• APAC stocks were mostly lower as the region digested a slew of earnings updates and following the weak handover from Wall St.
• There was a lack of progress in debt limit negotiations although President Biden will meet with congressional leaders again this Friday.
• Fed's Williams said the FOMC will raise rates again if needed and he doesn't see any reason to cut rates this year.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed down 0.6% yesterday.
• DXY is contained above 101.50, FX markets are otherwise steady, EUR/USD maintains 1.09 status.
• Looking ahead, highlights include US CPI, Chinese M2, Supply from UK, Germany & US. Earnings from ABN AMRO, Credit Agricole, Continental, E.ON, Telecom Italia, Nexi & Disney.

US TRADE

EQUITIES

• US stocks finished with mild losses with participants cautious ahead of the upcoming US inflation data and following a slew of central bank commentary including hawkish rhetoric from numerous ECB officials, while Fed's Williams pushed back against a rate cut this year and noted the Fed are prepared to raise rates again if needed.
• SPX -0.46% at 4,119, NDX -0.68% at 13,201, DJIA -0.17% at 33,561, RUT -0.27% at 1,749.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Williams (voter) said he is confident the Fed is on the right path to lower inflation to the 2% target and will be data dependent. Williams also noted that the Fed has not said it is done raising rates and has made "incredible progress on monetary policy" but added that they will raise rates again if needed and he doesn't see any reason to cut rates this year.
• US President Biden said he will meet again with congressional leaders on Friday on the debt ceiling and that White House and legislative staff will meet daily ahead of that meeting. Biden also said he made it clear that a default is not an option, while he added that House Speaker McCarthy's spending cuts will hurt Americans and he is not ruling out a short-term debt limit increase.
• US House Speaker McCarthy said his position is clear that House Republicans have done their job to avoid a default and responsibly raise the debt limit and Democrats must do the same, while he didn't see any new movement from the talks and said the progress they made was being able to meet. McCarthy also noted that President Biden did not offer spending cut ideas but he hopes that President Biden will begin to negotiate over the next two weeks and thinks they can go to conference if Senate Majority Leader Schumer can pass something.
• US Senate Majority Leader Schumer said House Speaker McCarthy refused to take default off the table and gave a plan to take default hostage, while Schumer added that President Biden asked staff from both parties to sit down and find common ground on budget issues but noted that disagreements over federal spending are wide.
• US Senate Republican Leader McConnell said the government is not going to default and there must be an agreement between President Biden and House Speaker McCarthy, while he added that there must be some restraint on spending if the debt limit is raised.
• US Treasury Borrowing Advisory Committee said it is deeply concerned about the lack of resolution of the statutory debt limit and warned that a protracted standoff over the debt limit will dramatically increase taxpayer costs and exacerbate market stress.
• US jury found that former US President Trump did not rape E. Jean Carroll but found that Trump sexually abused Carroll in a civil lawsuit, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were mostly lower as the region digested a slew of earnings updates and following the weak handover from Wall St where the major indices were cautious after hawkish central bank rhetoric and ahead of US inflation data, while there was also very little progress from US debt ceiling talks.
• ASX 200 was subdued amid underperformance in financials, energy and telecoms but with losses stemmed by the defensives and as participants mulled over the details of the recent federal budget.
• Nikkei 225 weakened with the focus in Japan centred on a deluge of earnings releases.
• Hang Seng and Shanghai Comp. conformed to the global downbeat mood amid weakness in China’s largest banks and with several property names also pressured, while a report that Chinese GDP growth is likely to pick up in Q2 due to policy support, did little to spur risk appetite.
• US equity futures traded rangebound amid the lacklustre overnight mood ahead of US CPI data.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed down 0.6% yesterday.

FX

• DXY traded rangebound with a non-committal tone ahead of incoming US CPI data due later today and following the lack of progress in debt limit negotiations although White House and legislative staff will meet daily before President Biden meets with congressional leaders again this Friday.
• EUR/USD attempted to recover lost ground after slipping beneath the 1.1000 handle yesterday despite the flurry of hawkish comments from numerous ECB officials.
• GBP/USD was steady amid quiet newsflow from the UK and ahead of Thursday’s BoE meeting.
• USD/JPY remained indecisive after oscillating around the 135.00 level at the whim of yields.
• Antipodeans were kept afloat but with gains capped by the cautious risk tone and sparse calendar.
• PBoC set USD/CNY mid-point at 6.9299 vs exp. 6.9301 (prev. 6.9255)

FIXED INCOME

• 10yr UST futures bounced off the prior day’s lows in the aftermath of a strong 3yr auction stateside albeit with price action contained with the attention turning to US CPI data and as default concerns linger.
• Bund futures were subdued after yesterday’s selling pressure and hawkish ECB rhetoric.
• 10yr JGB futures traded sideways amid a lack of tier-1 data releases and with the BoJ refraining from any unscheduled purchases.

COMMODITIES

• Crude futures softened amid the subdued risk tone and after mixed inventories including the surprise build in crude stockpiles, which pared some of the support seen from reports that Russian oil output cuts almost hit its pledged goal in April and that the US is planning start refilling the SPR after maintenance.
• US Energy Inventory Data (bbls): Crude +3.62mln (exp. -0.9mln), Gasoline +0.4mln (exp. -1.2mln), Distillate -3.9mln (exp. -0.8mln), Cushing -1.3mln.
• EIA STEO (May) 2023 world oil demand growth forecast was raised by 120k BPD to 1.56mln BPD Y/Y increase and the 2024 forecast was cut by 130k BPD to a 1.72mln BPD Y/Y increase.
• US President Biden admin plans to begin buying oil to refill the SPR after completing maintenance work this year, according to Bloomberg.
• Russia said its oil output cuts almost hit its pledged goal in April.
• UK's Unite union announced 1,200 offshore workers will conduct a 2-day strike in a dispute over jobs, pay and conditions with the strike action to hit various operators including BP, Shell, Repsol and others.
• Spot gold was indecisive amid an uneventful greenback ahead of US inflation data.
• Copper futures were uneventful alongside the cautious mood across risk assets.
• Peru's copper production rose 20.4% Y/Y in March, according to the energy and mining ministry.

CRYPTO

• Bitcoin was confined within yesterday's tight range beneath the USD 28,000 level.

NOTABLE ASIA-PAC HEADLINES

• China's GDP will likely pick up in Q2 amid policy support, according to China Securities Journal.
• A fresh COVID-19 wave is spreading through China as people return from public holiday travel which has reached trading floors and spurred concerns of an impact on trading volume, but is unlikely to be as pronounced as prior COVID disruptions, according to Reuters.
• USTR Tai will meet China's Commerce Minister in Detroit later this month, according to Bloomberg.
• US Secretary of State Blinken said the US encourages the WHO to invite Taiwan "as an observer" to the May meeting in Geneva.

GEOPOLITICS

• France told the EU that the Russian Wagner Group should be labelled as a terrorist group, according to The Guardian.

UK/EU

• ECB's Schnabel said inflation momentum remains high for all components except energy. Schnabel also commented that core inflation hasn't seen a turnaround like headline inflation and there is no doubt that they will have to do more to bring inflation to the target soon.
• The Times' BoE Shadow MPC voted 7-2 in favour of a 25bps hike in the Bank Rate to 4.5% with the two dissenters in favour of a larger 50bps move.