• European bourses are firmer as sentiment improves after the US House vote & Chinese Caixin PMI
• Stateside, futures are more contained as debt focus turns to the Senate and potential amendment votes
• DXY subdued after Wednesday’s Fed remarks with attention turning to US data before Friday’s NFP
• Flash EZ HICP spurred little sustained reaction, as it chimes with regionals; debt benchmarks dip after month-end
• Commodities are generally firmer given the Chinese data though crude has pared much of this since
• Looking ahead, highlights include US ISM Manufacturing PMI, Challenger Layoffs, ADP, IJC, Manufacturing PMI. ECB Minutes. Remarks from Fed's Harker & ECB's Enria.

US DEBT CEILING

• US House voted 314-117 to pass the debt ceiling bill which sends the measure to the Senate.
• "Senate Minority Whip John Thune told (Punchbowl) that he’d heard from at least a dozen GOP offices seeking amendment votes, and some Democrats are interested in amendments as well.", according to Punchbowl.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.0%, as sentiment continues to improve after the US House vote and strong Chinese Caixin PMI.
• Note, limited sustained reaction was seen following the EZ Flash PMIs given they very much chime with the skew from the regional metrics released in recent sessions.
• Sectors are predominantly firmer with Energy outperforming after recent marked pressure while Real Estate names lag across the region.
• Stateside, futures are essentially flat as we await the debt ceiling's progression into the Senate and particularly the prospect of amendments sending it back to the House, ES +0.2%.
• Nvidia (NVDA) CEO is to meet TSMC (2330 TT/TSM) and Foxconn (2354 TT) executives on Friday; adds that TSMC has immense capacity and incredible agility.
• Click here and here for a recap of the main European updates.
• Click here for more detail.

FX

• Buck bases after downside in wake of Fed's Harker and Jefferson backing June FOMC rate skip, DXY sits tight within 104.150-500 confines ahead of more NFP proxies, final US manufacturing PMI and ISM.
• Yen retreats towards 140.00 vs Dollar as UST-JGB differentials widen.
• Euro capped just shy of 1.0700 and raft of upside option expiries against the Greenback amidst mixed EZ data and manufacturing PMIs.
• Aussie underpinned around 0.6500 vs Buck after stronger than expected Capex, but Yuan remains week sub-7.1000 on US-China angst rather than 50+ Caixin Chinese PMI.
• PBoC set USD/CNY mid-point at 7.0965 vs exp. 7.0964 (prev. 7.0821)
• Click here for notable OpEx for the NY Cut.
• Click here for more detail.

FIXED INCOME

• Bonds retreat after pre-month end squeeze awaiting Senate debt ceiling passage, a busy June 1st US agenda and NFP on Friday.
• Bunds, Gilts and T-note are all underwater within 136.17-135.60, 96.74-34 and 114-16/01 respective ranges.
• French OATs and Spanish Bonos soft in the wake of multi-tranche issuance.
• Click here for more detail.

COMMODITIES

• WTI and Brent are incrementally firmer though off earlier best levels which occurred around the Chinese Caixin PMI overnight; since, specifics have been limited as we approach the weekend OPEC+ gathering and after multiple sessions of pronounced pressure.
• Industrial metals benefit from the mentioned Chinese data while spot gold is little changed but has been on a slight upward trajectory towards the neutral mark in recent trade.
• US Private Inventory (bbls): Crude +5.2mln (exp. -1.4mln), Cushing +1.8mln, Gasoline +1.9mln (exp. -0.5mln), Distillate +1.8mln (exp. +0.9mln).
• Russian plans to halve subsidies for oil refiners may be postponed until September, according to Interfax citing sources. However, the Russian Finance Ministry said no final decision on oil and gas sector subsidies has been taken yet.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Lagarde says today inflation is too high and is set to remain so for too long; we will keep moving forward – determined and undeterred – until we see inflation returning to our 2% medium-term target in a timely manner. Speech published after the EZ CPI print.
• ECB's Rehn says core inflation must slow for the ECB to consider easing. Monetary policy journey has not concluded yet. Remarks made before the EZ CPI print
• ECB's de Guindos says recent data on inflation are positive, still far from the inflation target. Still someway to go on rates Remarks made before the EZ CPI print
• ECB's Knot says there is a need to reconsider which banks should be considered systemic, time to reconsider liquidity buffers after the SVB collapse.
• BoE Monthly Decision Maker Panel data - May 2023: 1-year ahead CPI inflation expectations ticked up to 5.9%, up from 5.6% in April.

DATA RECAP

• EU HICP Flash YY (May) 6.1% vs. Exp. 6.3% (Prev. 7.0%); X Food & Energy Flash YY (May) 6.9% (Prev. 7.3%); X Food, Energy, Alcohol & Tobacco Flash YY (May) 5.3% vs. Exp. 5.5% (Prev. 5.6%)
• Netherlands CPI EU Harmonised Y/Y (May P) 6.8% vs Exp. 6.1% (Prev. 5.8%)
• UK Nationwide House Price YY (May) -3.4% vs. Exp. -3.7% (Prev. -2.7%); MM -0.1% vs. Exp. 0.1% (Prev. 0.5%, Rev. 0.4%)
• UK Mortgage Approvals (Apr) 48.69k vs. Exp. 53.000k (Prev. 52.011k); Mortgage Lending (Apr) -1.384B vs. Exp. 0.300B (Prev. 0.018B)
• German Retail Sales YY Real (Apr) -4.3% vs. Exp. -5.0% (Prev. -8.6%); MM Real (Apr) 0.8% vs. Exp. 1.0% (Prev. -2.4%)
• EU HCOB Manufacturing Final PMI (May) 44.8 vs. Exp. 44.6 (Prev. 44.6)
• UK S&P Global/CIPS Manufacturing PMI Final (May) 47.1 vs. Exp. 46.9 (Prev. 46.9)

NOTABLE US HEADLINES

• Click here for the US Early Morning Note.

GEOPOLITICS

• US Defence Secretary Austin told Japanese Defence Minister Hamada that he looks forward to deeper cooperation between the US-Japan alliance and with South Korea and Australia, while he stated that North Korea's launch was dangerous, destabilising and violates international law, according to Reuters.
• North Korean leader Kim's sister said no one can deny their right to launch a satellite and vowed to ramp up military surveillance efforts, while she added that North Korea's spy satellite will soon enter orbit to perform its mission and that North Korea will do everything to enhance its war deterrence. Kim also stated that North Korea should work harder to develop reconnaissance tools and the Foreign Ministry urged the US to halt joint military drills, according to KCNA.
• NATO SecGen Stoltenberg says all allies agree that Ukraine will become a member of the alliance and that Russia does not have a veto on enlargement. Will speak with Turkey soon about Sweden's accession.

CRYPTO

• Bitcoin is softer on the session, though only incrementally so, and remains in close proximity to the USD 27k mark which itself is towards the mid-point of sub-1k parameters.

APAC TRADE

• APAC stocks were mostly positive after the US House passed the debt ceiling bill to avert a default which now moves to the Senate and with sentiment helped by the surprise expansion in Chinese Caixin Manufacturing PMI.
• ASX 200 was choppy in early trade but ultimately gained after stronger-than-expected capital expenditure and the improvement in Chinese Caixin PMI.
• Nikkei 225 was marginally supported by data releases including business capex which grew at its fastest pace since Q3 2016 and with Japanese firms logging their largest recurring profits for Q1.
• Hang Seng and Shanghai Comp. shrugged off the early indecision and were boosted after the Chinese Caixin Manufacturing PMI data partially atoned for yesterday’s weak official PMI readings.

NOTABLE ASIA-PAC HEADLINES

• US official said fewer US companies are applying to export sensitive tech to China amid growing government scrutiny of the flow of goods to the country, especially those with potential military applications, according to WSJ.
• Taiwan's government said it expects to sign the first deal under the new trade talks framework with the US on Thursday, according to Reuters.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (May) 50.9 vs. Exp. 49.5 (Prev. 49.5)
• Japanese Company Profits YY (Q1) 4.3% (Prev. -2.8%); Business Capex YY (Q1) 11.0% vs. Exp. 5.5% (Prev. 7.7%)
• Australian Capital Expenditure (Q1) 2.4% vs. Exp. 1.3% (Prev. 2.2%)