• Equities are pressured across the board with Europe reacting to hawkish Central Bank commentary and the subsequent subdued APAC/Wall St. handover
• US futures are modestly softer after pivoting contained APAC parameters, today is the last day before Fed blackout
• DXY continues to climb printing fresh YTD highs while Cable slips to YTD lows after retail sales; broader FX is lower but magnitudes slimmer, high-betas lag
• Core debt continues to slip, albeit off worst levels, as yields remain elevated, and a flattening bias remains
• WTI and Brent are pressured in tandem with broader price action, USD strength and sources pointing to a China demand shock
• Russia aims for full control of Donbass and southern Ukraine, alongside pointing towards the Transnistria region of Moldova
• Looking ahead, highlights include US Flash PMIs, Canadian Retail Sales, Speech from ECB's Lagarde, Earnings from American Express & Verizon

LOOKING AHEAD

• US Flash PMIs, Canadian Retail Sales, Speech from ECB's Lagarde, Earnings from American Express & Verizon.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Ukrainian President Zelensky said Russia rejected a proposal for an Easter truce, according to Reuters.

DEFENCE/MILITARY

• Russian army says "We plan to take full control of Donbass and southern Ukraine as part of the second phase of military operations", via Sky News Arabia.
• Russian military says control of the south of Ukraine will present Russia another gateway to breakaway the Transnistria region of Moldova, according to Tass.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• Sputnik tweeted that US Congress is preparing dozens of draft bills related to new sanctions on Russia.
• Ukrainian Defence Minister calls for a comprehensive embargo on Russian oil and gas and real sanctions on its banking system, via Al Jazeera.

OTHER

• North Korean Leader Kim exchanged letters with South Korean President Moon and thanked Moon in the letter for efforts to improve ties, according to KCNA. Furthermore, North Korean Leader Kim said joint inter-Korean agreements were unremovable, while Moon expressed hopes for a swift restart in US-North Korean talks.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -1.8%, following APAC/Wall St. pressure amid hawkish Central Bank rhetoric.
• The FTSE 100 is the relative outperformer, but still negative, given favourable currency dynamics given broad USD strength and weak Retail Sales.
• Stateside, futures are modestly softer after spending much of the APAC session near the unchanged mark, ES -0.4%, moving in sympathy with EZ action and pre-PMIs. Note, today is the last day of potential Fed speak before the blackout period for May's gathering commences; no Fed officials scheduled.
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FX

• Sterling slides to bottom of G10 pile as UK retail sales data misses consensus by a distance and two out of three preliminary PMIs fall short of expectations, Cable hits new 2022 low circa 1.2865, EUR/GBP approaches 0.8400.
• Non-US Dollars decline amidst general risk aversion and other bearish factors; AUD/USD hovering just above 0.7300, NZD/USD sube-0.6700 and USD/CAD over 1.2675 ahead of Canadian consumption and producer price data.
• Euro fades irrespective of mostly stronger than forecast flash Eurozone PMIs as ECB President Lagarde tones down hawkish vibes, EUR/USD probes 1.0800.
• Yen holds up better than other majors after more concerted effort by Japan’s Finance Minister to curb rapid moves via confirmation that he is in close contact with US Treasury Secretary about currency developments, USD/JPY capped below 129.00.
• Yuan set for weakest week since devaluation seven years ago with PBoC Governor Li pledging policy stimulus for the real economy that is suffering from Covid contagion; USD/CNH through 6.5250.
• ECB President Lagarde told policymakers to refrain from airing dissenting views on decisions for several days, according to Reuters sources.
• Japanese Finance Minister Suzuki said he confirmed with US Treasury Secretary Yellen that US and Japan will communicate closely on FX and discussed with Yellen the recent market developments, in particular, USD/JPY moves, while he explained to Yellen recent JPY declines are rapid, according to Reuters.
• Japanese Finance Minister Suzuki and US Treasury Secretary Yellen likely discussed coordinated currency intervention during bilateral talks, according to TBS News citing a Japanese government source which noted the US side sounded as if it will consider the idea of joint FX intervention positively.
• BoC Governor Macklem said the March inflation report shows supply disruptions are not easing and noted they will not rule anything out regarding the rate hike path, according to Reuters.
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0700 (814M), 1.0825 (398M), 1.0850 (760M), 1.0900 (1.46BN), 1.0925-30 (550M), 1.0950 (491M)
• USD/CAD: 1.2500 (694M), 1.2540-50 (1.0BN), 1.2580-85 (530M)
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FIXED INCOME

• Bonds on track to rack up more weekly losses with Bunds down to 153.10 at worst, Gilts hitting 117.22 and 10 year T-note 118-08.
• Benchmark yields still targeting or touching psychological levels, like 1.0% in Germany, 2.0% and 3.0% in the UK and US respectively.
• Curves retain flatter bias and debt could yet derive traction from pre-weekend position squaring plus asset reallocation as equities dump.
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COMMODITIES

• WTI and Brent are pressured in tandem with broader price action, USD strength and sources pointing to a China demand shock.
• China is said to face the biggest oil demand shock since early 2020, according to Bloomberg sources.
• Currently, WTI and Brent have recovered marginally from session lows of USD 101.22/bbl and USD 105.80/bbl, respectively.
• Spot gold and silver are also hindered on the USD move, yellow metal continues to fall away from the USD 1950/oz mark (low, USD 1941/oz; high USD 1955.60/oz).
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NOTABLE EUROPEAN HEADLINES

• UK is readying to give ministers the power to scrap the Northern Ireland Brexit trade deal, while it was also reported that PM Johnson is to order a further delay of border checks on imports from the EU, according to FT
• UK PM Johnson answered 'yes' when asked if Chancellor Sunak will remain the Chancellor after an expected cabinet reshuffle later this year, according to Reuters.

NOTABLE EUROPEAN DATA

• UK GfK Consumer Confidence (Apr) -38 vs. Exp. -33 (Prev. -31), GfK said UK consumers' personal finances expectations component declined to a record low.
• UK Retail Sales MM (Mar) -1.4% vs. Exp. -0.3% (Prev. -0.3%); YY (Mar) 0.9% vs. Exp. 2.8% (Prev. 7.0%). Petrol sales volumes fall, some data indicates non-essential road travel reduced due to higher prices.
• EU S&P Global Composite Flash PMI (Apr) 55.8 vs. Exp. 53.9 (Prev. 54.9); Manufacturing Flash PMI (Apr) 55.3 vs. Exp. 54.7 (Prev. 56.5); Services Flash PMI (Apr) 57.7 vs. Exp. 55.0 (Prev. 55.6)
• German S&P Global Composite Flash PMI (Apr) 54.5 vs. Exp. 54.1 (Prev. 55.1); Manufacturing Flash PMI (Apr) 54.1 vs. Exp. 54.5 (Prev. 56.9); Services Flash PMI (Apr) 57.9 vs. Exp. 55.5 (Prev. 56.1)
• UK Flash Composite PMI (Apr) 57.6 vs. Exp. 59.0 (Prev. 60.9); Services PMI (Apr) 58.3 vs. Exp. 60.0 (Prev. 62.6); Manufacturing PMI (Apr) 55.3 vs. Exp. 54.0 (Prev. 55.2)

NOTABLE US HEADLINES

• Nomura forecasts the Fed to hike rates by 50bps in May and by 75bps each at the June and July meetings.

CRYPTO

• Bitcoin lost the USD 40k mark in APAC trade and while it is still negative on the session it has staged a modest recovery from USD 39.8k lows.

APAC TRADE

EQUITIES

• APAC stocks were negative on spillover selling from Wall St with risk sentiment sapped amid higher yields and hawkish central bank commentary.
• ASX 200 declined as tech suffered from higher yields and with miners subdued by OZ Mineral's weak output.
• Nikkei 225 underperformed as the optimism from incoming relief faded on the hawkish central bank views.
• Hang Seng and Shanghai Comp weakened amid large losses in Hong Kong's tech stocks and with sentiment not helped by the US adding another 17 firms to its SEC list for possible delisting.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a net neutral daily position.
• PBoC set USD/CNY mid-point at 6.4596 vs exp. 6.4641 (prev. 6.4098)
• PBoC Governor Yi said COVID put more pressure on China's economy and they will provide policy support for the real economy. Yi noted monetary policy will focus on supporting small firms and sectors hit by COVID. They will keep an accommodative and steady policy, and are ready to unveil more policy steps, according to Reuters.
• China's State Council Financial Committee hosted a meeting on Friday, the China Securities Regulatory Commission (CSRC) vows to ensure the stable and healthy operation of the capital market, via Bloomberg.
• China's securities regulator urged institutional investors to buy more domestic shares during a meeting on Thursday, according to Bloomberg.
• China's FX regulator says recent Yuan volatility is mostly due to global market fluctuations and demand/supply changes, expects Yuan to be basically stable at reasonably balanced levels. Will increase FX flexibility, via Reuters.
• Shanghai government said the city's lockdown will be lifted in batches once zero-covid at community level is reached and that normal life will return soon as long as policy is adhered to, while it will conduct daily city-wide testing, according to Reuters.
• Hong Kong government is set to scale back on the flight suspension threshold to ease restrictions that have crippled air travel, according to SCMP.
• Japan's relief package draft stated gasoline subsidies for wholesalers will increase to JPY 35/litre from JPY 25/litre and they will submit extra budget in the current parliament session to replenish reserves and fund spending to soften impact from rising prices. It also noted they must be vigilant to the impact of JPY's declines could have on households and importers, while they will compile another comprehensive relief package after outlining the long-term economic and fiscal policy in June, according to Reuters.

DATA RECAP

• Japanese National CPI YY (Mar) 1.2% vs. Exp. 1.2% (Prev. 0.9%)
• Japanese National CPI Ex. Fresh Food YY (Mar) 0.8% vs. Exp. 0.8% (Prev. 0.6%); Ex. Fresh Food & Energy YY (Mar) -0.7% vs. Exp. -0.8% (Prev. -1.0%)