• APAC stocks traded cautiously amid upside in yields and ahead of upcoming risk events. 
• European equity futures are indicative of a weaker open with Eurostoxx 50 -0.9% after the cash market closed higher by 1.5% yesterday.
• DXY remains firmer above 102.50, EUR/USD is back below 1.07 and RBA-inspired gains in AUD were trimmed.
• UK PM Johnson won the confidence vote, as expected, with total votes at 211 vs 148.
• Looking ahead, highlights include German Industrial Orders, UK Composite/Services PMI (Final), Canadian Trade Balance, EIA STEO, Supply from UK & US.

US TRADE

• US stocks eked modest gains to start the week after the bullishness out of APAC/Europe faded through the NY session amid a bond sell-off and firmer dollar.
• SPX +0.29% at 4,120, NDX +0.41% at 12,599, DJIA +0.05% at 32,915, RUT +0.45% at 1,888.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• US President Biden's decision on student debt is not expected until July, according to WSJ.
• US Senator Manchin wants to increase the age to 21 for gun purchases, according to CNN.
• US SEC is preparing to propose changes to the stock market’s plumbing as soon as this fall and Chairman Gensler is expected to outline ideas for improving market efficiency, according to WSJ
• Apple (AAPL) introduced its M2 silicon chip which has an 18% better performance than previous chip and will be used in Mac computers. (Newswires) Click here for the highlights from the WWDC 2022 event.
• US CDC raised its alert level and advised travellers to wear masks as it confirmed 31 cases of monkeypox in the US, according to Daily Mail.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Ukrainian forces are not giving up positions in Severodonetsk and that fierce street fighting continues, according to Reuters.
• Russian Foreign Ministry announced it banned entry to 61 US officials and company executives, while it imposed sanctions against US finance and energy ministers.
• Japan announced an asset freeze on two Russian banks and one Belarusian bank, according to Reuters.

OTHER

• US Deputy Secretary of State Sherman said the world would respond in a strong and clear manner in the case of a North Korean nuclear test, while she added that there would be a swift and forceful response in the case of a North Korean nuclear test, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously amid recent upside in yields and ahead of upcoming risk events.
• ASX 200 declined with losses exacerbated after the RBA delivered a larger-than-expected rate hike.
• Nikkei 225 swung between gains and losses although a weak JPY boosted the index above 28k.
• Hang Seng and Shanghai Comp. were varied as the mainland was kept afloat by reopening optimism and with Hong Kong subdued by property names, although tech benefitted from hopes Beijing may be easing its crackdown on the sector with China reportedly to conclude the cybersecurity probe into certain companies.
• US equity futures were pressured overnight as yields remained elevated after the prior day's bond sell-off; ES -0.6%
• European equity futures are indicative of a weaker open with Eurostoxx 50 -0.9% after the cash market closed higher by 1.5% yesterday.

FX

• DXY remained firmer above 102.50 after the recent upside in yields and the somewhat cautious risk environment.
• EUR/USD fell beneath 1.0700 amid the firmer dollar.
• GBP/USD faded the prior day’s gains and tested 1.2500 to the downside after PM Johnson won the no-confidence vote as expected, although the results showed a deeply divided Tory party as 41% of the party's MPs have no confidence in the PM which was worse than former PM May in 2018.
• USD/JPY extended to its highest level in two decades above 132.00 after weak data, dovish BoJ rhetoric and widening yield differentials
• Antipodeans were both initially subdued by the dollar strength although AUD/USD was later briefly supported after the RBA delivered a larger than expected rate increase of 50bps.

FIXED INCOME

• 10yr UST futures were subdued after the prior day's bond sell-off amid a busy corporate debt pipeline ahead of this week’s auctions and with the US 10yr yield near last month’s high above the 3.0% level.
• Bunds languished beneath 149.00 amid the upside in global yields.
• 10yr JGBs tracked the recent losses in global counterparts with price action not helped by mixed 30yr JGB auction results.

COMMODITIES

• Crude futures eked marginal gains overnight amid further China reopening optimism and bullish price forecasts.
• Libya's Sharara oil field halted production after a brief restart, according to Bloomberg.
• Goldman Sachs hiked its Q3 Brent oil forecast to USD 140/bbl from USD 125/bbl and increased its Q4 forecast to USD 130/bbl from USD 125/bbl.
• Morgan Stanley's base case view is for Brent to reach USD 130/bbl during Q3 with an upside to the bull case estimate of USD 150/bbl.
• Spot gold languished near the prior day's lows amid a firmer greenback.
• JPMorgan continues to see gold trading softer towards USD 1,800/oz in Q3 2022 on an expected rebound in investor risk sentiment and continued push higher in US yields.
• Copper remained lacklustre amid the cautious mood during Asian trade.

CRYPTO

• Bitcoin was pressured overnight and slumped beneath the 30,000 level.

NOTABLE APAC HEADLINES

• China's Tianjin city reopened all subway stations that were closed due to COVID, while Shanghai Port's daily volume rose to 95% of the normal level, according to local press.
• Labor Advisory Committee urged US President Biden to extend China tariffs, according to Axios.
• Japan set up a team to monitor land sales near bases and nuclear plants or on strategically located islands under a new law designed to prevent hostile foreigners from affecting national security, according to Nikkei.
• RBA hiked rates by 50bps to 0.85% (exp. 25bps increase) and said inflation in Australia has increased significantly, while it is committed to doing what is necessary to ensure that inflation in Australia returns to the target over time. RBA added that inflation is likely to be higher than was expected a month ago and the Board expects to take further steps in normalising monetary conditions over the months ahead with the size and timing of future interest rate increases to be guided by the incoming data and the assessment of the outlook for inflation and the labour market. Furthermore, it noted the Australian Economy is resilient although one source of uncertainty about the economic outlook is how household spending evolves, given the increasing pressure on Australian households' budgets from higher inflation.

DATA RECAP

• Japanese All Household Spending MM* (Apr) 1.0% vs. Exp. 1.3% (Prev. 4.1%)
• Japanese All Household Spending YY* (Apr) -1.7% vs. Exp. -0.8% (Prev. -2.3%)

EU/UK

NOTABLE HEADLINES

• UK PM Johnson won the confidence vote, as expected, with total votes at 211 vs 148, according to Reuters. However, the Telegraph highlights that Johnson is not "out of the woods yet" given that he has lost the support of so many backbenchers.
• UK PM Johnson said he is grateful for colleagues' support and that they need to come together as a party now. PM Johnson added that they can now focus on what they are doing to help people in the country and have a chance to continue strengthening the economy, while he responded that is certainly not interested when asked about a snap election, according to Reuters.
• UK Conservative Party said PM Johnson and Chancellor Sunak will outline a plan for economic growth next week and he told lawmakers he will cut taxes if he remains in office, according to a party source cited by Reuters.
• Barclaycard UK May consumer spending rose 9.3% Y/Y, which reflected the rising cost of living and base effects, according to Reuters.

DATA RECAP

• UK BRC Retail Sales YY (May) -1.5% (Prev. -1.7%)
• UK BRC Total Sales YY (May) -1.1% (Prev. -0.3%)