• European bourses are mixed/flat overall, as the complex reverted back to opening parameters after a hawkish move lower on the regions Flash PMIs; US futures in-fitting
• DXY firmer but back below 102.00, JPY outperforms while Antipodeans lag. GBP hit on retail sales and as EUR lifts on PMIs, though OpEx caps
• EGBs have lifted off troughs after initially dropping on hawkish PMIs
• Commodities choppy but have been tracking the above market action with crude specifics limited
• Fed's Harker, some additional tightening needed; Bowman, clearly need to continue to work to bring inflation down
• Looking ahead, highlights include US Flash PMIs, Speeches from Fed's Cook & Harker, ECB's Elderson & de Guindos.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed/flat overall, Euro Stoxx 50 +0.1%, as the complex reverted back to opening parameters after a hawkish move lower on the regions Flash PMIs.
• Sectors are mixed, in-fitting with the above, with marked underperformance in Basic Resources after updates from BHP and Glencore alongside broader commodity action.
• US futures are in-fitting with the above and are little changed with parameters even narrower than European peers ahead of PMIs and the final Fed speakers ahead of blackout.
• SAP (SAP GY) - Q1 (EUR): Revenue 7.44bln (exp. 7.34bln), Cloud Revenue 3.18bln (exp. 3.22bln), adj. EPS 1.08 (exp. 1.20)
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FX

• DXY mostly firmer within 102.070-101.750 range as the index recovers from post-US claims and Philly Fed retreat awaiting prelim. PMIs.
• Yen bucks trend after acceleration in Japan's ex-food and energy CPI amidst pre-weekend short squeeze, as USD/JPY reverses through 134.00.
• Euro propped by strength in EZ services and comp PMIs, but EUR/USD capped by 1.0970-80 option expiries.
• Sterling loses tech support(s) as UK retail sales miss consensus, Cable sub-1.2400 and EUR/GBP eyeing 0.8850.
• Aussie underperforms below 0.6700 vs Buck as iron ore prices tumble.
• PBoC set USD/CNY mid-point at 6.8752 vs exp. 6.8758 (prev. 6.8987)
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FIXED INCOME

• Bunds undermined by better than expected EZ services and composite PMI plus more ECB concerns about core inflation.
• Gilts underpinned by weak UK consumption data and US Treasuries sit tight ahead of flash PMIs.
• 10-year benchmarks diverge between 134.41-133.65, 101.19-100.71 and 114-26+/18 parameters for Bunds, Gilts and USTs respectively.
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COMMODITIES

• Crude benchmarks are choppy after initial pressure trimmed alongside the recovery in equity benchmarks after the initial hawkish PMI pressure, crude specifics limited.
• WTI trades on either side of USD 77.50/bbl while its Brent counterpart oscillates on either side of USD 81.00/bbl, both in relatively tight ranges.
• Spot gold was pushed back under USD 2,000/oz from a USD 2,005.62/oz overnight high as the DXY picked up, with the next level to the downside being Wednesday’s trough at USD 1,969.30/oz; base metals are generally lower, though off-lows given the above market action.
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NOTABLE HEADLINES

• BoE's Tenreyro said the UK inflation target is flexible and intended to respond to shocks, while she added that they may have already tightened a bit too much.
• ECB's Schnabel reiterated that headline inflation has started to decline but noted core inflation proves sticky, while she added that energy contributions to inflation are falling quickly although many other components to inflation are still on the rise.
• ECB's Makhlouf says it is too early to plan a pause in policy tightening.
• Chinese Commerce Ministry says it will extend anti-dumping tariffs on some optical fibre imports from the US and EU for five years from April 25th.

DATA RECAP

• UK GfK Consumer Confidence (Apr) -30 vs. Exp. -35 (Prev. -36)
• UK Retail Sales MM (Mar) -0.9% vs. Exp. -0.5% (Prev. 1.2%, Rev. 1.1%); Ex-Fuel MM (Mar) -1.0% vs. Exp. -0.7% (Prev. 1.5%, Rev. 1.4%)
• UK Retail Sales YY (Mar) -3.1% vs. Exp. -3.1% (Prev. -3.5%, Rev. -3.3%); Ex-Fuel YY (Mar) -3.2% vs. Exp. -3.1% (Prev. -3.3%, Rev. -3.0%)
• EU S&P Global Composite Flash PMI (Apr) 54.4 vs. Exp. 53.7 (Prev. 53.7); "Neither input prices nor sales prices are showing any significant slowdown in the upward momentum of prices... This increases the likelihood that the CB will tighten monetary policy more, or for longer."
• EU S&P Global Manufacturing Flash PMI (Apr) 45.5 vs. Exp. 48.0 (Prev. 47.3); Services Flash PMI (Apr) 56.6 vs. Exp. 54.5 (Prev. 55.0)
• UK Flash Composite PMI (Apr) 53.9 vs. Exp. 52.5 (Prev. 52.2); "... combination of faster growth and elevated price pressures put a twelfth rate hike by the Bank of England an increasingly done deal when it next meets on 11th May, and will add to speculation that further hikes may be needed.”
• UK Flash Services PMI (Apr) 54.9 vs. Exp. 52.9 (Prev. 52.9); Manufacturing PMI (Apr) 46.6 vs. Exp. 48.5 (Prev. 47.9)

NOTABLE US HEADLINES

• Fed Discount Window borrowing rose to USD 69.9bln on April 19th (prev. 67.6bln W/W) which was the first increase since mid-March, while BTFP lending increased to USD 74bln (prev. 71.8bln W/W) and other credit lending was at USD 172.6bln (prev. 172.6bln W/W).
• Fed's Bowman (voter) said they clearly need to continue to work to bring inflation down and that bankers see an economic slowdown as likely within the next year so are seeing fewer opportunities to lend.
• Fed's Harker (voter) said some additional tightening is needed to deal with high inflation and once rate hikes end, the Fed will need to hold steady for a while. Harker also commented that they need to be cautious when moving during a period of uncertainty and that the Fed is close to where it needs to be on rates.
• Fed's Mester (non-voter) said that growth will be slow this year and reiterated that how much higher than 5% rates would need to go and how long they stay there will depend on the economy, while she said that getting inflation down is her focus and they will evaluate the peak funds rate at the FOMC meeting.
• Fed could close a loophole that allows some midsized banks to hide losses on securities; "Potential change would reverse 2019 decision to loosen rules for midsize banks", according to WSJ sources.
• US President Biden and his team are preparing to announce his re-election campaign next week, according to Washington Post. Reuters also reported that President Biden plans to launch his re-election campaign with a video as soon as Tuesday, according to sources.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Chinese Foreign Minister Qin Gang said there has recently been absurd rhetoric accusing China of upending the status quo, as well as disrupting peace and stability across the Taiwan Strait, while Qin added that the logic is absurd and the conclusion dangerous. Qin also commented that both sides of the Strait belong to China and that those who play with fire on Taiwan will eventually get themselves burned, according to Reuters.
• G7 countries are considering a near-total ban of exports to Russia, according to Kyodo citing sources.
• North Korea said it will continue necessary action until military threats from the US are eliminated and its status of nuclear weapons state will remain an undeniable fact, while it warned it will take strong action if G7 countries attempt to violate its sovereignty and fundamental interests, according to KCNA.
• NATO Secretary General Stoltenberg says that all NATO allies have agreed that Ukraine will eventually become a member, main focus currently is to ensure Ukraine prevails against Russia.

CRYPTO

• Bitcoin is holding around the USD 28k mark, with parameters either side of the figure slim and within recent ranges after BTC backed away somewhat from the USD 30k mark in recent sessions.

APAC TRADE

• APAC stocks were mostly lower as the region tracked the losses on Wall St where risk sentiment was subdued after mixed earnings releases and disappointing US data.
• ASX 200 was pressured by weakness in financials and underperformance in the mining sector as Australia’s largest company BHP suffered after a decline in quarterly iron ore output.
• Nikkei 225 traded indecisively following mixed PMIs and the latest inflation data which printed mostly in line with estimates but remained above 3% and showed an acceleration in nationwide Ex. Fresh Food & Energy CPI.
• Hang Seng and Shanghai Comp underperformed amid ongoing US-China frictions with President Biden to unveil China investment curbs, while there was also fierce rhetoric from China's Foreign Minister who said both sides of the Taiwan Strait belong to China and warned that those who play with fire on Taiwan will get burned.

NOTABLE ASIA-PAC HEADLINES

• China's FX regulator said the valuation of Chinese A shares is low and investment prospects are good, while the regulator added that US-China yield differentials are shrinking and the external impact on China is decreasing.
• BoJ semi-annual financial system report: domestic financial system has been maintaining stability on the whole.
• BoJ is likely to maintain ultra-loose monetary policy and make no change to interest rate targets and yield allowance band at its meeting next week, according to Reuters sources.

DATA RECAP

• Japanese National CPI YY (Mar) 3.2% vs. Exp. 3.2% (Prev. 3.3%); Ex. Fresh Food YY (Mar) 3.1% vs. Exp. 3.1% (Prev. 3.1%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Mar) 3.8% vs. Exp. 3.4% (Prev. 3.5%)
• Japanese Manufacturing PMI (Apr P) 49.5 (Prev. 49.2); Services PMI (Apr P) 54.9 (Prev. 55.0)
• Japanese Composite (Apr P) 52.5 (Prev. 52.9)
• Australian Manufacturing PMI (Apr P) 48.1 (Prev. 49.1); Services PMI (Apr P) 52.6 (Prev. 48.6)
• Australian Composite PMI (Apr P) 52.2 (Prev. 48.5)