• Crude outperforms after the weekend announcement of a surprise voluntary OPEC+ output cut until end-2023.
• Equities are broadly mixed/tentative as markets digest elevated oil prices against the potential inflation/Central Bank implications.
• Amidst this, the FTSE 100 outperforms while the NQ lags; APAC trade was firmer but capped by soft data release.
• USD derived initial support from the above and yield moves, though the DXY is well off best with peers mixed.
• Fixed income is pressured post-OPEC+ action with yields bid, though much of this has pared.
• Looking ahead, highlights include US ISM Manufacturing and Speech from Fed’s Bullard & Cook.

EUROPEAN TRADE

EQUITIES

• Equities are broadly mixed/tentative as markets digest elevated oil prices against the potential inflation/Central Bank implications, Euro Stoxx 50 +0.2%.
• FTSE 100 +0.7% is the current outperformer given its Energy exposure, with the sector leading the European upside while Travel & Leisure names lag given higher fuel costs.
• Stateside, futures are softer but similarly tentative with the NQ -0.6% lagging as yields increase ahead of Fed speak and ISM Manufacturing to kick off the shortened week.
• Switzerland’s Attorney General is to investigate whether the Credit Suisse (CSGN SW) takeover by UBS (UBSN SW) broke Swiss criminal law and is looking into potential breaches by government officials, regulators and bank executives, according to The Guardian.
• Credit Suisse (CSGN SW) expands its sustainability offering for corporate clients through a new partnership with Act Cleantech Agentur Schweiz, while it was separately reported that UBS (UBS SW) shortlisted four consultants for the Credit Suisse integration and UBS will cut its workforce by between 20%-30% after completing the takeover.
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FX

• The USD derived initial support from the surprise OPEC+ move, pre-JMMC, which sent the DXY to a 103.06 peak as yields climb; however, it has since waned and is now in proximity to 102.50.
• A pullback which has aided peers with petro-FX outperforming, USD/CAD below 1.35, while AUD outperforms and is back above 0.67 ahead of the RBA.
• JPY resides at the other end of the spectrum as yield differentials weigh and the Tankan survey provided no support; USD/JPY eclipsed 133.50 from a 132.83 base.
• GBP and EUR are near unchanged but well off initial lows as the USD's strength wanes, with no real/sustained movement on Central Bank speak or final PMIs.
• PBoC set USD/CNY mid-point at 6.8805 vs exp. 6.8820 (prev. 6.8717)
• Click here for the newsquawk RBA preview.
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FIXED INCOME

• Bonds are pressured by the OPEC+ action and associated inflation/monetary implications, though the complex has since pared much of the decline.
• Action which has seen a spike in yields that is more pronounced at the short-end; German and US 10yr yields above 2.35% and 3.53% respectively.
• Gilts and the EZ periphery have been moving in tandem with the above that has seen USTs pare to downside of less than 10 ticks ahead of Fed speak and ISM Manufacturing.
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COMMODITIES

• Crude is bolstered though slightly off best levels after jumping at the resumption of trade following the surprise OPEC+ voluntary production cut.
• Specifically, WTI and Brent remain at the top-end of USD 81.69-79.00/bbl and USD 86.44-83.50/bbl today's parameters and well above Friday's USD75.72/bbl and USD 79.80/bbl respective bests.
• In metals, the complex is mostly lower with pressure stemming from the upside in yields and initial USD strength with the yellow metal moving below the USD 1968/oz 10-DMA.
• OPEC+ members announced voluntary oil output cuts with Saudi Arabia to reduce production by 500k bpd from May until year-end and Russia will also cut by 500k bpd until year-end as a precautionary measure against further market volatility. Furthermore, Iraq is to lower output by 211k bpd, UAE will cut output by 144k bpd, Kuwait will cut 128k bpd and Oman will reduce output by 40k bpd, according to Reuters. It was also separately reported that more OPEC+ member states are expected to announce voluntary cuts, according to Energy Intel’s Bakr.
• Iraq’s oil exports averaged 3.26mln bpd in March (prev. 3.30mln bpd in Feb.), while it was separately reported that Iraq’s government reached an initial deal with KRG to resume northern oil exports this week, according to Reuters.
• US National Security Council spokesperson said they do not think OPEC+ production cuts are advisable at this moment given market uncertainty which they have made clear and the Biden administration is focused on prices for US consumers and not barrels, while the Biden administration will continue to work with all producers and consumers to ensure energy markets support economic growth and lower prices for American consumers, according to Reuters.
• EU Energy Commissioner Simson said the provision proposed by EU countries allowing a halt of Russian and Belarusian LNG imports is not yet law but is broadly supported and a very concrete step, while she added that the agreement on higher EU renewable targets is an ambitious deal and should help member states to upgrade national energy and climate plans, according to Reuters.
• Russia has reportedly moved to Dubai benchmark in recent Indian oil deal for Urals, according to Reuters sources; Rosneft is to sell oil to India at a discount of USD 8-10/bbl to Dubai quotes, and on a delivered basis.
• India extended export restrictions on gasoline and diesel as it seeks to ensure the availability of refined fuels for the domestic market, according to Reuters.
• Click here for the newsquawk JMMC preview, from 11:00BST/06:00EDT.
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NOTABLE HEADLINES

• Hundreds of UK travellers faced disruptions for the third day at the Port of Dover as ministers insisted that the cause for the Channel crossing delays was not linked to Brexit, according to FT.
• ECB’s de Guindos said headline inflation is likely to decline considerably this year but added that underlying inflation dynamics will remain strong, while he noted that feedback between higher profit margins, wages and prices could pose more lasting upside risks to inflation. De Guindos also stated that the ECB is monitoring broad risks across the financial sector and will act to preserve liquidity in the euro area, as well as noted the Euro area banking sector is resilient with strong capital and liquidity conditions although vulnerabilities in the financial system prevail in the non-bank financial sector which grew rapidly and increased its risk-taking during the low interest rate environment, according to Reuters.
• ECB’s Panetta said there is a lot of discussion on wage growth and that they are probably paying insufficient attention to the other component of income which is profit.
• BoE Chief Economist Pill says inflation is still much too high. UK banking system is strong, via Le Temps.
• Italian Economy Minister Giorgetti said forecasts for 2023 are improving and they expect GDP variation in H1 to push overall projections up slightly but warned that higher interest rates intended to curb inflation could pose a threat to growth and said a recession should not be the price paid for fighting inflation via monetary policy, according to Reuters. - Fitch affirmed Germany at AAA; Outlook Stable.
• French President Macron and European Commission President von der Leyen are to visit China between April 5th-7th, via Chinese Foreign Ministry
• Finland’s opposition right-wing National Coalition Party is on course to win Sunday’s parliamentary election in a tight race with 48 out of 200 seats and the nationalist Finns Party are set to win 46 seats, while PM Marin’s Social Democrats are on track to win 43 seats. Furthermore, the National Coalition leader Orpo said it was a big win and that they will negotiate to form a new coalition government, according to Reuters.
• A magnitude 7.4 earthquake struck New Guinea, Papua New Guinea region although the US Tsunami Warning Centre said there was no tsunami threat following the earthquake, according to Reuters.

DATA RECAP

• EU S&P Global Manufacturing Final PMI (Mar) 47.3 vs. Exp. 47.1 (Prev. 47.1); German S&P Global/BME Manufacturing PMI (Mar) 44.7 vs. Exp. 44.4 (Prev. 44.4)
• UK S&P GLBL/CIPS Manufacturing PMI FNL (Mar) 47.9 vs. Exp. 48.0 (Prev. 48.0)
• Citi/YouGov 12-month UK inflation expectation (Feb) fell to 5.4% from 5.6%, long-term fell to 3.7% from 3.8%.
• Swiss CPI YY (Mar) 2.9% vs. Exp. 3.2% (Prev. 3.4%); MM (Mar) 0.2% vs. Exp. 0.4% (Prev. 0.7%)

NOTABLE US HEADLINES

• Fed’s Cook (Voter) said she is weighing implications of stronger momentum in the economy against potential headwinds from recent developments and that US policy outlook must balance data dependence with forward-looking analysis. Cook also said that the appropriate path of Fed policy rate may be lower than otherwise if tighter conditions constrain the economy and noted that recent bank developments may suggest greater headwinds for financial conditions and the economy, while she added that they may have more work to do if data shows continued economic strength and that monetary policy is now in restrictive territory, according to Reuters.
• Fed’s Waller (Voter) said the recent data is consistent with the idea that inflation can be brought down quickly with relatively little harm to the jobs market and defeating high inflation could require dramatic actions from the Fed to puncture expectations if people have started to believe that prices will just keep on rising, according to Reuters.
• Former US President Trump faces multiple charges on falsifying business records and at least one felony charge in the New York hush money probe, according to sources cited by AP.
• Tesla (TSLA) rolled out a record number of new cars in Q1 in which deliveries rose 4% Q/Q to around 422.9k vehicles, according to FT.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Ukrainian President Zelensky said the military situation is especially hot around the city of Bakhmut in eastern Ukraine, according to Reuters. Furthermore, Ukraine said its army still holds Bakhmut although the founder of Russia's Wagner Group said the Russian flag was raised over the administration of Bakhmut and that Ukrainian forces remained in western parts of the town.
• Ukrainian military spokesperson says Bakhmut area is Ukrainian and Russian forecast are very far from capturing it.
• A well-known Russian military blogger was killed and at least 25 people were injured from a bomb blast in a café in St Petersburg, Russia which was formally owned by Wagner Group head Prighozhin, according to BBC.
• Russia's ambassador to Belarus said Russian nuclear weapons in Belarus will be moved to the western borders of the country, according to RIA.
• US Secretary of State Blinken held a call with Russian Foreign Minister Lavrov and discussed the arrest of US reporter Gerskovich who was accused of spying. Blinken conveyed US grave concern over the detention and called for an immediate release, while Russia said the reporter was caught red-handed and his fate will be determined by a court. Lavrov also said it was unacceptable for Washington to politicise the case and whip up a stir, according to Reuters.
• North Korean leader Kim’s sister said Ukrainian President Zelensky is risking his country and being politically ambitious for wanting nuclear weapons, while she added that Zelensky is wrong to think the US nuclear umbrella could protect Ukraine from Russia, according to KCNA.
• US think tank said satellite images show an increasing level of activity at North Korea’s main nuclear site and that it may be close to completing a new reactor, according to NBC News.
• US Joint Chiefs of Staff Chair Milley said on Friday that his understanding and analysis of China is that at least their military, and perhaps others, have come to some sort of conclusion that war with the US is inevitable although he reiterated that he doesn’t believe war is inevitable.
• Iran claimed it chased off a US spy plane that entered Iranian air space near the Gulf of Oman, according to Tasnim.
• Large explosions were reported in Syria’s capital Damascus which state media said were caused by a car bomb around the Mezzah military airport area.

CRYPTO

• Coinbase (COIN) tweets "in the course of a recent routine review of our systems, we identified some accounts that no longer meet our updated standards".

APAC TRADE

• APAC stocks were mostly positive amid strength in the energy sector after oil prices were boosted by a surprise voluntary output cut by OPEC+ members although gains in the broader market were capped heading into this week’s key events and as participants digested a slew of data releases including disappointing Chinese Caixin Manufacturing PMI.
• ASX 200 was underpinned by the energy-related gains and with money market pricing leaning heavily towards a pause at tomorrow’s RBA meeting, while analysts are near-evenly split between a hike and a pause.
• Nikkei 225 notched modest gains with upside capped following the mixed Tankan survey in which the large manufacturers’ sentiment index deteriorated for the 5th consecutive quarter and fell to its lowest since December 2020.
• Hang Seng and Shanghai Comp. were mixed with price action cautious after Chinese Caixin Manufacturing PMI showed activity was flat in March and following a substantial liquidity drain by the PBoC.

NOTABLE ASIA-PAC HEADLINES

• PBoC called for stronger defences against a financial crisis and said that China should accelerate legislation of the Financial Stability Law, as well as improve other legal arrangements to prevent and dispose of financial risks, according to three central bank officials in PBoC-affiliated publication China Finance.
• Japanese Foreign Minister Hayashi met with Chinese Foreign Minister Qin and expressed concern regarding the situation in Hong Kong and Xinjiang, while Hayashi raised the issue with Premier Li regarding a detained Japanese national who was trying to promote Japanese investment in China and Hayashi was also reported to have met with Politburo member Wang Yi. Furthermore, Japan urged China to view the Ukraine war from a rule of law perspective and take responsible actions in the UN Security Council, while China pressed Japan to change course on chip export curbs, according to Reuters and FT.
• US called for joint G7 action against China’s economic bullying, according to Nikkei.
• US lawmakers are to meet with Taiwanese President Tsai, Apple (AAPL) CEO Cook and Disney (DIS) CEO Iger, according to Bloomberg.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Mar) 50.0 vs. Exp. 51.7 (Prev. 51.6)
• Japanese Tankan Large Manufacturing Index (Q1) 1 vs. Exp. 3 (Prev. 7); Outlook (Q1) 3 vs. Exp. 4 (Prev. 6)
• Japanese Tankan Large Non-Manufacturing Index (Q1) 20 vs. Exp. 20 (Prev. 19); Outlook (Q1) 15 vs. Exp. 16 (Prev. 11)
• Japanese Tankan Large All Industry Capex (Q1) 3.2% vs. Exp. 4.9% (Prev. 19.2%)