• US stocks eventually eked slight gains, APAC stocks traded mixed ahead of upcoming risk events and a slew of market closures.
• Fitch revised China's outlook to Negative and affirmed its rating at A+.
• European equity futures indicate a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down 1.1% on Tuesday.
• RBNZ kept the OCR unchanged as expected and noted that a restrictive monetary policy stance remains necessary.
• DXY is steady above the 104 mark, NZD the notable outperformer post-RBNZ, other majors are steady.
• Looking ahead, highlights include include Norwegian CPI, US CPI, BoC Policy Announcement, FOMC Minutes, Comments from Fed's Bowman, Barkin & Goolsbee, Supply from UK, Germany & US.

US TRADE

EQUITIES

• US stocks eventually eked slight gains after two-way price action ahead of looming risk events and with early headwinds amid notable selling in Nvidia (NVDA) shares which hit sentiment and dragged stocks into negative territory for most of the session. However, stocks then staged a late comeback which was also facilitated by less-hawkish commentary from Fed's Bostic who said they cannot eliminate the possibility that rate cuts move even further out but also suggested that cuts could be pulled forward if the disinflation pace resumes.
• SPX +0.14% at 5,209, NDX +0.39% at 18,169, DJIA -0.02% at 38,883, RUT +0.34% at 2,080.
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NOTABLE HEADLINES

• Fed's Bostic (voter) reiterated he expects a slow pace of disinflation in 2024 and stated that CPI coming in at consensus would be a welcome development, as well as noted that it is always possible Fed's growth forecast could rise. Bostic said they cannot eliminate the possibility that rate cuts move even further out but also suggested that cuts could be pulled forward if the disinflation pace resumes, while he added that if there seems like there is a looming cliff coming, he would then think about when it is appropriate to reduce rates.
• US President Biden said he and his administration are examining whether he has the authority to act on his own to shut down the US border with Mexico to migrants if deemed necessary, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded mixed with some lacking conviction ahead of looming risk events, while there were also holiday closures in South Korea, Singapore, Malaysia, Philippines, Indonesia & Middle East.
• ASX 200 was led higher by outperformance in the mining and defensive sectors.
• Nikkei 225 remained subdued but was off worst levels following mixed PPI data.
• Hang Seng and Shanghai Comp. were mixed with Hong Kong boosted by tech after China's Cyberspace Administration said several firms including China Mobile, Alibaba, Huawei and Tencent completed the filing of large model AI services registration. However, the mainland declined amid a lack of fresh drivers and with the EU wanting to talk with China about unfair competitive conditions and over-capacity during German Chancellor Scholz's visit.
• US equity futures traded sideways after yesterday's late recovery and as focus turns to US CPI.
• European equity futures indicate a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down 1.1% on Tuesday.

FX

• DXY traded steadily as participants braced for the incoming CPI data and FOMC Minutes, while comments from Fed's Bostic were less hawkish as he stated they cannot eliminate the possibility rate cuts move further out but also suggested cuts could be pulled forward if the disinflation pace resumes.
• EUR/USD lacked direction after yesterday's intraday pullback and amid light catalysts.
• GBP/USD traded sideways near its 100DMA after returning from a brief foray above 1.2700.
• USD/JPY saw muted price action after mixed PPI data and BoJ Governor Ueda's reiterations.
• Antipodeans were mixed alongside the similar risk mood in Asia but with mild support in NZD/USD after the RBNZ kept rates unchanged and stuck to a hawkish tone.
• PBoC set USD/CNY mid-point at 7.0959 vs exp. 7.2300 (prev. 7.0956).
• SNB's Vice Chairman Schlegel said FX interventions support the goal of achieving price stability and without forex sales, the SNB would have had to raise interest rates higher. Schlegel said FX purchases in the past have also helped head off deflation and that FX interventions complement interest rate policy, while he added the central bank only uses FX intervention when necessary.

FIXED INCOME

• 10-year UST futures kept afloat after rallying into the US inflation data, despite a poor 3-year auction.
• Bund futures took a breather near yesterday's peak after firm demand at the Bobl auction.
• 10-year JGB futures lacked demand after mixed PPI data and the absence of additional BoJ purchases, while the latest comments from BoJ Governor Ueda largely kept to the script.

COMMODITIES

• Crude futures languished near the prior day's lows amid the absence of any material escalation in the Middle East geopolitical situation and following bearish crude inventory data.
• US Energy Inventory Data (bbls): Crude +3mln (exp. +2.4mln), Gasoline -0.6mln (exp. -1.3mln), Distillate +0.1mln (exp. -1.2mln), Cushing +0.1mln.
• EIA STEO stated 2024 world oil demand growth was cut by 480k BPD to a 0.95mln BPD Y/Y increase and the 2025 forecast was cut by 30k BPD to a 1.35mln BPD Y/Y increase.
• Spot gold was indecisive after a pull-back from record levels ahead of US CPI data.
• Copper futures traded rangebound amid the mixed risk sentiment in Asia.
• World Steel Association forecasts that demand will see a 1.7% rebound this year to reach 1.793bln metric tons and steel demand is forecast to grow by 1.2% in 2025 to reach 1.815bln metric tons.

CRYPTO

• Bitcoin was indecisive and oscillated around the USD 69,000 level.

NOTABLE ASIA-PAC HEADLINES

• Fitch revised China's outlook to Negative and affirmed its rating at A+, while it stated the outlook revision reflects increasing risks to China's public finance outlook and forecasts general government deficit in China to rise to 7.1% of GDP in 2024.
• US Deputy Secretary of State Campbell said the easing of US travel advisories on China is under active consideration but added the large number of Chinese economic migrants coming to the US is of increasing concern.
• BoJ Governor Ueda said given the current outlook for economic activity and prices, the BoJ anticipates that accommodative financial conditions will be maintained for the time being and noted that with trend inflation yet to reach 2%, they need to support the economy's momentum toward hitting 2% by maintaining accommodative monetary conditions. Furthermore, they won't change monetary policy just to deal directly with FX moves but may need to change monetary policy if FX moves lead not just to rising import prices, but risk pushing up trend inflation more than expected.
• RBNZ kept the OCR unchanged at 5.50% as expected. RBNZ noted that a restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation, while the committee is confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1%-3% target range this calendar year. RBNZ Minutes noted the committee agreed interest rates need to remain at a restrictive level for a sustained period and there remains limited tolerance to increase the time to achieve the inflation target while inflation remains outside the target band and while inflation expectations and pricing intentions remain elevated.

DATA RECAP

• Japanese Corp Goods Price MM (Mar) 0.2% vs. Exp. 0.3% (Prev. 0.2%)
• Japanese Corp Goods Price YY (Mar) 0.8% vs. Exp. 0.8% (Prev. 0.6%, Rev. 0.7%)

GEOPOLITICS

MIDDLE EAST

• US President Biden said Israeli PM Netanyahu's policy in Gaza is wrong and he does not agree with it, while he called on Israel to cease fire and to allow full access to all food and medicine to Gaza, according to Al Jazeera. It was also reported that the Biden administration rejected Israeli PM Netanyahu's statement on the date of the Rafah operation and described it as a threat driven by a fragile political position, according to CNN and Al Jazeera
• Israeli Defence Minister Galant reportedly told US Secretary of Defense Austin that Israel has not yet set a date for the Rafah operation and that Israel would have to carry out several necessary actions before an operation in Rafah which are mainly an orderly evacuation of the civilian population and an increase in humanitarian aid, according to Axios.
• White House said an in-person Israel-US meeting on Rafah will take place in a couple of weeks.
• US Secretary of State Blinken said the US continues to work closely with Qatar and Egypt on a ceasefire agreement for Gaza, while the US does not have a date for the potential Israeli operation in Rafah and conversations with Israel are ongoing. Furthermore, Blinken said they have an offer for Hamas which is a "very serious" offer and should be accepted.
• US officials said the Biden administration rejected Israeli PM Netanyahu's statement on the date of the Rafah operation and described it as a threat driven by a fragile political position, according to CNN.
• Israeli Defence Force said they will carry out a large-scale humanitarian operation in southern Gaza.
• The town of Kafr Kila in southern Lebanon was subjected to Israeli raids, according to Sky News Arabia.

OTHER

• US President Biden’s administration is preparing to take the unusual step of issuing an order that would prevent US companies and citizens from using software made by a major Russian cybersecurity firm because of national security concerns, according to CNN sources.
• White House National Security Advisor Sullivan said more joint patrols can be expected after four-way naval drills in the South China Sea during the weekend. Sullivan also said that US President Biden and Japanese PM Kishida will announce measures to enhance defence and security cooperation, while they will also announce measures on space exploration soon.