• APAC stocks traded rangebound with the region indecisive following the flat handover from the US. Tesla lower by 6.1% after hours post-earnings.
• European equity futures are indicative of a contained open with Euro Stoxx 50 future flat after the cash market closed flat yesterday.
• DXY lingers just below the 102 mark, FX markets overall contained, NZD the laggard across the majors post-CPI.
• Crude futures continued to retreat after slipping beneath post-OPEC voluntary cut lows.
• Looking ahead, highlights include German Producer Prices, US IJC, Existing Home Sales, EZ Consumer Confidence (Flash), ECB Minutes, Speeches from Fed's Williams, Waller, Mester, Bowman & Bostic, ECB's Lagarde & Schnabel, Supply from Japan, Spain & France.
• Earnings from Phillip Morris, AT&T, American Express, Publicis, EssilorLuxottica, Renault & Nokia.

US TRADE

EQUITIES

• US stocks finished relatively flat after a choppy trading session as participants digested earnings releases and with early headwinds after firmer-than-expected UK CPI data spurred some global hawkish central bank repricing.
• SPX -0.01% at 4,152, NDX -0.02% at 13,089, DJIA -0.23% at 33,897, RUT -0.23% at 33,897.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Beige Book stated that overall economic activity was little changed in recent weeks and nine districts reported either no change or only a slight change in activity this period while three indicated modest growth.
• Fed's Goolsbee (voter) said the Fed is still figuring out the credit impact from the recent bank strains and he is still waiting to see if the fallout from recent bank failures could cause the economy to slow more than expected. Goolsbee added his message is to be prudent and patient, while he noted the things to watch during the next two weeks until the Fed's next meeting are prices and credit, according to Reuters citing a Marketplace interview.
• Fed's Williams (voter) said US inflation is still too high and the Fed will act to lower price pressures, as well as noted that tighter credit conditions will weigh on growth and it will take time to gauge the impact of tighter banking conditions. Williams also commented that it is likely to take two years to get back to the 2% inflation target and it will take time for Fed actions to lower inflation, while he sees inflation to ease to 3.25% this year and noted inflation is moderating but demand still outstrips supply.
• White House said it is always monitoring developments in the currency market and the primacy of the US dollar as the world's reserve currency is underpinned by fundamentals. Furthermore, the White House said there should be no negotiations on the debt ceiling which Republicans need to lift.
• US House Speaker McCarthy confirmed the introduction of a House debt limit legislation bill that proposes a debt ceiling lift of USD 1.5tln and a cut to federal spending of USD 4.5tln.
• Tesla (TSLA) - Q1 2023 (USD): Adj. EPS 0.85 (exp. 0.85), Revenue 23.33bln (exp. 23.29bln). Still sees FY production 1.80mln vehicles (exp. 1.84mln). Tesla did not release its automotive margins, but continues to believe that its operating margin will remain among the highest in the industry. CEO Musk has taken a view that pushing for higher volumes and a larger fleet is the right choice here vs lower volume and higher margins. Shares fell 6.1% after market

APAC TRADE

EQUITIES

• APAC stocks traded rangebound with the region indecisive following the flat handover from the US where earnings were under the spotlight and early headwinds were seen after firmer-than-expected UK CPI data.
• ASX 200 was indecisive as participants digested output updates and with the mining sector subdued despite the fresh record Q1 iron ore shipments by Rio Tinto, while Australian Treasurer Chalmers announced recommendations from the independent RBA review which included establishing separate boards for governance and monetary policy with fewer meetings and press conferences to be conducted after policy decisions.
• Nikkei 225 gradually pared opening losses following mixed trade data including better-than-expected exports growth and after a recent report that the BoJ is said to be wary of tweaking yield control this month.
• Hang Seng and Shanghai Comp were mixed following the lack of surprises by the PBoC which maintained its benchmark lending rates for the 8th consecutive month and as frictions lingered after the US Commerce Department imposed a USD 300mln civil penalty on Seagate for supplying hard disk drives to Huawei in violation of export controls.
• US equity futures (ES -0.3%) were softer after a bout of mixed earnings and amid the cautious mood in Asia.
• European equity futures are indicative of a contained open with Euro Stoxx 50 future flat after the cash market closed flat yesterday.

FX

• DXY traded rangebound but held on to the prior day’s gains and briefly reclaimed the 102.00 handle, after the firm inflation data from across the pond spurred some hawkish central bank pricing and with several Fed comments overnight including from Williams who noted that US inflation is still too high and the Fed will act to lower price pressures.
• EUR/USD remained stuck near the 1.0950 level albeit with the downside cushioned after recent hawkish comments by ECB officials on inflation and as participants await the ECB minutes due later today.
• GBP/USD was lacklustre with price action choppy after having faded its inflation-induced gains.
• USD/JPY kept afloat after a recent report suggested the unlikelihood of a BoJ policy tweak next week.
• Antipodeans declined with underperformance in NZD/USD after Q1 CPI printed softer than expected although the impact on money market pricing of rates was negligible as inflation remained well above target.
• PBoC set USD/CNY mid-point at 6.8987 vs exp. 6.8979 (prev. 6.8732)
• SNB's Schlegel said Swiss inflation is low in international comparison but still too high and above the level associated with price stability, while he said they cannot rule out further rate hikes to bring inflation under control and that markets expect that tightening isn't over.

FIXED INCOME

• 10yr UST futures eked slight gains and continued to claw back some of the prior day's losses that were spurred by the inflationary-induced headwinds from the UK, with the recovery facilitated after support held at 114.00.
• Bund futures were marginally higher albeit with further advances limited by recent hawkish ECB rhetoric.
• 10yr JGB futures were kept afloat amid prospects of a delayed exit from the BoJ’s ultra-easy policy although gains were limited after relatively softer results from the 20yr JGB auction.

COMMODITIES

• Crude futures continued to retreat after slipping beneath post-OPEC voluntary cut lows.
• Spot gold traded sideways with the precious metal contained by an uneventful dollar.
• Copper futures marginally weakened alongside the cautious overnight risk tone.

CRYPTO

• Bitcoin was rangebound with price action indecisive after its recent slip back below USD 29,000.

NOTABLE ASIA-PAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Apr) 3.65% vs Exp. 3.65% (Prev. 3.65%)
• PBoC 5-Year Loan Prime Rate (Apr) 4.30% vs Exp. 4.30% (Prev. 4.30%)
• US Trade Representative Tai said they have seen supply chain fragility and that US trade restrictions on China are narrowly targeted, while she added the US doesn't intend to decouple and intends a level trade playing field with China.
• US Commerce Department imposed a USD 300mln civil penalty on Seagate (STX) and said the Co. sold 7.4mln hard disk drives to Huawei between August 2020-September 2021 in violation of export controls, according to Reuters.
• RBA independent review recommended that the RBA should have dual objectives of price stability and full employment, while it should retain a flexible inflation target of 2%-3% and aim at the mid-point. It was also recommended that the government form a monetary policy board of experts which would comprise of the RBA Governor, Deputy Governor, Treasury Secretary and 6 external members with the Governor as Chair in which the policy board would conduct 8 meetings a year with a press conference after each meeting, while the government should establish a governance board with an external chair and legislate changes to commence from July 2024. Furthermore, the RBA should retain independence and the power of government to override decisions should be repealed.

DATA RECAP

• Japanese Trade Balance Total Yen (Mar) -754.5B vs. Exp. -1294.8B (Prev. -897.7B, Rev. -898.1B)
• Japanese Exports YY (Mar) 4.3% vs. Exp. 2.6% (Prev. 6.5%)
• Japanese Imports YY (Mar) 7.3% vs. Exp. 11.4% (Prev. 8.3%)
• Australian NAB Business Confidence (Q1) -4 (Prev. -1)
• New Zealand CPI QQ (Q1) 1.2% vs. Exp. 1.7% (Prev. 1.4%)
• New Zealand CPI YY (Q1) 6.7% vs. Exp. 7.1% (Prev. 7.2%)
• RBNZ Sectoral Factor Model Inflation Index (Q1) 5.7% (Prev. 5.8%)

EU/UK

• UK Chancellor Hunt said when inflation is above 10%, it is destabilizing the economy, while he added there is a plan to bring inflation down and that the tightness of the labour market is a factor behind inflation.
• UK government review is set to recommend a cut in reliance on semiconductor imports from geopolitically sensitive parts of the world such as Taiwan, while the strategy is to be announced "within weeks" and will offer "hundreds of millions" of pounds in long-term "targeted" financial support to the sector, according to FT sources.
• UK's Unite union said security officers at Heathrow Airport are to strike on May 4th-10th and May 25th-27th.
• ECB's Schnabel said while headline inflation has started to decline, underlying inflation proves sticky and inflation momentum remains high for all components except for energy, while she added that supply-side shocks from bottlenecks and the energy prices continue to fade.