• APAC stocks traded mostly subdued and failed to benefit from the slew of data from China including stronger GDP.
• Chinese Y/Y GDP topped forecasts, IP and Fixed Asset Investments printed below expectations, Retail Sales surged by a double-digit percentage.
• European equity futures are indicative of a contained cash open, with Euro Stoxx 50 future +0.1% after the cash market closed -0.5% yesterday.
• DXY holds onto gains and the 102 handle, EUR/USD and Cable remain sub 1.10 and 1.24 respectively.
• Looking ahead, highlights include UK Unemployment, German ZEW, US Housing Starts/Building Permits, Canadian CPI, Fed Discount Rate Minutes, Speech from Fed's Bowman, Supply from Netherlands & UK, Earnings from Ericsson, United Airlines, JNJ, Netflix, Goldman Sachs & Bank of America.

US TRADE

EQUITIES

• US stocks eventually pared losses heading into the close as the spot VIX printed 52-week lows beneath 17 and the VIX futures curve steepened further into contango. Newsflow was quiet with equity volatility compression the main story and participants digested mixed earnings releases, while other assets were contained.
• SPX +0.33% at 4,151, NDX +0.06% at 13,087, DJIA +0.30% at 33,987, RUT +1.22% at 1,802.
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NOTABLE HEADLINES

• Fed's Barkin (non-voter) said he is reassured by what he's seeing in the banking sector and never wants to declare victory on potential bank strain.
• US Senate Majority Leader Schumer said they are headed to a default if House Speaker McCarthy continues in this direction, while he added that cuts should be part of budget talks, not the debt limit. It was separately reported that House GOP Scalise said the GOP debt ceiling plan is coming on Tuesday.

APAC TRADE

EQUITIES

• APAC stocks traded mostly subdued and failed to benefit from the slew of data from China including stronger GDP growth with the mood tentative across global markets ahead of upcoming earnings releases stateside.
• ASX 200 was dragged lower by underperformance in energy and consumer stocks, while the RBA Minutes reaffirmed the potential for future rate increases as the central bank noted it is important to be clear that policy may be tightened again to curb inflation in a timely manner and that inflation is still too high.
• Nikkei 225 was kept afloat following reports that the BoJ is mulling CPI projections for FY25 of between 1.6%-1.9% which would remain below the 2% price goal and support the case for a delayed exit from easy policy.
• Hang Seng and Shanghai Comp were contained as participants reflected on the somewhat varied data releases from China in which GDP Q/Q matched estimates and Y/Y growth topped forecasts, while Industrial Production and Fixed Asset Investments printed below expectations, but Retail Sales surged by a double-digit percentage.
• US equity futures (ES -0.1%) were flat after the late bounce heading into the Wall St close and as key earnings loom.
• European equity futures are indicative of a contained cash open, with Euro Stoxx 50 future +0.1% after the cash market closed -0.5% yesterday.

FX

• DXY marginally softened but held on to most of the prior day’s gains after reclaiming the 102.00 status owing to the recent upside in yields and better-than-expected NY Fed Manufacturing data.
• EUR/USD traded rangebound after its recent losses and firm pullback from resistance at the 1.1000 level.
• GBP/USD reverted to below the 1.2400 handle again following recent price swings and tentative risk tone.
• USD/JPY was choppy but kept afloat after the recent widening of yield differentials and reports of a potential below-target Core CPI forecast for FY25 at next week’s BoJ Outlook Report.
• Antipodeans were mildly underpinned post-Chinese data and with AUD/USD slightly outperforming after the RBA Minutes kept the door wide open for a future resumption of rate increases.
• PBoC set USD/CNY mid-point at 6.8814 vs exp. 6.8828 (prev. 6.8679)

FIXED INCOME

• 10yr UST futures languished near the prior day’s lows after the recent upside in yields owing to the firm data from the US and improved banking sector sentiment.
• Bund futures remained lacklustre following a retreat to sub-134.00.
• 10yr JGB futures were kept afloat after a report noted a potential below-target CPI projection by the BoJ for FY25 and with the BoJ offering to purchase corporate bonds, while the enhanced liquidity auction in the long-end also attracted firmer demand.

COMMODITIES

• Crude futures were rangebound amid the tentative risk tone, recent dollar strength and mixed China data.
• US DoE said US SPR reserves fell 1.58mln bbls last week to 368mln bbls which is the lowest since 1983.
• EIA sees US total shale regions oil production for May up about 50k BPD at 9.238mln (prev. 65k BPD rise in April).
• Federal Iraq and KRG edge closer to deal to restart northern oil exports, while KRG oil will not be sold to Asia under the emerging agreement between Baghdad and Erbil, according to Reuters sources.
• Brazil's March oil and gas production fell 11.95% M/M, according to oil regulator ANP cited by Reuters.
• Spot gold eked marginal gains and attempted to reclaim the psychological USD 2,000/oz level.
• Copper futures traded sideways and alongside stocks, failed to benefit from the Chinese GDP data.
• Committee of ministers in Chile approved an environmental permit for Anglo American's (AAL LN) Los Bronces project.

CRYPTO

• Bitcoin was indecisive with prices capped by resistance at the USD 29,500 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese Finance Ministry official said there are positive changes in the property market but the market is still recovering gradually, while they will accelerate issuance and use of special local government bonds in H2.
• China stats bureau said the international environment is still complex and growth of external demand remains uncertain, while it added that constraints of domestic market demand and insufficient demand still exist but noted that demand for production has basically rebounded, according to Reuters.
• Chinese officers are accused of interfering with dissidents' meetings on US technology platforms,
• RBA Minutes from the April Meeting stated that the board considered a rate hike at the April meeting before deciding to pause, while it agreed there was a stronger case to pause and reassess the need for tightening at future meetings. RBA said it is assessing data on inflation, jobs, consumer spending and business conditions, as well as noted that updated RBA forecasts in May will help assess when and how much more tightening is needed. Furthermore, RBA said it is important to be clear that policy may be tightened again to curb inflation in a timely manner and noted that inflation is still too high.

DATA RECAP

• Chinese GDP QQ (Q1) 2.2% vs. Exp. 2.2% (Prev. 0.0%, Rev. 0.6%)
• Chinese GDP YY (Q1) 4.5% vs. Exp. 4.0% (Prev. 2.9%)
• Chinese Industrial Production YY (Mar) 3.9% vs. Exp. 4.0% (Prev. 2.4%)
• Chinese Retail Sales YY (Mar) 10.6% vs. Exp. 7.4% (Prev. 3.5%)
• Chinese Urban Investment YY YTD (Mar) 5.1% vs. Exp. 5.7% (Prev. 5.5%)

GEOPOLITICAL

• G7 Foreign Ministers communique said they condemn in the strongest possible terms Russia's war of aggression against Ukraine which constitutes a serious violation of international law including the UN Charter, while it noted that Russia's irresponsible nuclear rhetoric and threats to deploy nuclear weapons in Belarus are unacceptable. The communique also stated there is no legal basis for China's expansive maritime claims in the South China Sea and they oppose China's militarisation activities in the region, according to Reuters.
• Taiwan is to buy 400 US anti-ship missiles intended to repel China in a deal which is Taiwan's first for land-launched harpoon missiles, according to Bloomberg.

EU/UK

• ECB President Lagarde said data does not show substantial changes in the use of international currencies, while she responded that once the inflation objective is achieved, they can discuss it when asked about changing the 2% goal.
• French CFDT union leader said French President Macron has offered nothing concrete and they do not expect to return to negotiations before May 1st.