• APAC stocks were mixed ahead of this week's risk events and despite last Friday's strong NFP report and US-China talks.
• Fed's Bowman (voter) said on Friday that cutting rates too soon risks a rebound in inflation and although unlikely, it is possible the Fed may have to hike rates again to cool inflation.
• Spot gold was initially pressured in early trade alongside weakness across commodities but later printed a fresh record high above USD 2,350/oz.
• European equity futures indicate a flat open with the Euro Stoxx 50 future unchanged after the cash market closed down 1.1% on Friday.
• Looking ahead, highlights include German Industrial Output & Trade Balance, EZ Sentix, Comments from SNB’s Jordan and Supply from the Eurozone.

US TRADE

EQUITIES

• US stocks finished higher after having shrugged off the initial knee-jerk selling following the hot US jobs report in which 303k jobs were added (exp. +200k) and the Unemployment Rate surprisingly fell to 3.8% (exp. 3.9%), while the data spurred heavy selling in Treasuries and resulted in money markets pricing in 65bps of cuts this year vs 70bps+ right before the data.
• SPX +1.11% at 5,204, NDX +1.28% at 18,108, DJI +0.80% at 38,904, RUT +0.47% at 2,063.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bowman (voter) said on Friday that it is not yet time for the US to consider cutting interest rates and the baseline outlook continues to be that inflation will decline further with the policy rate held steady at its current level. Bowman said Fed policy is appropriately calibrated for the state of the economy and the Fed will eventually cut rates if inflation continues to ebb, while cutting rates too soon risks a rebound in inflation and although unlikely, it is possible the Fed may have to hike rates again to cool inflation. Furthermore, she said progress on lowering inflation has stalled and that a deterioration in economic conditions would affect policy view, according to Reuters.
• US FAA said a Southwest Airlines (LUV) Boeing (BA) 737-800 plane returned safely to Denver Airport on April 7th after crew reported an engine cowling fell off during take-off and struck a wing flap.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed as markets digested Friday's strong NFP report and US-China talks.
• ASX 200 eked mild gains amid strength in mining and tech, while there were some M&A-related headlines.
• Nikkei 225 outperformed with the help of recent currency weakness, while wage data matched estimates.
• Hang Seng and Shanghai Comp. swung between gains and losses with an early boost in Hong Kong after mainland markets and Stock Connect trade reopened from a 4-day weekend and with some encouragement from Yellen's meetings in China. However, stocks failed to sustain the early optimism with sentiment clouded by developer concerns after a winding-up petition was filed against Shimao Group.
• US equity futures traded sideways amid the flimsy mood in Asia and ahead of this week's main events.
• European equity futures indicate a flat open with the Euro Stoxx 50 future unchanged after the cash market closed down 1.1% on Friday.

FX

• DXY was rangebound after last Friday's choppy performance and lacked conviction ahead of this week's key events.
• EUR/USD was quiet in the absence of any major pertinent catalysts over the weekend and loitered near its 50DMA and 200DMA levels at 1.0828 and 1.0831, respectively.
• GBP/USD traded indecisively and was contained in a tight range at the 1.2600 handle with BoE's Breeden scheduled to speak later, while the calendar is very light for the UK during most of the week until Friday's monthly GDP and activity data.
• USD/JPY kept float after Friday's rebound and remained in proximity to launch a retest of the 152.00 level.
• Antipodeans were choppy in tandem with the mixed risk appetite and commodity price swings.
• PBoC set USD/CNY mid-point at 7.0947 vs exp. 7.2230 (prev. 7.0949).
• Turkish Central Bank released a statement on simplification of the macroprudential framework on Friday and decided to stop banks’ bond holding requirement according to credit growth rates.

FIXED INCOME

• 10-year UST futures extended on last week's selling following the strong jobs data and hawkish Fed rhetoric.
• Bund futures remained lacklustre and tested the 132.00 level to the downside where support just about held.
• 10-year JGB futures followed suit to the weakness in peers but with the downside stemmed by the BoJ presence in the market.

COMMODITIES

• Crude futures were pressured after a lack of any major geopolitical escalations over the weekend, while there was also said to be progress in discussions and agreement on the basic points between all parties during truce talks in Cairo.
• Odds for oil to reach USD 100/bbl are reportedly increasing amid supply shocks impacting the market, according to Bloomberg.
• Spot gold was initially pressured in early trade alongside weakness across commodities but later clawed back all of its losses after finding some support near the USD 2,300/oz level to eventually print a fresh record high above USD 2,350/oz.
• Chinese Gold Reserves (USD)(Mar) 161.1B (Prev. 148.6B).
• Copper futures fluctuated as there was early broad selling across the metals complex but then prices recovered from lows amid gains in some Asian commodity futures following China's return to the market.

CRYPTO

• Bitcoin was indecisive after pulling back from a brief incursion above the USD 70,000 level over the weekend.

NOTABLE ASIA-PAC HEADLINES

• PBoC is to set up a USD 70bln tech re-lending programme to support the science and technology sectors.
• US Treasury Secretary Yellen told Chinese Premier Li Qiang that the US-China relationship is now on a more stable footing and that US-China relations have improved because the two sides can have tough conversations. while Yellen also noted that Chinese officials feel more confident about their steps on the property market and financial stability. It was separately reported that the US Treasury and China’s Finance Ministry agreed to launch new exchanges on balanced growth in domestic and global economies, while the US Treasury also agreed with the PBoC to launch a new exchange on combating money laundering in their financial systems.
• Chinese Premier Li Qiang said constructive progress was made in US Treasury Secretary Yellen’s meeting in Guangzhou, while he added that the US and China need to respect each other and should be partners, not adversaries. Premier Li also stated that they hope the US and China can meet each other halfway and implement the consensus reached by their heads of state, according to Reuters.
• Chinese Vice Premier He Lifeng and US Treasury Secretary Yellen had an in-depth, candid, pragmatic and constructive exchange of views in Guangzhou talks, while China expressed serious concerns about US economic and trade curbs on China, as well as fully responded to the production capacity issue. Furthermore, the US and China agreed to continue communication, according to CCTV.
• Russian Foreign Minister Lavrov is to visit China on April 8th-9th.

DATA RECAP

• Chinese FX Reserves (USD)(Mar) 3.25T vs Exp. 3.21T (Prev. 3.23T).
• Japanese Labour Cash Earnings YY (Feb) 1.8% vs Exp. 1.8% (Prev. 2.0%)

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu said Hamas hopes to make Israel give in to its demands but that will not happen, while he added that Israel is ready to reach a hostage release deal in Gaza but not ready to give in to Hamas’s extreme demands, according to Reuters.
• Israel's delegation was given the green light to attend Gaza truce and hostage release talks in Cairo, according to a government official cited by Reuters. It was later reported that Hamas and Qatar delegations left Cairo and will return within two days to agree on terms of a final agreement, while there was progress in discussions and agreement on the basic points between all parties. Furthermore, Israel and US delegations were reportedly to leave Cairo and consultations will continue during the next two days, according to Egypt's Al Qahera News citing a senior Egyptian source.
• Israel’s military said it has completed another phase of the Northern Command’s readiness for war. There were also comments from a spokesperson that the Israeli military had withdrawn all ground troops from southern Gaza except for one brigade while Israel later confirmed it had withdrawn its troops from Khan Younis in southern Gaza to prepare for operations in Rafah. Furthermore, White House’s Kirby commented that the Israeli troop reduction appears to be a ‘rest and refit’ for some Israeli forces, according to Reuters.
• Israel launched strikes on Lebanon’s Bekaa, according to two Lebanese security sources cited by Reuters. It was later reported that three people were killed including a field commander in Hezbollah elite forces following an Israeli strike in southern Lebanon.
• Israel’s Defence Minister said preparations are completed to respond to any scenario that develops vis-a-vis Iran. It was also reported that Israel’s military chief Halevi said the IDF can handle Iran and can act forcefully against Iran in places near and far, while he added Israel is cooperating with the US and strategic regional partners, as well as noted that Israel’s military still has many forces in Gaza and it is a long war.
• Senior adviser to Iran’s Supreme Leader said Israeli embassies are no longer safe, according to TASNIM. It was also reported that Iran’s ISNA news agency published names and pictures of nine Iranian missiles that could reach Israel, according to Reuters.
• US Central Command said US forces destroyed one mobile surface-to-air missile system in Houthi-controlled territory of Yemen on April 6th and shot down an unmanned aerial vehicle over the Red Sea, while a coalition vessel also detected, engaged and destroyed one inbound anti-ship missile on April 6th, according to Reuters.
• UKMTO received a report of an incident 60NM southwest of Yemen’s Hodeidah in which a missile was intercepted by coalition forces and a second one impacted the water at a distance from a vessel, although there was no damage and the crew were reported safe, according to Reuters.
• Yemen’s Houthis said they launched rockets and drones targeting one British ship, two Israeli ships and a number of US frigates in the Red Sea, according to Reuters.

OTHER

• Ukrainian President Zelenskiy said Ukraine awaits and needs a big US aid package, while he continues to believe that the US Congress will vote for it. Zelenskiy said they may run out of missiles if the intensity of recent Russian attacks continues and 25 Patriot systems are needed to cover Ukraine fully. Zelenskiy also said Ukraine has enough defence stockpiles for now but is having to choose what to protect and Ukraine does not have artillery ammunition to conduct counteroffensive actions but is receiving artillery rounds under foreign initiatives that are enough for defence, according to FT.
• Ukrainian drones reportedly attacked the Zaporizhzhia Nuclear Station, according to RIA. However, a Ukrainian intelligence spokesman denied that Ukraine was involved in the “provocations” at the nuclear plant, while IAEA’s Chief Rossi said the drone attacks at the plant resulted in one casualty and the damage at one of the six reactors did not compromise nuclear safety but added that this a serious incident with the potential to undermine the integrity of the reactor’s containment system. Furthermore, Grossi said such reckless attacks significantly increase the risk of a major nuclear accident and must stop immediately, according to Reuters.
• Russian Security Council Deputy Chairman Medvedev called the leaders of the US, France, Great Britain and Germany accomplices of the terrorist attack in Crocus City Hall, according to RIA citing a post on social media platform X.
• US President Biden will warn China about its increasingly aggressive activity in the South China Sea during a summit this week with Japanese PM Kishida and Philippines’s President Marcos, according to FT.
• AUKUS is considering expanding a security pact to deter China in the South Pacific, according to FT.
• Philippines Defence Ministry announced maritime cooperative activity between the combined defence and armed forces of the US, Japan, Australia and the Philippines, according to Reuters.
• Philippines Coast Guard spokesperson said two Chinese Coast Guard vessels ‘harassed’ Filipino fishing boats on Thursday in which they went as far as pretending to man their water cannons and threaten the Filipino fisherman, while the harassment occurred in Iroquois reef within the Philippines’ exclusive economic zone, according to Reuters.
• Chinese Coast Guard spokesperson said the Philippines organised ships to “illegally conduct” activities in waters adjacent to a reef in the Nansha Islands and alleged that Philippine government ships have continued to undermine stability in the South China Sea under the guise of fishing protection, according to Reuters.
• Ecuador is facing condemnation over a raid on Friday at the Mexican embassy in Quinto where the former Ecuadorian Vice President Jorge Glas, according to CNN and FT.

EU/UK

NOTABLE HEADLINES

• Concern among large British companies about economic uncertainty has fallen to its lowest since mid-2021 although the improved sentiment is not yet converting to stronger investments, according to a survey by Deloitte.
• Recruitment and Employment Confederation survey found that starting salaries for permanent staff in the UK increased by the slowest rate in more than three years during March, according to Reuters.
• Slovak pro-Russian nationalist-left government candidate Peter Pellegrini emerged victorious in the country’s presidential election on Saturday, according to CNN.
• Moody’s affirmed the EU on Friday at AAA; Outlook Stable.