• APAC stocks traded mixed with the region mostly cautious at the start of a risk-packed week.
• US equity futures were flat overnight; European equity futures are indicative of a marginally higher open.
• DXY was marginally positive amid the cautious mood but with price action kept within a thin range; USD/JPY was indecisive after early upside.
• Several Chinese lenders cut yuan deposit rates from Monday which follows similar action by China's largest banks on Friday.
• Looking ahead, highlights include highlights include US NY Fed SCE, Supply from EU & US.

US TRADE

EQUITIES

• US stocks were mixed on Friday as a rally at the NY open unwound throughout the session which saw the SPX and DJIA finish more or less flat albeit with slight gains, while the NDX was supported as Tesla shares surged again for its 11th consecutive daily gain after the announcement it had partnered with GM to use its North American charging network and technologies. As such, the Nasdaq posted its 7th consecutive weekly gain for its longest winning streak since 2019 and the S&P 500 notched its 4th straight weekly gain which is the longest since the summer of last year.
• SPX +0.12% at 4,298, NDX +0.30% at 14,528, DJIA +0.13% at 33,876, RUT -0.80% at 1,865.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Interstate 95 which is the main north-south Interstate Highway for the East Coast of the US partially collapsed in Philadelphia after a tanker caught fire underneath the highway, while the US Transportation Secretary said the I95 closure will have a significant impact until the recovery is complete. There were also comments from the Pennsylvania Governor that they plan to announce a disaster declaration and that it will take some number of months to complete the rebuild of I95 roadway following the collapse.

APAC TRADE

EQUITIES

• APAC stocks traded mixed with the region mostly cautious at the start of a risk-packed week as markets await the upcoming key events including major central bank meetings and data releases, while Australian markets were shut in observance of the King’s Birthday holiday.
• Nikkei 225 initially outperformed and tested the 32,500 level amid expectations for the BoJ to maintain ultra-easy policy settings later this week and after PPI data was softer-than-expected and showed wholesale inflation eased for a 5th consecutive month which further supports the case for the BoJ to refrain from policy tweaks.
• Hang Seng and Shanghai Comp. were subdued amid weakness in healthcare and the property sector, with the latter pressured by a warning from Goldman Sachs. However, losses were stemmed amid some expectations for potential PBoC rate cuts to support the economy as more banks reduced their deposit rates and following comments last week from PBoC Governor Yi that there is plenty of room for policy adjustment and that they will continue targeted and forceful monetary policy.
• US equity futures were flat participants bracing for this week's bout of significant risk events.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.4% after the cash market closed down 0.2% on Friday.

FX

• DXY was marginally positive amid the cautious mood but with price action kept within a thin range ahead of the upcoming key events stateside including CPI tomorrow and the FOMC rate decision on Wednesday in which markets are pricing that the Fed will likely skip on its rate increases.
• EUR/USD was lacklustre after Friday’s pullback with trade uneventful owing to the lack of pertinent weekend news flow and with the ECB also to decide on rates later this week.
• GBP/USD took a breather from recent gains, while comments from BoE’s Mann provided little to spur a reaction.
• USD/JPY was indecisive with early upside seen as US-Japan yield differentials slightly widened and following softer-than-expected PPI data, although the move in the pair was gradually reversed.
• Antipodeans lacked direction owing to the cautious risk tone and absence of participants in Australia.
• PBoC set USD/CNY mid-point at 7.1212 vs exp. 7.1214 (prev. 7.1115)
• Nigeria’s new President suspended the country’s central bank Governor, according to Reuters.

FIXED INCOME

• 10yr UST futures were rangebound with a non-committal tone heading into the plethora of risk events including the latest US inflation figures and an expected skip by the Fed at the upcoming FOMC.
• Bund futures traded sideways owing to the absence of any significant weekend catalysts.
• 10yr JGB futures remained afloat amid softer PPI data and consensus for the BoJ to maintain its ultra-easy policy when it concludes its two-day policy meeting on Friday.

COMMODITIES

• Crude futures were on the backfoot owing to the flimsy risk appetite and with prices also weighed after Goldman Sachs cut its forecasts for December Brent and WTI crude oil prices to USD 86/bbl and USD 81/bbl, respectively.
• Saudi Energy Minister said Saudi Arabia and China have plenty of synergies and that demand for oil in China is still growing, while he wouldn’t be surprised if there will be more announcements soon on Saudi-Chinese investments and China will be more engaged with them on mid-stream business. Saudi’s Energy Minister also said that they went through a comprehensive reform to achieve the OPEC+ agreement and they are working against uncertainty and sentiment, as well as noted that Saudi and OPEC+ are more interested in doing a regulator job, according to Reuters.
• Saudi Aramco is to supply full contract volumes of crude oil to at least 5 North Asian refiners in July, according to sources cited by Reuters.
• US DoE said it is to issue new solicitation to buy another 3mln barrels for the strategic stockpile for delivery in September; and awarded contracts for its 3mln barrel crude oil purchase for the SPR in August, averaging USD 73/bbl, according to Reuters.
• Iraq's Parliament approved the 2023 Budget which set oil prices at USD 70/bbl and projects exports of 3.5mln bpd including 400k bps from the Kurdish region, according to Reuters.
• US is expected to begin unloading oil from a seized Iranian tanker which risks escalating a shadow tanker war with Tehran, according to FT.
• Venezuela’s PDVSA resumed operations in the El Palito refinery, according to Reuters.
• Goldman Sachs cuts its December Brent crude forecast to USD 86/bbl from 95/bbl and cut WTI crude price forecast to USD 81/bbl from 89/bbl, while it noted that Russian and Iranian oil supply are significantly above expectations despite Saudi's cut and it raised H2 2023-2024 global supply forecast excluding core OPEC by around 800k bpd.
• Spot gold was rangebound in tandem with the uneventful dollar as markets brace for this week's risk events.
• Copper futures were lower amid the cautious mood and Goldman Sachs warning on China's property sector.

CRYPTO

• Bitcoin was subdued after slipping beneath the USD 26,000 level which has turned to near-term resistance.

NOTABLE ASIA-PAC HEADLINES

• White House confirmed that China has had a spy base in Cuba since at least 2019, according to AP.
• China’s Foreign Ministry issued a complaint to South Korea over recent criticism of its envoy and hopes that South Korea deeply reflects on problems in Sino-South Korea relations, according to state media.
• Several Chinese lenders cut yuan deposit rates from Monday which follows similar action by China's largest banks on Friday due to recent calls from Beijing to support the economy.
• Goldman Sachs warned that property weakness will likely be a multi-year growth drag on China's economy and it expects an L-shaped recovery in China's property market, according to Bloomberg.
• New Zealand PM Hipkins said he will lead a trade delegation during a China visit at the end of June.

DATA RECAP

• Japanese Corp Goods Price MM (May) -0.7% (Prev. 0.2%, Rev. 0.3%)
• Japanese Corp Goods Price YY (May) 5.1% (Prev. 5.8%, Rev. 5.9%)

GEOPOLITICS

• Ukraine said its troops recaptured three villages from Russian forces in the southeast of the country which were the first results of its counteroffensive. In relevant news, Russia said Ukraine made an unsuccessful attempt to attack a vessel which was protecting gas pipelines in the Black Sea, while it was also reported that 3 people were killed and 10 wounded by Russian shelling of an evacuation boat in the flooded Kherson region.
• Ukraine and Russia announced a return of prisoners following negotiations in which 94 Russian soldiers and 95 Ukrainian soldiers were freed and returned, according to Reuters and TASS.
• Russian Kremlin spokesperson Peskov said there were no arrangements and no preconditions for talks with the Kyiv regime and that Russia sees Kyiv’s unwillingness to engage in dialogue, according to RIA.
• Head of Russia’s Wagner Group Prigozhin said Wagner fighters will not sign any contract with Russia’s Defence Ministry amid an attempt by the Russian Defence Minister to take control of its ranks, according to Daily Mail.
• Canadian PM Trudeau announced CAD 500mln in new funding for military assistance for Ukraine and said Canada will be part of a multinational effort to train Ukrainian fighter pilots, while he added that Canada is seizing Russian-owned Antonov cargo aircraft and starting the process of forfeiting the aircraft to Ukraine, according to Reuters.
• German Chancellor Scholz said he plans to talk to Russian President Putin soon and urge him to withdraw troops from Ukraine, according to Reuters.
• North Korean Leader Kim vowed stronger strategic ties with Russia in a congratulatory message to Russian President Putin for National Day, according to Yonhap.
• Iranian Supreme Leader Khamenei said Tehran should continue working with the UN nuclear watchdog under the framework of safeguards and that reaching an agreement with the West is fine but the country’s nuclear industry should be respected. Iran’s Supreme Leader also commented that talks about Iran’s nuclear weapons are a lie and they do not want nuclear arms based on religious beliefs, while he added that the West could not stop Iran from building nuclear arms if it chose to, according to state media.
• French President Macron expressed concerns about the current trajectory of the Iranian nuclear programme to Iranian President Raisi during a phone call on Saturday and warned about the consequences of drone deliveries to Russia, according to Reuters.
• Taiwanese Ministry of Defense said they sent planes and warships and used ground-based missile systems to monitor the activity of the Chinese military, according to Al Arabiya.

EU/UK

NOTABLE HEADLINES

• BoE's Mann said Britain and other rich nations should consider a carbon tax to lower greenhouse gas emissions, while she refrained from commenting on the short-term economic outlook in her essay for Resolution Foundation think tank, according to Reuters. BoE's Mann also urged the UK government to move economic policy away from being an emergency response tool and onto a more sustainable footing.
• Police in Scotland arrested former Scottish First Minister Sturgeon in an investigation into SNP finances but she was later released without charge pending further investigation, according to FT.
• German Finance Minister Lindner ruled out extra funds for the Intel (INTC) chip plant, according to FT.
• Credit Suisse (CSGN SW) CEO memo signalled that UBS (UBSG SW) deal is to close on Monday, while it was separately reported that UBS set red lines for Credit Suisse staff after takeover completion with UBS to impose tight restrictions on Credit Suisse bankers including a ban on new clients from high-risk countries and on complex financial products, according to Reuters and FT.
• Fitch affirmed Greece at BB+; Outlook Stable.