• European bourses began on the front-foot; however, the ‘turnaround’ was shortlived with bourses now red across the board, Euro Stoxx 50 -0.8%.
• Stateside, futures remain modestly positive, ES +0.4%, awaiting clarity from the Fed amid increasing speculation of a 75bp move
• DXY continues to slip with peers mixed with low-yielding nations benefitting though activity currencies slip once more
• Core debt has consolidated somewhat from Monday’s rout, though the curve continues to flatten amid the long-ends pullback; BTP-Bund eclipses 250bp
• Crude is firmer, but steady, awaiting fresh direction while the China-COVID situation remains tense and broader commodities unmoved on incremental US-China tariff developments
• Looking ahead, highlights include US PPI, OPEC MOMR (12:45BST/07:45ET), Speech from ECB's Schnabel

As of 11:30BST/06:30ET

LOOKING AHEAD

• US PPI, OPEC MOMR (12:45BST/07:45ET), Speech from ECB's Schnabel.
• Click here for the Week Ahead preview

GEOPOLITICS

• Eastward gas flows via the Yamal-Europe pipeline have increased, via Reuters citing Gascade data.

EUROPEAN TRADE

CENTRAL BANKS

• BoJ buys a record amount of bonds for a fixed-rate operations (JPY 2.2tln), via Bloomberg.
• ECB's Knot says “If conditions remain the same as today, we will have to raise the rate by more than 0.25 points", according to an interview in Le Monde.
• HKMA purchases HKD 4.396bln from the market, as the HKD hits the weak-end of the trading range.
• Norges Bank Regional Network Survey (Q2) 0.80 (Prev. 1.65); Capacity constraints and high inflation weigh on the growth outlook.

EQUITIES

• European bourses began on the front-foot but quickly slipped into negative territory, Euro Stoxx 50 -0.8%; since the post-open dip, price action has steadily deteriorated further.
• However, while US futures are directionally in-fitting they remain in positive territory, ES +0.3%; albeit, well of highs and the ES resides around 3760 currently awaiting Fed clarity amid increasing speculation for 75bp.
• Oracle Corp (ORCL) Q4 2022 (USD): Adj. EPS 1.54 (exp. 1.37), Revenue 11.8bln (exp. 11.66bln). Cloud License And On-Premise License: 2.54bln (exp. 2.19bln). Cloud Services And Licenses Support: 7.6bln (exp. 7.77bln). Total Hardware Revenues: 856mln (exp. 857.71mln). Total Services Revenues: 833mln (exp. 847.89mln). Added USD 15.8bln after Cerner acquisition and it expects cloud business to grow by over 30% in FY23; Co. expects Q1 rev. including Cerner to grow 17%-19%. (PR Newswire) +12% in the pre-market
• German cartel office has commenced proceedings against Apple (AAPL) re. tracking regulations for 3rd party apps, via Reuters.
• Click here for more detail.

FX

• Dollar consolidates after Monday’s melt up to new multi year peaks as clock ticks down to FOMC and US PPI data; DXY hovers around 105.00 and just shy of new 105.290 YTD high.
• Franc outperforms following suspension of trade in Russia against Rouble and Greenback; Usd/Chf probes 0.9000 to downside after pulling up only pips short of parity yesterday.
• Euro rebounds amidst more hawkish commentary from ECB’s Knot and irrespective of German ZEW survey misses; EUR/USD back above 1.0400 and decent option expiries between 1.0420-15.
• Aussie undermined by waning risk appetite and ongoing covid outbreaks in China, but underpinned by RBA Governor Lowe underlining determination to get inflation back to target, AUD/USD towards lower end of 0.6970-18 range.
• Pound fades after brief upturn in bigger than expected rise in UK employment as other labour market metrics fall short of expectations and EU rift over NI protocol persists; Cable on the cusp of 1.2100 after fleeting breach of round above, EUR/GBP crosses 0.8600 to set fresh 2 month apex.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Recovery in EZ debt derailed by supply and hawkish remarks from ECB's Knot as Bunds retreat to 145.00 within a 145.58-144.51 range
• Gilts and 10 year T-note hold up better between 112.97-29 and 116-03/115-01+ parameters in consolidation after Monday's rout and ahead of US PPI data
• ** BTP/Bund** spread blows out beyond 250 bp in advance of ECB's Schnabel on fragmentation in bond markets
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COMMODITIES

• WTI and Brent are firmer by circa. USD 1.0/bbl at present and reside towards the mid-point of a USD ~2.00/bbl range with specific newsflow thin and broader developments on familiar themes.
• Themes which include China COVID and travel demand, for instance; but, factors which are overshadowed by broader anticipation going into Wednesday's FOMC.
• US and Saudi Arabia will announce on Tuesday that US President Biden will visit Saudi Arabia on July 15th and 16th, according to NBC's Pegram citing sources.
• China's state planner is to increase retail prices of gasoline and diesel by CNY 390/tonne and CNY 375/tonne respectively as of June 15th, via NDRC.
• Spot gold is essentially unchanged on the session around USD 1820/oz after falling below the 10-, 21- & 200-DMAs yesterday; Copper softer amid broader risk.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• The EU is set to launch three separate lawsuits against the British government after it published its plans to override the protocol, according to the Telegraph. One option would reportedly see the EU end financial equivalence for the City of London.
• US urged the UK and EU to return to talks to resolve differences over the Northern Ireland Protocol and said it remains a priority to protect gains of the Good Friday Agreement.
• White House said proposed changes to N. Ireland Protocol won't be an impediment to potential US-UK trade deal or trade dialogue talks in Boston, according to Reuters.
• UK PM Johnson is not looking to lower household taxes until inflation is brought under control, as such action is unlikely before next year, according to the Telegraph.

NOTABLE EUROPEAN DATA

• UK ILO Unemployment Rate (Apr) 3.8% vs. Exp. 3.6% (Prev. 3.7%); Claimant Count Unem Chng (May) -19.7k vs. Exp. -49.4k (Prev. -56.9k, Rev. -65.5k)
• UK Average Earnings (Ex-Bonus) (Apr) 4.2% vs. Exp. 4.0% (Prev. 4.2%, Rev. 4.1%); Average Week Earnings 3M YY (Apr) 6.8% vs. Exp. 7.6% (Prev. 7.0%)
• German ZEW Economic Sentiment (Jun) -28.0 vs. Exp. -27.5 (Prev. -34.3); Current Conditions (Jun) -27.6 vs. Exp. -31.0 (Prev. -36.5)

NOTABLE US HEADLINES

• CNBC's Liesman said the Fed is very likely to hike rates by 75bps this week.
• Goldman Sachs revised its Fed forecasts to include 75bps rate hikes in June and July, while it now expects the median dot to show rates at 3.25%-3.50% by year-end followed by two further hikes in 2023 to 3.75%-4.00% and one 25bps cut in 2024.
• US President Biden, in a meeting last week with his Cabinet, indicated he is leaning towards removing some products from the Trump-era tariffs on China, via Axios citing sources; leaning towards ordering the USTR Office to run a formal exclusion process, in order to determine if some consumer items should be exempt from the Section 301 measures. Less likely to include large industrial items in this process.
• US House passed legislation to ease ocean shipping delays which awaits President Biden's signature, according to Reuters.
• US NFIB Business Optimism Index (May) 93.1 (Prev. 93.2)
• Click here for the US Early Morning note.

CRYPTO

• Further pressure in the Crypto space, though to a lesser extent that Monday's downside, with Bitcoin briefly dropping below the USD 21k mark at worst thus far.

APAC TRADE

EQUITIES

• APAC stocks were pressured following the global stock and bond slump as the aftershock from recent hot US inflation reverberated across risk assets and spurred further expectations for a 75bps Fed rate hike this week.
• ASX 200 was the worst performer as the losses caught up to the index on return from the extended weekend and with the declines led by underperformance in tech and metals.
• Nikkei 225 extended its declines despite the BoJ’s efforts to cap yields and with the recent rapid currency moves adding to the uncertainty.
• Hang Seng and Shanghai Comp. were negative as lockdown concerns lingered with China’s Vice Premier Sun suggesting it is necessary to strengthen COVID-19 prevention and control of key places, while Shanghai's Minhang district plans to conduct mass testing on Saturday.

NOTABLE APAC HEADLINES

• Shanghai's Minhang district is planning mass COVID-19 testing on Saturday, according to Bloomberg.
• BoJ announced additional bond purchases for Wednesday in which it will increase purchases of JGBs across several maturities, while it will continue to conduct additional buying as needed, according to Reuters.

NOTABLE APAC DATA

• Australian NAB Business Confidence (May) 6 (Prev. 10); Business Conditions (May) 16 (Prev. 20, Rev. 19)