• APAC stocks traded mostly higher albeit with gains capped in the absence of any major macro catalysts from over the weekend.
• European equity futures are indicative of a slightly firmer cash open, with Euro Stoxx 50 future +0.2% after the cash market closed +0.6% on Friday.
• DXY was steady overnight above 101.50, EUR/USD lingers below 1.10, Cable and USD/JPY sit on 1.24 and 134 handles respectively.
• US Treasury Secretary Yellen said bank credit tightening could be a substitute for further Fed rate hikes.
• Looking ahead, highlights include BoE's Cunliffe, ECB's Lagarde and Nagel.

US TRADE

EQUITIES

• US stocks and bonds finished lower on Friday albeit with the major indices off worst levels as participants digested several factors including weaker-than-expected retail sales, strong bank earnings and the latest Fed rhetoric.
• SPX -0.21% at 4,137, NDX -0.23% at 13,079, DJIA -0.42% at 33,885, RUT -0.86% at 1,781.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury Secretary Yellen said banks are likely to become more cautious after recent failures and bank credit tightening could be a substitute for further Fed rate hikes, while she noted deposit outflows from the banking system have stabilised and the situation has been calm but they are still monitoring things carefully, according to CNN.
• US House Speaker McCarthy's new debt limit negotiating proposal will include broad moves to restrict food assistance for millions of low-income Americans, according to Politico.
• A train containing potentially hazardous materials derailed and caught on fire on Saturday in a central Maine village.
• Merck (MRK) agreed to acquire Prometheus Biosciences (RXDX) for USD 10.8bln, according to FT.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher albeit with gains capped in the absence of any major macro catalysts from over the weekend and as participants brace for upcoming economic releases from China including GDP data.
• ASX 200 was positive as gains in tech and financials atoned for the losses in the commodity-related sectors.
• Nikkei 225 was indecisive around the 28,500 level with some of the biggest movers driven by their outlooks.
• Hang Seng and Shanghai Comp were underpinned after the PBoC vowed to make prudent monetary policy precise and forceful, as well as increase support to expand domestic demand and keep liquidity ample.
• US equity futures (ES +0.2%) were contained as markets await data releases and the latest earnings updates.
• European equity futures are indicative of a slightly firmer cash open, with Euro Stoxx 50 future +0.2% after the cash market closed +0.6% on Friday.

FX

• DXY was flat with price action rangebound across the FX space following the lack of major catalysts from over the weekend but held on to Friday’s gains which were helped by hawkish Fed commentary and mostly better-than-expected data including Industrial Production and University of Michigan Sentiment.
• EUR/USD remained subdued after its recent slip beneath the 1.1000 handle which has since provided resistance for the single currency despite the hawkish comments late last week from ECB’s Nagel.
• GBP/USD tested the 1.2400 level to the downside after Friday’s pullback and comments from BoE's Tenreyro that they need to be patient over the impact of past rate rises on inflation and are yet to see most of the impact.
• USD/JPY was kept afloat after taking out resistance at the 134.00 handle.
• Antipodeans were rangebound amid the absence of tier-1 data and as markets await tomorrow’s key releases.
• PBoC set USD/CNY mid-point at 6.8679 vs exp. 6.8654 (prev. 6.8606)

FIXED INCOME

• 10yr UST futures were off last week’s lows but with the rebound only marginal after Friday’s selling pressure owing to mostly firmer-than-expected data releases and hawkish commentary from Fed officials including Waller who noted that recent data shows the Fed hasn't made much progress on the inflation goal and rates need to increase further.
• Bund futures were lacklustre with ECB's Nagel suggesting the central bank is far from done with more rate hikes needed and that inflation risks are tilted to the upside.
• 10yr JGB futures followed suit to the recent weakness in global peers and amid a lack of additional BoJ purchases.

COMMODITIES

• Crude futures traded sideways amid a lack of pertinent catalysts and as participants await incoming data.
• G7 ministers agreed to speed up the phaseout of fossil fuels and shift towards renewable energy, according to FT.
• Saudi Arabia boosted its sovereign wealth fund with the transfer of an almost USD 80bln stake in Saudi Aramco to the PIF, according to FT.
• QatarEnergy signed an MOU with Namibia to enhance energy cooperation which includes exploring further investment opportunities in Namibia, according to Reuters.
• Norsk Hydro announced employees at Hydro Karmøy and Hydro Ardal will commence strike action this Monday, while corporate employees in the accounting department at Sunndalsøra will also go on strike, according to Reuters.
• Spot gold was indecisive and traded on both sides of the USD 2,000/oz level amid an uneventful greenback.
• Copper futures were rangebound amid the contained risk environment ahead of tomorrow's economic growth data from China, while Shanghai tin futures jumped by a double-digit percentage in early trade as Myanmar's tin-mining hub of Wa State plans to suspend all mining operations from August to protect its resources.

CRYPTO

• Bitcoin was pressured and briefly dipped beneath USD 30,000 in a mild pullback following recent advances.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 170bln (vs. CNY 150bln maturing) in 1-year MLF lending with the rate kept at 2.75%, while it injected CNY 20bln via 7-day reverse repos with the rate kept at 2.00%.
• PBoC Governor Yi suggested that history shows that central bank interventions in the FX market will sooner or later be defeated by markets and said that during times of market stability, they can phase out currency intervention by gradually reducing the amount and frequency of intervention. Yi also said in guiding monetary policy, they try to make the real interest rate slightly below the potential growth rate, according to Reuters. Furthermore, Yi called for collective action and “fair burden sharing” to address debt issues of developing countries, according to Caixin Global.
• China’s Mofcom said China resolutely opposes US sanctions on some Chinese firms and that the move affects the security and stability of global supply chains, while it called for the US to immediately correct its wrongdoing and stop unreasonable suppression of Chinese companies. Furthermore, it said that China will firmly safeguard the legitimate rights and interests of Chinese companies, according to Reuters.
• China is beginning a surgical retaliation against foreign companies after the US-led tech blockade, according to FT.
• China has refused to permit US Secretary of State Blinken to travel to China due to concerns about a pending FBI report on the investigation of the downed Chinese spy balloon, according to FT.
• Chinese top diplomat Wang Yi said during a meeting with German Foreign Minister Baerbock that Taiwan’s return to China was an important component of the post-World War II international order and hopes that Germany will support China’s peaceful reunification cause, while Wang added that China is willing to strengthen exchanges and communication with Germany, enhance mutual understanding and prepare for a new round of Sino-German consultations.
• China successfully launched a rocket carrying a weather satellite on Sunday, while Taiwan’s defence ministry said some rocket debris from China’s satellite launch fell into the “warning zone” in the sea north of Taiwan but did not affect the safety of Taiwan’s territory, according to Reuters.
• Japanese police arrested one suspect after a smoke bomb incident during an outdoor speech by PM Kishida, according to Kyodo.

DATA RECAP

• Chinese House Prices YY (Mar) -0.8% (Prev. -1.2%), prices rose M/M by 0.5% which is the fastest monthly increase since June 2021, according to Reuters.
• Singapore Non-Oil Exports MM (Mar) 18.4% vs. Exp. 1.7% (Prev. -8.0%)
• Singapore Non-Oil Exports YY (Mar) -8.3% vs. Exp. -20.8% (Prev. -15.6%)

GEOPOLITICAL

• Russian President Putin held a working meeting with Chinese Defence Minister Li Shangfu in Moscow on Sunday, according to Tass citing Kremlin spokesman Peskov. It was also reported that Russian President Putin praised ties between the Russian and Chinese militaries, while Chinese Defence Minister Li said China is willing to work with Russia to have close communications between their militaries and China is willing to strengthen multilateral coordination and cooperation with Russia, according to Bloomberg and Reuters.
• Russia said Wagner Group fighters continued to advance in Bakhmut and captured two more areas of the city, according to RIA. It was also reported that Wagner Group chief Prigozhin said the Ukrainian counteroffensive could succeed because of the ‘lazy Kremlin elite’ and wants to negotiate an end to the war, according to The Telegraph.
• Ukrainian Finance Minister Marchenko said the IMF-led USD 115bln support package boosted confidence that Ukraine can prevail in the war against Russia and that G7 finance officials underscored commitment to continue supporting Ukraine as long as needed, while he is confident the US Congress will maintain bipartisan consensus backing support for Ukraine, according to Reuters.
• G7 Sapporo Communique stated that they condemn Russia’s illegal, unjustifiable and unprovoked war of aggression against Ukraine and they stand ready to support a sustainable, resilient recovery and green reconstruction of Ukraine, according to Reuters.
• EU foreign policy chief Borrell said the only answer for the Ukraine crisis is to do more, faster for Ukraine and that they need to continue support for Ukraine and defend its territory against Russian invasion. Borrell said that China should talk to Ukraine and refrain from military assistance with Russia, while he noted the EU has an interest in peace and stability in the Taiwan Strait and that changing the status quo unilaterally will be unacceptable, according to Reuters.
• Arab Gulf foreign ministers discussed the Syrian crisis and Damascus’s potential return to the Arab League although no decision was made, according to the Saudi Foreign Ministry cited by Reuters.
• Sudan's army conducted strikes on paramilitary bases amid a deadly power struggle, according to Reuters.
• US Navy said a US warship sailed through the Taiwan Strait on Sunday, while China's military also stated that it followed and monitored a US destroyer which sailed through the Taiwan Strait, according to Reuters.
• South Korea, US and Japan are to hold missile defence drills to counter North Korea, according to Reuters. It was also reported that a South Korean navy vessel fired warning shots after a North Korean patrol boat crossed the maritime border, according to Yonhap.

EU/UK

• BoE is considering urgent reform of the deposit guarantee scheme in the wake of the SVB collapse, according to FT.
• BoE's Tenreyro said on Friday that they need to be patient over the impact of past rate rises on inflation and that they are yet to see most of the impact.
• UK PM Sunak is considering reducing the UK’s inheritance tax ahead of the next general election, according to people familiar with the matter cited by Bloomberg. It was separately reported that UK PM Sunak cancelled the building of new ‘smart motorways’ amid concerns about safety and costs, according to AFP.
• UK Chancellor Hunt is reportedly 'wary' of new subsidies as companies look to the US for government support, according to Sky News.
• UK Royal Mail and the Communication Workers Union reached a negotiators’ agreement in principle over pay and employment terms, according to a joint statement.
• Barclays (BARC LN) is to cut more than 100 investment banking jobs, according to Sky News.
• ECB’s Lagarde said during a CBS interview that she can’t imagine the US defaulting on debt and said US-China bipolarisation of the world could crimp growth.
• ECB's Nagel said on Friday that he does not think the ECB's job is already or even mostly done, while he added more rate hikes are needed with EZ inflation risks tilted to the upside and it is not a given that inflation returns to target over the medium term, according to Reuters.
• ECB's Centeno says for the ECB's May decision, either zero or 25 "are the numbers that are feasible" when it comes to rates, according to Bloomberg.
• European Commission said it is aware of Poland and Hungary’s announcement to ban imports of grain and other agricultural products from Ukraine to protect their local agricultural sectors, while a spokesperson said that trade policy is of EU exclusive competence and unilateral actions are not acceptable, according to Reuters.