• APAC stocks were mostly lower after the mixed performance in the US with the mood in the Asia-Pac region also contained amid the closures in Australia and New Zealand
• BoJ Governor Ueda said the BoJ sees it appropriate to maintain YCC and easy monetary policy
• European equity futures are indicative of a softer open with Euro Stoxx 50 future -0.3% after the cash market closed lower by 0.2% yesterday
• FX markets are overall contained, EUR/USD retains 1.10 status, Cable back below 1.25, AUD lags
• Highlights include US New Home Sales, Speech from BoE's Broadbent, Supply from Germany & US, Earnings from ASM, Santander, UBS, Novartis, Nestle, Alphabet, McDonald's, Microsoft, Verizon & Visa

US TRADE

EQUITIES

• US stocks finished mixed with the tech sector among the laggards ahead of key earnings this week including MSFT, GOOG, META and AMZN, with early headwinds after a disappointing Dallas Fed Manufacturing survey sparked fresh growth fears in the US.
• SPX +0.09% at 4,137, NDX -0.24% at 12,969, DJIA +0.20% at 33,875, RUT -0.15% at 1,788.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden said that we will know real soon about his election plans.

APAC TRADE

EQUITIES

• APAC stocks were mostly lower after the mixed performance in the US where sentiment was clouded by a disappointing Dallas Fed Manufacturing survey and the tech sector was among the laggards ahead of the upcoming big tech earnings, with the mood in the Asia-Pac region also contained amid the closures in Australia and New Zealand for ANZAC Day.
• Nikkei 225 was positive amid softer Services PPI data and after the government raised its view on imports for the first time since July last year, while BoJ Governor Ueda repeated that the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments.
• KOSPI failed to hold on to early gains after South Korean GDP printed mixed but still showed the economy averted a recession.
• Hang Seng and Shanghai Comp weakened with Hong Kong pressured by underperformance in tech and after the local benchmark slipped beneath the 20k level, although losses in the mainland were stemmed following another firm PBoC liquidity injection and reports that China urged banks to cut deposit rates.
• US equity futures (ES -0.3%) remained cautious with the mood not helped by banking sector headwinds after earnings from First Republic Bank which beat on the bottom line but its deposits fell by more than USD 100bln which triggered a 22% drop in its shares.
• European equity futures are indicative of a softer open with Euro Stoxx 50 future -0.3% after the cash market closed lower by 0.2% yesterday.

FX

• DXY was rangebound during the session but initially extended on the prior day’s losses amid the move lower in yields after the Dallas Fed Manufacturing disappointed and fell deeper into negative territory which further stoked fears of a US economic slowdown.
• EUR/USD held on to gains at the 1.1000 handle with tailwinds from the recent US/EU yield divergence and ECB comments including from Schnabel who noted that a 50bps hike next week is not off the table.
• GBP/USD took a breather following yesterday's advances and a brief incursion above 1.2500.
• USD/JPY was indecisive as BoJ Governor Ueda continued to suggest an unlikelihood of a policy tweak this week.
• Antipodeans traded mixed with price action choppy amid the absence of participants for ANZAC Day.
• PBoC set USD/CNY mid-point at 6.8847 vs exp. 6.8853 (prev. 6.8835)

FIXED INCOME

• 10yr UST futures extended on gains above 115.00 level as yields softened following disappointing US data.
• Bund futures bounced back from the prior day’s trough albeit with upside capped by hawkish ECB rhetoric.
• 10yr JGB futures marginally softened with prices rangebound after BoJ Governor Ueda continued to suggest the unlikelihood of a policy shift this week and noted that they see the risk of inflation undershooting forecasts as a bigger risk than overshooting which is why the BoJ must maintain easy policy for now.

COMMODITIES

• Crude futures were choppy amid the cautious mood and took a breather after yesterday's advances.
• China's increased purchases of the April-loading Urals oil and imports from Russia's Baltic and Black Sea ports hit an 11-month high, according to Refinitiv data and traders.
• Spot gold eked slight gains after recent dollar weakness but with upside capped by resistance at USD 2,000/oz.
• China March YTD gold output rose 1.9% Y/Y to 84.97 tonnes and gold consumption rose 12.0% Y/Y to 291.58 tonnes.
• Copper futures languished at the prior day's worst levels after the disappointing data from the US stoked growth fears.

CRYPTO

• Bitcoin is marginally lower amid the subdued risk appetite and after prices trickled beneath 27,500.
• Coinbase (COIN) filed a petition to push the SEC to create new rules on crypto, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo is likely to shift focus from stimulus to reforms when top leaders meet which could take place this week as China’s economic recovery is well on track, according to Bloomberg.
• China's Commerce Minister met with the European Commission EVP in Brussels and the sides exchanged views on topics including expanding trade and investment cooperation, according to MOFCOM.
• BoJ Governor Ueda said the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments, while he also said that Japan's bond yield curve is currently smooth as a whole. Ueda said tightening monetary policy now could push down inflation in the future which is already likely to slow on dissipating effect of import costs and noted that if they see the risk of runaway inflation, they must normalise monetary policy but added that they see the risk of inflation undershooting forecast as a bigger risk than overshooting which is why the BoJ must maintain easy policy for now.

DATA RECAP

• South Korean GDP QQ (Q1 A) 0.3% vs. Exp. 0.2% (Prev. -0.4%)
• South Korean GDP YY (Q1 A) 0.8% vs. Exp. 0.9% (Prev. 1.3%)

GEOPOLITICAL

• Russia may withdraw from the treaty banning intermediate and shorter-range nuclear missiles, according to a foreign ministry official cited by TASS.
• Russian Foreign Ministry's head of nuclear non-proliferation Yeramakov said the risks of a direct military confrontation between the two nuclear powers, Russia and the US, are increasing with Washington escalating the risks through its conduct, according to TASS.
• EU and Japan pushed back against a US proposal for the G7 to ban all exports to Russia, according to FT.
• UN Chief Guterres gave Russia, Ukraine and Turkey a letter that proposes a way forward and aims at improving, extending and expanding the Black Sea grain export deal, according to a UN spokesperson cited by Reuters. There were later comments from Russian Foreign Minister Lavrov that efforts to advance Russia's part of the grain deal are not very noticeable, according to TASS.
• UK Foreign Minister Cleverly is to call for constructive ties with China in his Mansion House speech on Tuesday, according to FT. However, The Telegraph reported that Ceverly is to also say that China must come clean on the ‘biggest military build-up in peacetime’ and is to warn of the danger of ‘tragic miscalculation’ if Beijing’s aggression continues.
• US President Biden is to unveil new efforts to protect South Korea from nuclear weapons, according to AP.
• Egyptian Foreign Ministry announced the killing of the assistant administrative attaché at the Egyptian embassy in Khartoum, Sudan, according to Sky News Arabia.

EU/UK

• ECB's Lane said current data suggests that they have to raise interest rates again at the upcoming meeting, while he added that beyond the May 4th meeting, further rate hikes will depend on data, according to Reuters.
• ECB's Makhlouf said on the evidence so far, it is too early to begin planning for a pause in tightening policy and he will be especially focused on incoming data at the next policy decision. Makhlouf added that based on the evidence they have to date, rates will need to continue at restrictive levels.
• ECB's Villeroy said they have travelled most of the journey on rate hikes and there may be a need for some additional interest rate hikes but they must be limited in number and size. Villeroy also said there are still no 'clear and convergent signs' of a change in underlying inflation and the inflation situation justifies maintaining their monetary action, according to a Figaro interview.
• German Finance Minister Lindner said they need to strengthen EU fiscal rules, not dilute them, and they are in discussions on the future design of the common European fiscal framework, according to FT.
• European Commission President von der Leyen said their critical infrastructure is under threat and they are working on stress tests for the worst-case scenario on infrastructure, while they have launched a joint task force with NATO on threats to key sectors including energy and will present results at the EU leaders meeting in July.
• EU Commission VP Vestager said the EU is looking to agree on blocwide labelling rules for generative artificial intelligence like ChatGPT as early as this year in which the new rules would make it an obligation to label, if, for instance, a photo or a film or a song is made with AI, according to a Nikkei interview.
• EU tweaked patent rules to make it easier for patent holders to seek injunctions, according to the latest draft rules cited by Reuters.