• European bourses are in the red as ASML highlights caution among customers & with the macro backdrop influenced by hawkish UK CPI.
• Stateside, futures are in the red with the NQ lagging as yields increase while banking names are deriving support from WAL's after-hours update.
• The session is characterised by broad USD strength, seemingly fuelled by yields and JPY underperformance.
• Though, the latter dynamic briefly lessened following a BoJ sources piece; GBP the relative outperformer post-CPI.
• As such, Gilts once again underperform with EGBs & USTs lower in sympathy, action which provided more pre-supply concessions.
• Crude benchmarks have experienced marked downside with fundamentals limited amid broad strength and the surrender of recent lows.
• Looking ahead, highlights include New Zealand CPI; Speeches from ECB's Lane & Schnabel, Fed's Goolsbee, BoE's Mann, SNB's Schlegel. Supply from the US. Earnings from American Airlines, IBM, Tesla, Morgan Stanley & Abbott.

EUROPEAN TRADE

EQUITIES

• European bourses are in the red, Euro Stoxx 50 -0.4%, after the index's largest weighted component ASML drops post-earnings despite beating estimates as it highlights caution among customers.
• Elsewhere, the macro backdrop has been influenced by hotter-than-expected UK CPI data with a hawkish move seen in Europe/UK at the time, FTSE 100 -0.4%.
• Given the above, sectors have a negative skew with Real Estate lagging as yields increase while Tech names slip given ASML, at the other end of the spectrum Food, Beverage and Tobacco outperforms after Heineken's update.
• Stateside, futures are in the red with the Nasdaq lagging as yields increase while banking names are deriving support from WAL's after-hours update.
• Netflix Inc (NFLX): Top- and bottom-lines were broadly in line with expectations, although net subscriber additions were short in the quarter, and guidance for the next quarter was soft relative to analyst expectations; some analysts suggested that the soft subscriber guidance was a result of pushing back the launch of its paid-sharing service into Q2.
• Western Alliance Bancorp (WAL): The regional bank reported that deposits stabilised in Q1, and profits topped expectations.
• ASML (ASML NA) Q1 2023 (EUR): Revenue 6.75bln (exp. 6.3bln), Net Income 1.95bln (exp. 1.64bln), EPS 4.96 (exp. 4.13), Gross Profit 3.4bln, Gross Margin 50.6% (exp. 49.8%). Total 2022 dividend of 5.80/shr (exp. 6.60/shr).
• Click here for more detail.

FX

• Overall, the session is characterised by broad USD strength which is seemingly being fuelled by yield action and associated JPY underperformance alongside dovish-sounding BoJ commentary.
• Thus far, the DXY has eclipsed the 102.00 handle to a 102.18 peak from a 101.65 base, with upside initially capped by GBP outperformance after hotter-than-expected CPI data; Cable peaked at 1.2472, but has since been drawn back to 1.2400.
• Returning to the JPY, USD/JPY has most recently pulled-back from the 135.00 mark to circa. 134.75 after source reports suggest the BoJ is wary of tweaking yield control in April, via Bloomberg.
• Elsewhere, peers are broadly-speaking softer against the USD with EUR unreactive to final HICP as marked OpEx draws interest while the CHF experienced only a fleeting upside from SNB's Maechler.
• Note, given the marked crude move petro-FX has been coming under slightly more pressure as the session progressed, with USD/CAD below the 200-DMA and towards its 10-DMA.
• SNB's Maechler says inflation is back with a vengeance and monetary policy is back to the traditional tools. Ready to sell foreign currencies..
• PBoC set USD/CNY mid-point at 6.8731 vs exp. 6.8728 (prev. 6.8814)
• Click here for more detail.

FIXED INCOME

• Gilts once again underperform after hawkish UK data ahead of the May BoE, with 25bp now fully priced compared to circa. 80% before-hand.
• As such, Gilts have been down to 99.85 with the associated 10yr yield above 3.85%
• Action which has been seen, though to a lesser extent, in EGBs and USTs and has served as another bout of concession before the well-received Bund outing and the upcoming US 20yr; albeit, limited upside from the German sale.
• Stateside, USTs remain pressured pre-supply/Goolsbee with the curve elevated and action again most pronounced at the short-end.
• Click here for more detail.

COMMODITIES

• WTI and Brent are under marked pressure that has seen the benchmarks move below the last two week's lows amid broad USD strength; note, the move occurred despite a lack of timely drivers and the initial bout did not coincide with Dollar action.
• Specifically, the benchmarks have moved below USD 79/bbl and USD 83/bbl respectively, from initial USD 81.24/bbl and USD 85/15/bbl peaks.
• China's NDRC said it will speed up the construction of iron ore projects and will firmly curb an irrational rise in iron ore prices, according to Reuters.
• China's Huayou Cobalt is looking to build a nickel ore processing plant in the Philippines, according to an industry source cited by Reuters.
• Spot gold has succumbed to the firmer USD and has surrendered the USD 2k/oz handle to a USD 1972/oz trough, with base metals under similar pressure though ranges are somewhat more contained in the likes of LME Copper.
• Ukraine's Deputy PM says ship inspections are recommencing under the Black Sea grain initiative and grain transit through Poland is to open overnight Thursday/Friday.
• Click here for more detail.

NOTABLE HEADLINES

• Morgan Stanley now expects the BoE to hike rates by 25bps in May vs. prev. view of unchanged.
• Central London property prices fell nearly 5% in the 12 months to March which is the largest annual decline since 2019, according to FT

DATA RECAP

• UK CPI YY (Mar) 10.1% vs. Exp. 9.8% (Prev. 10.4%); MM (Mar) 0.8% vs. Exp. 0.5% (Prev. 1.1%)
• UK CPI All Services 12-month rate 6.6% (prev. 6.6%)
• UK Core CPI YY (Mar) 6.2% vs. Exp. 6.0% (Prev. 6.2%); MM (Mar) 0.9% vs. Exp. 0.6% (Prev. 1.2%)
• EU HICP Final YY (Mar) 6.9% vs. Exp. 6.9% (Prev. 6.9%); X F&E Final YY (Mar) 7.5% vs. Exp. 7.5% (Prev. 7.5%); X F, E, A & T Final YY (Mar) 5.7% vs. Exp. 5.7% (Prev. 5.7%)

NOTABLE US HEADLINES

• US President Biden and Democratic congressional leaders Schumer and Jeffries agreed in a call that they won't negotiate on the debt limit, while Biden said he was ready to separately negotiate regarding the budget once Republicans present their plan, according to the White House cited by Reuters.
• TSMC (2330 TT/TSM) is reportedly seeking up to USD 15bln from the US for semiconductor plans, but pushes back on conditions that require factory profits to be shared and for detailed operation information to be provided, according to WSJ sources.
• Synchrony Financial (SYF) Q1 2023 (USD): Diluted EPS 1.35 (exp. 1.46), total deposits USD 74.4bln (exp. 71.4bln)
• Click here for the US Early Morning Note.

GEOPOLITICS

• US did not issue visas to all members of the Russian delegation going to the UN, according to RIA.
• UK government cyber defence agency warned of a threat to Western infrastructure from hackers sympathetic to Russia and its war on Ukraine, according to Reuters.
• South Korean President Yoon said South Korea may consider providing military aid for Ukraine if a large attack on civilians occurs and it will take the most appropriate measures considering battlefield developments in Ukraine. Yoon also commented that he won't hold a summit with North Korean leader Kim for show but the door for dialogue to promote peace remains open, while South Korea is developing ultra-high performance and high-power weapons to respond to North Korea's emerging threats and is discussing extended deterrence plans with the US including information sharing, joint planning and joint execution, according to Reuters.
• North Korean leader Kim ordered the preparation to launch a military spy satellite as planned and ordered the deployment of a series of spy satellites to boost reconnaissance capabilities, according to KCNA.
• US House China Select Committee will be war-gaming a scenario of China invading Taiwan, according to Axios
• A leaked US military assessment stated that China's military could soon deploy a high-altitude supersonic spy drone unit, according to Washington Post.

CRYPTO

• Bitcoin has come under marked pressure this morning, with BTC dropping from USD 30k to a test of USD 29k in a limited timeframe. At the time, there was no clear fundamental catalyst with the likes of Coindesk subsequently suggesting it may have been spurred by long-liquidations.
• US House Financial Services Committee will hold a hearing on stablecoin regulation on Wednesday, according to Cointelegraph.

APAC TRADE

• APAC stocks were lacklustre in the absence of any major positive macro drivers and following the flat handover from Wall St where risk sentiment was clouded amid mixed data releases and earnings results.
• ASX 200 was kept afloat amid outperformance in the mining and materials sectors although gains were limited by weakness in energy and consumer stocks, as well as uninspiring data with Westpac Leading Index flat.
• Nikkei 225 declined after the latest Reuters Tankan survey for April showed Japanese manufacturers remained glum with the Large Manufacturing Index stuck in negative territory.
• Hang Seng and Shanghai Comp were subdued with underperformance in Hong Kong amid losses in autos, property and tech, while the mainland was also cautious ahead of US Treasury Secretary Yellen’s major speech on Thursday regarding US-China Economic ties where she will outline US economic priorities on China.

NOTABLE ASIA-PAC HEADLINES

• BoJ is reportedly wary of tweaking yield control in April, via Bloomberg; BoJ is reportedly likely to mull of guidance change can wait or not; smoother yield curve is said to suggest no need for a move now; seeing elevated uncertainties after the banking crisis.
• China's NDRC said it is studying and drafting documents to recover and expand consumption, while it added that it will work hard to stabilise auto consumption, according to Reuters.
• UBS raises it FY23 Chinese GDP forecast to 5.7% Y/Y from 5.4%.

DATA RECAP

• Australian Westpac Leading Index MM (Mar) 0.0% (Prev. -0.1%)