• APAC stocks were higher across the board as the region took impetus from Wall St's fourth consecutive win streak.
• Former Japanese PM Abe collapsed and was taken to hospital after he was shot in the chest during a speech.
• European equity futures are indicative of a flat open with Eurostoxx 50 unchanged after the cash market closed up by 2.0% yesterday.
• DXY traded on either side of 107, EUR/USD stalled just shy of 1.02 and JPY gained post-Abe shooting.
• Looking ahead, highlights include US & Canadian Labour Market Reports, Speeches from ECB's Lagarde & Fed's Williams.

US TRADE

• US stocks traded higher amid a broad risk-on mood in which both the S&P 500 and Nasdaq notched a fourth consecutive win streak, while the gains were led by moves in the large caps with notable strength in Discretionary, Tech and Communication names although Energy was the clear outperformer thanks to the rebound in crude prices with WTI back above USD 100/bbl.
• SPX +1.50% at 3,901, NDX +2.16% at 12,109, DJIA +1.12% at 31,385, RUT +2.43% at 1,770.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Waller (voter) said inflation is too high and doesn't seem to be coming down, while they need to move to a much more restrictive setting and quickly, as well as need to frontload rate hikes with large increases early. Waller reiterated his call for a 75bps July meeting hike and said he is probably in favour of a 50bps rise in September.
• Fed's Bullard (2022 voter, hawk) said rather than stagflation, it's a better bet that growth will slow to trend and inflation will come under control rapidly. Bullard added the labour market could cool off a little and still be strong, while they have a good chance of a soft landing. Furthermore, he said a 75bps rate hike in July would 'make a lot of sense' and continues to advocate getting to a 3.5% FFR this year.
• US Senate Majority Leader Schumer is seeking an all-senators classified briefing next week regarding semiconductor chips and the global tech race, according to a spokesman cited by Reuters.
• Atlanta Fed GDPnow (Q2): -1.9% (prev. -2.1%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin said sanctions are causing difficulties, but not on the scale intended and they don't reject peace talks but the further it goes the harder it will be for an agreement. President Putin also said there is no doubt that Russia's ultimate military objective will be achieved, according to Reuters.
• Chinese Foreign Minister Wang met with Russian Foreign Minister Lavrov and Wang vowed to promote peace talks on Ukraine. Wang also stated that China and Russia have maintained normal cooperation in various fields and cast aside interferences, while he added that bilateral relations between their countries show strong resilience and strategic resolve, according to Reuters.
• Indonesian Foreign Minister hopes that G20 discussions will find ways to move on and noted that ripple effects from the Ukraine war are being felt globally, while she added it is their responsibility to end the war sooner rather than later, according to Reuters.
• Ukrainian Energy Minister said Ukraine opposes Canada handing over a gas turbine to Russia's Gazprom for the Nord Stream 1 pipeline and that it would flout sanctions imposed on Russia, according to Reuters citing a letter.

OTHER

• Fitch downgraded Belarus to C from CCC after the Finance Ministry said payments due in dollars on Eurobonds will be transferred to Belarussian rubles, according to Reuters.
• US State Department spokesperson Kirby said the US is exploring the integration of air defences with Middle East nations amid "growing Iranian threat", according to AFP.

APAC TRADE

EQUITIES

• APAC stocks were higher across the board as the region took impetus from Wall St's fourth consecutive win streak, but with gains capped heading into the NFP jobs data.
• ASX 200 was led higher by the energy sector and amid hopes of thawing Australia–China relations.
• Nikkei 225 traded positive but pared a majority of its gains following the shooting of former PM Abe.
• Hang Seng and Shanghai Comp. kept afloat amid stimulus hopes with China reportedly considering USD 220bln of stimulus although gains were capped in the mainland amid weakness in the property sector and after Chinese Premier Li noted China's economy is recovering but the foundation was not yet solid.
• US equity futures took a breather from recent gains as markets look ahead to the NFP data.
• European equity futures are indicative of a flat open with Eurostoxx 50 unchanged after the cash market closed up by 2.0% yesterday.

FX

• DXY was choppy and traded on both sides of the 107.00 level with the currency tentative ahead of the key NFP jobs data and following and following the latest Fed rhetoric including from Waller who noted that inflation is too high and that they need to move to a much more restrictive setting quickly, but suggested to favour a 50bps rise in September after a 75bps move later this month.
• EUR/USD was indecisive and reversed course after an early rebound stalled just shy of the 1.0200 handle.
• GBP/USD faded some of the gains which were spurred alongside the resignation of PM Johnson who will stay on in a caretaker role until a successor is chosen.
• USD/JPY initially gained but was then spooked after reports that former Japanese PM Abe was shot by an attacker and went into cardiac arrest.
• Antipodeans were subdued overnight but held on to most of the prior day’s gains alongside the rebound in oil and heightened risk appetite.

FIXED INCOME

• 10yr USTs nursed some of the losses seen during the New York session where the risk-on mood weighed on bond prices and which coincided with a return of the 10yr yield to above 3%.
• Bunds attempt to claw back some of its recent declines but with the rebound lacking in strength after the latest bout of mixed ECB rhetoric.
• 10yr JGBs were subdued amid the gains in stocks and with the BoJ only in the market today under its fixed-rate operations but offered to buy commercial paper for July 13th.

COMMODITIES

• Crude futures were choppy but eventually extended on gains after the recent rebound above USD 100/bbl.
• US President Biden’s meeting with the Saudi King will include Crown Prince MBS and Biden wants to discuss "energy security" when meeting with the GCC, according to State Department spokesperson Kirby.
• Kuwait set August KEC crude OSP for Asia at Oman/Dubai + USD 7.15/bbl, according to Reuters.
• Spot gold was flat amid an indecisive greenback.
• Copper prices eased after yesterday's gains amid positioning ahead of the key jobs report.

CRYPTO

• Bitcoin gained amid the constructive risk tone and rose above the 22,000 level.

NOTABLE APAC HEADLINES

• China's military said it is conducting a military exercise around Taiwan and US support for Taiwan 'separatist forces' is futile which will only disturb the peace in the Taiwan Strait, according to state media.
• China Defence Ministry said China firmly opposes the visit by a US senator to Taiwan which severely damages the relationship of the two countries and two militaries, while it added that the drill near Taiwan is directed at US and Taiwan provocation, according to Reuters.
• Former Japanese PM Abe collapsed and was taken to hospital after he was shot in the chest during a speech in Nara, while Abe was said to be unresponsive and in cardiac arrest, according to Kyodo. However, it was separately reported that Abe was said to be conscious and responsive while being transported after the shooting, according to NHK citing police sources.

DATA RECAP

• Japanese All Household Spending MM (May) -1.9% vs. Exp. 0.8% (Prev. 1.0%)
• Japanese All Household Spending YY (May) -0.5% vs. Exp. 2.1% (Prev. -1.7%)

EU/UK

NOTABLE HEADLINES

• UK PM Johnson’s successor is expected to be selected by early September, according to FT Tory party sources.
• BoE's Pill said he is willing to adopt a faster pace of tightening if required, according to Bloomberg.
• France's budget bill stated that in the event of a threat to the security of natural gas supply, the government can order operators of power generation facilities using gas to restrict or suspend operations. It was also reported that France's new inflation-relief package is to cost EUR 20bln and will be offset by greater tax revenue, according to a Reuters source.