• European bourses/US futures are slightly softer as broader sentiment tilts after mixed APAC trade ahead of US CPI
• DXY remains bid with peers generally contained though EUR slips on less-hawkish ECB speak while GBP remains bid pre-BoE
• EGBs caught a bid to fresh session highs after well-received UK supply and ECB's Lagarde on APP/PEPP
• Overall, commodities are pressured and in-fitting with the above; focus on China-Australia re. Copper and the Druzhba pipeline
• US Leaders meeting saw no real progress on the debt limit, Biden and leaders to meet again on Friday with daily staff-level gatherings
• Looking ahead, highlights include US CPI, Chinese M2, Supply from the US. Earnings from Disney.

EUROPEAN TRADE

EQUITIES

• European bourses are slightly softer, Euro Stoxx 50 -0.3%, in-fitting with the APAC handover and despite an initial firmer start to the European morning pre- US CPI.
• Stateside, ES -0.2%, futures are similarly lower though relatively rangebound in European hours ahead of US price data with focus also on Tuesday's Fed speak and the lack of debt ceiling progress.
• In Europe, sectors have a negative tilt in-fitting with the above; individual movers include Credit Agricole and ABN AMRO as the best performing banks after strong earnings while Continental supports auto names.
• US DoJ is reportedly looking at short selling activity in regional bank shares, according to Reuters sources.
• China Airlines converts purchase rights for 8 Boeing (BA) aircraft into confirmed orders, to pay up to USD 2.30bln for the 8 planes.
• Click here for more detail.

FX

• Dollar firm, but just shy of Tuesday's highs approaching US CPI, DXY retains 101.500+ status within a 101.750-510 range.
• Euro dips on less hawkish ECB undertones from Nagel and President Lagarde and back below key 1.0959 Fib retracement level.
• Pound retains 1.2600 handle on the eve of BoE as markets fully price another 25bp hike
• Yen tests 135.00 after selling in Asia and test of 200 HMA at 135.47.
• PBoC set USD/CNY mid-point at 6.9299 vs exp. 6.9301 (prev. 6.9255)
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Debt stages decent revival pre-US inflation data after relatively well received UK and German auctions and less-hawkish ECB rhetoric via Lagarde on APP/PEPP specifically.
• Bunds, Gilts and T-notes also find support near round numbers before rebounding to 135.69, 100.50 and 115-09+ respectively.
• Treasuries still have supply to digest via USD 35bln 10 year refunding.
• Click here for more detail.

COMMODITIES

• Overall, the complex is under pressure as the USD firms ahead of US CPI and as broader sentiment slips; action which follows Tuesday's firmer settlement though advances were capped by the surprise private inventory headline build.
• WTI June has fallen back under USD 73/bbl (vs high USD 73.64/bbl) while its Brent counterpart hovers around USD 76.50/bbl (vs high USD 77.39/bbl).
• US Energy Inventory Data (bbls): Crude +3.62mln (exp. -0.9mln), Gasoline +0.4mln (exp. -1.2mln), Distillate -3.9mln (exp. -0.8mln), Cushing -1.3mln.
• UK's Unite union announced 1,200 offshore workers will conduct a 2-day strike in a dispute over jobs, pay and conditions with the strike action to hit various operators including BP, Shell, Repsol and others.
• Peru's copper production rose 20.4% Y/Y in March, according to the energy and mining ministry.
• The grain deal is expected to be extended at the talks that started on Wednesday in Istanbul, taking into account Russia’s objections, a source in Ankara close to the talks told TASS. Subsequently, Kremlin declines comment on black see grain deal talks and adds we need to wait and see what the negotiation process yields.
• As mentioned, both precious and base metals are lower with the yellow metal within Tuesday's parameters while base metals were initially contained but have since slipped in-fitting with broader action.
• Chinese buyers are reportedly eyeing a resumption of copper trade with Australia as relations between the two nations improves ahead of an expected visit by Australia's Trade Minister Farrell to Beijing, China, via Reuters.
• Chevron (CVX) plans to boost Venezuela output, and optimise exports to accelerate debt recovery.
• Click here for more detail.

NOTABLE HEADLINES

• The Times' BoE Shadow MPC voted 7-2 in favour of a 25bps hike in the Bank Rate to 4.5% with the two dissenters in favour of a larger 50bps move.
• ECB President Lagarde says "There are factors that can induce significant upside risks to the inflation outlook.", via Nikkei; "Lagarde gave no indication of a September interest rate hike". Adding, "Nothing further has been discussed by the Governing Council, neither a proposal to sell assets under the APP, nor a change to the forward guidance that we have given in relation to the PEPP."
• ECB's Stournaras says as things stand can say that interest rate rises will be over in 2023, via Reuters citing Greek press.
• ECB's Nagel says he is optimistic that monetary policy is having an impact, via Deutschlandfunk; might be moving into the final stretch on hikes though we are not yet done, is satisfied with ECB policy.
• Norges Bank Financial Stability Report (H1): CCyB maintained at 2.5%. Problems at some banks abroad have led to large movements in financial markets, but Norwegian banks are well-positioned to deal with market stress and higher losses.

DATA RECAP

• German HICP Final YY (Apr) 7.6% vs. Exp. 7.6% (Prev. 7.6%); MM (Apr) 0.6% vs. Exp. 0.6% (Prev. 0.6%)
• Norwegian Core Inflation YY (Apr) 6.3% vs. Exp. 6.1% (Prev. 6.2%); MM (Apr) 1.0% vs. Exp. 0.7% (Prev. 0.6%)

NOTABLE US HEADLINES

• US President Biden said he will meet again with congressional leaders on Friday on the debt ceiling and that White House and legislative staff will meet daily ahead of that meeting. Biden also said he made it clear that a default is not an option, while he added that House Speaker McCarthy's spending cuts will hurt Americans and he is not ruling out a short-term debt limit increase.
• US House Speaker McCarthy said his position is clear that House Republicans have done their job to avoid a default and responsibly raise the debt limit and Democrats must do the same, while he didn't see any new movement from the talks and said the progress they made was being able to meet. McCarthy also noted that President Biden did not offer spending cut ideas but he hopes that President Biden will begin to negotiate over the next two weeks and thinks they can go to conference if Senate Majority Leader Schumer can pass something.
• US Senate Majority Leader Schumer said House Speaker McCarthy refused to take default off the table and gave a plan to take default hostage, while Schumer added that President Biden asked staff from both parties to sit down and find common ground on budget issues but noted that disagreements over federal spending are wide.
• US Senate Republican Leader McConnell said the government is not going to default and there must be an agreement between President Biden and House Speaker McCarthy, while he added that there must be some restraint on spending if the debt limit is raised.
• US Treasury Borrowing Advisory Committee said it is deeply concerned about the lack of resolution of the statutory debt limit and warned that a protracted standoff over the debt limit will dramatically increase taxpayer costs and exacerbate market stress.
• Click here for the US Early Morning Note.

GEOPOLITICS

• France told the EU that the Russian Wagner Group should be labelled as a terrorist group, according to The Guardian.
• Russian President Putin has formally signed a decree withdrawing from the Treaty on Conventional Armed Forces in Europe, according to Russian press.
• Russia's Transneft says Druzhba pipeline was attacked, according to Tass; details light; Unconfirmed reports suggest that this was in the Russian Bryansk region.

CRYPTO

• Bitcoin is a touch softer but overall relatively contained and holding just above the USD 27.5k mark within familiar ranges as participants await US CPI.

APAC TRADE

• APAC stocks were mostly lower as the region digested a slew of earnings updates and following the weak handover from Wall St where the major indices were cautious after hawkish central bank rhetoric and ahead of US inflation data, while there was also very little progress from US debt ceiling talks.
• ASX 200 was subdued amid underperformance in financials, energy and telecoms but with losses stemmed by the defensives and as participants mulled over the details of the recent federal budget.
• Nikkei 225 weakened with the focus in Japan centred on a deluge of earnings releases.
• Hang Seng and Shanghai Comp. conformed to the global downbeat mood amid weakness in China’s largest banks and with several property names also pressured, while a report that Chinese GDP growth is likely to pick up in Q2 due to policy support, did little to spur risk appetite.

NOTABLE ASIA-PAC HEADLINES

• China's GDP will likely pick up in Q2 amid policy support, according to China Securities Journal.
• A fresh COVID-19 wave is spreading through China as people return from public holiday travel which has reached trading floors and spurred concerns of an impact on trading volume, but is unlikely to be as pronounced as prior COVID disruptions, according to Reuters.
• USTR Tai will meet China's Commerce Minister in Detroit later this month, according to Bloomberg.
• China reportedly seeks to resume and expand Taiwan communications, according to Xinhua.