russian oil embargo without Hungary, according to Deutsche Welle.

OTHER

• Yemeni Houthis' top official al-Mashat said the group was not against extending the UN-brokered truce although described it as not encouraging enough, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mixed as momentum waned due to China's COVID woes and record Beijing infections.
• ASX 200 was just about kept afloat before ebbing lower after initial strength in mining names and the smooth change of government in Australia.
• Nikkei 225 advanced at the open with Tokyo said to be planning to revive its travel subsidy plan for residents.
• Hang Seng and Shanghai Comp were pressured by ongoing COVID concerns after Beijing extended its halt of dining in services and in-person classes for the whole city, as well as reporting a fresh record of daily COVID infections, while Shanghai restored its cross-district public transport on Sunday but ordered supermarkets and shops in the central Jingan district to shut and for residents to stay home until at least Tuesday.
• US equity futures extended on Friday's intraday rebound after the S&P 500 flirted with bear market territory: ES +0.9%
• European equity futures are indicative of a firmer open with Eurostoxx 50 +1% after the cash market closed higher by 0.5% on Friday.

FX

• DXY was subdued beneath 103.00 amid gains across the dollar’s major counterparts and amid light newsflow.
• EUR/USD strengthened to near the 1.0600 amid the pick-up in risk sentiment.
• GBP/USD extended on advances after it broke through resistance around 1.2500.
• USD/JPY was dragged lower by the weakness in the greenback and with initial momentum thwarted by resistance at 128.00.
• Antipodeans outperformed with AUD encouraged after the smooth handover of government post-election and with Australia expected to avert the worst-case scenario of a hung parliament, while NZD/USD also traded with firm gains ahead of this week’s RBNZ meeting and with the majority of the NZIER Shadow Board backing a 50bps rate hike to the OCR.

FIXED INCOME

• 10yr UST futures pulled back to beneath the 120.00 level with price action contained ahead of this week’s FOMC Minutes.
• Bunds retreated below 154.00..
• 10yr JGBs traded flat with the BoJ only present in the market under its daily fixed-rate operations.

COMMODITIES

• Crude futures were rangebound amid a lack of catalysts for oil and mixed COVID-19 headlines from China.
• Saudi Arabia signalled it will stand by Russia as a member of OPEC+ amid mounting pressure from sanctions, according to FT.
• Iraq’s government aims to set up a new oil company in the Kurdistan region and expects to enter service contracts with local oil firms, according to Reuters.
• Iran’s Oil Minister agreed to revive the pipeline laying project to pump Iranian gas to Oman which was stalled for nearly two decades, according to IRNA.
• Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said Iran’s leadership has matters under review regarding “the Iranian nuclear file” and said that pumping additional quantities of Iranian oil to the market will help stabilise crude prices and lower inflation, according to Al Jazeera TV.
• India cut its excise duty on petrol by INR 8/litre and diesel by INR 6/litre which will result in a revenue loss of about INR 1tln for the government, while Indian Finance Minister Sitharaman announced subsidies on cooking gas cylinders, as well as cuts to custom duties on raw materials and intermediaries for plastic products, according to Reuters.
• Spot gold marginally benefitted from the weaker greenback but with gains limited ahead of this week's FOMC Minutes.
• Copper prices remained afloat and found a base around the USD 4.30/lb level.

CRYPTO

• Bitcoin is marginally lower and briefly approached the 30,000 level to downside but then bounced off its lows.

NOTABLE HEADLINES

• Beijing reported 83 new symptomatic cases and 16 new asymptomatic cases for May 22nd with the city's total new cases at a new record, according to Bloomberg. It was also reported that thousands of Beijing residents were relocated to quarantine hotels due to a handful of infections, according to the BBC.
• Beijing is mulling easing its hotel quarantine requirement to one week in a hotel and one week at home from a previous hotel requirement of ten days and one week at home for international travellers, according to SCMP.
• Shanghai reported 570 new asymptomatic cases, 52 asymptomatic cases, 3 new COVID-related deaths and zero cases outside of quarantine, according to Reuters. Shanghai’s central district of Jingan will require all supermarkets and shops to close, while residents will be required to stay at home and conduct mass testing from May 22nd-24th, according to Reuters.
• Japanese PM Kishida said it is very disappointing that China is unilaterally developing areas in the East China Sea when borders are not yet set which Japan cannot accept, while it has lodged a complaint against China through diplomatic channels, according to Reuters.
• Japanese PM Kishida told US President Biden that they must achieve a free and open Indo-Pacific together, while President Biden said the US is fully committed to Japan's defence and that the IPEF will increase cooperation with other nations and deliver benefits to people in the region, according to Reuters.
• US-South Korea joint statement noted they agreed to discuss widening the scope and scale of joint military exercises and the US reiterated its commitment to defending South Korea with nuclear, conventional and missile defence, as well as reaffirmed its commitment to deploy strategic military assets in a timely and coordinated manner as necessary. The sides also condemned North Korea’s missile tests as a grave threat and agreed to relaunch a high-level extended deterrence strategy and consultation group at the earliest date, while they noted the path to dialogue with North Korea remains open and called for a resumption of negotiations, according to Reuters.
• US President Biden said the US-South Korea alliance has never been stronger and more vibrant. President Biden added they are ready to strengthen the joint defence posture to counter North Korea and are ready to work toward the complete denuclearisation of North Korea, while he offered vaccines to North Korea and said he would meet with North Korean leader Kim if he is serious, according to Reuters.
• South Korean President Yoon said North Korea is advancing nuclear capabilities and that US President Biden shares grave concerns regarding North Korea’s nuclear capabilities, while Yoon said they discussed the timing of possible deployment of fighter jets and bombers, according to Reuters.
• US official said the inclusion of South Korea to the Quad is not currently under consideration and stated that President Biden is impressed with the steps South Korea took to support efforts in Ukraine, while the official added that COVID may be a factor in the lack of North Korean response to the US offer for talks, according to Reuters.
• India’s government is mulling additional spending of INR 2tln in FY22/23 to cushion consumers from increasing prices and address multi-year high inflation, according to Reuters.
• Australian Labor Party leader Albanese was elected as Australia’s PM and was sworn in on Monday, according to Reuters.
• NZIER Shadow Board said there is a wide range of views within the shadow board regarding how much the RBNZ should hike interest rates, particularly for the coming year, while the majority view is for a 50bps hike to the OCR at this week's meeting.

UK/EU

NOTABLE HEADLINES

• EU’s infectious-disease agency is to recommend member states prepare strategies for possible vaccination programmes to counter increasing monkeypox cases, according to FT. It was also reported that Austria confirmed its first case of monkeypox and that Switzerland also confirmed its first case of monkeypox in the canton of Bern, according to Reuters.
• ECB President Lagarde indicated that July is likely for a rate increase as she noted that they will follow the path of stopping net asset purchases and then hike interest rates sometime after that which could be a few weeks, according to Bloomberg.
• EU policymakers are reportedly renewing efforts to push for real-time databases of stock and bond trading information as they believe that a 'consolidated tape' will make EU exchanges more attractive for investors, according to FT.

DATA RECAP

• UK Rightmove House Price Index MM (May) 2.1% (Prev. 1.6%)
• UK Rightmove House Price Index YY (May) 10.2% (Prev. 9.9%)