• APAC stocks were pressured amid headwinds from the US where disappointing Consumer Confidence data added to growth concerns (S&P 500 -2%)
• European equity futures are indicative of a softer open with Eurostoxx 50 -0.6% after the cash market closed higher by 0.3% yesterday
• DXY hovers around the 104.50 mark, EUR/USD maintains 1.05 status and USD/JPY sits on a 136 handle
• Turkey dropped its opposition to Sweden and Finland’s NATO bid
• Looking ahead, highlights include EZ Sentiment Survey, German CPI Prelim, US GDP Final, OPEC Meeting, Speeches from Fed’s Powell, Mester & Bullard, ECB’s Lagarde, de Guindos & Schnabel, BoE’s Bailey & MPC-elect Dhingra

US TRADE

• US stocks stumbled after US consumer confidence data missed expectations and highlighted deteriorating consumer expectations driven by concerns about high inflation and recessionary risks.
• SPX -2.01% at 3,822, NDX -3.09% at 11,638, DJIA -1.56% at 30,947, RUT -1.86% at 1,738.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US CDC activated an emergency operations centre for response to Monkeypox, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

OTHER

• Turkey dropped its opposition to Sweden and Finland’s NATO bid and said it was satisfied with the countries’ responses in NATO talks, while the parties signed a memorandum of joint commitment to safeguard common security, according to FT and Reuters.
• US, South Korean and Japanese joint drills show a sinister aim toward North Korea and are a dangerous prelude to the creation of an Asian version of NATO, while the reckless moves by the US and allies will cause catastrophic consequences of self-destruction, according to North Korean state media KCNA.

APAC TRADE

EQUITIES

• APAC stocks were pressured amid headwinds from the US where disappointing Consumer Confidence data added to the growth concerns.
• ASX 200 failed to benefit from better than expected Retail Sales and was dragged lower by weakness in miners and tech.
• Nikkei 225 fell beneath the 27,000 level as industries remained pressured by the ongoing power crunch.
• Hang Seng and Shanghai Comp. conformed to the negative picture in the region although losses in the mainland were initially stemmed after China cut its quarantine requirements which the National Health Commission caveated was not a relaxation but an optimization to make it more scientific and precise.
• US equity futures traded relatively sideways near the prior day's lows after the data-induced pressure; ES +0.2%
• European equity futures are indicative of a softer open with Eurostoxx 50 -0.6% after the cash market closed higher by 0.3% yesterday.

FX

• DXY took a breather from the prior day’s advances which were aided by the broad risk aversion and month-end flows with Citi's FX hedge flows pointing to strong USD buying.
• EUR/USD was contained and maintained 1.05 status after the recent remarks by ECB’s Lagarde provided little in the way of fresh insight and as participants await a busy slate of comments from central bank chiefs.
• GBP/USD lingers around the 1.22 mark but has far to go to recoup the prior day’s declines which coincided with pressure in cyclicals.
• USD/JPY was choppy and tested the 136.00 level to the downside amid the risk aversion and firmer Retail Sales.
• Antipodeans nursed losses but with upside in the high-beta pairs limited by the subdued risk appetite.

FIXED INCOME

• 10yr USTs remained underpinned by the negative risk tone and after disappointing data, with prices unrattled by the weak 7yr auction.
• Bunds retraced losses with a boost seen after the M/M contraction for CPI data from Germany's North Rhine-Westphalia.
• 10yr JGBs lacked firm direction despite the BoJ’s presence in the market for more than JPY 1.1tln of JGBs on top of its fixed-rate operations.

COMMODITIES

• Crude futures initially extended on gains amid tight supply concerns and after a wider than expected draw to private sector crude stockpiles, although prices then retreated amid the risk-off tone and with focus shifting to the delayed EIA report set for release later.
• US Private Inventory (bbls): Crude -3.8mln (exp. -0.6mln), Cushing -0.7mln, Distillate +2.6mln (exp. -0.2mln) and Gasoline +2.9mln (exp. -0.1mln).
• US Climate Envoy Kerry said the Russian invasion of Ukraine was a warning for countries dependent on "petrostate dictators" and said the energy crisis is not an excuse to delay the fight to tackle climate change, while he added Europe needs to make up for Russian gas but should be a "one for one replacement".
• Norway's Industri Energi and SAFE labour unions agreed a wage deal for oil drilling workers and will not go on strike, according to Reuters.
• Libya's Ras Lanuf oil terminal is reportedly under a force majeure, according to Bloomberg.
• Talks with India and China on the G7 price cap proposal for Russian oil have been productive and positive, according to sources cited by Reuters. Sources added that India and China have an incentive to comply with a Russian oil price cap mechanism because they could buy oil at an even steeper price discount.
• Natural Gas Pipeline Co. declared a force majeure at the Gulf Coast #3 mainline and it is performing pipeline remediation, according to Reuters.
• Spot gold was contained as price action reflected a rangebound dollar.
• Copper weakened alongside a subdued commodities complex and the risk-averse mood.

CRYPTO

• Bitcoin was uneventful with prices stuck in a tight range around 20,250.

NOTABLE APAC HEADLINES

• US Deputy Commerce Secretary Graves said the US will take a balanced approach on Chinese tariffs and that a clear response on China tariffs is coming soon, according to Bloomberg.
• China State Council's Taiwan Affairs Office said it firmly opposes the US signing any agreement that has sovereign connotations with Taiwan, according to Global Times.
• BoJ Governor Kuroda said Japanese Core CPI reached 2.1% in April and May which is almost fully due to international energy prices and Japan's economy has not been affected much by the global inflationary trend so monetary policy will stay accommodative, according to Reuters.

DATA RECAP

• Australian Retail Sales MM (May F) 0.9% vs. Exp. 0.4% (Prev. 0.9%)
• Japanese Retail Sales YY (May) 3.6% vs. Exp. 3.3% (Prev. 2.9%, Rev. 3.1%)

EU/UK

NOTABLE HEADLINES

• UK expects defence spending to reach 2.3% of GDP and said PM Johnson will announce new military commitments to NATO, according to Reuters.
• ECB is said to be weighting whether or not they should announce the size and duration of their upcoming bond-buying scheme, according to Reuters sources
• French Finance Ministry cut its 2022 growth forecast to 2.5% (prev. 4.0%) and average inflation is seen at 5% in 2022, according to Reuters.

DATA RECAP

• UK BRC Shop Price Index YY (Jun) 3.1% (Prev. 2.8%)
• German NW State CPI MM* (Jun) -0.1% (Prev. 0.9%)
• German NW State CPI YY* (Jun) 7.5% (Prev. 8.1%)