• European futures are on the front-foot with US futures in-fitting after Tuesday's regional banking pressure.
• DXY continues to slip as USTs advance pre-FOMC, NZD leads while EUR and GBP eye 1.1050 and 1.2550.
• Crude benchmarks came under marked pressure despite limited fresh catalysts as focus remains on the broader growth outlook.
• "Several House GOP leadership sources said they would want to see the Senate pass a short-term debt-limit hike before the House would consider it.", via Punchbowl
• Looking ahead, highlights include US ADP & ISM Services, FOMC Policy Announcement & Press Conference, US Quarterly Refunding & Press Conference. Earnings from Qualcomm.

EUROPEAN TRADE

EQUITIES

• European equities trade on the front-foot, Euro Stoxx 50 +0.5%, in an attempt to claw back some of yesterday’s losses ahead of tomorrow's ECB but before that, the FOMC later today.
• Equity sectors in Europe have a positive tilt with Consumer Products & Services and Food, Beverage and Tobacco names top of the leaderboard, whilst Energy names are enduring another session of losses after yesterday’s marked underperformance.
• Stateside, futures are trading in modest positive territory after Tuesday's pressure where the focus was on the regional banking sector, ES +0.1%.
• FBN's Gasparino tweets "Sources say bank analysts and traders are digesting the JPMorgan and First Republic deal and valuing regional bank assets off of it at about 85 cents on the dollar. It’s why all the regionals have sold off today and why the regional bank crisis probably isn’t over."
• Click here and here for the European equity updates, highlights include: BNP Paribas, UniCredit, Pandora, Stellantis & more.
• Click here for more detail.

FX

• DXY extends decline from recent peaks as clock ticks down to FOMC, index touches 101.500 from 101.920 high.
• Funding currencies relish low yield environment as Franc regains 0.8900+ status vs Dollar and Yen tests support into 135.50.
• Kiwi flies after upbeat NZ jobs data, with NZD/USD firm on the 0.6200 handle and the AUD/NZD cross sub-1.0700.
• Euro and Pound gain at the expense of the Buck as former eyes 1.1050 and latter tops 1.2530.
• Loonie lags below 1.3600 vs Greenback as oil continues to tank.
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Debt futures extend recovery rallies before waning at 136.70, 102.46 and 115-30+ in Bunds, Gilts and T-notes respectively ahead of ADP, services ISM and Fed.
• German and UK issuance snapped up as auctions both twice over-subscribed in the run up to US Quarterly Refunding remit and press conference.
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month futures are softer despite a lack of fresh catalysts, with analysts citing investor jitters surrounding the growth outlook and the expected rate hike by the FOMC.
• Spot gold prices remain above USD 2,000/oz due to a softer Dollar and ongoing fears surrounding the US banking sector, while base metals are indecisive due to growth fears, a softer Dollar, and recovering Chinese demand.
• US Energy Inventory Data (bbls): Crude -3.9mln (exp. -1.1mln), Cushing +0.7mln, Gasoline +0.4mln (exp. -1.2mln), Distillate -1.0mln (exp. -1.1mln)
• Morgan Stanley lowers Brent forecast to USD 75/bbl by year-end, expects the 2024 oil market to be 500k BPD oversupplied.
• Turkey, Russian and Ukraine's Deputy Defence Ministers are to meet on May 5th, via AA; to discuss extending the Black Sea Grain deal; Russian Foreign Ministry says talks on Black Sea grain deal on May 5th have not yet been agreed, according to Ria.
• Click here for more detail.

NOTABLE HEADLINES

• UK financial regulator proposes sweeping changes to stock market listing rules after the City of London missed out on a string of high-profile companies in favour of New York, according to FT

DATA RECAP

• EU Unemployment Rate (Mar) 6.5% vs. Exp. 6.6% (Prev. 6.6%)
• German Q1 Engineering Orders -13% YY, via VDMA; Domestic -14%, Foreign -13%.
• Germany's DIHK cuts forecast for real growth of German exports in 2023 to 1.0% (prev. 2.5%)

NOTABLE US HEADLINES

• White House said US President Biden will discuss initiating a separate budget process during the meeting with Congress leaders and given the short time frame, Congress should suspend the debt limit without conditions.
• "Several House GOP leadership sources said they would want to see the Senate pass a short-term debt-limit hike before the House would consider it.", according to Punchbowl sources; "Furthermore, it’s unclear that the right would have the appetite to give Biden and McCarthy more time unless an acceptable deal is truly in the offing."
• US Senate Banking Committee is to hold a hearing on recent bank failures on Thursday and will conduct a hearing on May 16th to examine the failures of SVB and Signature Bank, while its hearing on May 18th is on the state of the banking and credit union industries with witnesses to include Fed's Vice of Supervision Barr and the FDIC Chairman.
• USTR Tai and Canada's Trade Minister discussed Canada's proposed digital services tax, while Tai expressed her hope that the US and Canada could work together on this issue which could unfairly impact US businesses.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Explosions were reported in Ukraine's capital Kyiv and surrounding regions, according to TASS.
• Top US diplomat for East Asia Kritenbrink said the visit by Philippines President Marcos to the US highlights how enduring the alliance is and the importance of peace and stability in the Indo-Pacific. Kritenbrink said he remains deeply concerned about China's continued intimidation and harassment, while he added the US stands with the Philippines in the face of China Coast Guard's infringement and harassment of the Philippines' freedom of navigation in the South China Sea.
• Turkish Foreign Minister says meeting with Russian and Syrian foreign ministers could take place in Moscow on May 10th, according to Haberturk.
• US Fifth Fleet says a Panama-flagged oil tanker was seized by Iran's IRGC as it was transiting in the Strait of Hormuz on May 3rd.

CRYPTO

• Bitcoin is comparably contained at the time of writing, within USD 28.35-23.83k parameters with specifics light amid some broader market jitters ahead of the FOMC.

APAC TRADE

• APAC stocks were mostly negative following the losses on Wall St where the major indices declined ahead of the FOMC rate announcement amid regional bank jitters and with sentiment overnight also hampered by the key market closures in Japan and mainland China.
• ASX 200 was led lower by underperformance in energy after oil prices dropped more than 5% yesterday and with the mood not helped by mixed data releases including weak AIG Manufacturing and Construction figures.
• KOSPI declined as the broad risk aversion overshadowed the jump in sales by South Korea’s top automakers.
• Hang Seng was pressured by weakness in the energy and tech sectors, with participants bracing for the expected rate hike stateside and a similar move by the HKMA in lockstep with the Fed.

NOTABLE ASIA-PAC HEADLINES

• BoK Governor Rhee said it is premature to talk about a policy pivot, while he noted that it is time to wait and see as core inflation remains high and they are careful because of large FX volatility, according to a CNBC interview.
• RBNZ Financial Stability Report said New Zealand's financial system is well placed to handle the higher interest rate environment and international financial disruptions, while it added that global inflation is persisting at levels well above central banks’ policy targets.

DATA RECAP

• Australian AIG Manufacturing Index (Apr) -20.2 (Prev. 5.6); Construction Index (Apr) -12.4 (Prev. -5.8)
• Australian Retail Sales MM (Mar F) 0.4% vs. Exp. 0.3% (Prev. 0.2%)
• New Zealand HLFS Job Growth QQ (Q1) 0.8% vs. Exp. 0.4% (Prev. 0.2%)
• New Zealand HLFS Unemployment Rate (Q1) 3.4% vs. Exp. 3.5% (Prev. 3.4%); Participation Rate (Q1) 72.0% vs. Exp. 71.7% (Prev. 71.7%)
• New Zealand Labour Cost Index QQ (Q1) 0.9% vs. Exp. 1.0% (Prev. 1.1%); YY (Q1) 4.5% vs. Exp. 4.6% (Prev. 4.3%)