• APAC stocks traded mostly higher after gradually shrugging off headwinds from Wall Street. US equity futures recovered some of their recent losses as the mood in Asia gradually improved, albeit with price action contained. 
• European equity futures indicate a flat open with the Euro Stoxx 50 future unchanged after the cash market closed down 0.1% on Wednesday. 
• DXY was lacklustre after retreating beneath the 106.00 level,  EUR/USD sat around yesterday's best levels, and USD/JPY briefly tested 154.00 to the downside.
• Fed's Bowman (voter) said progress on inflation has slowed and perhaps stalled, Fed's Mester (voter) said inflation is a little higher than expected this year and they could keep rates where they are for longer if inflation isn't moving down to 2%. 
• Looking ahead, highlights include US IJC, Philly Fed, Comments from ECB’s de Guindos & Schnabel, Fed’s Williams, Bowman & Bostic, Supply from Spain, France & US, Earnings from EssilorLuxottica, L'Oreal, Danone, EasyJet, Rentokil, Segro, Nokia, TSMC, Netflix, Elevance Health & Blackstone.

US TRADE

EQUITIES

• US stocks declined with the downside led by the Nasdaq as the tech sector underperformed with semiconductor names pressured by poor ASML earnings, while stocks pared some of the weakness after a stellar 20-year bond auction before the selling resumed into the closing bell.
• SPX -0.58% at 5,022, NDX -1.24% at 17,493, DJIA -0.12% at 37,753, RUT -0.99% at 1,947.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bowman (voter) said progress on inflation has slowed and perhaps stalled, while she added that economic conditions are strong and strength of consumer spending is tied to jobs growth. Bowman also commented that current monetary policy is restrictive and time will tell if it is sufficiently restrictive.
• Fed's Mester (voter) said they want to get more information before they can say inflation is on a sustainable path to 2% and inflation is a little higher than expected this year, while they want to be pretty confident inflation is on this downward trajectory and she still expects inflation to come down. Mester said monetary policy is well-positioned and they could keep rates where they are for longer if inflation isn't moving down to 2% but added they could lower rates if labour markets deteriorate. Furthermore, she said that at some point, they will start to ease policy but don't have to ease policy in a hurry.
• Fed Beige Book stated overall economic activity expanded slightly and on balance since late February, while ten out of twelve districts experienced either slight or modest economic growth which is up from eight in the previous report, while the other two reported no changes in activity.
• US President Biden is expected to remove tariff exemption for bifacial solar panel imports although no timeline is set for removals.
• US House Appropriations Committee said the House Republican bills would send USD 8.12bln to aid Taiwan and counter Chinese efforts in the Indo-Pacific region, while it would provide USD 26.38bln for Israel and USD 68.84 in Ukraine.
• US Senate Majority Leader Schumer said he wants to get foreign aid and supplemental bills done as quickly as possible but needs to read the bill text first.
• US Republican presidential candidate Trump indicated to economic advisors he is interested in a new middle-class tax cut and among the ideas is slashing the payroll tax, according to Reuters sources.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher after gradually shrugging off headwinds from the tech-led selling in the US.
• ASX 200 was led by the mining industry after BHP's encouraging quarterly production update.
• Nikkei 225 recovered all of its opening losses and returned to above the 38,000 level.
• Hang Seng and Shanghai Comp. conformed to the positive mood but with upside capped in the mainland by US-China trade frictions after President Biden called for an increase in tariffs on Chinese metals.
• US equity futures recovered some of their recent losses as the mood in Asia gradually improved albeit with price action contained as Fed officials continued to signal rates could stay at their current level for longer.
• European equity futures indicate a flat open with the Euro Stoxx 50 future unchanged after the cash market closed down 0.1% on Wednesday.

FX

• DXY was lacklustre after retreating beneath the 106.00 level in the absence of any tier-1 data releases from the US, while the latest commentary had little impact on price action in which Fed's Bowman noted progress on inflation has slowed and perhaps stalled.
• EUR/USD sat around yesterday's best levels after benefitting from a softer dollar but remained under 1.0700 as the recent slew of ECB commentary provided very little incrementally and continued to allude to a potential June cut.
• GBP/USD eked slight gains with price action contained after BoE officials were unfazed by recent CPI data with Governor Bailey flagging a strong drop in inflation next month, while BoE's Greene noted the data is encouraging with the BoE is closer to the target than a few months ago.
• USD/JPY briefly tested 154.00 to the downside as officials echoed familiar jawboning before fading the move.
• Antipodeans edged higher amid the mild improvement in risk sentiment and with AUD/USD shrugging off mixed jobs data which showed a surprise decline in headline Employment Change but was solely due to part-time jobs.
• PBoC set USD/CNY mid-point at 7.1020 vs exp. 7.2281 (prev. 7.1025).

FIXED INCOME

• 10-year UST futures mildly extended on gains after recent short-covering and following a solid 20-year auction.
• Bund futures breached yesterday's best levels with the latest ECB rhetoric continuing to suggest a June cut.
• 10-year JGB futures tracked global counterparts higher but with gains capped amid a lack of fresh catalysts and with weaker demand at the latest enhanced liquidity auction for long- to super-long JGBs.

COMMODITIES

• Crude futures languished near the prior day's lows after slumping on bearish crude inventory data and a lack of any fresh major geopolitical developments.
• US replaced the license that eased oil sanctions on Venezuela with a new 45-day license for companies to wind down transactions, according to the Treasury website.** US officials also confirmed the license that eased oil sanctions on Venezuela would not be renewed after expiring at midnight** and said any activity allowed under the prior license will have to be wound down by May 31st.
• Qatar set June-loading Al-Shaheen crude term premium at USD 2.54/bbl which is the highest in six months.
• Spot gold recovered some of yesterday's losses after slumping from resistance near the USD 2,400/oz level.
• Copper futures were mildly supported as risk appetite in Asia gradually improved.
• Chile President Boric said 'totally clear' that copper prices are on the upswing, while he added that Codelco copper production levels are going to slowly grow as of this year and reach 1.7mln tons by 2030. Furthermore, the government is dedicated to speeding up the mining permitting process and they hope to double lithium output.

CRYPTO

• Bitcoin recovered some of the prior day's losses after bouncing off support at the USD 61,000 level ahead of this weekend's halving event.
• Binance converted the entire pool of assets held in an emergency fund for users into USDC stablecoin. The fund serves as a backstop for customers in “extreme situations”, according to Bloomberg.

NOTABLE ASIA-PAC HEADLINES

• PBoC Governor Pan met with Fed Chair Powell and they exchanged views on the economic situation, monetary policy and financial stability, while Pan also met with IMF's Georgieva in Washington and exchanged views on cooperation between China and the IMF.
• Chinese embassy said it hopes the US will work with China to stop actions that violate international economic and trade rules and disrupt the international economic and trade order.
• US President Biden commented there is no trade war when asked about the proposed China metals tariffs, while he also commented that he wants fair competition, not conflict, with China.
• US Secretary of State Blinken is travelling to China on April 23rd, according to Politico.
• US House Speaker Johnson said TikTok divest-or-ban bill moving on a fast track through Congress.
• BoJ Board Member Noguchi said it is essential for the BoJ to maintain ultra-loose monetary policy and it is essential to continue to maintain an appropriate balance between labour supply and demand through the continuation of its accommodative monetary policy to achieve the 2% price target. Noguchi said it will take a significant amount of time until trend inflation continues to rise to around 2%, while the focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilise.
• Japanese Finance Minister Suzuki held a bilateral meeting with US Treasury Secretary Yellen and agreed to communicate closely on FX, while Suzuki said he wants to closely consult with the US and South Korea on FX.
• Japanese Vice Finance Minister for International Affairs Kanda said Japan is always communicating with the US and each country's authorities on Japan's stance on FX and financial markets.

DATA RECAP

• Australian Employment (Mar) -6.6k vs. Exp. 10.0k (Prev. 116.5k)
• Australian Full Time Employment (Mar) 27.9k (Prev. 78.2k)
• Australian Unemployment Rate (Mar) 3.8% vs. Exp. 3.9% (Prev. 3.7%)
• Australian Participation Rate (Mar) 66.6% vs. Exp. 66.7% (Prev. 66.7%)
• Australian NAB Business Confidence (Q1) -2 (Prev. -6)

GEOPOLITICS

MIDDLE EAST

• Israel considered striking Iran on Monday but decided to wait, according to five US and Israeli sources cited by Axios. Furthermore, an Israeli official said the decision to respond to the Iranian attack against Israel has been made and the only question is when and how.
• Israeli air force said their fighter jets struck Hezbollah infrastructure in eastern Lebanon's Baalbek.
• Israel military said food trucks entered Gaza from the Ashdod port for the first time since the additional aid inspection point was opened.
• Iran’s Army Air Force commander said forces are ready to execute orders using the Soviet-era Sukhoi Su-24 bombers against Israel, according to Iran International.
• US Secretary of Defense Austin said the US will do what is necessary to help defend Israel, according to Al Jazeera.
• US Pentagon spokesman said won't hesitate to defend Israel and will work to protect its forces in the region, while the spokesman added that Defense Secretary Austin made a series of contacts to de-escalate so as not to go to a wider war, according to Al Jazeera.
• Qatari PM said that Qatar is reassessing its role as a mediator between Israel and Gaza because its role is being misused by some politicians for their own goals.
• Italy said EU foreign ministers back sanctions on everyone who gives drones, weapons, and missiles to Israel's enemies and those who attack ships in the Red Sea. It was later reported that an EU statement confirmed they will take restrictive measures against Iran, particularly linked to drones and missiles, while EU's Michel said they will target the companies needed for production and drones.

OTHER

• G7 statement noted significant geo-political risks from Russia's war against Ukraine and the Middle East situation could affect trade, supply chains and commodity prices, while they welcomed the EU proposal to direct extraordinary revenues from Russia's frozen assets to aid Ukraine and will continue working on all possible avenues by which frozen Russian assets could be used to support Ukraine. It was also reported that Japan's top currency diplomat Kanda said the G7 discussion on Iran-related language was a bit complicated and they haven't yet reached a conclusion on what sanction should be applied.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said the UK economy is on track with February forecasts and the Bank's job is to hit the inflation target sustainably, while he added to expect a strong drop in inflation next month and the latest CPI figures were only a small amount above expectations.
• ECB President Lagarde said growth in Europe is mediocre and much slower than in the US, while she added that Euro-area inflation is a "different animal" than in the US and they are clearly seeing timid signs of a recovery.
• ECB's Centeno said the ECB won't decide on all cuts at one meeting and "several" rate cuts are possible during the year. Centeno added the Fed won't guide monetary policy in the Euro Zone and "If we have to cut rates before the Fed, so be it”, while the number of cuts depends on incoming data.
• ECB's Nagel said a June rate cut looks increasingly likely but there are still some caveats and that certain parts of the incoming inflation data still look higher than desired, according to CNBC.
• ECB's Schnabel said financial markets repricing of rates over the last few months shows investors expect policymakers, at least for now, to continue to pay more attention to actual inflation outcomes.
• ECB's Vasle said he sees the deposit rate 'much closer' to 3% by year-end if disinflation goes to plan, according to Reuters.