• European bourses and US futures are essentially unchanged despite brief geopolitical jitters ahead of US CPI.
• China intends to impose a no-fly zone near Taiwan on April 16th for a "falling object", initial guidance was reportedly for a three-day period.
• FX complex is contained with the DXY slightly softer amid mixed Fed speak, antipodeans and the EUR are marginally firmer.
• Debt continues to drift lower despite bouts of consolidation around supply and geopols; US yield curve slightly elevated.
• Looking ahead, highlights include US CPI, BoC Rate Decision, FOMC Minutes, speeches from ECB's Lagarde, de Cos and de Guindos, BoE's Bailey, Fed's Barkin, Kashkari, Daly supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are essentially unchanged in-fitting with broader price action ahead of the packed US docket, Euro Stoxx 50 +0.2%.
• Sectors are mixed, with magnitudes slim, as Media leads amid UMG upside with a slight pro-defensive bias in play.
• Stateside, futures are in-fitting with the above as participants are entirely focused on CPI and Fed speak thereafter, ES +0.1%.
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FX

• The DXY is in close proximity to the neutral mark after somewhat mixed Fed commentary overnight and ahead of inflation with other catalysts limited, DXY holding above 102.00.
• Action which is lending some modest support to most G10 peers, with EUR outpacing somewhat in narrow 1.0912-1.0937 parameters while GBP is slightly softer and seemingly tied to 1.24.
• Antipodeans are similarly near the unchanged mark, with AUD faring slightly better than its peer but off best after remarks from RBA's Bullock.
• JPY has exhibited a comparably large range thus far and is currently holding at the mid-point of 133.56-134.04 boundaries as it digests firmer data and a reiteration from Uchida.
• PBoC set USD/CNY mid-point at 6.8854 vs exp. 68843. (prev. 6.8882).
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FIXED INCOME

• Debt continues to drift lower despite bouts of consolidation around supply and China-Taiwan geopolitics which have failed to markedly alter the tone pre-CPI/US supply.
• Specifically, the German conventional and subsequent UK I/L sale were well received, particularly the latter, though both Bunds and Gilts remain near their 135.46 and 103.09 troughs.
• Stateside, USTs are similarly softer with yields slightly bid and action a touch more pronounced at the long-end of the curve.
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COMMODITIES

• Overall, the commodity space is in-fitting with broader market action and as such is relatively contained ahead of US CPI and numerous Central Bank speakers/events.
• WTI and Brent are within touching distance of the unchanged mark within parameters less than USD 0.50/bbl as specific newsflow has been essentially non-existent aside from China-Taiwan geopolitics.
• ICE announces it is to implement expiry limits on Dutch TTF natural gas futures, effective for June 2023 TTF natural gas futures contract expiry. ICE Endex will introduce expiry limit of 7k lots in TTF for the last 5 trading days prior to expiry.
• Spot gold continues to hold above the USD 2k mark and has increased the gap somewhat when compared to Tuesday’s action from its 10-DMA at USD 1994/oz; elsewhere, base metals are mixed.
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NOTABLE HEADLINES

• ECB's Villeroy said we now face the risk of entrenched inflation, price growth has become more widespread, and potentially more persistent. He added the ECB's policy response is now moving from a “sprint” to a “long-distance race”, and the ECB is fully committed to reining inflation, according to Reuters.
• US President Biden and UK PM Sunak to meet at 11:15BST/06:15EDT; Biden is to deliver remarks at 13:00BST/08:00EDT, according to The White House.
• Swiss Lower House voted to retrospectively reject the CHF 109bln Credit Suisse (CSGN SW) rescue package, according to Reuters.
• UK-US free trade discussions are unlikely to resume until 2025 at the earliest when a new President could be in place, according to the Telegraph.

DATA RECAP

• Norwegian GDP (Feb): Month -0.1% (prev. -0.2%, rev. 0.0%); Month Mainland -0.2% vs exp. 0.2% (prev. -0.2%, rev. 0.1%)

NOTABLE US HEADLINES

• Fed's Harker (2023 voter, Neutral) said we have to be a little careful not to overdo it. Bank stress has calmed down but is not over. He does not think there should be a blanket increase in FDIC insurance caps and believes the primary tool for financial stability is not monetary policy, with a high bar for using it for financial stability. He believes this is not the time to change the Fed's 2% inflation target, and his view has always been to get rates above 5% and keep them there. If inflation does not move, he thinks more action will be needed. He finds it disappointing that recent readings show disinflation proceeding slowly, and the Fed will determine what, if any, additional action is needed by looking at the data, but already sees promising signs of the Fed's actions.
• Fed's Kashkari (2023 voter, hawkish) said he is less optimistic than the bond market on the speed of the fall in inflation, he sees inflation at the middle of 3% by year-end and closer to 2% next year. He said he is not ready to declare an all-clear after SVB failure, but there are hopeful signs. He stated that the 2% inflation target should not be changed. He does not see a buildup of the kind of risks that took down SVB building up in the banking sector as a whole. (Newswires)
• Click here for the US Early Morning Note.

GEOPOLITICS

• US House is set to vote next week on a bill to address potential Huawei and ZTE threats, according to Reuters.
• Taiwan's defence ministry said in the past 24 hours spotted 35 Chinese aircraft and 8 Chinese ships around Taiwan, according to Reuters.
• North Korea remains unresponsive to regular contact via the inter-Korean liaison line for a sixth day, according to Yonhap.
• US National Security Adviser Sullivan spoke with Saudi Crown Prince MBS on Tuesday, and they discussed global and regional matters and ongoing diplomacy related to ending the war in Yemen, according to Reuters.
• China has confirmed it is willing to work with the Australian government to resolve tariff disputes over both wine and barley exports, according to AFR.
• China's Foreign Ministry held a Sino-Dutch consultation on arms control and non-proliferation in Beijing on Tuesday, according to a ministry statement.
• China plans to impose a no-fly zone north of Taiwan during April 16th-18th, via Reuters citing sources; subsequently, the window has been reduced to 27minutes on the 16th for a "falling object related to a launch vehicle" according to S. Korea.
• China and Russia are in advanced discussions with Iran to replenish Iran's supply of a chemical compound which is used to propel ballistic missiles, via Politico citing sources; would be a clear violation of UN sanctions, article adds.

CRYPTO

• Rumours that the TRON founder Sun had been arrested, however Sun himself has since pushed back on this via social media. More recently, pressure in the crypto space being attributed to subsequent updates from Binance's US unit that it is to remove TRON and some other coins from its platform.

APAC TRADE

• APAC stocks saw a mixed session following a similar lead from Wall Street in the run-up to the risk-packed session.
• ASX 200 was once again propped up by mining names, with industrial metals underpinned by the recent Dollar decline.
• Nikkei 225 extended further above 28k, with the index buoyed by recent bullish comments from Warren Buffett on Japanese stocks ahead of a three-hour CNBC interview from Tokyo.
• Hang Seng and Shanghai Comp were mixed with the former underperforming amid losses in large-cap stocks (JD.com, Alibaba, Tencent) following weakness from Stateside peers.

NOTABLE ASIA-PAC HEADLINES

• China is reportedly negotiating a compromise plan with other major creditors that could help break a logjam in multibillion-dollar debt-relief talks for struggling developing nations, according to WSJ citing sources.
• IMF Financial Stability Report said changes to the BOJ's Yield Curve Control (YCC) may affect international financial markets through three channels of exchange rates, term premiums on sovereign bonds, and global risk premiums, according to Reuters.

DATA RECAP

• New Zealand Elec Card Retail Sale YY (Mar) 15.5% (Prev. 11.7%); MM (Mar) 0.7% (Rev. -0.1%)
• South Korean Unemployment Rate (Mar) 2.7% (Prev. 2.6%)