• European bourses are incrementally firmer while US futures are slightly softer in tentative pre-Easter/NFP trade.
• APAC handover was softer though Chinese Caixin data stemmed the downside.
• DXY is firmer though off the 102.05 peak with antipodeans/petro-FX softer while CHF leads with peers otherwise contained.
• EGBs have continued the week's trend and spiked to fresh highs post-Construction PMIs, USTs little changed by comparison.
• Commodities have been choppy but rangebound overall with the focus remaining on geopolitics and high-level meetings.
• Looking ahead, highlights include US IJC, Canadian Labour Market Report; Fed's Bullard. Note: Desk will close at 21:30BST, given Friday's market holidays.

EUROPEAN TRADE

EQUITIES

• European bourses are incrementally firmer but are set to conclude the shortened week roughly flat, Euro Stoxx 50 +0.1%.
• Sectors are mixed as such though Travel & Leisure is one of the outperformers after favourable Tui commentary.
• Stateside, futures are in close proximity to the unchanged mark but with a modest negative bias in-play ahead of IJC, Bullard and pre-Easter/NFP.
• Click here for more detail.

FX

• The USD is firmer though the index has dipped back below the 102.00 mark and has eased off the 102.05 high which itself is significantly shy of the 103.06 WTD peak.
• Action which comes to the modest detriment of the antipodeans, particularly the NZD as it gives back some of its post-RBNZ outperformance while the AUD continues to languish below 0.63 and 00.67 respectively.
• Petro-FX is erring lower amid choppy crude action with the CAD incrementally softer but largely rangebound ahead of its March jobs release.
• The relative outperformer is the CHF, with EUR/CHF at 0.9850 and continuing to move away from parity with focus on SNB FX action with desks suggesting 0.98 could be a figure to watch.
• Elsewhere, GBP and EUR are little changed at the time of writing and failed to see/sustain any meaningful reaction from the March Construction PMIs, despite a modest pick-up in EGBs at the time.
• PBoC set USD/CNY mid-point at 6.8747 vs exp. 6.8765 (prev. 6.8699)
• Click here for more detail.

FIXED INCOME

• A continuation of the week’s firmer action has seen fresh WTD highs in EGBs with a modest spike occurring on the March Construction PMIs in otherwise fairly limited pre-Easter/NFP trade.
• Bunds notched a fresh WTD peak at 137.85 following this, though we remain within recent parameters for both the benchmarks and yields. Currently, the periphery is moving in-line with core peers.
• USTs are yet to move meaningfully away from the neutral mark with the 10yr in fairly slim ~14 tick parameter in pre-Easter/NFP trade.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have been somewhat choppy after Wednesday's flat settlement with specific newsflow light aside from geopolitics/high-level meetings.
• Specifically, WTI and Brent have moved back below USD 80/bbl and USD 84.50/bbl respectively within circa. USD 1/bbl parameters.
• Spot gold is unchanged in a very narrow USD 10/oz range that remains comfortably above USD 2000/oz mark but still someway from the ATH at USD 2075/oz; base metals are mixed as Copper benefits from APAC data while iron ore continues to slip after recent NDRC commentary.
• Citi forecasts oil prices higher by USD 5/bbl for 2023, Brent to average USD 84/bbl & WTI USD 79/bbl.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Lane (interview conducted on April 5th) says if, by the time of the May meeting, projections remain on track, then a rate hike will be appropriate; stresses data-dependence.
• Chinese President Xi, speaking with French President Macron, said relations with France have maintained positive and steady momentum, according to state media. Macron said he knows he can count on China to reason with Russia and bring everyone back to the negotiating table.
• BoE Decision Maker Panel (DMP) March one-year CPI inflation expectations fell slightly. DMP members expected CPI inflation to be 5.8% one-year ahead, down from 5.9% in February.

DATA RECAP

• EU S&P Global Construction PMI (Mar) 45.0 (Prev. 47.6); German S&P Global Construction PMI (Mar) 42.9 (Prev. 48.6)
• UK S&P Global/CIPS Construction PMI (Mar) 50.7 vs. Exp. 53.5 (Prev. 54.6)
• UK Halifax House Prices MM (Mar) 0.8% vs. Exp. -0.3% (Prev. 1.1%, Rev. 1.2%); "Still expect to see a continued slowdown through the year."
• German Industrial Output MM (Feb) 2.0% vs. Exp. 0.1% (Prev. 3.5%)
• Swiss Unemployment Rate Adj. (Mar) 1.9% vs. Exp. 1.9% (Prev. 1.9%); Unadj. (Mar) 2.0% vs. Exp. 2.0% (Prev. 2.1%)

NOTABLE US HEADLINES

• FDIC retained its financial advisor to assist in the liquidation of securities of former Signature Bank (SBNY) and Silicon Valley Bank (SIVB) with Blackrock Financial Advisory to conduct portfolio sales, according to Reuters.
• Click here for the US Early Morning Note.

GEOPOLITICS

CHINA-TAIWAN

• US House Speaker McCarthy said the discussion with Taiwan's President was very productive and that they must continue arms sales to Taiwan, as well as strengthen economic cooperation, particularly with trade and technology. McCarthy stated that America's support for the people of Taiwan will remain resolute, unwavering and bipartisan, while he added that US arms sales to Taiwan must be delivered on a timely basis and that there is no need for retaliation from China for the meeting with Taiwan's President Tsai, according to Reuters.
• US Rep. Aguilar said they look forward to more meetings like this in the future, while Rep. Gallagher said they support Taiwan and will turn those words into action in this congress, according to Reuters.
• China's Foreign Ministry spokesperson said the US colluded with Taiwan authorities and connived at attempts by separatists seeking Taiwan independence to carry out political activities on US soil. China's Foreign Ministry spokesperson also said the US has breached the commitments it made and relentlessly challenges the bottom line, while it made provocations in matters like official interaction with Taiwan, as well as arms sales and military collusion with Taiwan. Furthermore, in response to the seriously erroneous acts of collusion, China will take resolute and effective measures to safeguard national sovereignty and territorial integrity, according to Reuters.
• China’s Fujian maritime safety administration launched a three-day special joint patrol and inspection operation in the central and northern parts of the Taiwan Strait which include moves to board ships, according to Reuters.
• Taiwan's Defence Minister said a China aircraft carrier was about 200 nautical miles off Taiwan's east coast and noted the carrier group is training but the timing is quite sensitive, according to Reuters.

OTHER

• Kyiv is reportedly willing to discuss the future of Crimea with Moscow if its forces reach the border of the Russian-occupied peninsula, according to FT citing a top adviser to President Zelensky.
• Chinese Foreign Ministry says the US and NATO bear responsibility for the continuation of the Ukrainian crisis, according to Al Jazeera.
• Russia's Kremlin says China has mediation potential, but in the case of Ukraine the situation is still complicated.
• Canadian PM Trudeau stated that he spoke with US President Biden about Ukraine and called on Russia to release the detained WSJ reporter Evan Gershkovich immediately, according to a tweet.
• North Korean state media KCNA noted commentary from security analyst Choe Ju Hyon who warned that US and South Korean military drills are escalating tensions to the brink of nuclear war. It was separately reported that South Korea's Defence Minister said North Korea is ready to conduct a nuclear test at any time, according to Yonhap.
• Iran and Saudi Arabia agree to cooperate to ensure regional security; Iran and Saudi agree to resume flights, facilitating visas for citizens.
• Japanese Self Defence Force helicopter has disappeared near Miyakojima Island, Japan, according to NHK; Japan says it spotted a Chinese frigate between the Yonaguni island and Taiwan, moving into the East China Sea from the Pacific Ocean on Wednesday.

CRYPTO

• Given the tentative tone overall, Bitcoin is similarly contained and only incrementally in the red on the session and essentially neutral for the week as a whole.

APAC TRADE

• APAC stocks were mostly subdued amid headwinds from further US weak data releases and with risk appetite also restricted as global markets approached the Easter holiday period, albeit with the downside stemmed as participants digested Chinese Caixin Services PMI data which showed a firm acceleration in services activity.
• ASX 200 was marginally lower as weakness in the tech and real estate sectors just about overshadowed the resilience in defensives and with trade data showing a monthly drop in both imports and exports.
• Nikkei 225 resumed the prior day’s underperformance amid some speculation of a potential policy shift by the BoJ soon as the Kuroda era comes to an end this week and with former BoJ Director Momma suggesting the recent drop in global bond yields has created favourable conditions for the BoJ to scrap its YCC this month.
• Hang Seng and Shanghai Comp were lacklustre after a substantial liquidity drain by the PBoC and amid frictions related to Taiwan President Tsai’s meeting in the US with members of Congress including House Speaker McCarthy although losses were kept to a minimum following the strong Chinese Caixin Services and Composite PMI data.

NOTABLE ASIA-PAC HEADLINES

• China is expected to cut the tax and fee burden by CNY 1.8tln for business entities this year and tax revenues are expected to show faster growth in Q2, according to a state taxation official cited by Reuters.
• China asked the WTO to investigate export restrictions on semiconductors by the US, Japan and the Netherlands.
• China approved the delayed Swap Connect scheme which clears the path for foreign investors to its USD 5tln swaps market, while the Swap Connect scheme is set to launch within months, according to FT.
• RBA Financial Stability Review stated that Australia is not immune to global financial shocks but Australian banks are well capitalised, profitable and highly liquid, while it noted that APRA has stepped up oversight of domestic institutions and is considering lessons for regulations. RBA also stated that global financial stability risks have increased and regulators will need to tighten rules, as well as protect against digital runs on banks.
• RBI kept the Repurchase Rate unchanged at 6.50% (exp. 25bps hike) via unanimous decision, while the MPC maintained its policy stance of remaining focused on the withdrawal of accommodation through a 5-1 vote. However, Governor Das said that the decision to pause is for this meeting only and they will not hesitate to take action if needed in future policy meetings with the MPC ready to act if warranted.
• Japan PM Kishida to meet with new BoJ Governor Ueda on April 10th, via Kyodo; incoming Governor likely to confirm intention to maintain current monetary easing for a while.

DATA RECAP

• Chinese Caixin Services PMI (Mar) 57.8 vs Exp. 55.0 (Prev. 55.0); Composite PMI (Mar) 54.5 (Prev. 54.2)
• Australian Trade Balance (AUD)(Feb) 13.9B vs. Exp. 11.1B (Prev. 11.7B)
• Australian Exports MM (Feb) -3% (Prev. 1%); Imports MM (Feb) -9% (Prev. 5%)