• APAC stocks were mixed with the region partially shrugging off the lacklustre handover from the US (S&P 500 -0.3%)
• European equity futures are indicative of a softer open with Eurostoxx 50 -0.4% after the cash market closed higher by 0.2% yesterday
• DXY continues to hover around the 104 mark with G10 FX muted ahead of the European session
• French President Macron informed US President Biden of limited extra oil production capacity for Saudi and UAE
• Looking ahead, German GfK Sentiment, US Consumer Confidence, G7 Summit, Speeches from ECB’s Lagarde, Lane, Elderson, Panetta & Fed’s Daly, Supply from Germany & US

US TRADE

• US stocks finished lower amid rising yields after firmer than expected data and with higher oil prices stoking inflationary concerns.
• SPX -0.30% at 3,900, NDX -0.88% at 11,999, DJIA -0.20% at 31,348, RUT +0.34% at 1,771.
• Click here for a detailed summary.

NOTABLE HEADLINES

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Deputy Chair of the Security Council Medvedev said Russia will strengthen its border if Finland and Sweden join NATO. Medvedev also warned that any attempts to infringe upon Crimea by a NATO country is a declaration of war which could lead to World War 3, while he added that if Sweden and Finland join NATO, they face the prospect of having Iskander missile systems at their threshold, according to Reuters.
• G7 leaders condemned the attack by Russia on the shopping mall in Ukraine and said Russian President Putin and the people responsible will be held to account, according to Reuters.
• White House issued a proclamation on increasing duties on certain articles from Russia in which the tariff rate on certain Russian imports was increased to 35%, according to Reuters.

OTHER

• Turkish President Erdogan said Sweden and Finland must change their stance on terror groups, while Erdogan also said Turkey will begin a new military operation in Syria as soon as our preparations are completed, according to Reuters and Daily Sabah.
• Iran and Turkey discussed energy cooperation, according to Al Jazeera.
• US President Biden is to announce an extension of US troop presence in Poland, according to NBC News.
• US State Department spokesperson confirmed that Iran and the US will have indirect discussions in Doha this week and said Iran needs to drop additional demands which go beyond the 2015 nuclear deal, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mixed with the region partially shrugging off the lacklustre handover from the US.
• ASX 200 was kept afloat with energy leading the gains amongst the commodity-related sectors.
• Nikkei 225 swung between gains and losses with upside capped by resistance above the 27K level.
• Hang Seng and Shanghai Comp. were pressured amid weakness in tech and lingering default concerns as Sunac plans discussions on extending a CNY bond and with Evergrande facing a wind-up petition.
• US equity futures were subdued alongside the indecisive mood in Asia; ES unch.
• European equity futures are indicative of a softer open with Eurostoxx 50 -0.4% after the cash market closed higher by 0.2% yesterday.

FX

• DXY lacked direction with price action stuck near the 104 level despite yesterday's gains in yields and firm data.
• EUR/USD traded flat heading into a flurry of ECB speakers and after failing to sustain a 1.0600 footing.
• GBP/USD was rangebound with with no follow-through after UK lawmakers voted 295-221 to support the Northern Ireland Protocol bill.
• USD/JPY marginally pulled back from Monday’s highs but held onto 135.00 status.
• Antipodeans were restricted owing to the lack of key data releases and cautious risk tone.

FIXED INCOME

• 10yr USTs bounced back from the prior day’s selling that was spurred by several factors including strong data, weak US bond auctions and as higher oil prices stoked inflation concerns, while the overnight rebound coincided with the cautious mood.
• Bunds remained despondent after a recent slump below 147.00 with attention shifting to upcoming ECB speakers.
• 10yr JGBs were lacklustre amid weaker results at the 2-year auction, while reports also noted that the BoJ may have faced as much as JPY 600bln in unrealised losses on its JGB holdings earlier this month as yields gained and prices declined.

COMMODITIES

• Crude futures extended on the prior day's gains after French President Macron informed US President Biden of limited extra capacity for Saudi and UAE oil production, while potential supply disruptions out of Libya are also a tailwind for prices.
• French President Macron told US President Biden after a conversation with UAE's crown prince, that the UAE is producing oil at near-maximum capacity, while the UAE crown prince said Saudi Arabia was able to increase output by 150k BPD or a little more and the UAE Energy Minister also noted that the UAE is producing near max capacity, according to Reuters.
• EU Energy Commissioner reiterated that the gas supply situation will become more challenging in the coming months and that further supply cuts from Russia cannot be excluded, while the Commissioner added that a serious disruption is likely and the EU is discussing an MoU on gas supply with Azerbaijan and said the EU may hold an emergency meeting of energy ministers on gas supplies if one is needed.
• US DoE said crude inventories in the Strategic Petroleum Reserve drew to 497.9mln (prev. 511.6mln W/W), which is the lowest since April 1986.
• Spot gold lacked firm direction owing to the uneventful greenback.
• Copper traded sideways with price action contained by the uninspired risk tone in Asia.

CRYPTO

• Bitcoin was rangebound with the initial downside stemmed by support north of the 20,500 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 110bln via 7-day reverse repos with the rate at 2.10% for a CNY 100bln net daily injection.
• China's state planner official said China faces new challenges in stabilising jobs and prices due to COVID and risks from the Ukraine crisis, while the NDRC added they will not resort to flood-like stimulus but will roll out tools in its policy reserve in a timely way to cope with challenges, according to Reuters.
• BoJ may have been saddled with as much as JPY 600bln in unrealised losses on its JGB holdings earlier this month, as a widening gap between domestic and overseas monetary policy pushed yields higher and prices lower, according to Nikkei.

EU/UK

NOTABLE HEADLINES

• UK lawmakers voted 295-221 to support the Northern Ireland Protocol bill in the first of many parliamentary tests it will face during the months ahead, according to Reuters.
• UK Foreign Minister Truss said the UK does not rule out using Article 16 further down the line but said that triggering it would not resolve fundamental issues in the protocol, while she added that EU leaders need to change negotiator Sefcovic's mandate so he has permission to re-open the text of the protocol in substantial parts as UK demands, according to Reuters.
• Three red wall Conservatives are reportedly in talks to defect to the Labour Party as they believe they will lose seats at the next election if they do not switch parties, according to The Telegraph citing sources.
• UK PM Johnson and Chancellor Sunak will resist calls from Conservative MPs to announce tax reductions in a joint economic speech due next month, according to The Times.
• Scotland's First Minister Sturgeon will set out a plan today for holding a second Scottish Independence Referendum, according to BBC News.