• APAC stocks were mostly positive but with gains capped and price action choppy after a lacklustre lead from global counterparts.
• European equity futures are indicative of a higher open with Eurostoxx 50 +1.0% after the cash market closed with losses of 1.6% yesterday.
• DXY eyes 102 to the upside, EUR/USD maintains 1.07 status and NZD outperforms post-RBNZ.
• RBNZ hiked rates by 50bps to 2.00% as expected, upgraded its OCR projections and signalled that rates will surpass neutral.
• Looking ahead, highlights include German GfK, US Durable Goods, FOMC Minutes, ECB Financial Stability Review, Speeches from ECB's Lagarde, Lane, Panetta, Fed's Brainard, Supply from Germany & US. Earnings from Marks & Spencer and NVIDIA.

US TRADE

• US stocks were mostly lower with tech leading the losses after Snapchat's macro outlook and heavy selling at the open following disappointing data releases, although the major indices spent most of the session nursing losses with the DJIA positive at the close.
• SPX -0.80% at 3,942, NDX -2.20% at 11,769, DJIA +0.16% at 31,931, RUT -1.25% at 1,766.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Bostic (2024 voter) said he supports expeditious rate hikes to neutral but done "with intention and without recklessness", while he doesn't see clear signs of a wage-price spiral and noted that uncertainties shroud the outlook on virtually every front, according to Reuters.
• US President Biden said the nation must ask when they will stand up to the gun lobby and said the idea that an 18-year old can buy an assault weapon is wrong, while he added it is time to act and that they will not forget those that obstruct or delay common-sense gun laws, according to Bloomberg.
• US Senator Manchin said he would do anything he can to move common-sense gun legislation forward, although he refuses to eliminate the filibuster, according to CNN.

GEOPOLITICS

RUSSIA-UKRAINE

• Donetsk Regional Governor said three Donetsk region settlements including the town of Svitlodarsk have fallen under Russian control.
• Hungarian PM Orban announced a state of emergency due to the war in Ukraine which will give the government emergency powers, while he noted the government needs room to manoeuvre and readiness for immediate action to safeguard Hungary's national security interests, to make sure they stay out of the war and to protect Hungarian families, according to a tweet by an official.
• US Treasury confirmed it will allow the general license that permitted Russia to pay US bondholders to expire at 00:01 EDT on Wednesday.

OTHER

• South Korean military said North Korea had fired three ballistic missiles from Pyongyang's Sunan area, while South Korea is to convene an emergency security meeting after North Korea fired multiple missiles, according to Reuters.
• South Korea conducted combined drills with the US including ground-to-ground missile tests in response to North Korea's missile launch, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive but with gains capped and price action choppy after a lacklustre lead from global counterparts as poor data from the US and Europe stoked growth concerns, while the region also reflected on the latest provocations by North Korea and the RBNZ’s rate increase.
• ASX 200 was led higher by commodity-related stocks despite the surprise contraction in Construction Work.
• Nikkei 225 remained subdued after recent currency inflows and with sentiment clouded by geopolitical tensions.
• Hang Seng and Shanghai Comp were marginally higher following further support efforts by the PBoC and CBIRC which have explored increasing loans with major institutions and with the central bank to boost credit support, although the upside is contained amid the ongoing COVID concerns and with Beijing said to tighten restrictions among essential workers.
• US equity futures continued the prior day's intraday bounce; ES +0.6%
• European equity futures are indicative of a higher open with Eurostoxx 50 +1.0% after the cash market closed with losses of 1.6% yesterday.

FX

• DXY rebounded from the prior day’s losses and attempted to reclaim the 102.00 level.
• EUR/USD faded some of the gains that were driven by the latest ECB hawkish rhetoric but has maintained 1.07 status.
• GBP/USD traded rangebound after the recent miss on PMI data and ahead of Chancellor Sunak’s mini-budget announcement to support struggling households which could occur as soon as Thursday.
• USD/JPY lacked direction and traded on both sides of 127.00 amid the tentative risk tone.
• Antipodeans were higher with NZD/USD boosted after the RBNZ hiked rates by 50bps to 2.00% as expected and upgraded its OCR projections, as well as signalled that rates will surpass neutral, while gains in AUD/USD were limited following a surprise contraction in Construction Work data which feeds into next week’s GDP release.

FIXED INCOME

• 10yr UST futures took a breather from yesterday's advances which were spurred by weak data.
• Bunds remained subdued after hitting resistance at 154.00 and following the hawkish ECB rhetoric.
• 10yr JGBs benefitted from the BoJ's presence in the market for nearly JPY 1.6tln of JGBs across the curve, on top of its fixed-rate operations.

COMMODITIES

• Crude futures notched mild gains after mixed private inventory data including bullish gasoline inventories.
• US Energy Inventory Data (bbls): Crude +0.6mln (exp. -0.7mln), Gasoline -4.2mln (exp. -0.6mln), Distillates -0.9mln (exp. +0.9mln), Cushing -0.7mln.
• US DoE announced an additional notice of sale of crude oil from the SPR for up to 40.1mln bbls with the announcement part of President Biden's March 31st plan, according to Reuters.
• US Treasury Department is preparing to renew Chevron's (CVX) license to operate in Venezuela, but likely without the greatly expanded terms it sought, according to Reuters sources.
• Spot gold was constrained as the greenback nursed losses and ahead of today's FOMC minutes.
• Copper prices were flat amid the tentativeness and with prices stuck near a base around USD 4.30/lb.

CRYPTO

• Bitcoin traded higher overnight with prices back above the 30,000 level.

NOTABLE HEADLINES

• US SEC official said significant issues remain in reaching a deal with China over audit inspections and even if US and China reach a deal on proceeding with inspections, they would still have a long way to go, according to Bloomberg.
• RBNZ hiked the OCR by 50bps as expected to 2.00% and raised its OCR forecasts to 2.68% in September 2022 (prev. 1.89%), 3.88% in June 2023 (prev. 2.84%) and 3.95% in September 2023 (prev. 3.1%), while the committee agreed to continue to lift the OCR to a level that will confidently bring consumer price inflation to within the target range and is resolute in its commitment to ensuring CPI returns to within 1%-3% target. RBNZ stated that monetary conditions need to constrain demand until there is a better match with New Zealand's productive capacity but noted that once aggregate supply and demand are more in balance, the OCR can return to a lower and more neutral level. Furthermore, they agreed stabilising inflation is its priority and that a higher level of OCR is necessary to ensure annual inflation returns to the target range in the next two years, as well as noted that the risk of doing too little too late is worse than doing too much too soon.
• RBNZ Governor Orr said they are very focused on restraining aggregate demand and need to anchor inflation expectations. Orr added the range of estimates for the neutral rate is around 2%-3% and they need rates above 3%, while they believe without a doubt that there is a lot more work ahead on rates.

DATA RECAP

• Australian Construction Work Done (Q1) -0.9% vs. Exp. 1.0% (Prev. -0.4%)
• Singapore GDP QQ (Q1 F) 0.7% vs Exp. 0.8% (prev. 1.4%)
• Singapore GDP YY (Q1 F) 3.7% vs Exp. 3.7% (prev. 3.4%)

UK/EU

NOTABLE HEADLINES

• UK Chancellor Sunak is set to announce a "mini-Budget worth billions of Pounds" as early as Thursday to help struggling households with their energy bills, according to FT citing government figures.
• UK Treasury windfall tax for North Sea oil and gas producers being considered would be similar to the one introduced in 2011 by George Osborne, who increased the "supplementary charge" levied on O&G production and raised GBP 2bln, according to FT.
• UK rail union RMT said its members have voted for strike action across Britain's rail network which could begin in mid-June, according to Reuters.
• EU is finalising a deal with Poland to free up EUR 36bln from the COVID recovery plan and EU Commission VP Dombrovskis said deadlock over the rule of law could end within days, according to FT.