• European bourses are firmer across the board, Euro Stoxx 50 +0.7%, but remain within initial ranges in what has been a relatively contained session
• US futures are relatively contained, ES +0.2%, with newsflow thin and on familiar themes following yesterday's minutes and before PCE on Friday
• JPY and GBP outperform after/ahead of BoJ Kuroda and Sunak's cost of living announcement respectively, DXY sub-102.00 as such
• Core debt's early bid, which saw Bunds breach touted technicals, has fizzled out as Gilts dropped on details around Sunak's update
• Crude benchmarks reside at the top-end of relatively narrow parameters with newsflow slim and focused on familiar themes
• Looking ahead, highlights include US GDP (2nd), US IJC, Canadian Retail Sales, CBRT, Fed's Brainard Speech, Supply from the US, Earnings from Alibaba & Baidu. Brent Jul'22 Options Expiry.

As of 11:15BST/06:15ET

LOOKING AHEAD

• US GDP (2nd), US IJC, Canadian Retail Sales, CBRT, Fed's Brainard Speech, Supply from the US, Earnings from Alibaba & Baidu. Brent Jul'22 Options Expiry.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Ministry has shown footage of an "Iskander" missile launch against a target in Ukraine, according to Ria.

TALKS/NEGOTIATIONS

• Ukrainian President Zelensky severely criticised suggestions that Kyiv give up territory and make concessions to end the war with Russia, which he likened the idea to attempts to appease Nazi Germany in 1938, according to The Telegraph.
• Turkey is negotiating with Russia and Ukraine regrading grain exports from Ukraine, according to an official.

ENERGY/SANCTIONS/ECONOMIC

• EU Diplomats are considering a solution to Hungary’s Russian oil embargo veto, whereby the embargo would be split and initially focus on seabound oil before then turning to pipeline oil, via Politico; amid reports that efforts to financially compensate Hungary are stalling, due to rule of law and RePowerEU issues.

OTHER

• UN Security Council is to vote in the coming days on the US-led push to sanction North Korea further, according to Reuters.
• China's UN mission said the US draft security council resolution on North Korea will not solve any problems and that the US knows the best way for de-escalation but resists it, according to Reuters.
• US military said US and Japanese fighter jets conducted joint drills over the Sea of Japan on Wednesday to deter and counter regional threats, according to Reuters.
• Iranian Foreign Minister reiterates "We have not reached the point where we can trust the American side, and we are not convinced that its behaviour has changed", according to Al Jazeera.
• Iranian Foreign Minister said they made minimal but good progress in relations with Saudi; could meet Saudi Foreign Minister in a third country.
• US official reiterate the US remains committed to one-China policy; US Secretary of State Blinken will say the US doesn't seek to sever China from US or world economy, but wants China to play by rules.

CENTRAL BANKS

• CBR (May, Emergency Meeting): Key Rate 11.00% (exp. ~11.00/12.00%, prev. 14.00%); holds open the prospect of further reductions at upcoming meetings.
• BoJ's Kuroda says, when exiting easy policy, they will likely combine rate hike and balance sheet reduction through specific means, timing to be dependent on developments at that point; FOMC rate hike may not necessarily result in a weaker JPY or outflows of funds from Japan if it affects US stock prices, via Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.7%, but remain within initial ranges in what has been a relatively contained session with much of northern-Europe away.
• Stateside, US futures are relatively contained, ES +0.2%, with newsflow thin and on familiar themes following yesterday's minutes and before PCE on Friday.
• Apple (AAPL) is reportedly planning on having a 220mln (exp. ~240mln) iPhone production target for 2022, via Bloomberg. -1.4% in the pre-market
• Baidu Inc (BIDU) Q1 2022 (CNY): non-GAAP EPS 11.22 (exp. 5.39), Revenue 28.4bln (exp. 27.82bln). +4.5% in the pre-market
• UK CMA is assessing whether Google's (GOOG) practises in parts of advertisement technology may distort competition.
• Click here for more detail.

FX

• Dollar drifts post FOMC minutes that reaffirm guidance for 50bp hikes in June and July, but nothing more aggressive, DXY slips into lower range around 102.00 vs 102.450 midweek peak.
• Yen outperforms after BoJ Governor Kuroda outlines exit strategy via a combination of tightening and balance sheet reduction, when the time comes; USD/JPY closer to 126.50 than 127.50 where 1.13bln option expiries start and end at 127.60.
• Rest of G10, bar Swedish Crown rangebound ahead of US data, with Loonie looking for independent direction via Canadian retail sales, USD/CAD inside 1.2850-00; Cable surpassing 1.2600 following reports that the cost of living package from UK Chancellor Sunak could top GBP 30bln.
• Lira hits new YTD low before CBRT and Rouble weaker following top end of range 300bp cut from CBR.
• Yuan halts retreat from recovery peaks ahead of key technical level, 6.7800 for USD/CNH.
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Noted FX Expiries, NY Cut:

• USD/JPY: 127.00 (290M), 127.50-60 (1.13BN), 128.00 (516M)
• Click here for more detail.

FIXED INCOME

• Debt wanes after early rebound on Ascension Day lifted Bunds beyond technical resistance levels to 154.74 vs 153.57 low.
• Gilts fall from grace between 119.17-118.19 parameters amidst concerns that a large UK cost of living support package could leave funding shortfall.
• US Treasuries remain firm, but off peaks for the 10 year T-note at 120-31 ahead of GDP, IJC, Pending Home Sales and 7 year supply.
• Click here for more detail.

COMMODITIES

• Crude benchmarks inch higher in relatively quiet newsflow as familiar themes dominate; though reports that EU officials are considering splitting the oil embargo has drawn attention.
• Currently WTI and Brent lie in proximity to USD 111/bbl and USD 115/bbl respectively; within USD 1.50/bbl ranges.
• Russian Deputy PM Novak expects 2022 oil output 480-500mln/T (prev. 524mln/T YY), via Ria.
• Spot gold is similarly contained around the USD 1850/oz mark, though its parameters are modestly more pronounced at circa. USD 13/oz
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Sunak's package today is likely to top GBP 30bln, according to sources via The Times; Chancellor will confirm that the package will be funded in part by windfall tax on oil & gas firms likely to come into effect in the autumn. Subsequently, UK Gov't sources are downplaying the idea that the overall support package is worth GBP 30bln, via Times' Swinford; told it is a very big intervention.
• UK car production declined 11.3% Y/Y to 60,554 units in April, according to the SMMT.

NOTABLE US HEADLINES

• Fed's Brainard's written testimony stated that no decision has been made about a US central bank digital currency and clear regulatory guard rails are needed for the digital financial system. Brainard stated new forms of digital money such as stablecoins could lead to meaningful counterparty risk and that private monies could threaten consumer protection and financial stability. Furthermore, she said it is important to strike the correct balance between privacy and crime prevention, as well as noted that there are risks of acting and risks of not acting, but added that a US central bank digital currency is one way to ensure the dollar continues to be used globally, according to Reuters.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin remains in proximity to the USD 30k mark, though has slipped as far as USD 28.5k.

APAC TRADE

EQUITIES

• APAC stocks were indecisive as risk appetite waned despite the positive handover from Wall St where the major indices extended on gains post-FOMC minutes after the risk event passed and contained no hawkish surprises.
• ASX 200 failed to hold on to opening gains as weakness in mining names, consumer stocks and defensives overshadowed the advances in tech and financials, while capex data was mixed with the headline private capital expenditure at a surprise contraction for Q1.
• Nikkei 225 faded early gains but downside was stemmed with Japan set to reopen to tourists on June 6th.
• Hang Seng and Shanghai Comp were mixed with early pressure after Premier Li warned the economy was worse in some aspects than in 2020 when the pandemic began, although he stated that China will unveil detailed implementation rules for a pro-growth policy package before the end of the month, while the PBoC issued a notice to promote credit lending to small firms and the MoF announced cash subsidies to Chinese airlines.

NOTABLE APAC HEADLINES

• PBoC issued a notice to promote credit lending to small firms and is to boost financial institutions' confidence to lend to small firms, according to Reuters.
• BoK raised its base rate by 25bps to 1.75%, as expected, via unanimous decision. BoK raised its 2022 inflation forecast to 4.5% from 3.1% and raised its 2023 forecast to 2.9% from 2.0%, while it sees GDP growth of 2.7% this year and 2.4% next year. BoK said consumer price inflation is to remain high in the 5% range for some time and sees it as warranted to conduct monetary policy with more focus on inflation, according to Reuters.
• Morgan Stanley has lowered China's 2022 GDP estimate to 3.2% from 4.2%.
• China is to sell 500k tonnes of imported soybeans from state reserves on June 1st, according to the trade centre.

NOTABLE APAC DATA

• Australian Capital Expenditure (Q1) -0.3% vs. Exp. 1.5% (Prev. 1.1%)
• Australian Private Capital Expenditure 2021-2022 (AUD)(Est. 6) 142.8B (Prev. 140.8B); 2022-2023 (AUD)(Est. 2) 130.5B (Prev. 116.7B)