• European bourses are firmer, but off best, with fresh drivers lacking after a busy pre-market ahead of the BoE
• Stateside, futures retain a positive bias but have been largely horizontal; DIS -5.5% after-earnings
• DXY lifts towards 102.00 with AUD lagging on Yuan/metals weakness after benign Chinese CPI/PPI
• Somewhat volatile EGB trade with Bunds bolstered by a 9k block but then slipping to lows with drivers slim
• Crude remains bid after yesterday's lower settlement while base metals are dented post-Chinese inflation
• Looking ahead, highlights include US IJC & PPI, BoE Policy Announcement & Press Conference, OPEC MOMR. Fed's Waller, ECB's Schnabel & de Guindos, Supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer, though off best Euro Stoxx 50 +0.4%, in a session devoid of specific fresh drivers from a macro perspective aside from Wall St. catch-up and looking ahead to the BoE/Fed speak.
• Sectors are predominantly in the green, with Consumer, Travel/Leisure and Retail experiencing some modest outperformance while Basic Resources lag in-fitting with underlying metals pricing.
• Stateside, futures retain a positive bias but have been largely horizontal in the European morning ahead of PPI, IJC and Fed speak, ES/NQ +0.3%; earlier remarks from Treasury Secretary Yellen focused on the debt ceiling but added little.
• Walt Disney Co (DIS) - Q2 2023 (USD): EPS Adj. 0.93 (exp. 0.93), Revenue 21.82bln (exp. 21.79bln). Media and entertainment distribution revenue 14.04bln (exp. 14.16bln). Parks, experiences and products revenue 7.78bln (exp. 7.67bln). Total Disney+ paid subscribers 157.8mln (exp. 163.1mln) -5.5% in the pre-market, shares fell 4.8% after market
• JD.Com Inc (JD) Q1 2023 (USD): EPS 0.69 (exp. 0.51), Revenue 35.4bln (exp. 34.64bln); In the coming quarters ahead, will further enhance business structure in order to drive the expansion of user base throughout China.
• Foxconn (2317 TT) Q1 (TWD): Net 12.8bln (exp. 29.18bln), sees FY revenue flat YY and Q2 revenue to decline YY; retains a conservative outlook for business this year, due to global economic uncertainties.
• SoftBank (9984 JT/SFTBY) Q1 2023 (JPY): Net -970.14bln (prev. -1.71tln). Pretax loss 469.1bln (prev. loss 869.56bln).
• Click here and here for a recap of the main European earnings, including: Bayer, Deutsche Telekom, Siltronic, ING, Rolls-Royce, Telefonica.
• Click here for more detail.

FX

• Aussie undermined by a decline in iron ore and Yuan weakness in the wake of very benign Chinese CPI and deflationary PPI.
• AUD/USD towards the low end of 0.6723-96 range, USD/CNY and USD/CNH nearer 6.9400 and 6.9500 respectively than 6.9300.
• DXY recoups all and more US inflation data losses between 101.300-940 parameters.
• Euro stalls just shy of 1.1000 vs Dollar before a sharp retreat to probe 1.7bln option expiry interest at 1.0925 amidst a raft of big strikes.
• Pound down partly in sympathy as Cable loses 1.2600+ status ahead of BoE.
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Volatile trade in bonds ahead of main risk events, Bunds squeeze after big block purchase then fade within 136.35-135.78 range as 2.25% yield holds.
• Gilts whippy between 101.06-100.70 parameters awaiting BoE and guidance beyond widely forecast 25 bp hike.
• US Treasuries idle into US jobless claims, producer prices and long bond leg of refunding, with T-note confined to 115-31+/24 band.
• EGBs saw a marked move higher in the early-European morning with Bunds leading the core rise at the time with a sizeable 9k block buy at 136.00 factoring; albeit, as above, we are off best.
• Click here for more detail.

COMMODITIES

• Crude benchmarks remain firmer after choppy trade on Wednesday which resulted in a lower settlement, with today's action tracking the positive skew to sentiment but with magnitudes relatively narrow as the USD firms and specifics are limited.
• For reference, WTI June sees some resistance ahead of USD 73.50/bbl while Brent July reclaimed USD 77/bbl+ status.
• Kuwait set June KEC crude OSP for Asia at Oman/Dubai + USD 1.70/bbl, according to Reuters.
• Iraq and Iran signed a memorandum of understanding to invest in joint oil fields and to cooperate on extracting and refining crude oil, according to the Iraqi PM's office.
• Spot gold resides in familiar territory and as such comfortably above the USD 2k/oz handle while base metals are dented by softer-than-expected Chinese inflation numbers.
• Additionally, for copper, ING points out that "China has seen a sizeable increase in refined copper exports over the last couple of months, suggesting that domestic demand is not as strong as many were expecting.”
• Click here for more detail.

NOTABLE HEADLINES

• NIESR sees UK GDP growth of 0.3% in 2023 and 0.6% in 2024 vs prev. forecast of 0.2% and 1.0%, respectively, while it sees UK CPI averaging 7.4% in 2023 and 3.9% in 2024 vs prev. forecast of 8.3% and 4.2%, respectively.
• ECB Consumer Expectations Survey (Mar): Inflation Expectations 5.0% 12-months ahead (Feb 4.6%), 3yr ahead 2.9% (Feb 2.4%)

DATA RECAP

• UK RICS Housing Survey (Apr) -39 vs. Exp. -40.0 (Prev. -43.0).

NOTABLE US HEADLINES

• US House panel will hold a hearing on failed banks and mortgage markets on May 17th.
• FDIC's Board will meet today to consider a proposal to impose special assessments on banking organisations to recover the losses arising from protecting uninsured depositors of the former SVB and Signature Bank.
• Blackstone (BX) is in talks with US regional banks on lending partnerships, according to FT.
• US Treasury Secretary Yellen says US Congress should raise the debt ceiling, cautions that a US default would result in economic and financial catastrophe. Markets are seeing the possibility of a US debt limit breach as a growing downside risk. Will work with G7 peers to increase economic resilience, boost economic security and form reliable critical supply chains.
• US President Biden's Admin is to unveil plans to cut power industry carbon emissions; plan seen costing the power industry USD 10bln for compliance, with climate and health benefits around USD 85bln.
• China's Commerce Ministry says it will resolutely object if US restricts US firms from investing in the Chinese semiconductor industry.
• China securities regulator willing to work with US regulatory agencies to continue to promote audit regulatory cooperation.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Russian Kremlin spokesman said the military operation against Ukraine is very difficult but certain goals have been achieved, while Russia is acting slowly in Ukraine because it is carrying out a special military operation, not a war, according to TASS.
• Chinese Foreign Minister Qin said China is committed to promoting a political solution to the Ukraine crisis, while it maintains communication with all parties and will continue to play a constructive role in that regard, according to Reuters.
• "Clashes between Armenian and Azerbaijani forces erupted this morning in the direction of Sotk. Artillery and mortars are being used. There are multiple wounded Armenian soldiers.", according to Faytuks News.
• UK has supplied Ukraine with multiple "storm shadow" cruise missiles, via CNN citing officials; the missiles have a range in excess of 155miles.

CRYPTO

• Bitcoin is softer and has moved marginally below the USD 27.5k mark in relatively narrow sub-500 parameters as we await the afternoon's key events with broader market action generally lacking catalysts at this point in time.

APAC TRADE

• APAC stocks traded mixed after the indecisive performance stateside where stock markets whipsawed and treasuries rallied in the absence of any hawkish surprises from the US CPI report, while the regional bourses also reflected on softer-than-expected Chinese inflation data.
• ASX 200 was marginally lower as weakness in utilities and the commodity-related sectors overshadowed the outperformance in tech and after consumer inflation expectations ticked higher.
• Nikkei 225 was indecisive with the biggest movers in the index largely influenced by earnings releases, while the BoJ’s Summary of Opinions from the April meeting did little to shift the dial.
• Hang Seng and Shanghai Comp. were choppy after the latest Chinese inflation supported the idea of a slow economic rebound as consumer prices grew at the slowest pace of increase since February 2021 and with factory gate prices at a deeper deflation.

NOTABLE ASIA-PAC HEADLINES

• China reportedly told the US that there is little chance of their defence chiefs meeting, according to FT.
• Chinese Foreign Minister Qin is to meet with his French counterpart and said that China wants to mutually open up markets with France and create a more resilient supply chain, while he added that China's determination to promote high-quality development and a high level of opening up is unswerving.
• BoJ Summary of Opinions from the April meeting stated that they must continue with the current easy policy given uncertainty over the global outlook and must support the wage hike momentum through monetary easing. It was also stated that the achievement of the price target appears to have come in sight but they must maintain easy policy for the time being given downside and upside risks. Furthermore, they must ensure that the tweak to interest rate forward guidance is not interpreted as a sign the BoJ would allow future rate hikes and should not target a specific monetary policy change when guiding the policy review to ensure it would be neutral and convincing.
• China's Foreign Ministry, regarding the Australian Trade Ministers visit to Beijing, says both sides can solve each others trade concerns via constructive dialogue; developing healthy relations is in both sides interests.

DATA RECAP

• Chinese CPI YY (Apr) 0.1% vs. Exp. 0.4% (Prev. 0.7%); PPI YY (Apr) -3.6% vs. Exp. -3.2% (Prev. -2.5%)
• Australian Melbourne Institute Inflation Expectations (May) 5.0% (Prev. 4.6%)