• APAC stocks initially opened lower but eventually traded mixed as the region pondered over the latest US CPI report and Wall Street losses.
• FOMC Minutes suggested several participants noted they considered whether it would be appropriate to leave rates unchanged at the meeting.
• DXY traded on either side of 101.50 after finding support at yesterday's low of 101.44, EUR/USD failed to breach resistance 1.1000.
• European equity futures are indicative of a mixed open, with Euro Stoxx 50 futures +0.2% (post-LVMH earnings) after cash markets closed flat on Wednesday.
• North Korea fired an unspecified ballistic missile toward the East Sea, the missile is suspected to be an ICBM whilst reports suggested it was a new weapon system
• Looking ahead, highlights include German Final CPI, UK GDP Estimate, EZ Industrial Production, US PPI, US IJC, OPEC MOMR, speeches from BoC's Macklem, BoE's Pill, supply from the UK, Italy, and the US.

US TRADE

EQUITIES

• US stocks were ultimately lower on Wednesday, fading the post-CPI rally, with the tech sector leading the weakness.
• SPX -0.41% at 4,092, NDX -0.89% at 12,848, DJIA -0.11% at 33,647, RUT -0.72% at 1,774.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Daly (non-voter) said the strength of the US economy and elevated inflation suggests "more work to do" on rate hikes; prudent policy requires calibrating decisions based on "all the data"; good reasons that the economy may keep slowing even without more hikes. She added the Fed must monitor tightening credit conditions in determining the path for rates. Daly said bank stresses have stabilised, and she expects inflation to end 2023 a little above 3% (vs March SEP Core PCE median at 3.6%), according to Reuters.
• FOMC MINUTES: Participants left rate projections unchanged from December after taking into account banking sector stresses; Many lowered views of rate peak on bank strains. Several participants noted they considered whether it would be appropriate to leave rates unchanged at this meeting. Several participants emphasized the need to retain flexibility and optionality in determining the appropriate stance of monetary policy given the highly uncertain economic outlook. NOTE: The market reaction was modest, the minutes did not offer new information and the release was overshadowed by US CPI data.

APAC TRADE

EQUITIES

• APAC stocks initially opened lower but eventually traded mixed as the region pondered over the latest US CPI report alongside Wall Street losses.
• ASX 200 remained in the red as gains in the Energy and Gold sectors failed to fully offset losses in Tech and Healthcare.
• Nikkei 225 briefly dipped under the 28k level before trimming losses, although the region was cautious as the Japanese government initially predicted the latest North Korean missile was in danger of landing in the Southwestern region of Hokkaido.
• Hang Seng and Shanghai Comp opened lower but then trimmed losses with Hong Kong heavily underperforming at the open as Alibaba slumped over 4.5% after the FT reported Softbank has reportedly moved to sell almost all of its remaining stake in Alibaba. Mainland China did not react to the Chinese March trade data beats across the board as China customs warned China's trade development will face greater difficulties and challenges.
• US equity futures (ES +0.1%) tilted higher throughout the session but price action was contained by the cautious mood.
• European equity futures clambered off worst levels overnight and are indicative of a mixed open, with Euro Stoxx 50 futures +0.2% (post-LVMH earnings) after cash markets closed flat on Wednesday.

FX

• DXY traded on either side of 101.50 after finding support at yesterday's low of 101.44.
• EUR/USD failed to convincingly breach 1.1000 to the upside after taking aim at the level since the US CPI release yesterday, with the overnight pullback picking up towards the end of the session after EUR/GBP breached support near 0.8800.
• GBP/USD met resistance near yesterday's high just before the 1.2500 level.
• JPY was uneventful and traded flat on either side of 133.00.
• AUD popped higher and rose up the G10 ranks after a healthy Aussie labour market report, which showed Employment Change topping forecasts – driven by full-time employment.
• KRW gained against the USD after the BoK confirmed an FX swap deal with National Pension Fund for a maximum of USD 35bln.
• PBoC sets USD/CNY mid-point at 6.8658 vs exp. 68672. (prev. 6.8854)

FIXED INCOME

• 10yr UST futures traded sideways within a tight range following the prior day’s post-CPI curve steepening, whilst the 10yr auction before the FOMC minutes was also towards the weaker end.
• Bund futures came off best levels to trade flat just above 135.00.
• 10yr JGB futures trades modestly higher in wake of regional geopolitical risks but pulled back towards flat levels throughout the second half of the session.
• Walmart (WMT) launched a USD 5bln five-parter (3yr, 5yr, 7yr, 10yr, 30yr).

COMMODITIES

• Crude futures consolidated overnight following another session of heavy gains, with the benchmarks breaking above their post-OPEC surprise production cut peaks.
• IEA's Birol said Europe should be able to do without Russian LNG, and the global oil market may see tightness in H2 2023, which could push oil prices higher, according to Reuters.
• Total Energies (TTE FP) CEO said the ability to increase global natural gas supply will not come before 2026. The CEO added that Europe's natural gas crisis is not fully over, the region has a supply gap and Europe is set to pay more for natural gas, according to Reuters.
• Spot gold remained in a tight range above USD 2,015/oz while base metals were overall mixed, with both CME and 3M LME copper futures subdued in line with the cautious regional mood.

CRYPTO

• Bitcoin reclaimed a USD 30k+ status, but gains were relatively modest.

NOTABLE ASIA-PAC HEADLINES

• Softbank (9984 JT) has reportedly moved to sell almost all of its remaining stake in Alibaba (9988 HK/BABA), according to the FT.
• BoJ Governor Ueda said the BoJ will continue monetary easing until the price target is stably and sustainably achieved; domestic consumer inflation is currently around 3% but likely to slow ahead. Governor Ueda said they should pay more attention to the risk of failing to achieve the 2% inflation target with a premature end to easing rather than the risk of being behind the curve on inflation, according to Reuters.
• China customs said China's trade development will face greater difficulties and challenges, according to Reuters. China's customs official said weakening external demand and geopolitical factors will test China's trade development, and the export of NEVs, lithium batteries, and solar products, drove up China's overall exports.
• Industry experts believe the PBoC's LPR will likely remain "unchanged" in April, according to Securities Daily.
• Bank of Korea confirmed FX swap deal with National Pension Fund for a maximum of USD 35bln, according to Reuters.

DATA RECAP

• Chinese Trade Balance (USD) (Mar) 88.19B vs. Exp. 39.2B
• Chinese Imports YY (Mar) -1.4% vs. Exp. -5.0% (Prev. -10.2%)
• Chinese Exports YY (Mar) 14.8% vs. Exp. -7.0% (Prev. -6.8%)
• Chinese Exports (Jan-Mar) (CNY) +8.4% Y/Y, Imports +0.2% Y/Y.
• Australian Employment (Mar) 53.0k vs. Exp. 20.0k (Prev. 64.6k)
• Australian Unemployment Rate (Mar) 3.5% vs. Exp. 3.6% (Prev. 3.5%)
• Australian Participation Rate (Mar) 66.7% vs. Exp. 66.6% (Prev. 66.6%)
• Australian Full Time Employment (Mar) 72.2k (Prev. 74.9k)
• South Korean Import Price Growth YY (Mar) -6.9% (Prev. -0.5%, Rev. -0.7%)
• South Korean Export Price Growth YY (Mar) -6.4% (Prev. -2.7%, Rev. -2.6%)

GEOPOLITICAL

• North Korea fired an unspecified ballistic missile toward the East Sea, according to the South Korean military cited by Yonhap.
• Japan issued an emergency warning following the North Korean missile launch. People in Hokkaido were told to seek shelter. This was later withdrawn.
• Japan's Defence Ministry said the North Korean missile may have been an Inter-continental Ballistic Missile (ICBM) type, according to Reuters.
• North Korea seemingly tested a new weapon system, possibly solid-fuel ballistic missiles, according to Yonhap.
• South Korea will hold a security meeting following North Korea's missile launch, according to YTN.
• White House "strongly condemns" what it calls a North Korean ICBM test, according to a statement.
• US-Indo-Pacific Command statement said the North Korean missile launch does not pose an immediate threat to U.S. personnel or territory, or to allies.
• Russian Defence Ministry said its SU-27 fighter aircraft escorted German Orion reconnaissance aircraft over the Baltic Sea, according to Reuters.
• Taiwanese Defence Ministry said in the past 24 hours, 26 Chinese aircrafts and seven ships were seen around Taiwan; 14 Chinese Air Force plane crossed the Taiwanese Strait Median line on Friday.
• Japan, US, Australia, India "Quad" summit likely to be held on May 24th in Sydney, according to Japanese press.

EU/UK

• LVMH (MC FP) - Q1 2023 (EUR): Revenue 21.04bln (exp. 19.7bln); Fashion & Leather Organic sales +18% (exp. +9.85%). Wine and Spirits organic sales 1.69bln, +3% Y/Y. Watches and Jewellery organic sales 2.59bln, +11%. Organic sales grew 8% in the US, and 14% in Asia ex. Japan. Co. said the US, a market which continues to grow, had a steady performance. Asia experienced a significant rebound following the lifting of health restrictions. Europe and Japan, which enjoyed strong growth momentum, benefitted from robust demand from local customers and international travellers. Co. holds a 12.5% weight in the CAC 40, a 6.7% weight in the Euro Stoxx 50, and a 2.1% weight in the Stoxx 600.
• ECB's Villeroy said inflation has become more broad-based, core inflation is still strong and core inflation is proving sticky and has become potentially more persistent. ECB still has a little way to go with rate hikes but it is premature to decide whether the ECB hikes in May, ECB has already completed most of its rate hike journey. He said the deferred effect of past rate hikes will be more significant than one of our future decisions, via Reuters.
• BoE Governor Bailey said the banking crisis is testing institutional structures, they should not "aim off" the rates decision due to the crisis but they will take financial conditions into account. BoE not seeing any concerning signs in markets due to QT, via Reuters.

DATA RECAP

• UK RICS Housing Survey* (Mar) -43 vs. Exp. -48.0 (Prev. -48.0, Rev. -47).