• European bourses are higher following cooler German-state/Spanish inflation metrics
• US futures hang onto Wednesday's upside with current gains more contained vs European peers
• USD softer with Fed speak ahead to the modest benefit of G10 peers, GBP leads with Cable above 1.2350
• Bunds led an initial rally on the inflation figures, though this has since dissipated with benchmarks now near unchanged
• Commodities benefit from the above tone and softer USD with specific newsflow light
• Looking ahead, highlights include German CPI (Prelim.), US Q4 GDP & PCE Prices (Final), Banxico & SARB Policy Announcement, CBRT Minutes, Speeches from Fed's Barkin, Collins, Kashkari, Treasury Secretary Yellen and SNB's Maechler & Moser.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Euro Stoxx 50 +1.2%, following soft inflation prints via Spain and the German state's ahead of the mainland figure.
• Sectors are similarly bolstered with defensives lagging while Retail and Real Estate outperform given H&M and (initially) lower yields respectively.
• Stateside, futures are firmer though the magnitude is more modest and sees the region holding onto their recent upside ahead of data/Fed speak.
• Blackstone (BX) CEO Schwarzman says their property investment is in good shape.
• Google (GOOG) Cloud VP says Microsoft (MSFT) is selectively buying out complainants and "definitely" has a very anti-competitive posture in cloud; criticised imminent deals with EU cloud rivals.
• Click here for more detail.

FX

• Dollar broadly softer on the eve of PCE data, as Fed Chair Powell points to dot plots showing one more hike in the cycle, DXY dips below midweek low. between 102.780-340 parameters as month-end positioning persists.
• Euro wobbles in wake of soft EZ inflation metrics before recovering ground vs Buck on a 1.0800 handle.
• Pound underpinned by firm UK implied rates and yields, with Cable hovering around 1.2350 and EUR/GBP eyeing 100 DMA just under 0.8800.
• Franc shrugs off sub-forecast Swiss Kof ahead of speeches from SNB, as USD/CHF approaches 0.9150 from around 0.9200 at one stage.
• PBoC set USD/CNY mid-point at 6.8886 vs exp. 6.8901 (prev. 6.8771).
• Brazil's proposed new fiscal rules would target zero primary deficit next year, a primary surplus of 0.5% of GDP in 2025 and 1.0% of GDP in 2026, according to sources cited by Reuters.
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FIXED INCOME

• Bunds led an initial rally in fixed following the cooler North Rhine-Westphalia inflation reading and thereafter peaked at 136.77 following a similarly 'cool' Spanish figure.
• Action which lifted USTs and Gilts in tandem to 114.23+ and 1014.47 respective peaks.
• However, this has since seen a marked reversal which was possibly Gilt/Sonia-led, irrespective of obvious catalyst; as such, core benchmarks are now essentially unchanged on the session ahead of the German mainland and US data points/speakers.
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COMMODITIES

• Crude benchmarks are bolstered by the softer USD and supportive risk tone following Wednesday's slightly lower settlement; WTI and Brent at the top-end of circa. USD 1/bbl parameters.
• Specifics have been light for crude and also gas markets, with the latter subdued and featuring Dutch TTF in relative proximity to the unch. mark.
• Metals are marginally firmer, in-line with the magnitude of US equity futures, deriving support from the USD/sentiment; Citi cuts its 2023 Palladium view to USD 1500/oz (prev. 2025/oz).
• Specifically, spot gold is at the mid-point of USD 1955-1971/oz boundaries, with the 10-DMA at USD 1970.80/oz capping action thus far.
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NOTABLE HEADLINES

• UK Chancellor Hunt is on course for a clash with BoE Governor Bailey after Hunt refused to rule out watering down post-financial crisis banking rules despite the BoE warning against weakening banking regulation, according to The Telegraph.
• UK Chancellor Hunt said Britain will not go toe-to-toe with the US and EU by offering billions in green subsidies, according to The Times.
• ECB's Schnabel said a rise in unit labour costs indicates possible second-round effects on inflation and her suspicion is that the energy impact won't drop out of core inflation quickly, while she also noted that they have not seen general outflow from Eurozone bank deposits, according to Reuters.
• ECB's Elderson says if the baseline scenario is met, there will be more ground to cover and rates will have to be increased further, adds we are not seeing any movements in the bond markets that give us cause for concern.

DATA RECAP

• German North Rhine-Westphalia State CPI YY (Mar) 6.9% (Prev. 8.5%); MM (Mar) 0.6% (Prev. 1.0%)
• German Saxony State CPI YY (Mar) 8.3% (Prev. 9.2%); MM (Mar) 0.9% (Prev. 0.8%)
• Reminder, the mainland figure is due at 13:00BST; German Nationwide CPI YY is expected at 7.3% (prev. 8.7%) with a forecast range of 6.7-8.1%.
• Spanish CPI Flash NSA YY (Mar): 3.3% vs exp. 3.8% (prev. 6.0%); Core YY 7.5% (prev. 7.6%)
• EU Consumer Inflation Expectations (Mar) 18.9 (Prev. 17.7); Selling Price Expectations (Mar) 18.7 (Prev. 23.8)
• Swiss KOF Indicator (Mar) 98.2 vs. Exp. 100.5 (Prev. 100.0, Rev. 98.9).

NOTABLE US HEADLINES

• Click here for the US Early Morning Note.

GEOPOLITICS

• Explosions were heard in the vicinity of Syria's capital of Damascus amid Israeli 'aggression', according to the state news agency.
• China's Defence Ministry says China's military is willing to work with Russia's military to strengthen strategic communication and coordination.
• Russia's Federal Security Service (FSB) says a WSJ reporter has been detained for espionage, according to Interfax; WSJ reporter Gershkovich detained in Russia, according to Bloomberg.

CRYPTO

• Coinbase (COIN) is reportedly in ongoing talks about remaining in Canada after a key deadline after Canada's tightened regulations passed, although its larger rival Binance looks set to close up shop, according to CoinDesk.

APAC TRADE

• APAC stocks traded mixed as the region only partially sustained the momentum from the US where the Nasdaq 100 entered a bull market after the recent bond selling slowed and as banking sector fears continued to subside.
• ASX 200 was higher with strength in tech, mining and financials leading the broad optimism across sectors and amid an adjustment in rate expectations with NAB lowering its peak rate forecast to 3.85% from 4.10%.
• Nikkei 225 was pressured heading closer to fiscal year-end amid mild upside in Japanese yields and with notable weakness across large transportation/logistics companies.
• Hang Seng and Shanghai Comp. were indecisive and ultimately faltered despite another substantial liquidity effort by the PBoC with participants digesting a slew of earnings releases and as US-China frictions lingered.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li said at the Boao Forum that to achieve greater success, chaos and conflicts must not happen in Asia otherwise the future of Asia will be lost and they oppose taking sides, forming new blocs and a new Cold War. Premier Li also commented that the economic situation in March is even better than in January and February, while they will consolidate the recovering trend of China's economy and promote a continued recovery, as well as roll out new measures to increase market access and improve the business environment, according to Reuters.
• Spanish PM Sanchez said at the Boao Forum that relations between Europe and China, and by extension between Spain and China, do not need to be confrontational, while he added there is ample room for win-win cooperation and that they must remain partners economically and beyond, according to Reuters.
• China and Brazil reached an agreement to trade in their own currencies, ditching the US dollar as an intermediary.

DATA RECAP

• New Zealand ANZ Business Confidence (Mar) -43.4% (Prev. -43.3%); Activity Outlook (Mar) -8.5% (Prev. -9.2%)