• European bourses are mixed, Euro Stoxx 50 +0.2%, and have struggled to find a clear direction after mixed APAC trade with a busy docket ahead.
• Similar performance seen in US futures, looking to key data and numerous speakers
• DXY bid but relatively contained while EUR lifted but failed to advance much on Holzmann’s latest given hefty OpEx
• WTI and Brent are recovering from yesterday's WSJ source report induced downside, with participants awaiting clarity/details at Thursday's OPEC+ gathering.
• Core EGBs have managed to regroup from early pressure, with BTPs also elevated, though USTs fail to derive upside this far
• Looking ahead, highlights include US Final PMIs, US ISM Manufacturing PMI, Construction Spending, BoC Policy Announcement Speeches from Fed's Williams, & Bullard, ECB's Lagarde, Lane, Panetta & Knot

As of 11:25BST/06:25ET

LOOKING AHEAD

• US Final PMIs, US ISM Manufacturing PMI, Construction Spending, BoC Policy Announcement Speeches from Fed's Williams, & Bullard, ECB's Lagarde, Lane, Panetta & Knot.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

MILITARY/DEFENSIVE/NATO

• US President Biden said the US is to provide Ukraine with advanced rocket systems and said the US is not seeking a war between NATO and Russia, while he added the US will not try to bring about Russian President Putin's ouster in Moscow. Biden also stated that the US will not be directly engaged in the conflict so long as the US or its allies are not attacked and that the US is not encouraging Ukraine to strike beyond its borders, according to NYT.
• US senior administration official said the new US weapons package to Ukraine includes the High Mobility Artillery Rocket System (HIMARS), while the official said Ukraine will not use HIMARS on targets in Russia and the US will not encourage Ukraine to make territorial concessions, according to Reuters.
• Russian nuclear forces are conducting drills in the Ivanovo province, according to IFAX citing the Russian Defence Ministry.

ENERGY/SANCTIONS/ECONOMIC

• RWE (RWE GY) said it transferred euros to an account at Gazprombank under the new payment scheme for Russian gas, while Shell (SHEL LN) said it has not agreed to new payment terms set out by Gazprom including the creation of a "K" Rouble account, according to Reuters.
• Russian Deputy Foreign Minister says the nation will find ways to supply markets with grain and fertilisers despite sanctions, according to Ria.

OTHER

• Turkish President Erdogan told colleagues not to hold discussions with Turkey anymore; not received any concrete proposals to address Finland/Sweden's NATO membership bid.

EUROPEAN TRADE

CENTRAL BANKS

• ECB's Holzmann says the record Eurozone inflation print backs the need for a 50bps hike, decisive action is required in order to avoid harsher steps later. A clear rate signal could support EUR.
• BoJ Deputy Governor Wakatabe said the BoJ must maintain powerful monetary easing and sustain an environment where wages can rise, while he added that the BoJ shouldn't rule out additional easing steps if risks to the economy materialise. Wakatabe also noted that most goods prices aren't increasing with recent inflation driven mostly by energy and some food price increases, as well as noted that consumer inflation has not yet achieved the BoJ's price goal in a sustained and stable manner, according to Reuters. Adds, it is undesirable to target FX in guiding monetary policy; desirable for FX to reflect fundamentals.

EQUITIES

• European bourses are mixed, Euro Stoxx 50 +0.1%, and have struggled to find a clear direction after mixed APAC trade with a busy docket ahead.
• Stateside, futures are posting similar performance and looking to a busy data and Central Bank afternoon session, ES +0.2%.
• Click here for more detail.

FX

• Yen extends losses through more technical support levels, 129.0O and 129.50 as BoJ reiterates dovish stance and maintains that it is undesirable for monetary policy to target FX rates.
• Dollar drifts otherwise after month end squeeze as attention turns to busy midweek agenda and run in to NFP on Friday, DXY retracts into tighter 102.060-101.760 range.
• Aussie outperforms on the back of firmer than forecast Q1 GDP data, but hampered by decent option expiry interest sub-0.7200 vs Greenback.
• Euro unable to glean much impetus from hawkish ECB Holzmann as option expiries sit between 1.0740-75.
• Loonie pivots 1.2650 pre-BoC awaiting confirmation of the 50bp hike expected or something more hawkish.
• Marked slowdown in Hungarian manufacturing PMI piles more pressure on Forint following half point NBH rate rise vs 60bp consensus, EUR/HUF inching closer to 400.00, at circa 398.50.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0600 (380M), 1.0640-50 (1.0BLN), 1.0700 (354M), 1.0740-50 (1.26BN), 1.0760 (848M), 1.0770-75 (1.18BN), 1.0790-00 (1.0BLN)
• AUD/USD: 0.7170-75 (1.29BN), 0.7190 (272M)
• EUR/SEK 10.4600 (717M), 10.4900 (1.08BN), 10.5600 (729M)
• Click here for more detail.

FIXED INCOME

• Debt settles somewhat divergently after EU bonds hit new cycle lows and regained enough composure to climb back above parity.
• Bunds towards top of 151.85-20 range, Gilts nearer 116.18 than 115.70, but 10 year T-note still underwater between 119-13+/03+ parameters
• Curves flatter as ECB's Holzmann repeats preference for 50 bp hike to combat record high EZ inflation
• Click here for more detail.

COMMODITIES

• WTI and Brent are recovering from yesterday's WSJ source report induced downside, with participants awaiting clarity/details at Thursday's OPEC+ gathering.
• Currently, the benchmarks are holding around/above USD 117/bbl, vs respective lows of USD 114.58/bbl and USD 115.40/bbl respectively.
• Russian Foreign Minister Lavrov met with his Saudi counterpart on Tuesday in which they both praised the level of cooperation in OPEC+, while they noted stabilising effect that tight Russia-Saudi coordination has on the global hydrocarbon market, according to Reuters.
• UAE is considering a plan to increase its oil capacity by an additional 1mln bpd to a total 6mln bpd by 2030, according to Energy Intel.
• JMMC on Thursday now scheduled for 13:00BST (prev. 12:00BST), OPEC+ at 13:30BST, via Argus' Itayim.
• Police clashed with communities blocking MMG's Las Bambas copper mine in Peru.
• China's State Planner says renewable energy consumption is to reach circa. 1bln/T of standard-coal-equivalent by 2025, equal to 20% of total consumption; aims to secure around 33% of electricity from renewable sources by 2025.
• Spot gold is modestly softer amid ongoing USD upside and continuing to draft from a cluster of DMAs above USD 1840/oz, with base metals broadly lower as well.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK government is drawing up plans that will task the BoE with stepping in and handling the implosion of a stablecoin in preparation for future crises in the crypto markets, according to The Times.
• EU Commission President von der Leyen will, on Wednesday, approve Poland’s national recovery plan; however, Politico reports that commissioners, including Timmermans and Vestager, will raise objections to this as Poland has not taken the necessary steps for Commission approval.

DATA RECAP

• UK S&P Global/CIPS Manufacturing PMI Final (May) 54.6 vs. Exp. 54.6 (Prev. 54.6)
• EU S&P Global Manufacturing Final PMI (May) 54.6 vs. Exp. 54.4 (Prev. 54.4)
• UK BRC Shop Price Index YY (May) 2.8% (Prev. 2.7%)
• German Retail Sales YY Real (Apr) -0.4% vs. Exp. 4.0% (Prev. -2.7%); MM Real (Apr) -5.4% vs. Exp. -0.2% (Prev. -0.1%)

NOTABLE US HEADLINES

• Fed's Bostic (2024 voter) said there could be a significant reduction in inflation this year and that his suggestion for a pause in September should not be interpreted as a "Fed put" or belief that the Fed would rescue markets, according to an interview in MarketWatch.
• US Treasury Secretary Yellen said US President Biden's top concern is inflation and shares the Fed's priority of slowing inflation, while she added she was wrong about the path inflation would take and doesn't expect the same pace of job gains going forward, according to Reuters.
• US DoJ asked the appeals court to overturn the order that ended the mask mandate on airplanes and buses, according to Reuters.
• US Treasury Secretary Yellen says US is at full employment but inflation is way too high, via CNBC.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin is within comparably narrow parameters, holding steady above the USD 31k mark.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as risk sentiment only mildly improved from the lacklustre performance stateside as the region digested another slew of data releases including the continued contraction in Chinese Caixin Manufacturing PMI.
• ASX 200 was kept afloat by strength in industrials, telecoms and the top-weighted financials sector, while better-than-expected Q1 GDP data provides some mild encouragement.
• Nikkei 225 was underpinned by further currency depreciation and with BoJ Deputy Governor Wakatabe reiterating the BoJ's dovish tone.
• Hang Seng and Shanghai Comp were indecisive after Chinese Caixin Manufacturing PMI remained in contraction territory and amid mixed COVID-related developments with Shanghai reopening from the lockdown whilst Beijing's Fengtai district tightened curbs and required all residents to work remotely.

NOTABLE APAC HEADLINES

• Beijing reports two COVID cases during 15hrs to 3pm local time on June 1st

NOTABLE APAC DATA

• Chinese Caixin Manufacturing PMI Final (May) 48.1 vs. Exp. 48.0 (Prev. 46.0)
• Australian Real GDP QQ SA (Q1) 0.8% vs. Exp. 0.5% (Prev. 3.4%)
• Australian Real GDP YY SA (Q1) 3.3% vs. Exp. 2.9% (Prev. 4.2%)