• APAC stocks were mostly subdued following the negative handover from Wall St amid the lack of bullish macro drivers.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.3% after the cash market closed down 0.4% yesterday.
• In FX, DXY lingers above 102.50, EUR/USD maintains 1.09 status, NZD leads the majors, JPY lags.
• 10yr UST futures marginally eased back after the prior day’s bull flattening, Crude futures are a touch firmer.
• Looking ahead, highlights include UK CPI, BoC Minutes, Speeches from Fed's Powell, Jefferson, Cook, Goolsbee, Mester & ECB's Schnabel, Supply from Germany & US.

US TRADE

EQUITIES

• US stocks finished lower on what was a choppy session on return from the extended weekend with initial spurts of weakness framed as preliminary month and quarter-end selling in the absence of any major data releases until Friday's ISMs, although the downside was stemmed amid a softening in yields and as participants digested strong Housing Starts data.
• SPX -0.47% at 4,389, NDX -0.09% at 15,070, DJIA -0.72% at 34,054, RUT -0.47% at 1,867
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Vice Chair nominee Jefferson (voter) said in prepared remarks for the Senate confirmation hearing that he remains focused on returning inflation to 2% and that they must remain attentive to all of inflation, banking-sector stress, and geopolitical uncertainty. Jefferson added that the US banking system is sound and resilient but he remains attuned to any threats to its stability, while he also noted that inflation has started to abate, according to Reuters.
• Fed Board nominee Cook (voter) said in prepared remarks for the Senate hearing that she is focused on inflation until the job is done, while she added that the US economy is at a critical juncture and she has consistently supported the Fed's work to lower inflation.
• Fed Board nominee Kugler said in prepared remarks for the Senate confirmation hearing that she is deeply committed to setting monetary policy to reduce inflation and promote maximum employment. Kugler also stated that high inflation hurts workers and businesses alike, while she added it is important to bring inflation down to the Fed's 2% target.
• Fed's Barr (voter) said the banking system is quite strong but there are concerns and observers should not over-generalise from Spring banking woes.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued following the negative handover from Wall St amid the lack of bullish macro drivers and as participants look ahead to Fed Chair Powell's testimony in Congress.
• ASX 200 was dragged lower by weakness in the commodity-related sectors and with the mood not helped by the deterioration in the Australian Westpac Leading Index.
• Nikkei 225 was initially pressured but then clawed back losses with SoftBank among the biggest gainers during its AGM where CEO Son noted that AI is about to grow explosively and the time has come to shift to offence mode, while there were also comments from BoJ’s Adachi who stuck to the dovish script.
• Hang Seng and Shanghai Comp. were lower with Hong Kong underperforming on tech losses and as sentiment in the mainland remained dampened by the weaker outlook with HSBC cutting China's GDP forecast to 5.3% from 6.3%, while the PBoC’s continued liquidity efforts and the recent US-China rhetoric did little to spur risk appetite.
• US equity futures were flat with price action contained after the prior day's lacklustre performance and cautious mood in Asia.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.3% after the cash market closed down 0.4% yesterday.

FX

• DXY traded rangebound and eked a slight gain after Fed Vice Chair nominee Jefferson, as well as Board nominees Cook and Kugler all suggested a determination to tackle inflation in their prepared remarks ahead of the confirmation hearing at the Senate, while participants also await Fed Chair Powell’s testimony at the House today.
• EUR/USD lacked direction after the prior day’s whipsawing where a drag from lower yields was offset by support at the 1.0900 level.
• GBP/USD was contained heading into the UK inflation data due later and tomorrow’s BoE rate decision.
• USD/JPY edged higher following dovish reiterations from BoJ's Adachi and the outdated April meeting minutes.
• Antipodeans eventually gained with price action choppy amid the cautious risk appetite and lack of tier-1 releases.
• PBoC set USD/CNY mid-point at 7.1795 vs exp. 7.1802 (prev. 7.1596)

FIXED INCOME

• 10yr UST futures marginally eased back after the prior day’s bull flattening which had coincided with the rise in European counterparts and growing anxiety around month- and quarter-end flows, while attention turns to the upcoming Fed rhetoric in Congress.
• Bund futures pared some of their gains but with the pullback limited after recent ECB comments provided very little incrementally.
• 10yr JGB futures were kept afloat following the lack of surprises from the continued dovish-leaning BoJ rhetoric.

COMMODITIES

• Crude futures traded marginally higher but with upside limited amid the lack of oil-specific catalysts ahead of the holiday-delayed inventory data beginning with the private sector report due later today.
• Spot gold remained lacklustre albeit off worst levels following yesterday's data-induced selling.
• Copper futures were rangebound as tailwinds from the PBoC's liquidity efforts and expectations of additional policy support were offset by the cautious risk appetite and HSBC's downgrade to its China growth forecast.

CRYPTO

• Bitcoin extended on yesterday's firm advances and edged closer to the USD 29,000 level with the short squeeze facilitated by the recent crypto initiatives by several financial institutions.

NOTABLE ASIA-PAC HEADLINES

• US President Biden said Chinese President Xi didn't know where the balloons were and didn't know a balloon was blown off course. Furthermore, Biden referred to Xi as a dictator and stated that Xi is in a position where he desires a resumption of relations with the US, while Biden also commented that climate envoy John Kerry may travel to China soon, according to Reuters.
• EU Summit draft conclusions call on China to engage in global challenges including climate change, biodiversity and debt relief, according to an EU official.
• Nasdaq executives plan to visit China this year to restart data partnership talks with companies there about access to economic data desperately sought by Western investors, according to Semafor.
• BoJ Board Member Adachi said inflation is faster than he expected but noted it is too early to tweak easy monetary policy and that their baseline price scenario is bound with uncertainty. Adachi said there are both upside and downside risks to the price outlook and longer-run downside risks appear to be bigger, while he reiterated it is appropriate to continue monetary easing under the YCC framework.
• BoJ April meeting minutes stated members said it is important to continue with monetary easing and that a few members pointed out that past price increases in commodities and raw materials continued to be passed on to consumer prices with a time lag. BoJ minutes stated that they must support wage moment with easing and wage gains are needed for sustainable inflation goal, while some members said it was appropriate for the Bank to continue with current monetary easing due to the difficulty of assessing the suitability of future wage hikes and developments in inflation expectations.

GEOPOLITICS

• Russia's Navy is to receive 2 new nuclear submarines by year-end, according to TASS.
• China's Ministry of Foreign Affairs commented on the US's Taiwan position in which it stated that the US has distorted its political promise to China.

EU/UK

NOTABLE HEADLINES

• ECB's Villeroy said inflation is past the peak in France and the Euro area, while he added ECB decisions are to depend on inflation data and most of the ECB rate hike path is complete.
• The Times' Shadow MPC voted 6-3 in favour of the BoE raising rates by 50bps this week (vs. market expectations of a 25bps move) in an "aggressive move to fight back against stubbornly high inflation"