• APAC stocks were mixed following the indecisive performance on Wall St where the focus was on the Fed’s SLOOS
• The report showed that banks tightened credit terms and demand for loans declined.
• Chinese trade figures showed stronger-than-expected export growth but imports disappointed with a surprise contraction.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed up 0.2% yesterday.
• DXY is flat with price action across the majors relatively contained, EUR/USD is back on a 1.09 handle.
• Looking ahead, highlights include Speeches from ECB's Lane & Schnabel, Fed's Williams & Jefferson, Supply from Germany & US, Earnings from Daimler Truck, Ubisoft, Direct Line, Airbnb & Occidental Petroleum.

US TRADE

EQUITIES

• US stocks were little changed in choppy, rangebound trade and following the mixed reception to the Fed's senior loan officer opinion survey (SLOOS) which showed a tightening of credit availability although this was largely what Fed Chair Powell had alluded to last week, while trading activity was lighter than usual with UK markets shut.
• SPX +0.05% at 4,138, NDX +0.25% at 13,291, DJIA -0.17% at 33,618, RUT -0.31% at 1,754.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Semi-Annual Financial Stability Report stated that recent turmoil in the banking industry has stabilised but could weigh on credit conditions going forward and said the banking sector overall remained resilient with substantial loss-absorbing capacity. It also stated that policy interventions by bank regulators limit the potential for further stress and domestic banks have ample liquidity overall, while funding strains were notable for some banks but overall funding risks across the banking system were low.
• Fed SLOOS noted a net 46.0% of banks (prev. 44.8% Q/Q) tightened credit for C&I loans for large & medium firms and a net 46.7% of banks (prev. 43.8% Q/Q) tightened credit for C&I loans for small firms through Q1. Furthermore, respondents reported, on balance, tighter standards and weaker demand for commercial and industrial loans to large and middle-market firms as well as small firms over Q1. Banks also noted lending standards tightened across all categories of residential real estate loans other than government-sponsored enterprise-eligible and government residential mortgages, which remained basically unchanged.
• US Treasury Secretary Yellen reiterated the projection that the Treasury will run out of cash and extraordinary measures to pay debts as soon as June 1st and warned if Congress doesn't raise the debt ceiling, US President Biden will have to make decisions on what to do with resources but there are no good options. Furthermore, Yellen noted that there is clearly a big gap between the President's position and that of Republicans regarding the debt ceiling, according to a CNBC interview.
• California's financial regulator released its report on the Silicon Valley Bank (SIVB) failure and stated that it failed to make SVB address management problems fast enough, while it increased scrutiny of banks with assets of more than USD 50bln, according to Reuters.
• US SEC staff are said to be against a short-selling ban on regional bank stocks given its failure in 2008, according to sources cited by FBN's Gasparino.
• G7 intends to devise plans for addressing bank runs of the type that led to the collapse of SVB with the plan outline expected to be announced as soon as Saturday, according to Nikkei.

APAC TRADE

EQUITIES

• APAC stocks were mixed following the indecisive performance from Wall St where the focus was on the Fed’s SLOOS which showed banks tightened credit terms and demand for loans declined, while the attention in the region shifted to earnings and data releases including mixed Chinese trade figures.
• ASX 200 was lower with early pressure seen across nearly all sectors and with the top-weighted financial industry choppy after earnings from Australia’s largest lender CBA which reported a slight increase in Q3 cash profit although NII was lower compared to the quarterly average in H1 and the Co. also noted that many customers are feeling the strain of higher interest rates and rising living costs.
• Nikkei 225 outperformed and reclaimed the 29,000 status, with the index unfazed by weak household spending data as participants digested earnings.
• Hang Seng and Shanghai Comp. were varied after the latest Chinese trade figures which showed stronger-than-expected export growth but imports disappointed with a surprise contraction.
• US equity futures remained rangebound following yesterday's lack of firm direction.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed up 0.2% yesterday.

FX

• DXY was flat after the prior day’s humdrum mood; trades just below 101.50.
• EUR/USD marginally softened and breached yesterday's support at the 1.1000 level.
• GBP/USD languished around the prior day's lows following the bank holiday lull.
• USD/JPY was choppy after various comments from BoJ Governor Ueda who stated that the scheduled review won't have any pre-set idea in mind on specific monetary policy moves but also noted that Japan's inflation expectations have heightened and remained at elevated levels.
• Antipodeans were contained after mixed Chinese trade data and ahead of the Australian Budget which is said to record the first budget surplus in 15 years.
• PBoC set USD/CNY mid-point at 6.9255 vs exp. 6.9251 (prev. 6.9158)

FIXED INCOME

• 10yr UST futures attempted to nurse losses once again after yesterday’s selling pressure owing to heavy corporate supply and after the Fed SLOOS risk unwound.
• Bund futures were lacklustre following recent losses and hawkish ECB rhetoric.
• 10yr JGB futures saw spillover selling from global peers and with softer demand at the 10yr JGB auction.

COMMODITIES

• Crude futures took a breather from their recent rebound which had been helped by a soothing of recession concerns, while Goldman Sachs also noted that demand fears were overblown.
• Spot gold traded sideways in tandem with the uneventful mood in the greenback.
• Copper futures were subdued amid the mixed risk tone and Chinese trade data.

CRYPTO

• Bitcoin remained lacklustre after the prior day's retreat beneath the USD 28,000 level.
• US exchanges listed over a dozen cryptos the SEC said are illegal to sell, according to WSJ.

NOTABLE ASIA-PAC HEADLINES

• EU Ambassador to China thinks the comment by EU's Borrell suggesting that EU navies patrol the Taiwan Strait has been grossly exaggerated, while he also commented regarding China's anti-espionage law and consultancy crackdown in which he stated that this is not good news and expressed doubts regarding the compatibility of this policy with the opening up of China's economy.
• Canada expelled a Chinese diplomat accused of targeting a Canadian MP in a foreign meddling scheme, while the Chinese embassy said China strongly condemns and firmly opposes Canada's decision to expel the Chinese diplomat and has lodged a protest with the Canadian government. China also claimed that Canada 'sabotaged' relations and vowed 'resolute countermeasures'.
• BoJ Governor Ueda said their scheduled review won't have any pre-set idea in mind on specific monetary policy moves and said they will take necessary policy action at each meeting with an eye on financial and price developments even while conducting the review. Ueda also commented that if the price target is met in a sustainable manner, the BoJ will end YCC and then shrink its balance sheet, while he added they are seeing some bright signs including on inflation expectations which have heightened and remain at elevated levels.

DATA RECAP

• Chinese Trade Balance (USD)(Apr) 90.21B vs. Exp. 71.6B (Prev. 88.19B)
• Chinese Exports YY (USD)(Apr) 8.5% vs. Exp. 8.0% (Prev. 14.8%)
• Chinese Imports YY (USD)(Apr) -7.9% vs. Exp. 0.0% (Prev. -1.4%)
• Chinese Trade Balance (CNY)(Apr) 618.4B vs. Exp. 632.7B (Prev. 601.0B)
• Chinese Exports YY (CNY)(Apr) 16.8% vs. Exp. 10.5% (Prev. 23.4%)
• Chinese Imports YY (CNY)(Apr) -0.8% vs. Exp. 4.2% (Prev. 6.1%)
• Japanese All Household Spending MM (Mar) -0.8% vs. Exp. 1.5% (Prev. -2.4%)
• Japanese All Household Spending YY (Mar) -1.9% vs. Exp. 0.4% (Prev. 1.6%)
• Australian Retail Trade (Q1) -0.6% vs. Exp. -0.6% (Prev. -0.2%, Rev. -0.3%)

GEOPOLITICS

• Russian-installed official said units' operations were suspended at the Zaporizhzhia nuclear plant to avoid Ukrainian provocations.
• Head of Russian Wagner Group Prigozhin said that they have not received the promised ammunition after earlier stating that shipments were preliminarily sent, according to Reuters.
• NATO air policing units were put on "higher readiness" due to "dangerous behaviour" of a Russian military plane near a Polish aircraft over the Black Sea on Friday, according to a NATO official.
• US is to provide USD 1.2bln more in long-term military aid to Ukraine to further bolster its air defences, according to US officials cited by AP.
• UK Foreign Secretary Cleverly is visiting the US and will hold talks with US Secretary of State Blinken on Tuesday to discuss support for Ukraine, according to Sky News.
• US State Department said the US Ambassador to China told Chinese Foreign Minister Qin that there has been no change to US one-China policy, while US Secretary of State Blinken would like to visit China and intends to go when conditions allow.
• Israeli Foreign Minister said discussed with US Secretary of State Blinken "advancing additional normalisation moves" in the region.

UK/EU

• UK Barclaycard April consumer spending rose 4.3% Y/Y but was impacted by inflation squeeze on disposable incomes and higher food prices, according to Reuters.

DATA RECAP

• UK BRC Retail Sales Like-For-Like YY (Apr) 5.2% (Prev. 4.9%)
• UK BRC Total Sales YY (Apr) 5.1% (Prev. 5.1%)