• European bourses are modestly pressured, Euro Stoxx 50 -0.9%, with newsflow relatively limited once more and participants looking ahead to the week's risks events
• Stateside, futures are in-fitting directionally, but magnitudes marginally more contained ahead of a sparse US-specific docket
• AUD is contained once more after a 50bp RBA hike, exceeding expectations, sparked short-lived upside while the DXY is steady mid-range
• EGBs have drifted from intraday best levels as broader sentiment steadies somewhat and newsflow remains limited; US in-fitting, 3yr supply due
• WTI and Brent are also off best levels in-fitting with the risk tone after being initially buoyed by bullish bank commentary via GS & MS
• Looking ahead, highlights include Canadian Trade Balance, EIA STEO, Yellen speaking & supply from the US.

As of 11:15BST/06:15ET

LOOKING AHEAD

• Canadian Trade Balance, EIA STEO, Yellen speaking & supply from the US.
• Click here for the Week Ahead preview

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Ukrainian forces are not giving up positions in Severodonetsk and that fierce street fighting continues, according to Reuters.
• Japan announced an asset freeze on two Russian banks and one Belarusian bank, according to Reuters.
• Russian Defence Minister says Berdyansk and Mariupol ports are ready for the shipment of grain, via IFX; follows, Ukraine's Agriculture Minister says it would take around six-months to demine the sea, even in the scenario that Russian port blockade is removed.
• Russian Kremlin reiterates that Ukraine must de-mine the approach to ports; adding, they are hearing distrust from the Ukrainian side.
• Lithuania President says German and Baltic leaders agree that defence must be strengthened in the Baltic region by increasing troops, adding air and maritime defenses.

OTHER

• US Deputy Secretary of State Sherman said the world would respond in a strong and clear manner in the case of a North Korean nuclear test, while she added that there would be a swift and forceful response in the case of a North Korean nuclear test, according to Reuters.
• China's Defence Ministry says they identified and verified an Australian military craft, warning them to leave after intercepting a surveillance plane in the South China Sea, via Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly pressured, Euro Stoxx 50 -0.9% , with newsflow relatively limited once more and participants looking ahead to the week's risks events.
• Stateside, performance is in-fitting with this directionally, though marginally more contained in terms of magnitudes, with a limited US docket ahead; ES -0.5%.
• EU lawmakers have come to an agreement on a single mobile charging point, via Reuters; will be USB-C by fall-2024.
• Click here for more detail.

FX

• Dollar takes time out after rallying further on yield factors and frailty of others, DXY midway between 102.830-450 range.
• Yen continues to underperform on rate and relative BoJ policy dynamics, with Franc also feeling the heat from SNB vs Fed, ECB etc policy divergence; USD/JPY touches 133.00 before easing back, USD/CHF tops 0.9675 and EUR/CHF crosses 1.0400.
• Kiwi hit by abrupt turnaround in AUD/NZD tide after RBA exceeded market expectations with a 50bp hike compounded by hawkish guidance; NZD/USD sub-0.6500 around 0.6450, AUD/NZD above 1.1100 and AUD/USD within sight of 0.7200.
• Sterling volatile after PM Johnson wins confidence vote, but significant minority of Conservative Party want him out; Cable choppy either side of 1.2500 and EUR/GBP whipsaws around 0.8550.
• Loonie softer with oil ahead of Canadian trade data and Ivey PMIs, USD/CAD near 1.2600 after probe beyond round number.
• Lira continues to slide after Turkish President Erdogan repeats intention to keep cutting rates irrespective of ongoing rise in inflation, USD/TRY tests 14.7500.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.0600 (1.13BN), 1.0650-60 (464M), 1.0700 (552M), 1.0730-40 (1.3BN), 1.0790-00 (606M)
• Click here for more detail.

FIXED INCOME

• Firm bounce in bonds following extension of bear run to new cycle lows.
• Bunds lead the way in core debt circles with a near full point recovery to 149.80, while BTPs remain to the fore at the margins between 121.27-122.86 bounds.
• Gilts flat after falling short of 115.00 before solid 2025 DMO auction, T-note a tad firmer and curve flatter for choice ahead of 3 year sale.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have waned from initial upside stemming from bullish bank commentary amid a broader easing in risk sentiment.
• Thus far, WTI and Brent have been as low as USD 117.76/bbl and USD 118.62/bbl respectively, circa. USD 2.00/bbl from initial highs.
• Goldman Sachs hiked its Q3 Brent oil forecast to USD 140/bbl from USD 125/bbl and increased its Q4 forecast to USD 130/bbl from USD 125/bbl.
• Morgan Stanley's base case view is for Brent to reach USD 130/bbl during Q3 with an upside to the bull case estimate of USD 150/bbl.
• Spot gold languished near the prior day's lows amid a firmer greenback.
• JPMorgan continues to see gold trading softer towards USD 1,800/oz in Q3 2022 on an expected rebound in investor risk sentiment and continued push higher in US yields.
• Spot gold is firmer but capped by USD 1850/oz, which now coincides with its 10-DMA, after losing the level late on Monday; base metals are generally pressured, amid risk aversion and following yesterday's price action.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK PM Johnson won the confidence vote, as expected, with total votes at 211 vs 148, according to Reuters. However, the Telegraph highlights that Johnson is not "out of the woods yet" given that he has lost the support of so many backbenchers.
• UK PM Johnson said he is grateful for colleagues' support and that they need to come together as a party now. PM Johnson added that they can now focus on what they are doing to help people in the country and have a chance to continue strengthening the economy, while he responded that is certainly not interested when asked about a snap election, according to Reuters.
• Subsequently, the 1922 Committee is, according to the understanding of UK MP Ellwood, looking at altering party rules to allow another no-confidence vote within a one-year period, via Sky's Degenhardt.
• Barclaycard UK May consumer spending rose 9.3% Y/Y, which reflected the rising cost of living and base effects, according to Reuters.

DATA RECAP

• UK BRC Retail Sales YY (May) -1.5% (Prev. -1.7%); Total Sales YY (May) -1.1% (Prev. -0.3%)
• UK S&P Global/CIPS Services PMI Final (May) 53.4 vs. Exp. 51.8 (Prev. 51.8)
• EU S&P Global Construction PMI (May) 49.2 (Prev. 50.4)
• EU Sentix Index (Jun) -15.8 vs. Exp. -20.0 (Prev. -22.6)

NOTABLE US HEADLINES

• US CDC raised its alert level and advised travellers to wear masks as it confirmed 31 cases of monkeypox in the US, according to Daily Mail.
• Citi (C) is to hire 3k in the Asia institutional banking business, as part of a growth push, according to Reuters citing the APAC CEO.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin is pressured and back below the USD 30k mark and incrementally below last week's trough of USD 29.04k.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously amid recent upside in yields and ahead of upcoming risk events.
• ASX 200 declined with losses exacerbated after the RBA delivered a larger-than-expected rate hike.
• Nikkei 225 swung between gains and losses although a weak JPY boosted the index above 28k.
• Hang Seng and Shanghai Comp. were varied as the mainland was kept afloat by reopening optimism and with Hong Kong subdued by property names, although tech benefitted from hopes Beijing may be easing its crackdown on the sector with China reportedly to conclude the cybersecurity probe into certain companies.
• UMC (2303 TT) May sales +42.17% Y/Y; Jan-May +37.17%.

NOTABLE APAC HEADLINES

• China's Tianjin city reopened all subway stations that were closed due to COVID, while Shanghai Port's daily volume rose to 95% of the normal level, according to local press.
• Labor Advisory Committee urged US President Biden to extend China tariffs, according to Axios.
• Japan set up a team to monitor land sales near bases and nuclear plants or on strategically located islands under a new law designed to prevent hostile foreigners from affecting national security, according to Nikkei.
• RBA hiked rates by 50bps to 0.85% (exp. 25bps increase) and said inflation in Australia has increased significantly, while it is committed to doing what is necessary to ensure that inflation in Australia returns to the target over time. RBA added that inflation is likely to be higher than was expected a month ago and the Board expects to take further steps in normalising monetary conditions over the months ahead with the size and timing of future interest rate increases to be guided by the incoming data and the assessment of the outlook for inflation and the labour market. Furthermore, it noted the Australian Economy is resilient although one source of uncertainty about the economic outlook is how household spending evolves, given the increasing pressure on Australian households' budgets from higher inflation.
• Japan's Economy Minister Yamagiwa says they are closely watching any impact of FX movements on the economy, wants to refrain from commenting on FX levels, via Reuters.

NOTABLE APAC DATA

• Japanese All Household Spending MM (Apr) 1.0% vs. Exp. 1.3% (Prev. 4.1%); YY (Apr) -1.7% vs. Exp. -0.8% (Prev. -2.3%)