• Asian equities traded lower amid the downbeat tone from Wall Street whereby lacklustre earnings dragged prices lower
• GBP took focus after the EU close yesterday with GBP/USD steamrolling tspanough stops to briefly break above 1.2900
• Looking ahead, highlights include Eurozone CPI, DoEs, Fed’s George, Rosengren and ECB’s Coeure

ASIA

Asia equity markets traded negative following a similar lead from Wall St., where disappointing earnings from the likes of Johnson & Johnson and Goldman Sachs dampened sentiment. This resulted in early pressure in Nikkei 225 (Unch.) and ASX 200 (-0.6%) with weakness in financials and commodities leading the declines in the latter. Shanghai Comp (-1.0%) and Hang Seng (-0.6%) also conformed to the downbeat tone observed across their global counterparts amid mild increases in Chinese money market rates, with the PBoC’s liquidity operations failing to provide an uplift. 10yr JGBs traded higher as participants sought after safer assets due to the dampened tone in the region, while the 10yr yield declined to 0% which was its lowest since November.

PBoC injected CNY 40bln 7-day reverse repos, CNY 20bln in 14-day reverse repos and CNY 20bln in 28-day reverse repos.

PBoC set CNY mid-point at 6.8664 (Prev. 6.8849). (Newswires)

EUROPE/UK

German Finance Ministry is said to think that an ECB rate hike would help lower Germany's current account surplus. (Newswires)

Theresa May is on course to win a majority of more than 100 in a June snap election, with Labour’s pro-Brexit voters deserting Jeremy Corbyn, according to polling data for The Times.

FX

FX markets took a breather from yesterday’s significant price action, with GBP/USD holding above 1.2800 after steamrolling tspanough stops to briefly break above 1.2900 on reaction to the June 8th snap election announcement. AUD was once again pressured as iron ore prices continued their downtrend, with EUR/AUD gaining a foothold above 1.4200 and AUD/NZD declining below 1.0700.

COMMODITIES

Trade across the commodities complex remained uneventful with WTI crude futures only slightly pressured following a smaller than expected headline crude drawdown in the latest API Inventory Report. Elsewhere, gold (-0.2%) continued to pull back from 5-month highs as the USD attempted to nurse yesterday’s weakness, while copper found some reprieve and rebounded from 3-months lows.

US API Crude Oil Inventory Report (Apr 14) W/W -840K (Prev. -1300K). (Newswires)

US

Treasury markets saw strong performance across the curve, as the poor large cap US earnings, alongside another data missed led to buying. Analysts at Informa noted that the 10y appears that it is set to test the open gap between 2.15-2.165%. As a result, the 10y T-note Jun’17 future settled near session highs at 126.16+ up 19+ ticks.