• APAC stocks were mostly firmer after taking impetus from the tech-led gains on Wall Street and better-than-expected Chinese PMI figures.
• Chinese Manufacturing PMI topped forecasts and Non-Manufacturing PMI rose to its highest since 2011.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.1% after the cash market closed up 1.3% on Thursday.
• DXY is holding above the 102 mark, FX markets are overall relatively contained, NZD marginally outperforms, havens are a touch softer.
• Looking ahead, highlights include German retail sales, UK GDP (Q4), French CPI, Eurozone CPI, German labour market report, Canadian GDP, US PCE and core PCE, Chicago PMI, Uni. of Michigan (Final), Fed's Collins, Williams, Barkin, Waller, Cook, ECB's Lagarde.

US TRADE

EQUITIES

• US stocks were mostly higher amid continued strength in the tech sector which saw the Nasdaq 100 print fresh YTD highs, while the recent selling pressure in US treasuries further cooled after the mostly weaker-than-expected data releases from the US.
• SPX +0.57% at 4,051, NDX +0.91% at 12,963, DJIA +0.43% at 32,859, RUT -0.18% at 1,768.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kashkari (voter) said they have very high inflation but it is not being driven by wages and that they have to bring down inflation. Kashkari added that once the Fed gets inflation down, they can get back to a pre-COVID economy with low inflation, low unemployment and decent wage growth.
• Fed's Barkin (non-voter) said deposit flows among US banks are relatively stable and he is encouraged by evidence of resilience, while he added that the Fed will need to stay nimble in weighing the fallout from bank stress against incoming data on inflation. Barkin also stated that he has no view yet on the appropriate rate hike at the next meeting and there is still a lot of data to come before then.
• Fed's Collins (non-voter) said they likely need to hike rates more with further work needed on inflation and the Fed's SEP of one more hike seems reasonable. Collins stated tighter credit may offset the need for more rate hikes, while she added the banking system is strong and resilient but likely to pull back on lending which will restrain the economy.
• White House called on US regulators to reverse Trump-era rule changes for large regional banks and urged regulators to accelerate work on expanding long-term debt requirements to a broader set of banks. Furthermore, it stated the costs of replenishing the deposit insurance fund should not be borne by community banks and that proposed reforms can be accomplished under existing law.
• Fed's Balance Sheet fell to USD 8.765tln (prev. 8.784tln), BTFP lending rose to USD 64.4bln (prev. 53.7bln) and Discount Window borrowing fell to 88.2bln (prev. 110.2bln). In relevant news, ECB tapped Fed Dollar swap lines for USD 487.5mln in the week to March 29th and SNB tapped Dollar swap lines for USD 100mln in the week to March 30th.
• US House Speaker McCarthy said Republicans could act on their own regarding the debt ceiling if US President Biden does not negotiate.
• Former US President Trump has been indicted in New York after the probe into the Stormy Daniels payment, according to New York Times. Furthermore, sources said Trump faces more than 30 counts related to business fraud and is expected to surrender to the Manhattan District Attorney's office early next week, according to CNN and NBC.

APAC TRADE

EQUITIES

• APAC stocks were mostly firmer at quarter-end as they took impetus from the tech-led gains on Wall Street and with participants digesting a slew of data releases including better-than-expected Chinese PMI figures.
• ASX 200 was led by the mining and resources sectors after the strong data from Australia’s largest trading partner although the upside was capped ahead of next week’s RBA meeting with a recent Reuters poll showing near-even expectations amongst economists between a hike and a pause.
• Nikkei 225 gained heading into the end of the fiscal year and climbed back above the 28,000 level after encouraging Industrial Production and Retail Sales data but was off highs with chipmakers later pressured after Japan announced to impose new restrictions on chip-making gear.
• Hang Seng and Shanghai Comp. were positive after the strong Chinese PMI data in which Manufacturing PMI topped forecasts and Non-Manufacturing PMI rose to its highest since 2011, with the outperformance in Hong Kong led by tech as JD.com plans to spin off its industrials and property units. However, the gains in the mainland were limited amid a deluge of earnings releases including mixed results from China’s mega-banks and with the nation’s largest property developer Country Garden posting its first annual loss since its listing in 2007.
• US equity futures (ES +0.2%) edged slightly higher in tandem with the constructive mood across Asia.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.1% after the cash market closed up 1.3% on Thursday.

FX

• DXY slightly softened amid the mostly positive risk tone but with some of the downside pared after bouncing off support near the 102.00 level and with participants tentative ahead of the Fed’s preferred inflation gauge.
• EUR/USD moved off intraday highs but held on to most of the prior day's gains around the 1.0900 level.
• GBP/USD briefly reclaimed the 1.2400 status owing to the buck's recent retreat and the risk environment.
• USD/JPY initially benefitted from haven outflows but then failed to sustain a brief incursion above 133.00.
• Antipodeans were supported by the constructive mood and strong Chinese data, while NZD outperformed its trans-Tasman counterpart amid differing market views regarding RBA and RBNZ policy action next week.
• PBoC set USD/CNY mid-point at 6.8717 vs exp. 6.8718 (prev. 6.8886)
• Banxico hiked rates by 25bps as expected to 11.25% in a unanimous decision and said risks to inflation remain biased to the upside, while it noted that for its upcoming decision, the Board will take into account the inflation outlook, considering the monetary policy stance already attained.
• SNB's Maechler said the SNB remains ready to be active in FX markets and foreign currency sales have been a mainstay of activities in the FX market.

FIXED INCOME

• 10yr UST futures were marginally lower amid the positive risk tone and a slight uptick in yields, while there were several comments from Fed officials including Kashkari who noted that they have very high inflation and Collins suggested the need to hike rates further with more work needed on inflation.
• Bund futures were steady as prices calmed down from yesterday’s whipsawing and ahead of upcoming data releases from the bloc including the latest EU inflation figures.
• 10yr JGB futures were subdued after firmer-than-expected Tokyo CPI data and lack of additional BoJ purchases.

COMMODITIES

• Crude futures took a breather from recent gains amid the flat performance across commodities.
• Spot gold was rangebound near the prior day's highs amid a softer dollar and ahead of PCE price data.
• Copper futures were indecisive and failed to benefit from the risk environment and strong Chinese PMIs.

CRYPTO

• Bitcoin edged slight gains amid the positive risk tone and after reclaiming the USD 28,000 level.
• Circle's USDC outflows exceeded USD 10bln since the crypto bank crisis, according to The Information.
• PBoC Deputy Governor Xuan said regulatory oversight quality over the digital economy will be improved, while he added that digital currencies and new inventions of cryptocurrencies are not fixing issues in finance and can create new issues. Xuan also stated that new technologies, especially new forms of finance, should not be blindly accepted and recognised, as well as thinks that the US has failed at regulating cryptocurrencies, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• Chinese Vice Finance Minister Zhu said China needs to step up fiscal policy adjustments to support the economy and that China will move steadily in implementing preferential tax and fee policies. Zhu also stated that China will effectively ease tax burdens of small firms and household businesses, while he noted that recently announced preferential tax and fee policies will reduce companies' burdens by CNY 480bln per year, according to Reuters.
• China's Ambassador to the EU warned the bloc of ‘peril’ in following the US on trade curbs, while he urged resistance to ‘unwarranted’ pressure and said that Beijing will not be ‘trampled’, according to FT.
• China’s Commerce Chief is to visit Brussels as EU trade relations sour, according to SCMP.
• Japan is to impose new restrictions of chip-making gear, according to Bloomberg and Reuters. Japan said it will impose restrictions on 23 types of chip-making equipment from July. Japanese officials said the scope of restrictions went further than the US measures imposed in 2022. Chip-equipment exporters would need licenses for all regions. The measures will affect a broader range of companies than previously expected, according to FT.

DATA RECAP

• Chinese NBS Manufacturing PMI (Mar) 51.9 vs. Exp. 51.5 (Prev. 52.6)
• Chinese NBS Non-Manufacturing PMI (Mar) 58.2 vs. Exp. 55.0 (Prev. 56.3)
• Chinese Composite PMI (Mar) 57.0 (Prev. 56.4)
• Japanese Industrial Production MM (Feb P) 4.5% vs. Exp. 2.7% (Prev. -5.3%)
• Japanese Retail Sales YY (Feb) 6.6% vs. Exp. 5.8% (Prev. 6.3%, Rev. 5.0%)
• Tokyo CPI YY (Mar) 3.3% vs. Exp. 3.2% (Prev. 3.4%)
• Tokyo CPI Ex. Fresh Food YY (Mar) 3.2% vs. Exp. 3.1% (Prev. 3.3%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Mar) 3.4% vs. Exp. 3.2% (Prev. 3.2%)

GEOPOLITICAL

• Japanese Finance Minister Suzuki said Japan is to extend the suspension of its most favoured nation treatment on tariffs for Russia, while it was also reported that Japan banned Russia-bound exports of steel, aluminium and aircraft from April 7th, according to the Ministry of Economy, Trade and Industry cited by Reuters.
• Turkish parliament approved a bill to clear the way for Finland's NATO accession, according to Reuters.

EU/UK

• UK PM Sunak's office said Britain will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Trans-Pacific after the bloc's members reached an agreement on Britain joining the trade pact, while Japan's Economy Minister said they aim for an early signing of UK joining the CPTPP, according to Reuters.
• EU's Vestager is optimistic that the EU can reach battery minerals trade agreement with the US that is similar to the US-Japan agreement but noted that more work is needed on the legal framework for a US battery minerals agreement.

DATA RECAP

• UK Lloyds Business Barometer (Feb) 32 (Prev. 21)