• APAC stocks traded mixed after the negative lead from Wall St with trade also hampered by the closures in the Greater China region.
• RBNZ delivered a more aggressive than expected rate hike of 50bps and signalled a further rate increase to return inflation to its target.
• European equity futures are indicative of a marginally lower open with the Euro Stoxx 50 -0.2% after the cash market closed up 0.1% on Tuesday.
• FX markets were broadly contained overnight, DXY sits just above 101.50, EUR/USD trades around the 1.0950 mark, NZD leads the majors post-RBNZ.
• Looking ahead, highlights include US ADP, International Trade, ISM Services PMI, Speeches from Fed's Mester, ECB's Lane, Supply from UK & Germany.

US TRADE

EQUITIES

• US stocks were pressured with cyclical and value sectors leading the declines after the big dip in JOLTS job openings dimmed labour market and growth expectations. The tumble in February JOLTS comes ahead of the more timely March NFP report on Friday but was enough of a warning to ignite a large Treasury bull-steepener ahead of the BLS report, especially given that markets will be closed, while the data also spurred dovish Fed pricing which now suggests a near-coinflip between a 25bps hike and a pause at the next Fed meeting.
• SPX -0.58% at 4,100, NDX -0.37% at 13,100, DJIA -0.59% at 33,402, RUT -1.81% at 1,769.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Mester (non-voter) said the Fed will need to raise rates above 5% and keep them there for a while, as well as noted that inflation remains too high and that the rate path depends on how much inflation expectations fall. Mester also stated that tightening policy is needed to cool too-hot inflation, while she was very comfortable with the Fed's recent 25bps hike and doesn't share the market outlook for cutting rates this year.
• US Treasury Secretary Yellen said the IRS will release its strategic operating plan for spending USD 80bln in new 10-year funding, while she added that IRS investments in 'fair enforcement' are expected to reduce deficits by hundreds of billions of dollars over the next decade.
• Former US President Trump gave remarks at Mar-a-Lago after pleading not guilty to charges in New York and suggested that the situation of being charged was election interference.

APAC TRADE

EQUITIES

• APAC stocks traded mixed after the negative lead from Wall St where risk assets were pressured as weak JOLTS data stoked growth concerns, with trade also hampered by the closures in the Greater China region.
• ASX 200 was rangebound with early support from strength in healthcare, tech and gold-related stocks although gains were later pared amid weakness in the commodity-related sectors and confirmation of a contraction to PMIs.
• NZX 50 wiped out initial gains and was pressured after the RBNZ delivered a more aggressive than expected rate hike of 50bps and signalled a further rate increase to return inflation to its target.
• Nikkei 225 underperformed and fell below 28,000 amid broad weakness across sectors and as retailers including index heavyweight Fast Retailing failed to benefit from the recent monthly comparable store sales updates.
• US equity futures were lacklustre (ES flat) after the recent weak US jobs data and cautious mood in Asia.
• European equity futures are indicative of a marginally lower open with the Euro Stoxx 50 -0.2% after the cash market closed up 0.1% on Tuesday.

FX

• DXY was rangebound and languished firmly beneath the 102.00 level in the aftermath of the weak JOLTS data which showed job openings declined to their lowest since May 2021 and spurred dovish rate bets with money markets virtually pricing a coin flip between a hike and a pause at the next Fed meeting.
• EUR/USD held on to most of the prior day’s gains at the 1.0900 handle owing to the recent dollar weakness.
• GBP/USD made several failed attempts to breach resistance at 1.2500 after yesterday’s outperformance.
• USD/JPY was contained with the prior day's headwinds attributed to haven flows and yield differentials.
• Antipodeans were mixed with NZD/USD boosted after the RBNZ’s hawkish rate hike in which it delivered a larger-than-expected rate increase of 50bps and signalled a further rate increase, while AUD/USD was choppy after comments from RBA Governor Lowe who noted that the decision to hold rates steady this month does not imply interest rate rises are over and reiterated that the board expects that some further tightening of monetary policy may well be needed.

FIXED INCOME

• 10yr UST futures slightly eased back following yesterday’s bull-steepening which was spurred by the fall in job openings and as the Fed rate hike pricing receded.
• Bund futures remained afloat after having benefitted in sympathy with USTs.
• 10yr JGB futures faded some of the prior day’s after-hours gains despite the BoJ’s presence in the market for more than 1.3tln of JGBs and a mild boost of its purchases in 10yr-25yr maturities.

COMMODITIES

• Crude futures edged higher with oil prices mildly underpinned by bullish private sector inventory data.
• US Energy Inventory Data (bbls): Crude -4.3mln (exp. -2.3mln), Gasoline -4.0mln (exp. -1.7mln), Distillate -3.7mln (exp. -0.4mln), Cushing -1.0mln.
• White House said the US will continue to work with producers and others to ensure energy markets and lower prices for the American consumer after the OPEC decision.
• Spot gold held on to its recent gains with the precious metal sitting comfortably above USD 2,000/oz.
• Copper futures traded sideways amid the mixed risk appetite and absence of Chinese buyers.
• Codelco copper production fell 14.8% Y/Y in February to 105.4k tonnes, while Escondida mine copper production rose 4% to 72.7k tonnes and Collahuasi copper mine production fell 6% Y/Y to 44.1k tonnes.

CRYPTO

• Bitcoin resumed its recent advances and climbed back above the USD 28,500 level.

NOTABLE ASIA-PAC HEADLINES

• Taiwan President Tsai is to meet with US House Speaker McCarthy today at 10:00PDT (18:00BST/13:00EDT)
• RBNZ raised the OCR by 50bps to 5.25% (exp. 25bps hike), while it stated that the OCR needs to increase and the Committee agreed it must continue to raise the OCR to return inflation to the 1%-3% target and to fulfil its remit. RBNZ Board discussed a 25bp and 50bps hike at this meeting and the Committee expects to see a continued slowing of domestic demand, as well as a moderation in core inflation and inflation expectations with the extent of this moderation to determine the direction of future monetary policy. MPC also agreed the OCR needs to be at a level that will reduce inflation and inflation expectations to within the target range over the medium-term and members observed inflation is still too high and persistent, while they viewed risks to inflation pressure from fiscal policy as skewed to the upside.
• RBA Governor Lowe said the decision to hold rates steady does not imply interest rate rises are over and noted that the board expects that some further tightening of monetary policy may well be needed. Lowe also commented that it was prudent to hold rates steady this month to allow more time to assess the impact of past increases and that this approach is consistent with their practice in earlier interest rate cycles. Furthermore, Lowe said the board is prepared to have a slightly slower return to the inflation target than some other central banks, while he said that he is not 100% certain they will have to hike rates again but added that the balance of risks lean toward further rate rises.

DATA RECAP

• Japanese Services PMI (Mar F) 55.0 (Prelim. 54.2)
• Japanese Composite PMI (Mar F) 52.9 (Prelim. 51.9)
• Australian Services PMI (Mar F) 48.6 (Prelim. 48.2)
• Australian Composite PMI (Mar F) 48.5 (Prelim. 48.1)

GEOPOLITICAL

• US President Biden and French President Macron held a call on Tuesday in which they discussed China and mentioned a willingness to engage China to accelerate the end of the Ukraine war, according to Reuters.
• Iran appointed an ambassador to the UAE for the first time in 8 years, according to state media.
• Israeli police reported clashes inside the Al-Aqsa Mosque in Jerusalem and Hamas called on Palestinians to march to Jerusalem to defend the Al-Aqsa Mosque, according to AFP News Agency. Furthermore, Saudi and Jordanian Foreign Ministries condemned Israeli for storming the Al-Aqsa Mosque, while it was later reported that Israeli planes conducted a strike on Gaza following rockets from the enclave amid tensions in Al-Aqsa, according to Reuters.

EU/UK

• BoE approved UBS's (UBSG SW) takeover of Credit Suisse (CSGN SW) in the UK, according to Reuters.
• ECB's Centeno said the risk of default in Portugal is low despite the steep rise in ECB interest rates.