• European bourses are pressured in a continuation of the APAC handover, Euro Stoxx 50 -1.6%
• US futures are mixed/flat for the most part, ES -0.2%, ahead of the US CPI release
• DXY is bid but off 103.49 best levels while antipodeans/JPY outperform as GBP and CAD lag
• BTP-Bund yield spread continues to gradually widen, though Bund upside is offsetting this somewhat
• USTs pivot the unchanged mark pre-CPI, yield curve flattens
• WTI and Brent futures are choppy with relatively modest intraday gains following yesterday’s China-induced weakness
• Looking ahead, highlights include US CPI, Canadian Jobs Report, US University of Michigan (Prelim.), Speech from ECB's Lagarde (pre-recorded) and President Biden (on CPI)

As of 11:10BST/06:10ET

LOOKING AHEAD

• US CPI, Canadian Jobs Report, US University of Michigan (Prelim.), Speech from ECB's Lagarde (pre-recorded).
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GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said there has been positive military news from the Zaporizhzhia region and said that Ukrainian forces are gradually advancing in the Kharkiv region, according to Reuters.
• Hungarian PM Orban says an embargo on Russian gas would destroy the European economy, via Reuters citing radio.

OTHER

• Britain, France and Germany condemned the steps taken by Iran following the IAEA board resolution which they said aggravates the situation and complicates efforts to return to the nuclear deal, according to Reuters.

EUROPEAN TRADE

CENTRAL BANKS

• ECB's Villeroy says inflation is too high and too broad; will hike gradually until they hit the "neutral rate", which is somewhere between 1-2%. Reiteration
• ECB's Nagel says EZ inflation will not fall by itself, resolute ECB action is needed; current trends could lift FY22 inflation "considerably" above 7% within Germany.
• ECB's Holzmann says the hike in September will be at least 25bps but it could be 50bps or something in-between.
• Japan's BoJ, MoF, and FSA says they are concerned about the rapid JPY weakening seen recently - will respond appropriately as needed in the FX market based on G7 agreement. It is important for currency markets to move stably reflecting fundamentals; rapid swings are undesirable.
• Deutsche Bank now expects two 50bp ECB hikes this year (prev. one 50bp hike), via Reuters.
• Citi expects the SNB to hike the key rate by 25bp to -0.50% at the June gathering and exit negative territory by end-2022, via Reuters.
• Statistics Norway Expects a 50bp hike from the Norges Bank in June and then 25bp in September and December; expects the Key Rate will increase to 2.5% in 2023, and remain at this level.

EQUITIES

• The mood across European equities remains downbeat as the region plays catch-up to yesterday’s Wall Street tumble; Euro Stoxx 50 -1.6%
• European cash bourses trade lower across the board with the Dutch AEX and UK’s FTSE 100 slightly more cushioned.
• Sectors in Europe are all lower but largely hold a defensive bias; EZ Periphery banks continue to lag post-ECB while Luxury slips on China/COVID updates
• US equity futures trade with modest gains with the ES -0.2% just about holding onto the 4,000 handle
• TSMC (2330 TW) - May (TWD): Sales 185.7bln, +65% YY, +7.6% MM. January-May Sales 849.3bln, +44.9% YY.
• Tesla (TSLA) CEO Musk says the next FSD beta version will be coming out in two weeks.
• Amazon (AMZN) is planning to pull out of the USD 7.7bln race for IPL cricket rights, according to Bloomberg.
• UK CMA is planning a market investigation into mobile browsers and cloud gaming; Apple (AAPL) and Google (GOOG) "hold all the cards" with interventions needed to give innovators and competitors a fair chance.
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FX

• DXY recovers from overnight lows of 103.04 heading into the US CPI release.
• Antipodeans stand as the current G10 outperformers with NZD leading the charge, with the AUD/NZD cross subsequently paring back recent ground and falling under 1.1100.
• CAD is under some pressure pre-jobs data; USD/CAD today sees its 100 DMA at 1.2700, 21 DMA at 1.2722, and 50 DMA at 1.2723.
• EUR and GBP are now under pressure as the dollar recovers from early losses.
• The Yen attempts to claw back some ground after the BoJ, MoF, and FSA expressed concern in a joint release.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• BTP-Bund spread continues to widen, out to 234bp thus far, though, offset amid incremental Bund upside via Holzmann.
• Hawk Holzmann took perhaps an incrementally more 'dovish' line than usual re. September's hike increment, alluding to a non-standard increment move.
• USTs are essentially unchanged at 117.30+ pre-CPI though the yield curve continues to flatten in-line with EGBs and after well received long-end issuance.
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COMMODITIES

• WTI and Brent futures are choppy with relatively modest intraday gains following yesterday’s China-induced weakness.
• WTI Jul’ resides just under USD 122/bbl (vs low 120.09/bbl), whilst Brent Aug’ trades around USD 123.50/bbl (vs low 121.60/bbl).
• Kuwait set July KEC crude OSP for Asia at Oman/Dubai +USD 6.15/bbl vs prev. premium of USD 4.35/bbl in June, according to Reuters.
• A minimum of four north-Asian refiners are facing crude oil supply cuts from Saudi in July, according to Reuters sources.
• Peruvian communities said they are ready to end the 51-day shutdown at MMG's (1208 HK) Las Bambas mine and allow the copper mine to restart, while the mine will not begin construction of the Chalcobambas pit during a 30-day truce and the Peru government will lift the state of emergency in the Las Bambas mine area, according to Reuters.
• Metals markets are relatively tentative and uneventful; spot gold trades on either side of its 21 DMA (1,844/oz), while base metals similarly hold a mild downside bias.
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NOTABLE EUROPEAN HEADLINES

• On the ECB decision, one dovish member said “impression is everybody lost”, described the EGB and EUR downside as “..not what you want”; conversely, a hawk described the meeting as having gone very well. Additionally, re. QT, a dovish member does not believe this will happen any time soon, according to FT.
• UK employers hired staff at the slowest pace since early 2021, according to a survey by REC cited by Reuters which showed the measure declined for a sixth consecutive month to 59.2 from 59.8 M/M but remained in expansion territory above the 50 benchmark level.
• Former UK Brexit Minister Frost has warned that PM Johnson must deliver a "new Conservative vision for Britain" or risk being removed from his position by the autumn, according to the Telegraph.

NOTABLE EUROPEAN DATA

• Norwegian Consumer Price Index YY (May) 5.7% vs. Exp. 5.6% (Prev. 5.4%); MM (May) 0.2% (Prev. 1.2%)

NOTABLE US HEADLINES

• US Treasury Secretary Yellen said she does not think the US is going to have a recession and expects growth to slow down but added that consumer and investment spending is solid, while she commented that it is amazing how pessimistic people are considering that the US has the strongest labour market in a post-war period, according to Reuters.
• US senior official expects Friday's CPI data to show a continued impact of the Russian invasion of Ukraine on food and energy prices, as well as spillover from supply chains, while the official expects to see inflation in prices of goods to moderate in months ahead, according to Reuters.-
• Chinese Defense Minister Wei Fenghe will meet with US Defense Secretary Lloyd Austin on Friday afternoon at Shangri-La Dialogue, according to CCTV via Global Times

CRYPTO

• Bitcoin is softer on the session, though only modestly so, and as such remains in recent ranges which continue to pivot USD 30k.

APAC TRADE

EQUITIES

• APAC stocks were mostly negative after the glum mood rolled over from global counterparts with a hawkish ECB meeting and fresh COVID restrictions in Beijing stoking growth slowdown concerns.
• ASX 200 was dragged lower by the energy and mining-related sectors after recent declines in underlying commodity prices and with participants taking risk off the table ahead of the extended weekend in Australia.
• Nikkei 225 retreated beneath the 28k level amid the broad risk aversion and as the domestic currency found some reprieve from its weakening trend.
• Hang Seng and Shanghai Comp. were both initially subdued after weak earnings and Ant Group’s denial regarding plans to relaunch its mammoth IPO, while participants also digested the mixed inflation data from China and the latest COVID restrictions in Beijing, although the mainland then spent the session recouping lost ground.
• China May Vehicles -12.6% (prev. -47.6% in April), according to the Industry Association.

NOTABLE APAC HEADLINES

• South Korean Transport Ministry held a meeting with the trucker union leadership on Friday and is holding a working-level meeting with the union, while it added that about 7,500 unionised truck drivers were expected to strike today. It was also reported that striking South Korean truckers halted and turned around non-union truckers from trying to enter the Ulsan petrochemical complex and the movement of containers through South Korea's Ulsan port was totally suspended amid the trucker strike, according to Reuters.
• Beijing City reports 21 (prev. 3) cases during the 15 hours to 3pm on June 10th, according to an official, via Reuters.

NOTABLE APAC DATA

• Chinese CPI YY (May) 2.1% vs. Exp. 2.2% (Prev. 2.1%); MM (May) -0.2% vs. Exp. -0.3% (Prev. 0.4%);
• Chinese PPI YY (May) 6.4% vs. Exp. 6.4% (Prev. 8.0%)