• Equities are mostly lower, continuing the sell-off seen in the prior session; the RTY underperforms
• Dollar is flat and firmly above 105, USD/JPY back on a 153 handle
• USTs contained at post-CPI lows whilst Bunds dip lower ahead of the ECB
• Crude is incrementally firmer, XAU rangebound and base metals little changed despite softer Chinese inflation figures
• Looking ahead, US IJC & PPI, ECB Policy Announcement & Lagarde Conference, Comments from Fed's Williams, Collins, Bostic & Barkin, Supply from the US

LOOKING AHEAD

• US IJC & PPI, ECB Policy Announcement & Lagarde Conference, Comments from Fed's Williams, Collins, Bostic & Barkin, Supply from the US.
• Click here for the Newsquawk Week Ahead.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (U/C), initially traded with little direction, though have succumbed to marginal selling pressure, in tandem with similar price action seen in the US.
• European sectors are mixed. Energy and Basic Resources take the top spots, lifted by broader strength in underlying commodity prices. Travel & Leisure is found at the foot of the pile.
• US Equity Futures (ES U/C, NQ U/C, RTY -0.2%) are entirely in the red, with slight underperformance in the economy-linked RTY, post-CPI and ahead of PPI.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
• Click here for more details.

FX

• DXY is a touch lower but holding above the 105.00 mark post-CPI print; a dovish ECB today could open up a test of 106 for the index.
• EUR is flat vs. the USD after a tumultuous session yesterday which sent the pair to a low of 1.0728. Price action for the pair will likely be more swayed by the EUR side of the equation due to the ECB. A dovish release could see a test of 1.07 to the downside with the YTD trough at 1.0694.
• GBP is benefitting in today's trade alongside other risk-sensitive currencies but well beneath yesterday's 1.27+ peak.
• JPY is flat vs. the USD but that will be of little consolation to officials in Tokyo after the pair ripped through 152 yesterday, topping out at 153.28. Jawboning overnight has proved futile and as such, intervention speculation is rife.
• Antipodeans are both firmer vs. the USD after a bruising session yesterday. AUD/USD still has some way to go before paring yesterday's heavy losses with interim resistance coming via the 50 and 200DMAs.
• PBoC set USD/CNY mid-point at 7.0968 vs exp. 7.2622 (prev. 7.0959).
• Click here for more details.
• Click here for today's option expiries for the NY cut.

FIXED INCOME

• USTs are contained following Wednesday's significant US CPI-induced sell-off. Today's 108-05 base is half a tick below Wednesday's trough, support limited below and attention still firmly on yields as a return to near 5.0% re-enters the conversation.
• Bunds are under pressure as markets begin to pare ECB rate expectations in the wake of the hot US CPI. Bunds down to 131.41 and the 10yr yield to 2.47% bringing 2.50% into view. The ECB at 13:15 BST / 08:15 ET will dictate price action for today.
• Gilts are pressured and underperforming as the benchmark catches up to the poor US 10yr and FOMC Minutes. Additional weakness may have also been sparked by hawkish commentary from BoE's Greene, who said rate cuts should "still be a way off".
• Italy sells EUR 8.25bln vs exp. EUR 7.0-8.25bln 2.95% 2027, 3.50% 2031 & 4.15% 2039 BTPs.
• Japan sells JPY 815bln 20yr JGBs; b/c 3.05x (prev. 3.01), average yield 1.630% (prev. 1.559%).
• Click here for more details.

COMMODITIES

• Crude holds near recent highs though price action has been contained throughout the European morning; Brent June trades within a 90.35-90.80/bbl parameter. Ahead, the OPEC MOMR will be released today (timing TBC), but this is unlikely to move crude markets.
• Precious metals are mixed following yesterday's slump triggered by the hot US CPI data; XAU sits at the bottom of a USD 2,330.65-2,346.95/oz range.
• Base metals are mixed with the breadth of the market narrow. The sub-forecast Chinese inflation figures overnight did little to affect base western metal prices.
• Click here for more details.

NOTABLE HEADLINES

• BoE's Greene wrote in the FT that markets must stop comparing the UK and the US, as well as noted that inflation persistence is a greater threat for the former than the latter and that rate cuts are a way off. Greene noted that markets now expect the BoE will cut rates earlier and by more than the Fed this year and that UK services inflation remains much higher than in the US, while she added that higher inflation expectations have translated to higher pay growth, by metrics now between 6%-7% in the UK.

DATA RECAP

• Italian Industrial Output YY WDA (Feb) -3.1% (Prev. -3.4%); Industrial Output MM SA (Feb) 0.1% vs. Exp. 0.5% (Prev. -1.2%)
• UK RICS House Price Balance (Mar) -4 vs. Exp. -6 (Prev. -10); RICS Housing Survey (Mar) -4.0 vs. Exp. -6.0 (Prev. -10.0, Rev. -10)
• Norwegian GDP Month Mainland (Feb) -0.2% vs. Exp. 0.1% (Prev. 0.4%)
• Swedish Reg Unemployment Rate (Mar) 6.7% (Prev. 6.8%); Money Market CPIF Inflation 1-Year (Apr) 2.0% (Prev. 2.0%); Money Mkt CPIF Inflation 5-Years (Apr) 2.0% (Prev. 2.0%)
• Hungarian CPI YY 3.6% vs. Exp. 3.6% (Prev. 3.7%)

NOTABLE US HEADLINES

• UBS Global Wealth Management now expects the Fed to start cutting rates in September (prev. June); expects the Fed to cut rates twice by 25bps each this year.
• Apple (AAPL) warned users in India and 91 other countries of potential "mercenary spyware attack" aimed at compromising iPhones, the Economic Times reported. These attacks were deemed rare and highly sophisticated.
• Costco (COST) boosts quarterly dividend to USD 1.16/shr (prev. 1.02). March net sales USD 23.48bln (9.4% Y/Y); net sales for the first 31 weeks were USD 146.64bln (+6.4% Y/Y) percent from $137.77 billion last year. US comps (ex gasoline prices and FX) +7.4%.

GEOPOLITICS

MIDDLE EAST

• US Secretary of State Blinken made it clear in a call with Israeli Defence Minister Gallant that the US will stand with Israel against any threats by Iran and its proxies, while they discussed efforts to release all hostages through an immediate ceasefire agreement in Gaza and Blinken reiterated that incidents such as the targeting World Central Kitchen workers must not be repeated.
• US senior general is to visit Israel to coordinate on Iran attack threat with CENTCOM commander Gen. Kurilla expected to meet senior Israeli Defence Force officials and Defense Minister Gallant, according to Axios. Israeli officials said they are preparing for a possible, unprecedented direct attack against Israel from Iranian soil using ballistic missiles, drones and cruise missiles against Israeli targets, while Israel would retaliate with its own direct attack against Iran in such a scenario.
• Saudi Arabia, Qatar, UAE and Iraq's Foreign Ministers spoke by phone last night with the Iranian Foreign Minister to discuss regional tensions, according to Axios's Ravid. The officials contacted the Iranian Foreign Minister after conversations with US President Biden's senior Middle East adviser McGurk who asked them to convey a message to Iran that Iran must refrain from escalation with Israel which could also thwart efforts to reach a ceasefire in Gaza.
• "Israeli Finance Minister: Rafah and Deir al-Balah and Nuseirat must be entered starting today", according to Al Arabiya; "The army is preparing to deepen operations in Rafah".

OTHER

• Explosions were heard in Ukraine's Kharkiv with the city being attacked by Russian missiles.
• US bipartisan bill reportedly seeks USD 2.5bln for Philippines defence in the face of Chinese pressure.
• North Korean leader Kim said now is the time to be prepared for war more than ever before, according to KCNA.

CRYPTO

• Bitcoin holds incrementally above USD 70k, whilst Ethereum (+2.2%) firmly sits above USD 3.5k.

APAC TRADE

• APAC stocks were subdued after hotter-than-expected US CPI data and a further unwinding of Fed rate cut bets reverberated across global markets, although stocks are off their worst levels and participants also digested the latest Chinese inflation figures.
• ASX 200 was led lower by underperformance in the rate-sensitive real estate and tech sectors amid higher yields.
• Nikkei 225 declined at the open but retained the 39,000 level with downside cushioned by currency weakness.
• Hang Seng and Shanghai Comp. were mixed with underperformance in Hong Kong amid notable weakness in developers and tech stocks, while the mainland bucked the trend as softer-than-expected Chinese CPI and persistent producer price deflation kept the door open for future support measures.

NOTABLE ASIA-PAC HEADLINES

• China MOFCOM official said China lodged solemn representations with the EU on issues such as the investigation of foreign subsidies to China and believes the probes launched by the EU so far are all aimed at Chinese new energy-related enterprises, which will seriously damage the confidence of Chinese enterprises in carrying out investment and trade cooperation.
• Japanese Finance Minister Suzuki reiterated it is important for currencies to move in a stable manner reflecting fundamentals and excessive FX moves undesirable, while he won't rule out any steps to respond to excessive FX moves and is looking at the background of yen weakening to 152 and 153 against the dollar and not necessarily the levels themselves. Suzuki said 'no comment' on the FX level and government response but stated that FX levels are basically determined by markets and that a weak yen has merits and demerits.
• Japan's top currency diplomat Kanda said recent yen moves are rapid and won't rule out any steps to respond to disorderly FX moves, while he said they are prepared to take necessary actions whenever possible but wouldn't comment on whether overnight forex moves are excessive.
• Japan Chief Cabinet Secretary Hayashi said won't comment on forex levels and currency intervention, but added it is important for currencies to move in a stable manner reflecting fundamentals and that excessive FX volatility is undesirable. Hayashi also stated that he is closely watching FX moves with a high sense of urgency and won't rule out any steps to respond to excessive FX moves.
• South Korea's PM and senior officials in the Presidential Office offered to resign, while President Yoon said he humbly accepts the parliament election result and will renew the administration, according to Yonhap. It was separately reported that the leader of South Korea's ruling party leader resigned following the parliamentary election defeat, according to AFP News Agency.
• Fast Retailing (9983 JT) Q2 (JPY) Operating Income 110.4bln (exp. 118.1bln), Net 88bln (exp. 79bln). FY Guidance: Net 320bln (prev. guided 310bln), Dividend 350/shr (prev. guided 330/shr).
• REUTERS POLL: Chinese 2024 GDP growth seen at 4.6% (prev. 4.6% in Jan poll), 2025 growth seen at 4.4%; Q1 GDP at 4.6%, Q2 5.0% Y/Y, 2024 CPI seen at 0.7% (prev. 1.0% in Jan poll), 2025 CPI at 1.6%. PBoC seen cutting banks' RRR by 25bps in Q3 2024.
• Morgan Stanley upgrades China's 2024 real GGDP target to 4.8% from 4.2%
• China's Foreign Ministry decided to take countermeasures again two US enterprises over arms sales to Taiwan, according to Reuters; Measures taken on general atomic aeronautical systems and General Dynamics land systems (GD), effective April 11th

DATA RECAP

• Chinese CPI MM (Mar) -1.0% vs. Exp. -0.5% (Prev. 1.0%); YY (Mar) 0.1% vs. Exp. 0.4% (Prev. 0.7%)
• Chinese PPI YY (Mar) -2.8% vs. Exp. -2.8% (Prev. -2.7%)