• Asian equities followed their US counterparts amid a slew of strong corporate earnings
• AUD slipped in response to softer than expected inflation figures, despite moving to within the RBA target range for the first time since 2014.
• Looking ahead, highlights include US DoE Crude Inventories and Canadian Retail Sales.

ASIA

Asia equity markets maintained the positive momentum from their counterparts in US, where the DJIA outperformed on strong earnings and the NASDAQ Comp. closed over 6,000 for the first time ever. ASX 200 (+0.8%) gained on return from holiday, while Nikkei 225 (+0.9%) benefitted after the JPY weakened against its major counterparts. The Hang Seng (+0.6%) and Shanghai Comp. (+0.4%) also conformed to the upside after the PBoC continued its liquidity injections. Finally, 10yr JGBs were lower with demand dampened amid the broad-based heightened risk appetite and as the BoJ kick-started its 2-day policy meeting in which the bank is widely expected to remain on hold, while there was also notable underperformance observed in the super long end.

PBoC injected CNY 40bln in 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 6.8845 (Prev. 6.8833). (Newswires)

EUROPE

France far-right candidate Le Pen's chances is said to have 'some light' after Melenchon refused to endorse Macron, according to press reports. (NYT)

UK

UK could face EU budget payments until 2020 following Brexit negotiations, according to press reports. (Telegraph)

FX

FX markets reflected the firm risk sentiment, as outflows were seen in safe-haven JPY to push USD/JPY above the 111.00 level. Elsewhere, AUD/USD was pressured following the release of Australian inflation figures which were mostly lower than expected, although still showed inflation moved to within the RBA’s 2-3% target for the first time since Q3 2014.

Australian CPI (Q1) Q/Q 0.5% vs. Exp. 0.6% (Prev. 0.5%)

- CPI (Q1) Y/Y 2.1% vs. Exp. 2.2% (Prev. 1.5%)

COMMODITIES

WTI crude futures attempted to recover the mild losses seen following an unexpected build in API crude inventories, however prices remain negative for the session and below the USD 50/bbl level. Gold (+0.1%) languished near 2-week lows as the widespread positive risk appetite kept safe-haven demand subdued which in turn helped copper hold on to yesterday’s gains which were inspired by falling inventories.

US API Crude Oil Inventory Report (Apr 21) W/W 897K (Prev. -840K). (Newswires)

US

US treasuries leaked lower, led by the long end of the curve, as equity markets rallied on strong earnings. The 2y auction was well received and provided a short reprieve as the yield stopped tspanough the WI at the bidding deadline, B/C was highest since May last year and dealers were left with a below-average portion of the issuance. Nevertheless, treasuries continued to slide late in the day to close at the lows. Jun’17 10y T-note futures settled at 125.13, down 12+ ticks.

US administration official confirmed that President Trump’s tax plan is to be released on Wednesday, which will reduce tax on repatriation of corporate profits from overseas to 10% and cut the tax rate on pass-tspanough businesses to 15% from 39.6%. (Newswires)

US Commerce Secretary Ross stated that trade-related national security probes could also include semiconductors and aluminium, while he also commented that the Trump administration is mulling further trade actions. (Newswires)

House Republicans were reported to have circulated text of an amendment to the Obamacare replacement bill which they think could attract many conservatives on board according to reports in The Hill. Furthermore, Washington Post political reporter Robert Costa tweeted that there was movement towards a consensus on tweaked health care bill, citing sources in the Freedom Caucus and White House. (The Hill/Twitter)