• European bourses are pressured following the subdued APAC/US handover, stateside performance is currently mixed/rangebound with a focus on regional banks/earnings.
• DXY nears 101.50 from a 101.02 base as the Euro failed to eclipse 1.11 with peers contained ex-out/underperformance in NZD and CHF
• Crude benchmarks are firmer after an initial marked slump overnight; Shell says they are nearing 2019 levels of oil demand in China
• UST yields continue to steepen post-FOMC while EGBs have pulled back to marginal negative territory pre-ECB
• Spot gold, on some charts, hit an ATH though has since pulled back while base metals are underpinned by China's return despite a contractionary PMI
• Looking ahead, highlights include US IJC, ECB Policy Announcement & Press Conference. US Senate Banking Hearing. Earnings from Apple, Kellogg, AEP, Moderna, Paramount & Conoco.

EUROPEAN TRADE

EQUITIES

• European equities, Euro Stoxx 50 -0.7%, trade mostly lower following the post-FOMC selling pressure in US indices.
• Equity sectors in Europe are mostly lower in what has been a busy morning for corporates. To the downside, Media and Auto names lag while Energy names are the clear outperformer in what has been a tough week for the sector amid declines in underlying crude prices, with upside also spurred by Shell's +1.8% update.
• US equity futures have spent the morning slightly better than flat in an attempted recovery following the Fed rate decision and further jitters on the regional banking front, with PACW's shares plunging over 50% in afterhours trade.
• PacWest (PACW) has reportedly been approached by several potential partners and investors, according to Bloomberg.. -35% in the pre-market.
• TD Bank (TD) and First Horizon (FHN) have mutually agreed to terminate their merger pact, via Bloomberg.
• Click here and here for the European equity updates, highlights include: Shell, Maersk, BMW, Volkswagen, Infineon, Airbus, ArcelorMittal, AB InBev & more.
• Click here for more detail.

FX

• DXY defends 101.000 in post-FOMC aftermath, as EUR/USD rejects 1.1100 in the run-up to the ECB amidst mixed EZ PMIs and a raft of hefty option expiries.
• Kiwi retains momentum above 0.6200 vs Buck and around 1.0700 vs Aussie as NZ building consents rebound firmly, AUD/USD underpinned within a 0.6699-41 band after export-led wider than forecast trade surplus.
• Pound perky near new YTD peak vs Buck just under 1.2600 with impetus from upgraded UK services and composite PMIs.
• PBoC set USD/CNY mid-point at 6.9054 vs exp. 6.9061 (prev. 6.9240)
• Norges Bank Key Policy Rate: 3.25% vs. Exp. 3.25% (Prev. 3.0%); policy rate will most likely be raised further in June. If NOK remains weaker than projected or pressures in the economy persist, a higher policy rate than envisaged earlier may be needed.
• Brazil Central Bank maintained the Selic rate at 13.75%, as expected. BCB said it will assess if the strategy of maintaining the Selic rate for a long period will be sufficient to ensure the convergence of inflation to the target and will persist in its strategy until consolidating disinflation and anchoring expectations around its targets.
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Treasuries retain their bull-steepening trajectory post-Fed and ahead of several US data points, with T-notes holding above 116-00.
• Bunds probe 136.00 from 136.66 a peak as ECB looms and hawkish guidance is seen accompanying a 25 bp hike.
• Gilts teeter towards base of 101.37-93 range after upwardly revised UK services and composite PMIs.
• Click here for more detail.

COMMODITIES

• WTI and Brent futures are firmer following the recent hefty losses in the complex. WTI June and Brent July slumped to lows of USD 63.64/bbl and USD 71.28/bbl respectively overnight as futures reopened amid banking sector woes.
• Spot gold shot higher by some USD 40/oz overnight, very briefly to a fresh all-time high on some charts, north of USD 2,080/oz. The yellow metal then immediately pulled back to levels under USD 2,050/oz and trades lower intraday in the European morning.
• Base metals are mostly firmer, underpinned by the return of the markets largest purchaser China from a five-day holiday.
• Shell (SHEL LN) CEO says they are getting close to Chinese levels of oil demand last seen in 2019; sees strong rebound in gas demand in China's services sectors, but less in the industrial sectors.
• Click here for more detail.

NOTABLE HEADLINES

• BoE DMP: DMP members expected CPI to be 5.6% one-year ahead, down from 5.8%. Three-year ahead CPI expectations fell by 0.1 percentage point in April to 3.5%.

DATA RECAP

• EU S&P Global Services Final PMI (Apr) 56.2 vs. Exp. 56.6 (Prev. 56.6); Composite Final PMI (Apr) 54.1 vs. Exp. 54.4 (Prev. 54.4)
• EU Producer Prices MM (Mar) -1.6% vs. Exp. -1.7% (Prev. -0.5%, Rev. -0.4%); YY (Mar) 5.9% vs. Exp. 5.9% (Prev. 13.2%, Rev. 13.3%)
• UK S&P Global/CIPS Services PMI Final (Apr) 55.9 vs. Exp. 54.9 (Prev. 54.9); Composite PMI Final (Apr) 54.9 vs. Exp. 53.9 (Prev. 53.9)
• German Trade Balance, EUR, SA (Mar) 16.7B vs. Exp. 16.1B (Prev. 16.0B)

NOTABLE US HEADLINES

• Fox's Pergram reminds there is a Senate Banking Committee hearing today on recent bank failures; Commencing at 15:00BST/10:00EDT.
• White House CEA report said a protracted US default could result in a loss of 8.3mln jobs and a 6.1% drop in GDP, while a short default could result in a loss of 500k jobs and a 0.6% drop in GDP.
• US SEC is not considering a short selling ban as worries over bank soundness hurt shares, according to an SEC official cited by Reuters.
• PacWest Bancorp (PACW) is said to weigh strategic options including a sale, according to Bloomberg. Co. later stated that it has explored strategic asset sales including a USD 2.7bln lender finance loan portfolio and said that core customer deposits have increased since March 31st with total deposits totalling USD 28bln as of May 2nd, while it will continue to evaluate all options to maximise shareholder value, according to Reuters.
• Western Alliance (WAL) said it has not experienced unusual deposit outflows following the sale of First Republic Bank and other recent industry news, while it added that deposits as of Tuesday rose to USD 48.8bln from USD 48.2bln on Monday and QTD deposits are up USD 1.2bln from end-March.
• Click here for the US Early Morning Note.

GEOPOLITICS

• An oil refinery in Krasnodar Krai, southern Russia caught fire after a drone attack, according to TASS.
• The governor of the Russian Voronezh region announces that the air defenses shot down a drone over the city, according to Sky News Arabia citing Tass.
• Russian Foreign Ministry says "Moscow will quickly deal with Kiev's terrorist and subversive activities", via Al Jazeera.
• Indian and Russia suspend negotiations to settle bilateral trade in Rupees, Russia reportedly not willing to amass INR as trade gap remains large, via Reuters citing sources.
• Russia's Kremlin says we know decisions about such terrorist acts are taking in Washington and not Kyiv; Washington is definitely behind the attack, Kremlin is well aware of this; Russia has multiple response options, response will be thought-out.

CRYPTO

• Bitcoin is essentially unchanged, pivoting the USD 29k mark in parameters that are even thinner than those seen at this time yesterday.

APAC TRADE

• APAC stocks were mixed in the aftermath of the FOMC meeting where the Fed delivered a widely expected 25bps rate hike and paved the way for a pause, although Fed Chair Powell pushed back against cutting rates this year and alluded to banks tightening lending standards and slowing the pace of lending.
• ASX 200 was lacklustre amid weakness in its top-weighted financial sector after big four bank NAB's H1 profit missed analysts’ estimates, although losses were cushioned by resilience in mining names and improved trade data.
• KOSPI was subdued as participants digested mixed earnings results, while Nikkei 225 remain closed.
• Hang Seng and Shanghai Comp. were firmer as mainland participants returned from the golden week break with Chinese markets shrugging off the surprise contraction in Caixin Manufacturing PMI and the PBoC’s significant liquidity drain, as well as the HKMA’s 25bps rate hike in lockstep with the Fed.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 33bln via 7-day reverse repos with the rate at 2.00% for a CNY 529bln net drain.
• HKMA raised its base rate by 25bps to 5.50%, as expected.
• Chinese airlines will be allowed to expand their flights to the US, according to FT.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Apr) 49.5 vs. Exp. 50.3 (Prev. 50.0)
• Australian Trade Balance (AUD)(Mar) 15.27B vs. Exp. 12.65B (Prev. 13.87B)
• Australian Goods/Services Exports MM (Mar) 4% (Prev. -3%); Imports MM (Mar) 2% (Prev. -9%)