• European bourses are under pressure continuing the APAC handover with drivers light ex-earnings.
• SMI outperforms following Nestle, Novartis and ABB while Banking names lag after UBS and Santander.
• Stateside, futures are lower; FRC -19.5% in pre-market as deposits miss expectation.
• DXY firmer but at the mid-point of the day's range with JPY outperforming while AUD lags once again
• Core debt is bid across the board with USTs picking up further after a 10k 5yr block trade
• Commodities choppy with Crude and Spot Gold contained/slightly softer while base metals languish.
• Looking ahead, highlights include US New Home Sales. Supply from the US. Earnings from Alphabet, McDonald's, Microsoft, Verizon & Visa.

EUROPEAN TRADE

EQUITIES

• European bourses are under pressure, Euro Stoxx 50 -0.6%, continuing the downbeat APAC tone with drivers light ex-earnings; SMI +0.2% outperforms after heavyweights Nestle, Novartis and ABB.
• Sectors are similarly pressured with Banks hit by UBS and Santander.
• US futures are lower, ES -0.4%, with attention almost exclusively on earnings. Note, Biden has as expected kicked off his re-election campaign.
• First Republic Bank (FRC) Q1 2023 (USD): EPS 1.23 (exp. 0.72), Revenue 1.2bln (exp. 1.22bln); Deposits 104.47bln (exp. 136.67bln), down 1.7% from March 31st. Cutting workforce by about 20-25% in Q2. -19.5% in pre-market trade
• Nestle (NESN SW) - Q1 (CHF): Revenue 23.47bln (exp. 23.82bln), Organic Revenue +9.3% (exp. +7.25%). Confirms FY outlook for organic growth of 6-8%. +1.3% in European trade
• Click here for more detail.

FX

• Initial cagey and contained trade has picked up slightly throughout the European morning, with the dollar index at the mid-point of 101.19-10151 parameters and dipping within this slightly as JPY advances.
• JPY is the relative outperformer irrespective of dovish Ueda commentary as UST yields dip and the US yield curve flattens, USD/JPY below 134.00 from initial 134.47 best.
• At the other end of the spectrum AUD has come under renewed pressure as base metals flounder further in holiday thinned conditions for ANZAC day, with further declines in AUD/NZD cross evidence of the Aussies recent underperformance and ahead of Q1 CPI.
• EUR and GBP continue to drift but remain above 1.10 and 1.245 respectively with specific drivers limited aside from Central Bank commentary that hasn't fundamentally altered the narrative.
• PBoC set USD/CNY mid-point at 6.8847 vs exp. 6.8853 (prev. 6.8835)
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Bonds remain bid after extending rebounds from Monday to 134.40, 101.40 and 115-15 for Bunds, Gilts and the T-note respectively.
• German 2 year supply reasonably well received in contrast to recent sales and ahead of the USD 42bln auction.
• USTs experienced a modest boost back towards earlier highs following a 10k five year block trade at 109.27+, with the US five year yield the incremental domestic laggard following this.
• UK DMO revises the 2023/24 Gilt issuance remit to GBP 237.8bln (prev. 241.1bln)
• Click here for more detail.

COMMODITIES

• WTI and Brent futures are choppy but have been ultimately horizontal above USD 78.50 and USD 82.50/bbl respectively since around the settlement yesterday before some modest downside in recent trade.
• Spot gold remains sub-USD 2,000/oz and attempted to top the level before the Chinese cash opened last night.
• Industrial metals are lower across the board as the greenback and soured risk tone pressure the complex
• China March YTD gold output rose 1.9% Y/Y to 84.97 tonnes and gold consumption rose 12.0% Y/Y to 291.58 tonnes.
• Russian Deputy Energy Minister says volatility and uncertainty on global energy markets will increase due to underinvestment, hope to share some results of the new energy strategy in the next few months.
• Click here for more detail.

NOTABLE HEADLINES

• BoE, BoJ, ECB and SNB in consultation with the Fed have decided to revert the frequency of their 7-day operations from daily to once per week, effective 1st May. Decision taken in view of the improvements in USD funding conditions and low demand at recent USD liquidity providing operations.
• ECB's Lane said current data suggests that they have to raise interest rates again at the upcoming meeting, while he added that beyond the May 4th meeting, further rate hikes will depend on data, according to Reuters.
• German Finance Minister Lindner said they need to strengthen EU fiscal rules, not dilute them, and they are in discussions on the future design of the common European fiscal framework, according to FT.
• EU tweaked patent rules to make it easier for patent holders to seek injunctions, according to the latest draft rules cited by Reuters.
• German Chancellor Scholz to meet with Chinese leadership in Berlin on 20th June.

DATA RECAP

• UK PSNB, GBP (Mar) 20.709B GB (Prev. 15.859B GB, Rev. 12.501B GB); PSNCR, GBP (Mar) 18.886B GB (Prev. -0.227B GB, Rev. -1.693B GB)
• Spanish Industrial Prices (Mar): -1.0% YY (prev. 7.8%, rev. 8.0%)

NOTABLE US HEADLINES

• US President Biden said that we will know real soon about his election plans.
• Samsung SDI (006400 KS) to invest USD 3bln or more jointly with General Motors (GM) to build an EV factory in the US.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Russia may withdraw from the treaty banning intermediate and shorter-range nuclear missiles, according to a foreign ministry official cited by TASS.
• Russian Foreign Ministry's head of nuclear non-proliferation Yeramakov said the risks of a direct military confrontation between the two nuclear powers, Russia and the US, are increasing with Washington escalating the risks through its conduct, according to TASS.
• EU and Japan pushed back against a US proposal for the G7 to ban all exports to Russia, according to FT.
• UK Foreign Minister Cleverly is to call for constructive ties with China in his Mansion House speech on Tuesday, according to FT. However, The Telegraph reported that Cleverly is to also say that China must come clean on the ‘biggest military build-up in peacetime’ and is to warn of the danger of ‘tragic miscalculation’ if Beijing’s aggression continues.
• Egyptian Foreign Ministry announced the killing of the assistant administrative attaché at the Egyptian embassy in Khartoum, Sudan, according to Sky News Arabia.
• Deputy Chairman of the Russian Security Council, said "our competitors should not underestimate the possibility of our use of nuclear weapons", via Al Jazeera.

CRYPTO

• Coinbase (COIN) filed a petition to push the SEC to create new rules on crypto, according to Reuters.

APAC TRADE

• APAC stocks were mostly lower after the mixed performance in the US where sentiment was clouded by a disappointing Dallas Fed Manufacturing survey and the tech sector was among the laggards ahead of the upcoming big tech earnings, with the mood in the Asia-Pac region also contained amid the closures in Australia and New Zealand for ANZAC Day.
• Nikkei 225 was positive amid softer Services PPI data and after the government raised its view on imports for the first time since July last year, while BoJ Governor Ueda repeated that the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments.
• KOSPI failed to hold on to early gains after South Korean GDP printed mixed but still showed the economy averted a recession.
• Hang Seng and Shanghai Comp weakened with Hong Kong pressured by underperformance in tech and after the local benchmark slipped beneath the 20k level, although losses in the mainland were stemmed following another firm PBoC liquidity injection and reports that China urged banks to cut deposit rates.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo is likely to shift focus from stimulus to reforms when top leaders meet which could take place this week as China’s economic recovery is well on track, according to Bloomberg.
• China's Commerce Minister met with the European Commission EVP in Brussels and the sides exchanged views on topics including expanding trade and investment cooperation, according to MOFCOM.
• BoJ Governor Ueda said the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments, while he also said that Japan's bond yield curve is currently smooth as a whole. Ueda said tightening monetary policy now could push down inflation in the future which is already likely to slow on dissipating effect of import costs and noted that if they see the risk of runaway inflation, they must normalise monetary policy but added that they see the risk of inflation undershooting forecast as a bigger risk than overshooting which is why the BoJ must maintain easy policy for now.
• China's Foreign Ministry announced that airline companies will no longer check COVID-19 nucleic acid test results of passengers to China before boarding from April 29th, via Global Times.

DATA RECAP

• South Korean GDP QQ (Q1 A) 0.3% vs. Exp. 0.2% (Prev. -0.4%); YY (Q1 A) 0.8% vs. Exp. 0.9% (Prev. 1.3%)