• APAC stocks were subdued following a weak handover from the US and with sentiment cautious
• DXY faded the prior day's marginal gains; G10s were broadly flat with some modest outperformance in the JPY
• The White House said it expects elevated inflation numbers to be released on Friday, according to Reuters
• Shanghai will lock down the Minhang district on Saturday morning for mass COVID-19 testing, according to Bloomberg
• Looking ahead, highlights include US IJC, ECB Policy Announcement/Press Conference, Supply from US (30yr)

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US TRADE

• US stocks traded lower with participants cautious amid higher yields and ahead of risk events. While catalysts were light for macro sentiment, lows in stocks were seen in the wake of the new SEC rules on markets as it takes a tighter grip on regulation.
• SPX -1.08% at 4,116, NDX -0.76% at 12,615, DJIA -0.81% at 32,911, RUT -1.49% at 1,891
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed Vice-Chair nominee Barr received enough votes in the US Senate Banking Committee to advance his nomination, according to Reuters.
• The White House said it expects elevated inflation numbers to be released on Friday, according to Reuters.
• SEC Chair Gensler said new SEC rules would see broker-dealers and market centres disclose more data around order execution quality to benefit investors, according to Reuters.
• US House passed the gun bill to raise the assault rifle purchase age to 21 although the plan faces long odds in the Senate, according to CNBC.

GEOPOLITICS

• Iran's Foreign Minister said Tehran presented a new proposal to the US to revive the 2015 nuclear deal, according to state TV.
• IAEA said Iran informed it that it intends to install two more cascades of advanced IR-6 centrifuges at its underground plant at Natanz.
• France, Britain, Germany and US urge Iran to fulfil its legal obligations and cooperate with the IAEA without further delay, according to Reuters.
• White House's Sullivan said the US is watching very closely the continued possibility of a North Korean nuclear test, to which the US would have a robust response, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were subdued following a weak handover from the US and with sentiment cautious.
• ASX 200 was pressured by underperformance in the top-weighted financials sector and weakness in property-related stocks also suffering amid expectations of aggressive RBA rate hikes which increases banks’ funding costs and could threaten the quality of their loan portfolios.
• Nikkei 225 kept afloat as participants contemplated the ramifications of further currency depreciation.
• Hang Seng and Shanghai Comp. were lacklustre despite the mostly better than expected Chinese trade data as some COVID concerns resurfaced in Shanghai with the city locking down the Minhang district on Saturday morning for mass COVID testing.
• US equity futures were rangebound with a tentative mood as focus shifts to the ECB and tomorrow's US CPI.
• European equity futures are indicative of a softer open with Eurostoxx 50 -0.5% after the cash market closed lower by 0.8% yesterday.

FX

• DXY faded the prior day's marginal gains that were spurred by the cautious mood and upside in yields.
• EUR/USD marginally strengthened ahead of the ECB meeting which is expected to be the one before ‘the one’.
• GBP/USD was contained in tandem with the subdued risk appetite and quiet news flow from the UK.
• USD/JPY initially extended on gains above the 134.00 but then retreated as the greenback eventually softened.
• Antipodeans clawed back early losses with the rebound helped by a firmer CNH after Chinese trade data topped forecasts.

FIXED INCOME

• 10yr UST futures dipped below 118.00 after a disappointing 10yr auction and with the US 10yr yield above 3%.
• Bunds extended on the prior day’s declines amid positioning heading into the ECB meeting.
• 10yr JGBs kept afloat and benefitted from firm demand at the enhanced liquidity auction for longer-dated JGBs.

COMMODITIES

• Crude futures traded flat and held on to the prior day's gains, while natgas prices slumped following reports that Freeport LNG experienced an explosion at its export facility in Houston – analysts cited disruptions to the export plant’s demand for gas.
• Venezuela started requiring upfront payments for spot crude exports after defaults, according to Reuters sources.
• Freeport LNG experienced an explosion at its export facility in Houston, while Texas police later issued an "all clear" for the Freeport LNG facility and employees were allowed to re-enter the facility although its export terminal will be shuttered for at least three weeks following the explosion, according to Reuters and Argus.
• Spot gold eked marginal gains and benefitted from the slightly softer greenback.
• Copper was subdued by the cautious risk tone and despite firmer than expected Chinese trade data.

CRYPTO

• Bitcoin eked marginal gains overnight after prices reverted to above the 30,000 level.

NOTABLE APAC HEADLINES

• Shanghai will lockdown the Minhang district on Saturday morning for mass COVID-19 testing, according to Bloomberg.
• US Treasury Secretary Yellen said China is guilty of unfair trade practices but some tariffs on Chinese goods do not serve US strategic interests and the Biden administration is looking to reconfigure tariffs in a way that would be more strategic, according to Bloomberg.
• Japan is planning to expand its prefectural travel subsidies across the entire country, according to Yomiuri.
• RBNZ outlined plans to sell New Zealand government bonds from July 2022 in which it intends to offload NZD 5bln per fiscal year in order of maturity date until its LSAP holdings are reduced to zero, according to Reuters.

DATA RECAP

• Chinese Trade Balance (USD)(May) 78.76B vs. Exp. 58.0B (Prev. 51.12B)
• Chinese Exports YY (USD)(May) 16.9% vs. Exp. 8.0% (Prev. 3.9%)
• Chinese Imports YY (USD)(May) 4.1% vs. Exp. 2.0% (Prev. 0.0%)
• Chinese Trade Balance (CNY)(May) 502.9B vs. Exp. 400.0B (Prev. 325.1B)
• Chinese Exports YY (CNY)(May) 15.3 vs. Exp. 9.2% (Prev. 1.9%)
• Chinese Imports YY (CNY)(May) 2.8% vs. Exp. 4.2% (Prev. -2.0%)

EU/UK

NOTABLE HEADLINES

• UK government delay to the Northern Ireland Protocol legislation "goes on" and it is now looking like it will be revealed next week, according to BBC's Parker.
• Algeria suspended its friendship-cooperation pact with Spain, while it banned all imports from Spain beginning on Thursday, according to Reuters.
• EU's Breton told Hungary to suspend discriminatory fuel prices or face possible legal action, according to an EU document.