• European bourses are firmer across the board, Euro Stoxx 50 +1.5%, in a continuation of the constructive APAC handover though action remains choppy.
• Bourses, and US futures, were bolstered amid reports that China is considering USD 220bln of stimulus with unprecedented bond sales, via BBG.
• DXY takes a reprieve and resided sub-107.00 with antipodeans leading on sentiment and GBP bid amid the looming resignation of PM Johnson
• Reports on this dented Gilts, though the complex more broadly was briefly hit on the China stimulus headline
• Senior US State Department Official says no announcement on China tariffs is expected from Secretary of State Blinken at his meeting with China's Foreign Minister Wang Yi
• Looking ahead, highlights include US International Trade, ECB Minutes, Speeches from Fed's Waller & Bullard, BoE's Pill, US Refunding.

As of 11:30BST/06:30ET

LOOKING AHEAD

• US International Trade, ECB Minutes, Speeches from Fed's Waller & Bullard, BoE's Pill, US Refunding.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• Russia is preparing to mobilise its economy for a prolonged war in Ukraine in which bills to support the economy will increase control over businesses as Moscow seeks to withstand sanctions pressure, according to the FT.
• Russian Defence Ministry says they have hit Snake Island, via Reuters citing Ifx.

EUROPEAN TRADE

CENTRAL BANKS

• ECB's Enria (supervisory board) says conservative capital trajectories should be utilized by banks when announcing distribution plans; from the point of view of capital adequacy, we are asking individual banks to review their capital trajectories.
• BoJ is expected to increase its FY22 inflation forecast marginally to slightly above 2% from 1.9% in its quarterly outlook due on July 21st, according to Reuters sources. Expected to lower economic growth forecast (currently 2.9%). BoJ will likely maintain ultra-low interest rates and dovish policy bias.

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.7%, in a continuation of the constructive APAC handover though action remains choppy.
• Stateside, futures are firmer across the board but the magnitudes more contained that European peers after yesterday's choppy action; note, relatively brief upside was sparked on China stimulus reports, via BBG.
• Within Europe, sectors feature noted outperformance in Basic Resources and Autos while some of the more defensively-inclined components are in the red.
• Click here for more detail.

FX

• Pound perks up as UK PM prepares to stand down in face of mass ministerial and party mutiny, Cable back over 1.2000 vs low 1.1900 base, EUR/GBP closer to 0.8500 than 0.8550.
• Aussie rebounds with risk sentiment and on back of record trade surplus, AUD/USD approaching 0.6850 from recent lows near 0.6760.
• Greenback fades after forging further gains in advance of hawkish line from Fed minutes, DXY pivoting 107.000 within range below 107.270 high on Wednesday.
• Loonie regroups with WTI ahead of Canadian trade and Ivey PMIs as USD/CAD probes 1.3000 from 1.3050+, Euro regains sight of 1.0200 level amidst retreat in EGBs pre-ECB minutes.
• Yen slips on rate dynamics and digests source reports suggesting BoJ may tweak inflation forecast a fraction above 2% and trim growth projection in quarterly outlook next week, USD/JPY rebounds towards 136.00 from around 135.55.
• Forint gets fleeting fillip from 200bp 1-week depo rate hike by NBH, while Zloty awaits 75bp tightening move from NBP; EUR/HUF tops 415.00, while EUR/PLN holds near 4.7850.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0100 (1.08BN), 1.0185 (408M), 1.0215-25 (1.46BN), 1.0275 (830M), 1.0290-00 (1.14BN), 1.0325 (578M), 1.0350 (1.1BN)
• USD/JPY: 133.95-05 (1.64BN), 134.15 (220M), 135.00 (1.07BN), 136.00 (1.07BN), 136.15-20 (433M), 137.00 (760M)
• Click here for more detail.

FIXED INCOME

• Bonds back under pressure as risk sentiment continues to improve and most Central Banks remain hawkish
• Bunds reverse from 151.65 to 150.15 before finding underlying bids, Gilts from 115.60 to 114.66 and the 10 year T-note from 119-05 to 115-15
• Curves flatter or more inverted after FOMC minutes flag potential for even more restrictive policy
• Click here for more detail.

COMMODITIES

• WTI and Brent are modestly bid benefiting from stimulus reports and the relative reprieve in the USD's recent ascension; benchmarks firmer by USD ~0.80/bbl.
• US Private Inventory Data: Crude +3.8mln (exp. -1.0mln), Cushing +0.5mln, Gasoline -1.8mln (exp. -0.5mln), Distillate -0.6mln (exp. +1.1mln)
• Dutch Minister says gas storage is 58% full, therefore the 80% winter target is achievable. Groningen gas field could be tapped in a emergency scenario
• BofA says copper prices could slip below USD 6,000/tonne in the coming months. Click here for the full list of price forecasts from BofA.
• Spot gold is, in a similar vein to crude, modestly supported on the USD breather, and steady between touted resistance/support at USD 1750.70/oz and USD 1735-37/oz respectively.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK PM Johnson is to resign today (expected around 12:00-13:00BST/07:00-08:00ET), according to multiple reports. As it stands, it appears that Johnson wants to remain in place as a caretaker until a new Conservative Party leader can be assigned, which is likely to occur around the autumn given the impending summer recess. However, MPs are seemingly divided on whether they want to allow Johnson to remain, with some calling for the immediate appointment of an alternative caretaker such as current Deputy PM Raab.
• Hungarian PM Orban's Chief of Staff says discussions with the EU have progressed re. funds, adopted the Commission's stance on four issues. Accepted the proposal that funds must be spent on energy independence, via Reuters.

NOTABLE EUROPEAN DATA

• French Public Audit Office says divergence in France from low debt nations such as Germany are a threat to the Eurozone, via Reuters.

NOTABLE US HEADLINES

• Senior US State Department Official says no announcement on China tariffs is expected from Secretary of State Blinken at his meeting with China's Foreign Minister Wang Yi, via Reuters. Subsequently, China's Commerce Ministry says they have agreed with the US trade team to maintain close communication, following online talks.
• Click here for the US Early Morning note.

CRYPTO

• In a similar fashion to price action earlier in the week, Bitcoin resides in a narrow range and is holding in relative proximity to the USD 20k mark.

APAC TRADE

EQUITIES

• APAC stocks traded mostly positive but with gains capped following the choppy performance on Wall St and after an uneventful FOMC Minutes which noted participants judged a rate increase of 50bps or 75bps would likely be appropriate at the July meeting.
• ASX 200 was kept afloat alongside strength in the mining and materials sectors, as well as encouraging trade data.
• Nikkei 225 was underpinned amid reports the BoJ was said to be completely committed to its easing policy.
• Hang Seng and Shanghai Comp. were mixed with Hong Kong pressured by tech weakness, while the mainland was initially subdued after the PBoC drained liquidity and with Beijing to impose China’s first-ever COVID-19 vaccine mandate, although Chinese bourses then pared losses as markets also digested MOFCOM's announcement to rollout measures to support auto consumption.

NOTABLE APAC HEADLINES

• China is reportedly considering USD 220bln of stimulus with unprecedented bond sales, according to Bloomberg.
• PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 77bln net drain.
• US counterintelligence officials are reportedly stepping up a campaign to warn state and local government leaders and business executives about what they see as China’s increasing use of overt and covert means to influence policy-making, according to WSJ.
• China's MOFCOM announced to rollout measures to expand vehicle consumption and is studying extending tax exemptions for new energy vehicles, while China's MIIT said China will ensure a stable supply of auto chips and raw materials, according to Reuters.
• Hong Kong government announced it is to suspend COVID-related flight bans, according to Reuters.
• BoJ is reportedly expected to raise its CPI expectations for the current year to above the 2% target and is considering lowering its GDP growth forecast, while it is said to be completely committed to its easing policy, according to Jiji press.
• Tokyo's Governor said they will discuss potential COVID curbs, according to FNN.

DATA RECAP

• Australian Trade Balance (AUD)(May) 15.97B vs. Exp. 10.73B (Prev. 10.50B)
• Australian Exports MM (May) 9% (Prev. 1%); Imports MM (May) 6% (Prev. -1%)