• European bourses and US futures are hampered following a surprise SNB hike, with pronounced price action seen across assets
• SNB hikes by 50bp to -0.25% and cannot rule out further increases ahead; sparking noted CHF appreciation
• DXY is well off best levels, but has recouped 105.00 as activity currencies come under pressure while CHF & JPY outperform
• Bonds collapse as SNB unexpectedly strikes against inflation; with USTs back to bear-flattening before the afternoon’s data docket
• Russia and US are now at a "very, very hot point of confrontation", via Ria quoting the Kremlin.
• Looking ahead, highlights include US IJC, New Zealand Manufacturing PMI, BoE Policy Announcement & speeches from ECB's Makhlouf.

As of 11:20BST/06:20ET

LOOKING AHEAD

• US IJC, New Zealand Manufacturing PMI, BoE Policy Announcement, Speeches from ECB's Makhlouf.
• Click here for the Week Ahead preview

GEOPOLITICS

• Russian Kremlin spokesman said Russia and US must discuss an extension of the nuclear arms reduction treaty, according to RIA.
• Russia and US are now at a "very, very hot point of confrontation", via Ria quoting the Kremlin.
• Russian Chief Negotiator says they are ready for peace discussions with Ukraine, but are yet to receive a response to peace proposals from Kyiv, via Ifx.
• North Korea appears to be expanding restoration work at its nuclear test site to include a second tunnel, according to a report by a US-based think tank cited by several Twitter sources.
• Further issues with the turbines for Nord Stream 1 could result in its suspension, via Ria citing an official.

EUROPEAN TRADE

CENTRAL BANKS

• Swiss SNB Policy Rate (Q2) -0.25% vs. Exp. -0.75% (Prev. -0.75%); cannot rule out further rate increases. Inflation Forecasts: 2022 2.8% (prev. 2.1%), 2023 1.9% (prev. 0.9%), 2024 1.6% (prev. 0.9%). Exemption Threshold: 28x (prev. 30x). Click here for newsquawk analysis and reaction.
• SNB's Jordan: tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland; CHF is no longer highly valued.
• BoJ fixed rate bond buying operation receives take-up of JPY 733bln.
• ECB's Visco says price rises are being mostly driven by energy and gas, not being driven by higher demand.
• ECB's de Guindos says inflation expectations are "quite anchored".
• NBH hikes one-week deposit rate to 7.25% (prev. 6.75%) at the weekly tender.
• CBR's Nabiullina says there will not be a ban on USD and foreign currency accounts within Russia; FY economic contraction will be smaller than thought in April, are in discussions with many nations on settlements in national currencies. Do not currently have the technical ability to purchase EUR or USD.

EQUITIES

• European bourses and US futures are hampered following a surprise SNB hike, Euro Stoxx 50 -2.4%; an announcement that exacerbated the modest pressure seen at the European cash open, in-spite of initial modest upside in the regions futures.
• Stateside, losses are relatively broad-based though the NQ -2.5%, lags its peers modestly given the pronounced upside in yields.
• Tesla (TSLA) has raised US prices for all vehicles, according to its website, confirming an earlier report in Electrek; by as much as USD 6k.
• Samsung Electronics (005930 KS) has temporarily reduced procurement amid inventory pressure, Nikkei reports; has asked component makers and others to delay shipments.
• Toyota (7203 JT) is to suspend some domestic plant operations from June 17th; remains difficult to look ahead given the shortage of semis. Global production plan for June to be revised to ~750k units.
• Click here for more detail.

FX

• Franc soars as SNB strikes with half point hike to prevent further rise in inflation and spread to Swiss goods and services. Bank also removes highly valued tag even as USD/CHF tanks from high 0.9900s to sub-0.9800 and EUR/CHF probes 1.0200 vs 1.0400+.
• Yen rebounds strongly as risk sentiment sours significantly on the eve of BoJ; USD/JPY through 132.50 compared to 134.65+ peak and a Fib retracement (133.42) along the way.
• Dollar revival from post-FOMC lows derailed irrespective of deteriorating market tone and 75 bp rate rise, DXY back down around 105.000 within a 105.500-104.700 range.
• Pound precarious pre-BoE on premise that MPC will stick to steady 25bp policy normalisation steps; Cable choppy either side of 1.2100 and EUR/GBP pivoting 0.8600.
• Kiwi undermined by negative NZ Q1 GDP print and Aussie labours even though jobs data was largely better than expected; NZD/USD under 0.6300 and AUD/USD below 0.7000.
• Brazilian Central Bank raised the Selic rate by 50bps to 13.25%, as expected, through a unanimous decision and it left the door open for further monetary tightening, while it sees another rate increase of equal or lesser magnitude at the next meeting.
• Russian First Deputy PM said Rouble is overvalued and industry would be more comfortable if it fell between 70-80 against the Dollar, while Russian Y/Y inflation will be around 15% in December 2022, according to TASS.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• Click here for more detail.

FIXED INCOME

• Bonds collapse as SNB unexpectedly strikes against inflation with a 50bp rate hike
• Bunds recoil from 145.00+ to sub-142.00 at worst as ECB tightening expectations rise and BTPs reverse gains made on anti-fragmentation efforts between 119.20-116.01 parameters
• Gilts caught in the cross-fire ahead of BoE and down below 112.00 vs 113.12 at one stage even though MPC is seen maintaining 25 bp pace
• US Treasuries revert to bear-flattening after dovish reaction to FOMC overall and await housing data, jobless claims and Philly Fed
• Click here for more detail.

COMMODITIES

• Crude benchmarks are hampered in-fitting with the global tone as markets digest the shock 50bp hike from the SNB.
• Currently, WTI and Brent are lower by just shy of USD 1.00/bbl and holding just above yesterday’s troughs.
• US Department of Energy requested to meet with refiners regarding prices no later than June 21st, according to Reuters sources.
• US reportedly fears the EU and UK ban on insuring Russian oil tankers could result in surging crude prices and urges European capitals to seek ways to ease the impact of their ban on insuring Russian oil cargoes, according to FT.
• Ukraine's energy minister said gas production could fall to 16-17 BCM in 2022 from around 20 BCM in 2021, according to Reuters.
• Russian Deputy PM Novak says Russian can raise oil output in July; Russian oil production is restoring as oil flows are redirected.
• OPEC+ document shows Russian oil output at 9.27mln BPD in May, according to Reuters; OPEC+ was producing 2.695mln BPD beneath its targets in May, document says.
• China will set up a centralised iron ore buyer to counter the dominance of Australia as it hopes bulk buying will secure lower prices, according to FT.
• Spot gold is relatively contained in a sub-USD 10/oz range in-spite of the pronounced price action in the USD and Fixed Income spaces; with any upside for the metal capped again by a cluster of DMAs between USD 1840-46/oz.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK food inflation is likely to peak at up to 15% during the summer and high levels will persist into next year, according to Reuters citing industry researcher IGD.
• ECB’s bond scheme is to come with loose conditions such as compliance with the commission's recommendations and it is to stress scheme aims to bring the spread between bond yields in line with fundamentals, according to Reuters sources. Furthermore, conditions will likely be achieved through quantitative benchmarks, such as historical spreads which may then be turned into a "traffic light" system to instruct staff on which country's bonds to buy and at which frequency.

NOTABLE US HEADLINES

• Click here for the US Early Morning note.

CRYPTO

• Bitcoin has recouped from worst levels but remains pressured overall and in proximity to the USD 21k handle.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive and followed suit to the gains on Wall Street in the aftermath of the FOMC meeting where the Fed hiked rates by 75bps and lifted its Fed funds rate projections, while markets found relief from Fed Chair Powell’s press conference as he does not expect 75bp moves to be common and kept the door open for either a 50bps or 75bps hike in July.
• ASX 200 traded higher but with gains capped as participants reflected on the latest data releases including a mixed jobs report and a further rise in consumer inflation expectations.
• Nikkei 225 shrugged off mixed trade data as Japan seeks to raise the minimum hourly wage above JPY 1000 and is also looking to implement steps to increase tourist demand next month.
• Hang Seng and Shanghai Comp. were choppy with COVID-related concerns stoked by an increase in cases in Hong Kong and with Shanghai to conduct weekly community COVID testing across all districts until end-July, while property names lagged after Chinese house prices contracted Y/Y.

NOTABLE APAC HEADLINES

• HKMA raised its base rate by 75bps to 2.00%, as expected, following the earlier Fed rate hike.
• China's NDRC said it will ensure reasonable economic growth in Q2 to provide a firm foundation for H2 and will expand the scope of use of funds raised by local government special bonds to include high-tech infrastructure for the first time, according to Reuters.
• White House official said US President Biden will keep his mind open regarding relaxing tariffs on Chinese goods, according to Reuters.
• China is to continue expanding high-level opening up, according to MOFCOM's Shu and is confident foreign trade will be in a reasonable range.
• Hong Kong reports 1085 (prev. 1047) new COVID cases.

NOTABLE APAC DATA

• Chinese House Prices YY (May) -0.1% (Prev. 0.7%)
• Japanese Trade Balance Total Yen (May) -2384.7B vs. Exp. -2022.6B (Prev. -839.2B, Rev. -842.8B)
• Japanese Exports YY (May) 15.8% vs. Exp. 16.4% (Prev. 12.5%); Imports YY (May) 48.9% vs. Exp. 43.6% (Prev. 28.2%, Rev. 28.3%)
• Australian Employment (May) 60.6k vs. Exp. 25.0k (Prev. 4.0k); Unemployment Rate (May) 3.9% vs. Exp. 3.8% (Prev. 3.9%)
• Australian Participation Rate (May) 66.7% vs. Exp. 66.4% (Prev. 66.3%)
• Australian Consumer Inflation Expectations (June) 6.7% (Prev. 5.0%)
• New Zealand GDP QQ (Q1) -0.2% vs. Exp. 0.6% (Prev. 3.0%); YY (Q1) 1.2% vs Exp. 2.4% (Prev. 3.1%)