• European bourses and US futures are firmer despite the mixed APAC session as participants await NFP
• Within this, DAX 40 outperformers aided by German electricity adjustments and strong Adidas earnings.
• ABA is urging the SEC to investigate short-selling activity while the White House is hopeful on avoiding a debt default.
• AUD outperforms after hawkish-SOMP while CHF lags post-CPI; USD is softer but relatively rangebound.
• Core fixed benchmarks continue to pullback from post-Fed/ECB peaks, despite an uptick on German industrial data.
• Commodities are mixed with crude firmer in a continuation of recent price action while metals are generally softer.
• Looking ahead, highlights include US & Canadian Labour Market Reports. Speeches from Fed's Cook & Bullard.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer, Euro Stoxx 50 +0.3%, somewhat shrugging off the mixed APAC handover where regional banking concerns served as a headwind in holiday thinned conditions.
• The DAX 40 +0.7% is the marked outperformer, aided by German electricity adjustments and strong Adidas earnings, +7.8%; sectors are more of a mixed bag, with Energy outperforming while Travel/Healthcare lag.
• Stateside, futures are firmer and have been edging slightly higher in typically contained pre-NFP trade after yesterday's regional banking induced pressures, ES +0.5%.
• Alibaba's (BABA) Ant Group's transformation into a fully regulated company has reportedly been held up by a reshuffle of China's financial-regulatory system, according to WSJ sources.
• Cigna Group (CI) Q1 2023 (USD): Adj. Operating EPS 5.41 (exp. 5.22), Revenue 46.4bln (exp. 45.55bln); raises FY23 outlook.
• Click here and here for the European equity updates, highlights include: Adidas, IHG, Software AG & more.
• Click here for more detail.

FX

• Hawkish RBA SOMP helps Aussie outperform and probe 200 DMA vs Greenback at 0.6728.
• Franc deflated after softer than forecast Swiss CPI even though SNB Chief Jordan repeats that further hikes cannot be ruled out given still very high underlying inflation; USD/CHF and EUR/CHF above 0.8900 and 0.9800 respectively
• Dollar drifting into NFP with DXY keeping afloat to 101.000 within a tight 101.110-370 range.
• Sterling sets fresh 2023 best beyond 1.2600, Loonie pares losses on 1.3500 handle ahead of Canada's LFS and Euro retains 1.1000+ status amidst more big option expiries, disappointing EZ data and hawkish ECB rhetoric.
• PBoC set USD/CNY mid-point at 6.9114 vs exp. 6.9128 (prev. 6.9054)
• Russia's Lavrov says we accumulated billions of IMR in Indian banks and needs to convert them into other currencies.
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Debt retraces further from post-Fed/ECB peaks as risk appetite recovers ahead of NFP.
• Bunds also take heed of hawkish-leaning ECB commentary between 136.74-19 bounds.
• Gilts down in sympathy within a 101.71-23 range and T-note treading water above 116-00 inside tight 116-03/12 band.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are firmer, in a continuation of the complex's upward momentum which commenced in Thursday's session; albeit, WTI and Brent are still markedly down on the week.
• Overall, the complex remains firmly focused on growth concerns and banking-sector woes with broader market action awaiting the upcoming NFP report for the next scheduled catalyst.
• Spot gold is incrementally lower, in a USD 2038-2053/oz range after a week of marked gains for the yellow metal. Conversely, base metals are predominantly softer as the DXY attempts to lift off worst levels and after the mixed APAC trade.
• Click here for more detail.

NOTABLE HEADLINES

• German Economy Ministry is proposing a industrial electricity price of EUR 0.06/KWh until 2030, would cost EUR 25-30bn. Funding to be taken from fund initial created for COVID. Reduced price would be valid for 80% of base power consumption.
• Sky News noted it is early days regarding the UK local council election results but suggested there are currently encouraging signs in the data for the opposition Labour Party, whilst Conservative MP Mercer said his party is having a "really terrible night".
• ECB's Villeroy says the alteration in rate increase rhythm is an important signal, favours smaller ECB hiked. Will likely be several more hikes; though, we have done the essential. Goal is to win the fight against inflation, without sparking a recession. Will bring inflation back to target by 2025 maybe even by end-2024.
• ECB's Simkus says May's hike was not the last, concerns that core inflation remains high.
• ECB's Muller says yesterday's rate hike will not be the last; no sign yet of core inflation easing.
• ECB Survey of Professional Forecasters: 2023 inflation cut to 5.6% from 5.9%, 2023 growth upgraded to 0.6% from 0.2%.

DATA RECAP

• German Industrial Orders MM (Mar) -10.7% vs. Exp. -2.2% (Prev. 4.8%, Rev. 4.5%)
• Swiss CPI YY (Apr) 2.6% vs. Exp. 2.8% (Prev. 2.9%); MM (Apr) 0.0% vs. Exp. 0.2% (Prev. 0.2%)
• EU S&P Global Construction PMI (Apr) 45.2 (Prev. 45.0)
• EU Retail Sales YY (Mar) -3.8% vs. Exp. -3.1% (Prev. -3.0%, Rev. -2.4%); MM (Mar) -1.2% vs. Exp. -0.1% (Prev. -0.8%, Rev. -0.2%)

NOTABLE US HEADLINES

• Fed Discount Window borrowing at USD 5.3bln on May 3rd (prev. 73.9bln on April 26th), BTFP at USD 75.8bln (prev. 81.3bln), Other Credit at USD 228.2bln (prev. 170.4bln), while First Republic (FRC) Discount Window and BTFP borrowing shifted to 'Other Credit', according to Reuters.
• American Bankers Association urged the SEC to investigate short-selling activity that does not reflect firms' financial status, as well as take measures to reduce avenues of abusive trading practices and restore investor confidence
• White House OMB Director Young is hopeful about finding a path to avoid a debt default and said they will have to work through how long the debt limit is extended for, while she also commented that prioritising payments is a default by another name and that nothing is off the table in terms of the potential length of debt ceiling extension.
• Apple Inc (AAPL) Q2 2023 (USD): EPS 1.52 (exp. 1.43), Revenue 94.84bln (exp. 92.96bln), Products revenue 73.93bln (exp. 71.91bln), iPhone revenue 51.33bln (exp. 48.97bln), iPad revenue 6.67bln (exp. 6.69bln), Mac revenue 7.17bln (exp. 7.74bln), Co. authorised an additional USD 90bln for share repurchases. Co. shares were higher by 2.5% after-hours.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Chinese Foreign Minister Qin, on meeting with Russian Foreign Lavrov, said China will persist in promoting peace talks and is willing to maintain communication and coordination with Russia to make tangible contributions to a political settlement of the Ukraine crisis, according to Reuters.
• White House said it is not clear right now that China can put forth a peace plan that Ukrainian President Zelenskiy will support, according to MSNBC.
• White House National Security Adviser Sullivan said we will take the necessary action to ensure Iran does not acquire a nuclear weapon and said the US still wants a diplomatic solution to Iran's nuclear program. Sullivan also commented that he will be in Saudi Arabia this weekend to meet with Saudi leaders and that the US is still working towards the goal of a deal normalising relations between Israel and Saudi Arabia.
• Reports suggest a drone attack causes fire at Ilsky refinery in Southern Russia, according to Tass.
• Russia's Foreign Minister Lavrov reiterates we will not say if the drone attack on the Kremlin is a case for war, but we will respond.
• Russia's Wagner group head Prigozhin says their forces will leave Bakhmut on May 10th, forces have to do this due to a lack of ammunition.

CRYPTO

• Bitcoin is firmer and holding steady above the USD 29k, holding towards the top-end of USD 28.7-29.5k.

APAC TRADE

• APAC stocks traded mixed after the weak lead from the US where risk sentiment was subdued by banking-related headwinds and amid holiday-thinned conditions in Asia due to closures in Japan and South Korea.
• ASX 200 was choppy amid indecision in the top-weighted financial industry after ANZ Bank’s earnings which showed H1 cash profit rose to a record although the Co. warned of increased difficulties in H2, while the RBA’s quarterly Statement on Monetary Policy stuck to the hawkish script.
• Hang Seng and Shanghai Comp. diverged with the Hong Kong benchmark led higher by strength in tech and property stocks, while the mainland is pressured after Chinese Caixin Services and Composite PMI data which showed the pace of China’s services activity slowed by more than expected but remained at a firm expansion.

NOTABLE ASIA-PAC HEADLINES

• A bipartisan group of US senators introduced legislation that would allow US President Biden to sign a tax agreement with Taiwan and which addresses an issue viewed as a barrier for further investment, according to Bloomberg.
• RBA Statement on Monetary Policy reiterated to do what is necessary to return inflation to the target and that some further tightening may be required to reach the target in a reasonable timeframe. RBA added that the longer inflation remains above target, the greater the risk of a price-wage spiral, as well as noted that goods disinflation is limited so far and energy price inflation is to stay high this year, while rent growth is to pick up and materially added to inflation out to mid-2025.
• Earthquake early warning issued for Japan's Ishikawa prefecture, intensity of 6 on Japan's 1-7 scale, prelim magnitude of 6.3 (rev. 6.5), according to JMA; Japan earthquake has shaking intensity of 6+ on scale of 7, according to NHK; No tsunami warning issued.
• China's State Planner to study a new round of pork purchases for reserves, amid weakening prices..

DATA RECAP

• Chinese Caixin Services PMI (Apr) 56.4 vs. Exp. 57.3 (Prev. 57.8); Composite PMI (Apr) 53.6 (Prev. 54.5)