• European bourses have trimmed initial upside, Euro Stoxx 50 -0.2%, with macro newsflow limited and the initial strength primarily a continuation of APAC/Wall St. leads.
• Stateside, futures are modestly pressured overall but well within overnight ranges ahead of a slim docket; ES -0.4%.
• USD/JPY continues to extend and has peaked just shy of 134.00 thus far; DXY continues to extend though is off intra-day bests
• Core debt experienced hefty concession into UK & German 10yr issuance, with respective debt off-lows post auctions; US 10yr ahead
• WTI and Brent have been moving in-line with broader risk; however, following the UAE Minister, the benchmarks have extended to the upside and post gains in excess of USD 1.50/bbl.
• Looking ahead, highlights include US MBAs & supply from the US.

As of 11:25BST/06:25ET

LOOKING AHEAD

• US MBAs & supply from the US.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

• Ukraine said there is no deal yet to unblock the Black Sea, while talks between the Russian and Turkish Foreign Ministers are set for Wednesday, according to Politico.
• Over 1,000 Ukrainian soldiers who surrendered in Mariupol have been transferred to Russia for investigation, according to TASS citing a Russian law enforcement source and more Ukrainian prisoners are to be transferred later on.
• Grain shipments are to depart from Berdyansk, Ukraine this week, following work to remove mines, according to local authorities via Tass; subsequently, Turkish Foreign Minister says Turkey is ready to adopt UN plan on Ukrainian grains.
• Ukraine Traders Union UGA director says Turkey not a sufficient enough force to guarantee secure Ukranian grain exports via the Black Sea; Black Sea ports could take no less than 2-3 months to demine.

OTHER

• South Korea, US and Japan said North Korea's recent missile tests were serious provocations and they reaffirmed the shared goal of North Korea's denuclearisation, while they added the door for dialogue with North Korea is always open and the US reaffirmed extended deterrence to defend South Korea and Japan, according to Reuters.
• Two UN surveillance cameras turned off at a nuclear site, according to Sky News Arabia citing Iranian TV; subsequently, Iran's Atomic Energy Organization says the cameras that were stopped are not part of Iran's commitment to the comprehensive safeguards agreement, via Al Jazeera.

EUROPEAN TRADE

CENTRAL BANKS

• RBI hiked the Repurchase Rate by 50bps to 4.90% (exp. 40bps hike) via unanimous decision and dropped mention of "staying accommodative", while RBI Governor Das noted that inflation has increased above upper tolerance levels and they remain focused on bringing down inflation. Das added they will control inflation without losing sight of growth and that further monetary policy measures are necessary to anchor inflation, as well as noted that upside risk to inflation had intensified and materialised sooner than expected.
• RBI Governor says they dropped the word "accommodative" from their stance, but they remain accommodative; liquidity withdrawal going forward will be calibrated and gradual.
• BoJ's Kuroda says rapid weakening of JPY as seen recently is undesirable; various macroeconomic models show that a weak JPY is positive. I It is important for FX to move stably, reflecting fundamentals.
• BoJ is expected to maintain its view that the domestic economy is picking up as a trend and will likely continue improving, according to Reuters sources.
• PBoC international department official Zhou said the PBoC will keep guiding financing costs lower, while the PBoC also announced that China will extend the trading hours of the interbank FX market, according to Reuters.

EQUITIES

• European bourses have trimmed initial upside, Euro Stoxx 50 -0.2%, with macro newsflow limited and the initial strength primarily a continuation of APAC/Wall St. leads.
• In specifics, Credit Suisse (-5%) issued a Q2 profit warning for the group and its Investment Bank division while noted Retail name Inditex (+4%) provided a positive update.
• Stateside, futures are modestly pressured overall but well within overnight ranges ahead of a slim docket; ES -0.4%.
• DiDi (DIDI) is in advanced discussions to own a one-third stake of Sinomach Zhijun, a China state-backed EV maker, according to Reuters sources.
• Click here for more detail.

FX

• Buck bounces as Yen rout continues after soft verbal intervention from BoJ Governor and Japanese Economy Minister; DXY back around 102.500 axis, USD.JPY climbs to circa 133.86 at one stage.
• More Lira depreciation on multiple negative factors including unconventional easing policy stance aimed at returning inflation to target, USD/TRY touches 17.1500.
• Aussie and Kiwi undermined by Greenback rebound and fade in general risk sentiment; AUD/USD loses 0.7200+ status again, NZD/USD sub-0.6450.
• Franc and Pound down, but Euro and Loonie resilient as former awaits ECB and latter leans on strong crude prices; USD/CHF just shy of 0.9790, Cable under 1.2550, EUR/USD probing 1.0700 and USD/CAD pivoting 1.2550.
• Forint and Zloty underpinned post-strong Hungarian CPI metrics and pre-NBP that is expected to hike 75bp; EUR/HUF & EUR/PLN around 389.60 and 4.5700 respectively.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• Click here for more detail.

FIXED INCOME

• Bunds and Gilts pare some losses after testing round and half round number levels at 149.00 and 114.50 respectively, with added incentive after solid demand for 10 year German and UK supply.
• US Treasuries await 2032 issuance with caution given a lukewarm reception at 3 year auction.
• 10 year note just off base of 118-03/13 overnight range.
• Click here for more detail.

COMMODITIES

• WTI and Brent have been moving in-line with broader risk; however, following the UAE Minister the benchmarks have extended to the upside and post gains in excess of USD 1.50/bbl.
• US Energy Inventory Data (bbls): Crude +1.8mln (exp. -1.9mln), Cushing -1.8mln, Gasoline +1.8mln (exp. +1.1mln), Distillates +3.4mln (exp. +1.1mln)
• Brazilian government is considering measures to monitor fuel prices at distributors, according to Reuters sources.
• UAE Energy Minister says situation is not encouraging when it comes to the amounts of crude OPEC+ can bring to the market, via Reuters; Notes conformity with the OPEC+ deal is more than 200%, are risks when China is back, in talks with Germany and other nations to see if they are interested in UAE natgas.
• Spot gold is essentially unchanged, and continues to pivot its 10-DMA, while base metals are primarily tracking broader risk sentiment.
• Click here for more detail.

DATA RECAP

• UK S&P Global/CIPS Cons PMI (May) 56.4 vs. Exp. 56.6 (Prev. 58.2).

NOTABLE US HEADLINES

• OECD cuts world economic growth view, sees 3.0% growth in 2022 (prev. 4.5%) and sees 2.8% growth in 2023 (prev. 3.2%). Click here for more detail.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin is pressured and once more in proximity to the USD 30k mark, within a comparable narrow sub-2k range.

APAC TRADE

EQUITIES

• APAC stocks were mostly higher following the gains on Wall St and optimism of China easing its tech crackdown.
• ASX 200 recovered from the prior day’s RBA-induced selling with nearly all sectors in the green, although financials underperformed.
• Nikkei 225 extended further above the 28k level on currency weakness and with Q1 GDP data revised upwards to a narrower contraction.
• Hang Seng and Shanghai Comp. traded mixed with tech fuelling the gains in Hong Kong after China’s NPPA approved the publishing licences for 60 games this month, while sentiment in the mainland gradually soured despite support efforts as an official also warned that China's foreign trade stabilisation faces uncertainties and large pressure.

NOTABLE APAC HEADLINES

• China Vice Commerce Minister Wang said China's foreign trade stabilisation faces uncertainties and a large pressure from domestic and external factors. Furthermore, he sees global demand growth as low, while he added that China will accelerate export tax rebates and MOFCOM will assist foreign trade companies in securing orders, according to Reuters.
• Chinese Retail Passenger Car Sales (May) +30% M/M, according to PCA's Prelim data cited by Bloomberg.
• Japan's CDP has, as expected, submitted a no-confidence motion against the governing administration within the Lower House, motion will be put to a vote on June 9th, via Asahi; Asahi adds that the move is not expected to go anywhere

NOTABLE APAC DATA

• Japanese GDP Revised QQ (Q1) -0.1% vs. Exp. -0.3% (Prev. -0.2%); Revised Annualised (Q1) -0.5% vs. Exp. -1.0% (Prev. -1.0%)
• South Korean GDP Growth QQ Revised (Q1) 0.6% (Prev. 0.7%); YY Revised (Q1) 3.0% (Prev. 3.1%)