• NQ outperforms post-NVDA, with Europe deriving upside in tandem though capped after German GDP revisions
• Stateside, debt ceiling concerns continue with focus on Fitch though journalist updates since have been somewhat constructive on talks
• USD remains dominant with the DXY above 104.00 with NZD descending further after Orr’s remarks
• EGBs/USTs continue to slip though Gilts remains the standout laggard in a continuation of the UK-CPI move
• Bearish crude action on growth concerns and after Novak’s remarks ahead of the June 4th OPEC
• Looking ahead, highlights include US IJC, GDP (2nd), PCE Prices Prelim., CBRT & SARB Policy Announcements, Speeches from BoE's Haskel, ECB's Lane, Wunsch, Makhlouf & Vujcic,  Fed's Barkin & Collins, Supply from the US. Earnings from Ralph Lauren.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed after initial pressure on a negative German GDP revision, DAX 40 -0.2%; though, tech is the standout outperformer post-NVDA, with Euro Stoxx 50 +0.3% as such.
• Stateside, the NQ +1.9% and ES +0.7% are firmer, given Nvidia, while the RTY and YM reside in negative territory amid broader market concern over the debt ceiling and after Fitch's update.
• Nvidia (NVDA) Q1 23 (USD): Adj. EPS 1.09 (exp. 0.92), revenue 7.19bln (exp. 6.52bln). Q2 23 revenue view 11bln (+/- 2%) (exp. 7.18bln). CFO said that the data centre revenue rise in the quarter is led by growing demand for generative AI and large language models using GPUs. +24% in pre-market trade
• Swiss government to commence consultation on liquidity backstop of all systemically important banks, according to the Finance Ministry; SNB's Maechler says Credit Suisse (CSGN SW) crisis was one of confidence.
• Click here and here for a recap of the main European updates.
• Click here for more detail.

FX

• Dollar remains dominant as US debt ceiling talks proceed productively, DXY tops 104.000 and probes Fib at 104.090.
• Kiwi descends further as RBNZ Governor Orr underscores guidance indicating no further tightening, NZD/USD hovers under 0.6100.
• Euro undermined by unexpected negative German Q1 GDP print, EUR/USD fades from just above 1.0750 and EUR/GBP retreats through sub-0.8700 10 DMA.
• Sterling rebounds towards 1.2400 vs Buck as Gilts reverse sharply from post-UK inflation correction lows.
• Yen hits new y-t-d trough, but stays afloat of big option barriers seen at 140.00 against Greenback
• PBoC set USD/CNY mid-point at 7.0529 vs exp. 7.0515 (prev. 7.0560)
• Turkey asked banks to buy dollar debt to support default swaps, according to Bloomberg.
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Gilts markedly underperform amidst reversion toward post-UK inflation data lows within a 96.24-95.10 range.
• Bunds and T-notes retreat in sympathy between 133.93-56 and 113-12+/00 bounds, the former irrespective of Q1 German GDP contraction and the latter ahead of US IJC, GDP, Fed speakers and 7 year auction.
• BTPs resilient and only just below par in the wake of well-received Italian end-of-month supply.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are softer intraday, with WTI & Brent July under USD 73.50 and USD 77.50/bbl respectively after soft German data and remarks from Novak ahead of next week's OPEC+ confab; most recently, the benchmarks are closer to USD 73.00/bbl and USD 77.00/bbl.
• On this, ING writes that “There is a large speculative gross short in the market and they will likely be hesitant to carry too much risk into the OPEC+ meeting scheduled for 4 June”.
• Spot gold is deriving support from the broader macro tone, ex-tech, though is yet to see any real haven bid despite the Fitch update and as the X-date draws closer as updates on progress this morning are more-encouraging, overall.
• Base metals mixed with LME Copper still under USD 8k/T while tin was initially bolstered after the Wa region reiterated its mining ban.
• Russian Deputy PM Novak says do not see new steps at the June 4th OPEC+ meeting and sees Brent crude above USD 80/bbl by year-end.
• Chevron (CVX) launched the sale of tis oil and gas assets in Congo which could raise up to USD 1.5bln, according to Reuters sources.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Vasle said the ECB must still raise rates further and inflation is becoming increasingly stubborn.
• Riksbank's Thedeen says the SEKs level is worrying.
• UK's Ofgem sets the energy price cap at GBP 2074 for dual-fuel households (prev. 3280), for July-September; the cap represents a reduction QQ and a reduction in how much customers will pay on their bills.
• Shipping activity returns to normal in Suez Canal after a malfunctioning ship was towed away, according to Two Canal.

DATA RECAP

• German GDP Detailed QQ SA (Q1) -0.3% vs Exp. 0.00% (Prev. 0.00%) - German economy suffered a winter recession. The persistence of high price increases continued to be a burden on the German economy at the start of the year. This was particularly reflected in household final consumption expenditure.
• German GfK Consumer Sentiment (Jun) -24.2 vs. Exp. -24.0 (Prev. -25.7, Rev. -25.8)

NOTABLE US HEADLINES/DEBT CEILING

• Fed's Bostic (non-voter) said Fed officials will let the data guide them on rate moves and the Fed doesn't want to be locked into a particular rate move. Bostic expects to see labour market stress as inflation eases to the goal and said failure to get inflation to 2% is more problematic for the economy, while he added the best-case scenario is that the Fed will not consider a rate cut until well into 2024.
• US House Speaker McCarthy said he believes they can get back to a 2022 spending level and has always thought that they could get a deal in a day, while he also stated there should not be any fear in markets and negotiations have made some progress. McCarthy also noted that a number of issues remain unresolved but added that things are better than they were the prior day, while he will stay in Washington DC this weekend and said they could get a debt agreement in principle this weekend, according to Reuters.
• US House Majority Leader Scalise said the weekend recess will begin on Thursday as planned, while debt ceiling talks will continue and lawmakers should be ready to return in case of a deal. Scalise also stated that members will get 24 hours' notice that they need to return if an agreement is reached and members will get 72 hours to read any debt ceiling bill, according to Reuters.
• US House Republican leadership reportedly feels very good about the state of the debt limit negotiations after several days of little progress, according to Punchbowl's Jake Sherman.
• US House Democratic leader Jeffries demanded that the length of spending caps match the length of the debt limit increase, according to a Bloomberg reporter.
• Fitch placed the US AAA sovereign rating on Rating Watch Negative which reflects the increased political partisanship that is hindering a resolution to raise or suspend the debt limit, while it still expects a resolution to the debt limit before the X-date but believes risks have risen that the debt limit will not be raised or suspended prior to the X-date. Fitch added that it would expect the US country ceiling to remain at AAA even in the scenario of a debt default and believes a failure to make full and timely payments on debt securities is less likely than reaching the X-date and is a very low probability event, according to Reuters.
• White House said the Fitch report reinforces the need for Congress to quickly pass a bipartisan agreement to avoid a debt default, while the US Treasury said brinkmanship over the debt limit does serious harm to businesses and American families, raises short-term borrowing costs for taxpayers and threatens the credit rating of the US.
• Many within the US House Republican Leadership expect a deal to be finalised by the weekend, via Punchbowl; if a deal came together on Thursday, it would take around two days to convert this into legislative text, implying a final vote as soon as Tuesday. Albeit, Punchbowl writes "it seems very possible that Congress won’t be able to lift the debt limit until next weekend, which is June 3-4".
• Click here for the US Early Morning Note.

GEOPOLITICS

• EU is reportedly discussing sending profits from EUR 196.6bln of frozen Russian assets to Ukraine, according to FT.
• Twitter sources noted air raid sirens in Kyiv and that Shahed drones were launched towards northern and southern Ukraine.
• Hundreds of thousands of South Korean artillery rounds are on their way to Ukraine via the US, according to WSJ sources.
• Russian and Belarus Defence Ministers have signed a document on the deployment of tactical nuclear weapons in Belarus, via Tass; Russia's Shoigu says West is waging undeclared war against Russia and Belarus, according to RIA; Defence Minister Shoigu says Russia are to control nuclear weapons in Belarus, according to IFX.
• China Commerce Minister Wang will meet US Commerce Secretary Raimondo, according to Reuters citing the Chinese Commerce Ministry
• Japan Defence Ministry says Japan scrambled jets after spotting Russian information gathering aircrafts over pacific ocean, sea of Japan on Thursday.

CRYPTO

• Bitcoin is lower but holding above the USD 26k mark despite briefly dropping below the figure in early trade, with the USD capping upside and broader marks still focused on the debt ceiling as we near the US long weekend.

APAC TRADE

• APAC stocks were mostly lower with the region cautious after the losses on Wall St owing to debt ceiling fears and after the FOMC Minutes showed officials were split on support for more hikes, while Fitch placed the US AAA sovereign rating on Rating Watch Negative despite several optimistic comments from House Speaker McCarthy.
• ASX 200 weakened as the commodity-related sectors led the broad declines across nearly all industries and with sentiment also dampened as households are set to pay hundreds of dollars more each year after the energy regulator approved an increase of up to 25% in electricity bills.
• Nikkei 225 was kept afloat but with the upside capped in the absence of any major positive drivers.
• KOSPI was subdued after the BoK rate decision in which the central bank kept rates unchanged as expected, although 6 out of the 7 board members saw the need to keep the door open for one more rate hike.
• Hang Seng and Shanghai Comp. were pressured with underperformance in Hong Kong after the benchmark index slipped beneath the 19,000 level, while the mainland was lacklustre amid recent US-China frictions.

NOTABLE ASIA-PAC HEADLINES

• Chinese companies reportedly switch auditors to avoid US delisting risk, according to FT.
• USTR Tai is reportedly to meet with Taiwan's minister in charge of the Office of Trade Negotiations.
• BoK maintained its base rate at 3.5%, as expected, through a unanimous decision although six board members saw the need to keep the door open for one more rate hike. BoK statement noted economic growth is to remain weak for some time and inflation will likely fall considerably before rebounding slightly for the rest of the year, while it stated uncertainty is high over the Chinese economy and IT sector, as well as lowered its 2023 GDP growth forecast to 1.4% from 1.6%. Furthermore, BoK Governor Rhee said core inflation is not easing as much as board members had expected and that board members share the opinion that it is premature to talk about a rate cut this year with uncertainty higher over regarding whether inflation will approach the 2% target before year-end.
• RBNZ Governor Orr said rates are restrictive and well above neutral, while he added that economic growth and inflation are weaker than expected although they can change the assessment if needed as new data emerges, according to Reuters.
• BoJ Governor Ueda says we are beginning to see good signs in the economy but still some distance to stably and sustainably hit inflation target; BoJ will patiently sustain easy monetary policy.
• Japan raises May overall economic view for first time since July 2022 and says economy is recovering moderately.

DATA RECAP

• Singapore GDP QQ (Q1 F) -1.6% vs Exp. -2.5% (prev. -2.7%); YY (Q1 F) 0.4% vs Exp. 0.2% (prev. 0.1%)