• European bourses are now firmer across the board, Euro Stoxx 50 +1.2%, as performance picks up following a mixed open amid comparably quiet newsflow
• US futures are in-fitting though the overall complex is cognisant of Quad Witching & Chair Powell
• DXY bid as the JPY tumbles amid the BoJ bucking the trend and remaining ultra-accommodative; activity-FX also hampered
• Core debt has seen a concerted bounce from earlier lows, though action has been two-way and pronounced; BTP-Bund sub-200bp
• WTI and Brent are modestly firmer and reside in proximity to the mid-point of the week’s over USD 11.00/bbl range
• Looking ahead, highlights include Quad Witching & a speech from Fed Chair Powell

As of 11:30BST/06:30ET

LOOKING AHEAD

• Quad Witching & a speech from Fed Chair Powell.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian top official dismissed Russia’s latest claim about being ready to resume peace talks and said Kyiv will definitely return to negotiations with Russia but only at the right time and with a strong negotiating position, according to Reuters.
• South Korea President Yoon said the UN Security Council should respond in a united way to North Korean missile provocations, according to Reuters.
• French pipeline operator GRTgaz says inbound gas flows to France from Germany have come to a halt amid reduced deliveries from Russia. Subsequently, Germany's BDEW says gas supplies continue to run stably, in-spite of the curtailment of supplies from Russia, via Reuters.
• EU Commission confirms the opinion to grant EU candidacy status to Ukraine.

EUROPEAN TRADE

CENTRAL BANKS

• BoJ kept policy settings unchanged as expected with rates at -0.10% and QQE with yield curve control maintained to target 10yr JGB yields at around 0% with the decision on YCC made via an 8-1 vote as Kataoka dissented. BoJ repeated its April guidance that it will offer to buy 10yr JGBs at 0.25% every business day unless it is highly likely that no bids will be submitted and it also reiterated guidance on policy bias that it will take additional easing steps without hesitation as needed with an eye on the pandemic's impact on the economy. Furthermore, the BoJ said the economy is picking up as a trend though some weakness has been seen and they must carefully watch the impact of FX moves on Japan's economy and prices.
• BoJ's Kuroda says upward pressure is being seen in bond yields, and it is important for FX to move stable reflecting fundamentals, no change to the concept that YCC strongly supports the economic recovery; does not see a limit in YCC. Recent rapid JPY weakness is a weakness for the economy.. Does not see a need for further policy easing now. Not thinking about raising the cap on the BoJ's long-term yield target above 0.25%, as it could result in higher yields and weaken the effect of monetary easing.
• BoJ purchases JPY 70.1bln in ETFs.
• BoJ offers to purchase the cheapest-to-deliver issuance for an extended time as of June 20th.
• ECB's Knot says that several 50bps rate increases are possible in the event that inflation worsens, via BNR; does not see hikes reaching 200bp before early-2023.
• BoE's Pill says markets will have to make their own judgement on whether the BoE is considering a 50bp hike, via Bloomberg TV; stresses the conditionality around the inclusion of "forcefully" in the statement, in the context of "if necessary". Trying to signal that we may need to act further, looking at the persistence of inflationary pressure. Price pressures becoming embedded would be a trigger for more aggressive BoE action.

EQUITIES

• European bourses are now firmer across the board, Euro Stoxx 50 +1.2%, as performance picks up following a mixed open amid comparably quiet newsflow.
• Stateside, US futures are performing similarly, ES +1.0%, though the complex is cognisant of commentary from Chair Powell later.
• Note, today is Quad Witching; recently, GS’ Rubner highlighted “literally massive” USD 3.2tln notional open interest of US listed options which expire on June 17th, writing that the passing of this may allow the market to move more freely.
• Click here for more detail.

FX

• Yen recoils after racking up big risk averse gains as BoJ sticks rigidly to ultra accommodative stance with additional measures to maintain YCC, USD/JPY hovers just under 135.00 vs 131.49 low on Thursday.
• Buck benefits after extending post-FOMC retreat in wake of weak US data and pronounced bounce in Treasuries, DXY extends recovery to 104.540 from 103.410 low.
• Franc maintains SNB hike momentum to rally further across the board, USD/CHF around 0.9650 compared to par-plus peaks earlier in the week.
• Euro underpinned by decent option expiry interest and hawkish ECB commentary, but Aussie undermined as Government gives authorities power to stop coal exports; EUR/USD on the 1.0500 handle and above 1+ bln rolling off between 1.0500-1.0495, AUD/USD capped just under 0.7000.
• Kiwi gleans some traction from a rise in NZ manufacturing PMI and RBNZ rate hike calls; NZD/USD straddles 0.6350, AUD/NZD cross sub-1.1050.
• Lira lags following latest CBRT survey showing higher inflation forecasts and USD/TRY rate, latter at 18.8874 by year end vs 17.5682 previously and circa 17.3200 at present.
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0425 (292M), 1.0495-00 (1.13BN), 1.0600 (315M), 1.0650 (317M)
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FIXED INCOME

• Debt extends intraday ranges as volatility remains high on Friday.
• Bunds veer from 142.56 to 144.99, Gilts between 111.83 and 112.91 and the 10 year T-note within a 116-19/115.28+ range.
• Hawkish comments from ECB's Knot largely discounted as EZ periphery bonds outperform on anti-fragmentation dynamic, but BoE's Pill rattles Sonia strip.
• Click here for more detail.

COMMODITIES

• WTI and Brent are currently set to end the week with gains in excess of USD 1.00/bbl overall, though the benchmarks reside towards the mid-point of the over USD 11.00/bbl range for the week.
• Newsflow has been comparably limited but primarily focused on familiar themes.
• US Energy Secretary called an emergency meeting with oil refiners next week to discuss steps companies can take to increase refining capacity and output, according to Reuters citing a DoE spokesperson.
• White House is reportedly considering fuel export limits as pump prices surge and options such as waiving anti-smog rules are also being discussed, according to Bloomberg.
• Qatar Energy set August Al-Shaheen crude term price at a premium of USD 9.24/bbl above Dubai quotes which is the highest in 3 months, according to traders cited by Reuters.
• Brazil's Petrobras is to announce a fuel price increase today, according to Reuters citing local press.
• China's national oil majors are reportedly in advanced discussions with Qatar around investment in North Field East LNG and for long-term contractual purchases of LNG, according to Reuters sources.
• Australia has invoked measures to give authorities the power to prevent coal exports if needed in an attempt to avert the risk of blackouts, according to the FT.
• Spot gold is rangebound in European hours having successfully surpassed the cluster of DMAs between USD 1843-1848/oz during Thursday’s blockbuster session.
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NOTABLE EUROPEAN HEADLINES

• UK is to set out new data rules which diverge from the EU on Friday as it seeks to ease pressure on businesses, while it believes the new rules will maintain free flow of data from Europe and does not expect the EU to object to its data reforms, according to Reuters.
• German Finance Minister Lindner told ECB President Lagarde that the ECB's talk regarding fragmentation threatens to dent confidence, according to FT.
• Hungarian Chief of Staff Gulyas says the idea of a global minimum tax is not accepted by the Hungarian government.

NOTABLE US HEADLINES

• US President Biden said a recession is not inevitable, according to AP.
• US Treasury Secretary Yellen said Congress must take action on digital asset regulation, according to Reuters.
• China has no information over a proposal for talks between President Xi and US President Biden.

CRYPTO

• Bitcoin is currently modestly firmer, but the overall sessions range is in proximity to USD 20k with the current trough at USD 20.19k.

APAC TRADE

EQUITIES

• APAC stocks mostly suffered firm losses amid the global risk-aversion after the recent flurry of central bank rate increases and with weak data in the US stoking recession fears.
• ASX 200 was led lower by underperformance in tech and the commodity-related sectors, although gold miners have weathered the storm after the recent upside in the precious metal.
• Nikkei 225 was pressured and failed to benefit from the BoJ decision to keep policy settings unchanged.
• Hang Seng and Shanghai Comp. pared opening losses amid virus-related optimism after Beijing reported zero cases outside of quarantine and with US-China defence meetings showing signs of cooling tensions.

NOTABLE APAC DATA

• Singapore Non-Oil Exports MM (May) 3.2% vs. Exp. 1.4% (Prev. -3.3%); YY (May) 12.4% vs. Exp. 7.6% (Prev. 6.4%)