• US futures are firmer across the board, ES +0.3%, though overall action here is more contained than in Europe given the FOMC looms
• European bourses are supported amid an ad-hoc ECB meeting on current market conditions, an update which bolstered the EUR and narrowed the BTP-Bund spread
• However, the spread re-widened amid sources which did not appear to indicate a marked policy shift from the gathering
• Broader FX features a downtrodden DXY to the benefit of peers across the board
• Crude has been curtailed amid COVID updates from China and Hong Kong alongside Biden's reported push for an explanation from producers over why supply isn't increasing.
• Looking ahead, highlights include US Import/Export Prices & Retail Sales, FOMC Policy Announcement & Press Conference, Speeches from ECB's Lagarde, de Cos, Panetta, Centeno

As of 11:30BST/06:30ET

LOOKING AHEAD

• US Import/Export Prices & Retail Sales, FOMC Policy Announcement & Press Conference, Speeches from ECB's Lagarde, de Cos, Panetta, Centeno. Note, given the ad-hoc meeting it is unclear if the ECB speakers will provide remarks.
• Click here for the Week Ahead preview

GEOPOLITICS

• US Deputy Treasury Secretary Adeyemo said a full US trade embargo on Russia would have a marginal impact on Russia's economy at best, according to Reuters.
• Russia considers Turkey's possible military operation in Syria as unwise and could cause an escalation, while Russia no longer considers Geneva a suitable venue for Syrian talks, according to RIA and TASS citing the Russian negotiator.
• Senior Iranian Revolutionary Guards commander says Iranian strikes on Israel have doubled recently and will continue in the future, according to Al Jazeera.

EUROPEAN TRADE

ECB

• ECB is holding an ad-hoc Governing Council meeting on Wednesday, expected to have commenced around 10:00BST/05:00ET, to discuss current market conditions and the recent sell-off in gov't bonds, via Reuters. Unclear if a statement would be published. Updates which lifted EUR to a fresh session peak and sparked a narrowing of the BTP-Bund spread post-open.
• Subsequently, Bloomberg sources indicated that the meeting would last for around two-hours and the ECB is set to discuss reinvestments of PEPP bonds at is emergency meeting and can tilt reinvestments towards weaker nations. *An update which, as it does not appear to indicate a marked policy shift, prompted modest EUR/USD downside and a re-widening of the BTP-Bund spread to over 240bp.
• Click here for the newsquawk analysis on the ECB ad-hoc meeting.

CENTRAL BANKS

• Click here for the newsquawk FOMC preview.
• BoJ offers an additional emergency bond buying operation; to buy unlimited amounts of 10yr JGBs on June 16th & 17th at 0.25%.
• Fall in JGB futures has triggered a circuit breaker at the Tokyo stock exchange, via Japan Exchange Group.
• Japan's Securities Dealer Association's Morita says the JPY may have weakened too much, via Reuters.
• 8/9 members (vs. 3/9 at the May meeting) of the Times' shadow MPC believe that the BoE should raise rates by 50bps at its policy meeting tomorrow, according to the Times.

EQUITIES

• European equities are firmer across the board ahead of the impromptu ECB meeting, Euro Stoxx 50 +1.0%; unsurprisingly, periphery-nation indexes are outperforming, FTSE MIB +3.0%, given upside in banking names.
• As such, the Banking sector outperforms with most of its peers also in the green, though the Energy sector lags amid benchmark pricing.
• Stateside, futures are firmer across the board deriving impetus from European performance, but with overall action somewhat more contained ahead of the Fed and uncertainty around 75bp, ES +0.3%.
• Baidu (BIDU) is in discussions with potential suitors to offload its 53% stake in video-streaming name Iqiyi, according to Reuters sources. +3.8% in the pre-market
• Click here for more detail.

FX

• Buck backs off from best levels into FOMC and US data awaiting confirmation of the hawkish hype or half point hike signalled pre-hot CPI; DXY slips from 105.650 peak on Tuesday into 105.380-104.700 range.
• Aussie rebounds on risk grounds and more aggressive RBA tightening calls, AUD/USD reclaims 0.6900+ status.
• Yen takes note of latest verbal intervention and Hong Kong Dollar supported by more physical HKMA buying to keep it pegged; USD/JPY sub-134.50 vs 135.50+ overnight.
• Euro extends recovery rally as ECB holds ad hoc meeting to discuss fragmenting debt markets and Wunsch contends that gradualism does not rule out larger than 25 bp moves; EUR/USD pops over 1.0500 from just below 1.0400 yesterday.
• Yuan gleans impetus from better than expected or feared Chinese industrial production and retail sales, USD/CNH nearer 6.7200 than 6.7600, USD/CNY close to 6.7100 and not far from 21 DMA at 6.6965 today.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• Click here for more detail.

FIXED INCOME

• Decent bear market retracement in debt approaching the FOMC.
• Bunds up to 143.79 at best vs new 143.25 cycle low, Gilts towards top of 112.48-111.88 band and 10 year T-note closer to 115-06 than 114-10.
• BTPs markedly outperform after near 3 full point bounce from Tuesday close in anticipation of an anti-fragmentation tool from the ECB as GC meets for crisis talks.
• Click here for more detail.

COMMODITIES

• Currently, WTI and Brent are lower by circa. USD 1.00bbl but reside within comparably narrow ranges of around USD 2.00bbl vs, for instance, yesterday’s USD +6.00/bbl parameters.
• Curtailed amid COVID updates from China and Hong Kong alongside Biden's reported push for an explanation from producers over why supply isn't increasing.
• US President Biden has demanded an explanation from oil companies over why they are refraining from putting additional gasoline on the market and wants concrete ideas as to how they can increase supplied, according to a letter seen by Reuters.
• US Energy Inventory Data (bbls): Crude +0.7mln (exp. -1.3mln), Cushing -1.1mln, Gasoline -2.2mln (exp. +1.1mln), Distillates +0.2mln (exp. +0.3mln)
• US DoE announced contract awards and issued the fourth emergency sale of crude oil from SPR (as previously announced), in which contracts were awarded to nine including Chevron (CVX), Exxon (XOM) and Marathon Petroleum (MPC).
• Kazakhstan has capped wheat exports at 550k tonnes and wheat flour at 370k tonnes until September 30th, according to the Agriculture Ministry, via Reuters.
• Spot gold derives impetus from the USD’s retreat and is now back above USD 1820/oz but still shy of yesterday’s USD 1831/oz best and the subsequent 200-, 10- & 21-DMAs ahead at USD 1842, 1843 & 1845 respectively.

NOTABLE EUROPEAN HEADLINES

• UK PM Johnson is reportedly determined to reverse Chancellor Sunak's planned GBP 15bln tax raid on business as he tries to firm up support following last week's confidence vote, according to The Times.
• UK PM Johnson is understood to have told his cabinet to 'de-escalate' the Northern Ireland Protocol stand-off with the EU, according to The Telegraph.
• UK exports to the EU during H1 of last year fell by 15.6% amid Brexit frictions, according to a study by Aston University cited by FT.
• Swiss SECO Forecasts (summer): Inflation: 2022 2.5% (prev. 1.9%), 2023 1.4% (prev. 0.7%). GDP: 2022 2.8% (prev. 3.0%), 1.6% (prev. 1.7%)

NOTABLE US HEADLINES

• Click here for the US Early Morning note.

CRYPTO

• Bitcoin continues to decline and at worst has been within USD 100 of the USD 20k handle; albeit, it is currently off lows but still shy of USD 21k.

APAC TRADE

EQUITIES

• APAC stocks traded mixed amid cautiousness heading into the FOMC with markets pricing in a more than 90% chance of a 75bps rate hike, while the region also digested better-than-expected Chinese activity data.
• ASX 200 was led lower by energy, resources and tech, despite a 5.2% national minimum wage increase.
• Nikkei 225 failed to benefit from strong Machinery Orders data amid the ongoing currency-related jitters.
• Hang Seng and Shanghai Comp. were positive with encouragement from the latest activity data that showed surprise growth in Industrial Production and a narrower than feared contraction in Retail Sales, while attention was also on the PBoC which rolled over CNY 200bln through its 1-year MLF with the rate unchanged.

NOTABLE APAC HEADLINES

• PBoC injected CNY 200bln via 1-year MLF vs. CNY 200bln maturing with the rate kept at 2.85%, as expected.
• China's stats bureau said the main indicators show marginal improvement and the economy shows good recovery momentum, but added that the economic recovery still faces many difficulties and challenges. Furthermore, it said policies to stabilise economic growth gained traction and it expects economic performance to improve further in June due to policy support, but noted recovery is still at an initial stage and main indicators are at low levels, according to Reuters.
• Hong Kong reports 1047 new COVID cases. Appears to be the first time since early April that cases have surpassed the 1k mark.

NOTABLE APAC DATA

• Chinese Industrial Output YY (May) 0.7% vs. Exp. -0.7% (Prev. -2.9%); Retail Sales YY (May) -6.7% vs. Exp. -7.1% (Prev. -11.1%)
• Japanese Machinery Orders MM (Apr) 10.8% vs. Exp. -1.5% (Prev. 7.1%); YY (Apr) 19.0% vs. Exp. 5.3% (Prev. 7.6%)
• Australian Westpac Consumer Confidence Index (June) 86.4 (Prev. 90.4)