• European bourses have meandered higher after a contained open, US futures near unchanged
• Geopols. and US-China talks in focus; Hamas sources report no progress in Cairo negotiations
• DXY steady but towards the top-end of the day’s range with peers generally steady in limited newsflow
• Core fixed benchmarks lower in an extension of Friday’s bearish action, US yields higher across the curve
• WTI and Brent pressured as geopolitically tensions did not materially escalated over the weekend, XAU at a fresh record high
• Looking ahead, highlights include US NY Fed SCE, SNB's Jordan, BoE's Breeden & Fed's Goolsbee

EUROPEAN TRADE

EQUITIES

• European bourses are mostly firmer after a contained open, Stoxx 600 +0.2%, upside which occurred despite a lack of fresh fundamental drivers and amid ongoing hawkish fixed income action; DAX 40 +0.5% the outperformer given its Auto exposure and after strong German Industrial Output data.
• Sectors have a slight anti-defensive bias with Media, Food/Beverage and Healthcare names in the red while Basic Resources and Autos outperform on the return of China.
• Stateside, futures are near the unchanged mark, ES -0.1%, with specifics light as participants look to the NY Fed SCE later before Wednesday's CPI and FOMC Minutes for further insight into the Fed's calculus amid recent hawkish price action.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• DXY steady and towards the top-end of 104.24-104.43 bounds, further upside potentially capped as we await CPI on Wednesday.
• EUR and GBP both steady against the USD, single currency not significantly swayed by German data points with the 50- & 200-DMA in proximity alongside OpEx at 1.0790-00 while GBP is entirely flat with specifics light thus far.
• USD/JPY slightly firmer. eyeing the 151.97 YTD peak while overnight light jawboning had no real effect.
• Antipodeans contained overall as the NZD awaits the RBNZ later in the week while the AUD ekes some modest support from iron ore.
• 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.
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• Click here for today's option expiries for the NY cut.

FIXED INCOME

• Newsflow focused on geopols and US-China with the positive tone in Europe giving fixed benchmarks another reason to continue Friday's bearish action but with the US yield curve current lower across the board as opposed to Friday's flattening.
• Bunds dipped on German Industrial Output and have continued to drift to a 131.65 trough with USTs down to 109-04 thus far. No real reaction to the EZ NGEU supply.
• Gilts pressured in tandem with USTs/Bunds; UK specifics non-existent ahead of BoE's Breeden who last spoke in February at which point she was focussed on how long rates needed to be on hold for.
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COMMODITIES

• Crude benchmarks pressured as geopolitical tensions did not materially escalate over the weekend and progress was initially reported in ceasefire talks but clarification since makes clear that gaps remain.
• WTI and Brent at the middle of circa. USD 0.80/bbl parameters holding around USD 86.10/bbl and USD 90.30/bbl respectively. Modest pressure occurred on the RTRS reports around the Iraq-Turkey pipeline.
• Spot gold pressured overnight but has managed to recuperate this and has since lifted to a fresh record high above USD 2.35k/oz Base metals also off lows and into the green with catalysts light and the action seemingly a function of China's return to market.
• Odds for oil to reach USD 100/bbl are reportedly increasing amid supply shocks impacting the market, according to Bloomberg.
• Azerbaijan oil output 7.3mln/T in January-March (4.8mln/T January-February), via Energy Ministry.
• Iraq has completed the first stage of repairing oil export pipeline to Turkey, according to the Deputy Oil Minister cited by Reuters; to be operational by the end of April; ready to export 350k BPD from the northern oilfields.
• Iraq sets May 2024 Basrah Medium Crude OSP to Asia at par with Oman/Dubai Average (vs prev USD -0.60/bbl), Europe at USD -5.15/bbl vs dated Brent (prev. USD -5.85/bbl), US at USD -0.90/bbl vs ASCI (prev. USD -0.95/bbl).
• Chinese Gold Reserves (USD)(Mar) 161.1B (Prev. 148.6B).
• UBS lifts all of their gold forecasts by USD 250/oz. Forecast gold at USD 2.3k/oz in June, USD 2.5k/oz at end-2024 and March-2025.
• Shanghai Gold Exchange says it is to increase trading limits for some silver future contracts to 11% from 9% and and increase the margin requirement for some contracts to 12% from 10%.
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DATA RECAP

• Swiss Unemployment Rate Adjusted (Mar) 2.3% vs. Exp. 2.2% (Prev. 2.2%); Unadjusted (Mar) 2.4% (Prev. 2.4%)
• German Industrial Output MM (Feb) 2.1% vs. Exp. 0.3% (Prev. 1.0%)
• German Trade Balance, EUR, SA (Feb) 21.4B vs. Exp. 25.5B (Prev. 27.5B); Imports MM SA 3.2% vs. Exp. -1.0% (Prev. 3.6%, Rev. 3.3%); Exports MM SA -2.0% vs. Exp. -0.5% (Prev. 6.3%)

NOTABLE HEADLINES

• German chancellor to begin visit to China next Saturday, according to Sky News Arabia; spokesperson adds that Scholz is sceptical on EU tariffs.
• 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.

NOTABLE US HEADLINES

• 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.
• Alibaba (9988 HK/BABA) Cloud announces price cuts of as much as 59% on cloud-products which are powered by data centres outside of China.
• TSMC (2330 TT/TSM) has agreed to USD 6.6bln subsidy for TSMC Arizona chip production; and up to USD 5bln in low cost government loans.
• US Treasury Secretary Yellen says she is confident that inflation will continue to come down, via CNBC.

GEOPOLITICS

MIDDLE EAST - EUROPEAN MORNING

• "Hamas leading source to Al Jazeera: No progress in negotiations in Cairo and the Israeli delegation did not respond to any of Hamas' demands". Furthermore, "Israeli media: Senior official says gap between Israel and Hamas over possible deal remains large", according to Al Arabiya.
• Israeli Broadcasting Authority says "any Israeli movement in Rafah will not begin before the end of the talks with Washington", according to Sky News Arabia.
• "Israeli sources involved in the negotiations: By Tuesday evening we will know if it is possible to proceed with the negotiations and wait for Hamas' response", according to Sky News Arabia

MIDDLE EAST - OVERNIGHT

• 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.

CRYPTO

• Bitcoin continues to lift, surpassing the USD 72k mark with the mid-March peaks next on the radar.

APAC TRADE

• 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.

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.
• Japan's Keidanren Chief says current JPY weakness is excessive; elsewhere, Japan's former top FX official Nakao says in relation to recent speculative JPY weakening that if moves are rapid enough it could trigger intervention at any moment.

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%)