• European bourses are firmer though the region is set to end the week where it began, US futures modestly bid.
• DXY underpinned vs most G10s with USTs slightly softer and Fed's Bowman saying recent CPI and NFP reports do not provide persistent evidence of disinflation.
• EGBs have struggled for firm direction but are veering lower after hitting WTD peaks on Thursday.
• Crude has lifted off initial lows to trade flat with macro news limited as we await updates from Turkey on Northern Oil.
• US President Biden and congressional leaders' meeting was postponed to next week; Yellen is to talk with JPMorgan & Citi CEOs next week.
• Looking ahead, highlights include US Export/Import Prices, Uni. of Michigan (Prelim.), Speeches from Treasury Secretary Yellen, Fed's Bullard & Daly, BoE's Pill, ECB's de Guindos.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.5%, with the Stoxx 600 set to end the week roughly where it commenced it.
• Sectors are primarily in the green with Consumer Products/Services outperforming post-Richemont's (+5.0%) FY update while Real Estate/Autos lag.
• The APAC handover was a mixed one with sentiment inching higher since though with no clear driver/firm narrative behind this.
• Stateside, ES +0.2%, futures are bid but only modestly so as we await data and more Fed speak after Bowman's early-doors commentary while Yellen provided familiar lines on the debt ceiling.
• Tesla (TSLA) to recall a total of 1,104,622 of imported Model S, Model X, Model 3 and domestic Model 3 and Model Y, according to Chinese market regulator. Elsewhere, WSJ said NBCUniversal's head of advertising Linda Yaccarino was the candidate in talks to become the new CEO of Twitter.
• Softbank (9984 JT) is to reportedly pitch its USD 10bln Arm IPO, according to Bloomberg.
• Foxconn (2317 TT) says it is to delay Bharat FIH's IPO plan in India. Foxconn delayed the IPO of this subsidiary in October 2022 due to poor market conditions.
• Click here and here for a recap of the main European earnings, including: Allianz, Richemont, Scor, Austrian Post & more
• Click here for more detail.

FX

• Buck broadly underpinned as DXY fastens grip on 102.000 handle and Fed's Bowman says recent CPI and NFP reports do not provide persistent evidence of disinflation.
• Kiwi undermined by much cooler NZ inflation expectations, NZD/USD sub-0.6250 from just above 0.6300, AUD/NZD cross tops 1.0700 vs 1.0640 low.
• Yen and Loonie soft against Greenback, but eyeing decent option expiry interest at 135.00 and 1.3500 for support.
• Pound retains 1.2500+ status despite monthly UK GDP contraction pre-BoE's Pill and Euro treading water near 1.0900 irrespective of more hawkish ECB commentary.
• PBoC set USD/CNY mid-point at 6.9481 vs exp. 6.9472 (prev. 6.9101)
• Click here for more detail.
• Click here for the notable FX expiries for today's NY cut.

FIXED INCOME

• Bonds chop and churn after extending recovery gains to new w-t-d highs on Thursday.
• Bunds pivot 136.50 and 2.25% yield, Gilt veer towards base of 101.14-68 range and T-note hovers just under 116-00 within 116-07/115-28 confines ahead of more Central Bank speakers, US import/export prices and UoM sentiment
• Click here for more detail.

COMMODITIES

• Crude benchmarks are flat after spending the morning slightly softer and only picking up incrementally most recently with no fresh driver behind the move at the time and action overall in familiar ranges.
• Iraqi oil minister says Iraq didn't get a reply from Turkish Botas on the request to resume oil flow, expects Northern Oil exports to restart on Saturday with pumping of 500,000 barrels per day.
• Spot gold resides around this week’s lows, and just above the USD 2,000/oz level following yesterday's advances in the Dollar index, whilst fresh macro new flows remain light; base metals mixed, overall.
• Turkish Defence Minister says parties to the Black Sea grain deal are approaching an agreement on an extension. Subsequently, Russian Kremlin says nothing new to report, for now, after Black Sea grain deal talks in Istanbul; potential conversation with Turkey's Erdogan and Russia's Putin won't help achieve a deal.
• Click here for more detail.

NOTABLE HEADLINES

• Riksbank's Thedeen says he is surprised as their rate increases have not "bitten" as he expected, the impact on the economy has not been that great, via SvD Näringsliv. "every time we have presented a new interest rate forecast; we have later revised it upwards... It is a sign that monetary policy may not have the desired effect as we have thought." One explanation for why household consumption continues to be above expectations is their belief that rates will soon decrease rapidly. On QE, says he is somewhat "more sceptical" than perhaps some others have been, should be a "relatively high" threshold for implementing it.
• Northvolt investment within Germany reportedly to be circa. EUR 3-5bln with hundreds of millions expected in subsidies, via Reuters citing sources. *Follows earlier source reports in the FT and commentary from German officials who suggested that no details have been decided on yet.

DATA RECAP

• UK GDP Estimate MM (Mar) -0.3% vs. Exp. 0.0% (Prev. 0.0%); 3M/3M (Mar) 0.1% vs. Exp. 0.1% (Prev. 0.1%); YY (Mar) 0.3% vs. Exp. 0.4% (Prev. 0.5%, Rev. 0.6%)
• UK GDP Prelim QQ (Q1) 0.1% vs. Exp. 0.1% (Prev. 0.1%); YY (Q1) 0.2% vs. Exp. 0.2% (Prev. 0.6%)

NOTABLE US HEADLINES

• Fed Discount Window borrowing at USD 9.3bln on May 10th (prev. 5.3bln on May 3rd), BTFP lending at USD 83.1bln (prev. 75.8bln), Other Credit at USD 212.5bln (prev. 228.2bln).
• The meeting between US President Biden and congressional leaders was postponed to next week. White House said staff will continue working on the debt limit and that principals agreed to meet early next week, while a source stated that this is a positive development and meetings are progressing.
• US House Speaker McCarthy said postponing the debt ceiling meeting doesn't mean that debt talks have fallen apart and leaders decided it was in the best interest to let staff meet again, while he doesn't think there was enough progress for the leaders to get back together but expects them to meet next week.
• US Treasury Secretary Yellen is to talk with JPMorgan (JPM) CEO Dimon and Citi (C) CEO Fraser in Washington next week, according to Reuters.
• US Treasury Secretary Yellen says if Congress fails to raise the debt ceiling, "we will face financial and economic catastrophe". Still some uncertainty on precisely when we will run out of cash, will update Congress on the X-data as more data becomes available. Intends to visit China but cannot say when; not had contact yet with her new Chinese counterpart.
• Fed's Bowman (voter) says additional rate hikes are "likely appropriate" if inflation stays high and labour market stays tight. Recent CPI and jobs reports have not provided persistent evidence that inflation is on a downward path. Fed policy rate will need to remains sufficiently restrictive for some time. Policy is now restrictive, but uncertain if it is sufficiently restrictive to bring down inflation; future rate hikes will look for "consistent evidence" of falling inflation.
• UAE Royal Group’s Sheikh Tahnoon Bin Zayed said they plan to invest in the US market.
• On the US debt ceiling negotiations, Punchbowl says "two sides haven’t narrowed down the policies they might want to include in a debt-limit or spending-cut package".
• Click here for the US Early Morning Note.

GEOPOLITICS

• China's foreign ministry says China representative of Eurasian affairs to visit Ukraine, Poland, France, Germany and Russia from May 15th to promote peace.
• Israeli PM Netanyahu will hold a security consultation session shortly with senior security chiefs, according to Al Jazeera.
• From the EU-China strategy paper, WSJ's Norman highlights that "EU-China relations will not develop if China does not push Russia to withdraw from Ukraine..."

CRYPTO

• Bitcoin is softer on the session and nearing the USD 26k mark with newsflow generally light after a busy macro week ahead of a relatively busy US session. Action which keeps Bitcoin just above the earlier WTD trough.

APAC TRADE

• APAC stocks were mostly lower amid a busy slate of earnings releases and after the subdued performance stateside where regional bank fears resurfaced and initial jobless claims disappointed.
• ASX 200 was lacklustre with the index constrained by weakness in the energy and mining-related sectors after the recent pressure in underlying commodity prices.
• Nikkei 225 outperformed and rose to its highest since November 2021 with price action largely driven by earnings results including various blue-chip stocks.
• Hang Seng and Shanghai Comp. were indecisive as talks between US National Security Adviser Sullivan and China's top diplomat Wang Yi provided some encouragement towards a potential Biden-Xi call, although participants also digested weaker-than-expected Chinese loans and financing data.

NOTABLE ASIA-PAC HEADLINES

• Chinese Foreign Minister Qin Gang is to visit Australia in July for a reciprocal visit as ties between Australia and China ease, according to SCMP.
• EU Economic Commissioner Gentiloni said we cannot be too dependent on foreign powers and noted that decoupling would be a dangerous risk for the global economy, while he added that he is not talking about closing the trade with China but is instead talking about making supply chains more secure.

DATA RECAP

• New Zealand 1yr Inflation Expectations (Q2) 4.3% (Prev. 5.1%); 2yr Inflation Expectations (Q2) 2.8% (Prev. 3.3%).