• Equities mostly, but modestly firmer; TSMC beat Q1 expectations, though lower in the pre-market
• Dollar slightly lower, G10’s generally flat/firmer with newsflow light
• Bonds bid, continuing the upside seen following Wednesday’s auction
• Crude is at lows, pressured by Israel/Iran reports; XAU edges higher
• Looking ahead, US IJC, Philly Fed, Comments from ECB’s Schnabel, Fed’s Williams, Bowman & Bostic, Earnings from EssilorLuxottica, L'Oreal, Netflix, Elevance Health & Blackstone

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.3%) are mostly, but modestly firmer. Initially futures were lifted following strong TSMC results/guidance, though equities have tilted slightly lower in recent trade.
• European sectors are mixed, having initially held a positive tilt; Energy underperforms, given the slump in oil prices following bearish crude inventory data and geopolitical updates. Utilities is found at the top of the pile.
• US Equity Futures (ES +0.1%, NQ +0.2%, RTY +0.1%) are incrementally firmer, though ultimately resides around the unchanged mark; TSMC (-2.2%) beat on Q1 expectations and notes of strong AI demand, name was initially firmer in the pre-market but has since trimmed markedly and fallen into the red.
• Click here and here for the sessions European pre-market equity newsflow, including earnings/updates from: Nokia, easyJet, ABB and more.
• Click here for more details.

FX

• USD is softer vs. all major peers with the DXY back on a 105 handle after printing a 106.51 high earlier in the week.
• EUR/USD has continued its recovery after printing a base around the 1.06 mark earlier in the week. That being said, policy divergences remain wide between the Fed and ECB, therefore, focus amongst strategists is on whether the pair can hold above 1.05.
• GBP is attempting to claw back some losses vs. the USD but Cable hasn't been able to reclaim a 1.25 handle throughout the week.
• Antipodeans are both firmer vs. the USD following a pick-up in sentiment in APAC hours and firm trade in base metals. AUD/USD saw little sustained follow-through from Aus. jobs as the unexpected contraction in employment was driven by part-time jobs.
• PBoC set USD/CNY mid-point at 7.1020 vs exp. 7.2281 (prev. 7.1025).
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• Click here for notable OpEx for the NY Cut.

FIXED INCOME

• USTs are bid, but only modestly so with newsflow somewhat limited thus far ahead of IJC & Fed speak. Positive undertones continue from the strong 20yr sale on Wednesday; USTs around their 108-10+ peak, surpassing Tuesday's 108-08 best.
• Bunds are also firmer and closer to USTs than Gilts in terms of the magnitude of gains thus far. Holding just off the 131.87 peak around Wednesday's 131.67 best.
• Gilts are outperforming but largely a function of catch-up play to the strong 20yr US sale, yesterday's Bailey remarks and the general bullish grind for benchmarks late doors on Tuesday. As it stands, Gilts at a 97.20 peak having picked up markedly from Wednesday's 96.01 contract low.
• Spain sells EUR 6.143bln vs exp. EUR 5.5-6.5bln 2.50% 2027, 1.95% 2030, 3.25% 2034 & 3.45% 2066.
• France sells EUR 12.417bln vs exp. EUR 11.0-12.5bln 0.00% 2027, 2.50% 2027, 2.75% 2030 & 0.00% 2032 OATs.
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COMMODITIES

• The crude complex extended on yesterday's slide, with prices subdued by the lack of Israeli response against Iran coupled with this week's inventory builds in weekly data. More recent reports meanwhile suggested a potential Israeli strike on Iran after Passover; Brent June looking to test USD 85.50/bbl to the downside.
• Precious metals are firmer across the board amid the softer Dollar, with mild outperformance in palladium vs gold and silver; XAU currently sits at the top of USD 2,361.10-2.381.10/oz range.
• Base metals are higher trade across the board for base metals with copper reaching a level last seen in June 2022, and iron ore continuing to surge higher. The complex is supported by optimism surrounding China coupled with the intraday fall in the Dollar.
• Qatar set June-loading Al-Shaheen crude term premium at USD 2.54/bbl which is the highest in six months.
• 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.
• Kazakhstan's Energy Ministry says oil production losses due to floods have amounted to 16k tons; Azerbaijan is in talks to ship up to 5mln tons of Kazakh crude via Baku-Supsa pipeline.
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NOTABLE EUROPEAN HEADLINES

• 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.
• ECB's de Guindos says inflation has fallen further this year, expected to continue declining in the medium term but the pace will be slower. If inflation conditions are met, it would be appropriate to reduce the current level of restrictions.

DATA RECAP

• EU Current Account NSA,EUR (Feb) 31.64B (Prev. 24.87B)

NOTABLE US 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.
• 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.

EARNINGS

• TSMC (2330 TW) Q1 (TWD) Net 225bln (exp. 213bln), CapEx USD 5.77bln (prev. 5.24bln Q/Q), Gross Margin 53.1% (exp. 53%). Q2 Guidance: Revenue 19.6-20.4 (exp. 19.2bln, prev. 15.68bln Y/Y), Gross Margin 51-53% (Q1 53.1%), Operating Margin 40-42% (Q1 42%), Expects higher power costs; H2 business will be stronger than H1. Click here for more. Adds, demand for AI is "very, very strong". Still not able to meet customer demand for AI. Shares -2.2% in pre-market trade
• Nokia (NOKIA FH) Q1 (EUR) EPS 0.09 (exp. 0.07), sales 4.67bln (exp. 5.00bln). Notes that the environment is still challenging but order trends continue to improve. (Newswires)
• Elevance Health (ELV) Q1 2024 (USD): EPS 10.64 (exp. 10.53), Revenue 42.3bln (exp. 42.63bln). FY EPS view >37.20 (exp. 37.16, prev. >37.10)
• Alaska Air Group Inc (ALK) Q1 2024 (USD): EPS -0.92 (exp. -1.05), Revenue 2.23bln (exp. 2.19bln)

GEOPOLITICS

MIDDLE EAST

• "Multiple reports claiming Netanyahu is postponing counter strike on Iran till after Passover next week", according to Sky News' Waghorn "Al Araby al Jadeed claiming he’s promised a more limited retaliation in return for freedom to strike Rafah hard."
• US has reportedly agreed to back an Israeli operation in Rafah in return for Israel not conducting a major strike on Iran, via JNS citing Egyptian officials.
• "Israel Broadcasting Corporation: The army is waiting for the green light to start its operations in Rafah, south of Gaza", according to Al Arabiya.
• "Al-Arabiya correspondent: Large movements of Israeli armoured vehicles near the outskirts of the city of Rafah", according to Al Arabiya.
• 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.
• UK Ministry of Defence insider speaking to Politico says they now expect “strikes back and forth” between Israel and Iran, via Politico

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.

CRYPTO

• Bitcoin back above USD 61k, whilst Ethereum finds support around USD 3k.
• 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.

APAC TRADE

• 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.

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.
• PBoC Deputy Governor says there is still room for monetary policy going forward.
• 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.
• 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.
• PBoC official says high real interest rates in some sectors may help control capacity and reduce inventories.

DATA RECAP

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