• European bourses are slightly firmer following APAC/post-HICP; US more tentative pre-PCE.
• EZ HICP YY cooled more than expected while the core measures were in-line causing EGB upside.
• Specifically, Bunds spiked to a 135.64 peak with ECB pricing easing slightly for May.
• EUR saw fleeting movement while USD remains bid with JPY pressured into month-end.
• Commodities fairly contained amid numerous geopolitical updates before afternoon events
• Looking ahead, highlights include Canadian GDP, US PCE and core PCE, Chicago PMI, Uni. of Michigan (Final), Fed's Collins, Williams, Barkin, Waller, Cook, ECB's Lagarde.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer, Euro Stoxx 50 +0.3%, continuing the positive APAC tone with incremental impetus from as-expected EZ Core HICP.
• Sectors are mixed with Banks lagging as yields retreat post-HICP while Personal Care/Drug names outperform.
• Stateside, futures are incrementally in the green with the tone more cautious ahead of PCE data and Fed speak, incl. Williams, thereafter.
• Click here for more detail.

FX

• USD/JPY and Yen crosses still marching higher into month end as importer hedging and buy orders persist, headline pair popped above 133.50 before topping out and DXY holding 102.000+ status as a result.
• Aussie unable to keep hold of 0.6700 handle as AUD/NZD cross retreats through 1.0700 on divergent RBA/RBNZ rate expectations.
• Euro mixed after EZ inflation data showing a softer than forecast headline, but firmer than previous core, EUR/USD sub-1.0900, but EUR/CHF nearer parity than 0.9950.
• Cable unable to hold above 1.2400 irrespective of UK Q4 GDP upgrades as Buck bounces broadly pre-US PCE.
• PBoC set USD/CNY mid-point at 6.8717 vs exp. 6.8718 (prev. 6.8886)
• Click here for more detail.

FIXED INCOME

• EGBs experienced a marked bounce following the EZ inflation measure after dipping on the initial French reading; with the EZ figure showing a larger than expected cooling in the headline while the core measures are stick but were as-expected.
• Specifically, Bunds have been up to a 135.64 peak which saw the associated yield pullback from 2.40% best towards the 2.30% mark.
• USTs and Gilts have been moving in tandem with EGBs; though, USTs are somewhat more cautious ahead of upcoming events with yields slightly firmer as it stands.
• BoJ Q2 Bond Purchase plans; expands range for mid-to-superlong purchases for Q2. Click here for more detail.
• Click here for more detail.

COMMODITIES

• WTI and Brent are mixed/flat after settling higher by over USD 1.0bbl on Thursday with the overall tone tentative ahead of the US docket while crude specifically is cognisant of next week's JMMC.
• Specifically, benchmarks are near-unchanged but at the upper-end of USD 73.77-74.67/bbl and USD 78.54-79.18/bbl parameters.
• Metals hold a slight downward bias in otherwise tentative trade for the space with the USD's strength capping any potential upside from the somewhat cauutious tone.
• Click here for more detail.

NOTABLE HEADLINES

• UK PM Sunak's office said Britain will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Trans-Pacific after the bloc's members reached an agreement on Britain joining the trade pact, while Japan's Economy Minister said they aim for an early signing of UK joining the CPTPP, according to Reuters.

DATA RECAP

• EU HICP Flash YY (Mar) 6.9% vs. Exp. 7.1% (Prev. 8.5%)
• EU HICP-X F&E Flash YY (Mar) 7.5% vs. Exp. 7.5% (Prev. 7.4%); X F,E,A&T Flash YY (Mar) 5.70% vs. Exp. 5.70% (Prev. 5.60%)
• Italian Consumer Price Prelim YY (Mar) 7.7% vs. Exp. 8.2% (Prev. 9.1%); MM (Mar) -0.3% (Prev. 0.2%)
• French CPI Prelim YY (Mar): 5.6% vs Exp. 5.5% (prev. 6.3%); MM 0.8% vs exp. 0.9% (prev. 1.0%)
• UK GDP QQ (Q4) 0.1% vs Exp. 0.0%; YY (Q4) 0.6% vs. Exp. 0.4% (Prev. 0.4%)
• German Unemployment Rate SA (Mar) 5.6% vs. Exp. 5.5% (Prev. 5.5%); Unemployment Change SA (Mar) 16k (Prev. 2.0k)
• UK Lloyds Business Barometer (Feb) 32 (Prev. 21)

NOTABLE US HEADLINES

• Fed's Balance Sheet fell to USD 8.765tln (prev. 8.784tln), BTFP lending rose to USD 64.4bln (prev. 53.7bln) and Discount Window borrowing fell to 88.2bln (prev. 110.2bln). In relevant news, ECB tapped Fed Dollar swap lines for USD 487.5mln in the week to March 29th and SNB tapped Dollar swap lines for USD 100mln in the week to March 30th.
• Former US President Trump has been indicted in New York after the probe into the Stormy Daniels payment, according to New York Times. Furthermore, sources said Trump faces more than 30 counts related to business fraud and is expected to surrender to the Manhattan District Attorney's office early next week, according to CNN and NBC.
• Elon Musk reportedly intends to visit China as early as April, via Reuters citing sources; team reportedly making efforts to set up a meeting with Chinese Premier Li Qiang.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Japanese Finance Minister Suzuki said Japan is to extend the suspension of its most favoured nation treatment on tariffs for Russia, while it was also reported that Japan banned Russia-bound exports of steel, aluminium and aircraft from April 7th, according to the Ministry of Economy, Trade and Industry cited by Reuters.
• Turkish parliament approved a bill to clear the way for Finland's NATO accession, according to Reuters.
• Deputy Chairman of the Russian National Security Council says "our army will arrive in Kiev if necessary".
• Belarusian President Lukashenko warns that the West seeks to invade his country with the aim of "destroying" it; The war is not far from us and there are attempts to drag us into it; return of nuclear weapons is not blackmail but a safeguard. Says, talks to resolve the conflict in Ukraine need to commence now, a ceasefire without pre-conditions should be declared.
• Russia's Kremlin says Russian President Putin is to hold an "important" meeting of Security Council today; Foreign Ministry Lavrov to present a new concept of Russian foreign policy. Will talk to Belarussian President next week about Lukashenko's call for immediate peace talks, cContinuation of special military operation is the only way to achieve goals at the moment.

CRYPTO

• Circle's USDC outflows exceeded USD 10bln since the crypto bank crisis, according to The Information.
• PBoC Deputy Governor Xuan said regulatory oversight quality over the digital economy will be improved, while he added that digital currencies and new inventions of cryptocurrencies are not fixing issues in finance and can create new issues. Xuan also stated that new technologies, especially new forms of finance, should not be blindly accepted and recognised, as well as thinks that the US has failed at regulating cryptocurrencies, according to Reuters.

APAC TRADE

• APAC stocks were mostly firmer at quarter-end as they took impetus from the tech-led gains on Wall Street and with participants digesting a slew of data releases including better-than-expected Chinese PMI figures.
• ASX 200 was led by the mining and resources sectors after the strong data from Australia’s largest trading partner although the upside was capped ahead of next week’s RBA meeting with a recent Reuters poll showing near-even expectations amongst economists between a hike and a pause.
• Nikkei 225 gained heading into the end of the fiscal year and climbed back above the 28,000 level after encouraging Industrial Production and Retail Sales data but was off highs with chipmakers later pressured after Japan announced to impose new restrictions on chip-making gear.
• Hang Seng and Shanghai Comp. were positive after the strong Chinese PMI data in which Manufacturing PMI topped forecasts and Non-Manufacturing PMI rose to its highest since 2011, with the outperformance in Hong Kong led by tech as JD.com plans to spin off its industrials and property units. However, the gains in the mainland were limited amid a deluge of earnings releases including mixed results from China’s mega-banks and with the nation’s largest property developer Country Garden posting its first annual loss since its listing in 2007.

NOTABLE ASIA-PAC HEADLINES

• Chinese Vice Finance Minister Zhu said China needs to step up fiscal policy adjustments to support the economy and that China will move steadily in implementing preferential tax and fee policies. Zhu also stated that China will effectively ease tax burdens of small firms and household businesses, while he noted that recently announced preferential tax and fee policies will reduce companies' burdens by CNY 480bln per year, according to Reuters.
• China's Ambassador to the EU warned the bloc of ‘peril’ in following the US on trade curbs, while he urged resistance to ‘unwarranted’ pressure and said that Beijing will not be ‘trampled’, according to FT.
• Japan is to impose new restrictions of chip-making gear, according to Bloomberg and Reuters. Japan said it will impose restrictions on 23 types of chip-making equipment from July. Japanese officials said the scope of restrictions went further than the US measures imposed in 2022. Chip-equipment exporters would need licenses for all regions. The measures will affect a broader range of companies than previously expected, according to FT.
• Agricultural Bank of China (1288 HK) says NIM for the banking sector will continue to shrink in Q1; Co. says its NIM faces downward pressure in 2023. Bank of China (3988 HK) CFO says they are to face a mild decline in NIM this year.
• Japan is to end current COVID border measures on May 8th, via TBS; replaced with random genomic surveillance at airports.

DATA RECAP

• Chinese NBS Manufacturing PMI (Mar) 51.9 vs. Exp. 51.5 (Prev. 52.6); Non-Manufacturing PMI (Mar) 58.2 vs. Exp. 55.0 (Prev. 56.3)
• Chinese Composite PMI (Mar) 57.0 (Prev. 56.4)
• Japanese Industrial Production MM (Feb P) 4.5% vs. Exp. 2.7% (Prev. -5.3%); Retail Sales YY (Feb) 6.6% vs. Exp. 5.8% (Prev. 6.3%, Rev. 5.0%)
• Tokyo CPI YY (Mar) 3.3% vs. Exp. 3.2% (Prev. 3.4%); Ex. Fresh Food YY (Mar) 3.2% vs. Exp. 3.1% (Prev. 3.3%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Mar) 3.4% vs. Exp. 3.2% (Prev. 3.2%)