MNI US OPEN - Shoigu Shakeup Biggest Since Onset of Ukraine War

NEWS

SPAIN (NYT): Spain’s Socialists Win Catalan Vote Dominated by Amnesty for Separatists
For the first time in over a decade, the regional government in Catalonia may be led by a party opposed to independence. Spain’s governing Socialist party emerged on Sunday as the winner of regional elections in Catalonia that had been widely seen as a litmus test for Prime Minister Pedro Sánchez’s polarizing amnesty measure for separatists. They most likely face weeks of bargaining, and possibly a repeat election if no agreement is reached. But for the first time in over a decade, they may be able to form a regional government led by an anti-independence party.

RUSSIA (MNI): Replacement Of Def Min Biggest Shakeup In Leadership Since Start Of War
The replacement of Defence Minister Sergei Shoigu after 12 years in the position comes as the biggest shakeup of Russia's military establishment during the coure of the entire war in Ukraine. Shoigu, a civil engineer by training, has been replaced by another non-military man in the form of economist and former Deputy PM Andrei Belousov. Shoigu will move to become secretary of the National Security Council, where he replaces Nikolai Patrushev.

AUSTRALIA (BBG): Australia Treasurer Says He Will Proceed With RBA Board Overhaul
Australian Treasurer Jim Chalmers is determined to press ahead with his overhaul of the Reserve Bank in the face of demands for some changes from the center-right opposition, foreshadowing a prolonged stalemate.

JAPAN (NHK): Japan PM Kishida Watching Yen Moves Closely
Japan Prime Minister Fumio Kishida said he’s carefully monitoring the recent depreciation of the yen, and emphasized the government and the Bank of Japan will continue to work together closely, NHK reported Friday. The government will work to boost wages and ensure rising costs are reflected in prices, Kishida said at an economic panel meeting on Friday, the NHK said

BOJ (MNI): BOJ Cuts Scale Of 5-10 Year JGB Buying By JPY50 Bln
The Bank of Japan on Monday revealed it had lowered the scale of Japanese government bond buying with a remaining life of five to 10 years to JPY425 billion from April 24's similar JPY475 billion operation. The 10-year JGB yield rose to 0.935% for the highest level since November 2023 as the reduction increased speculation over a further JGB buying cut.

JAPAN (MNI): BOJ Eyes Yen Despite Small Impact So Far - Sekine
The weak yen could hasten monetary tightening should it feed upside price risks, even if the underlying inflation trend remains below its 2% target, a former Bank of Japan chief economist told MNI, though he noted the impact of currency weakening on inflation so far had been minimal. Toshitaka Sekine, professor at the School of International and Public Policy at Hitotsubashi University, said the BOJ is focused on the impact of forex on prices, particularly on potential second-round effects. If these accelerate, it could prompt it to consider reducing the degree of monetary accommodation, he added.

CHINA (MNI): Beijing Reveals 2024 Bond Issuance Plan
China’s Ministry of Finance published its 2024 schedule for issuing general treasury and ultra-long-term special treasury bonds on Monday. The notice revealed ultra-long-term special treasury bonds would print with maturities of 20, 30 and 50 years. The ministry will start issuance of the 30-year bonds on May 17, 20-year on May 24, and the 50-year on June 14. China will likely issue a significant volume of ultra long-term special treasury bonds to support government investment over the next few years, a prominent policy advisor told MNI in an interview.

EGBs: Little Changed As Initial Support Fades

Core/semi-core EGBs are little changed.

• Chinese economic data and notable EGB-related cash flows appeared to support EGBs at the open, but gains have faded.
• A modest rebound in crude oil futures may have limited/countered the early EGB rally.
• Bund futures are +7 at 130.82, having traded in a tight 27-tick range today (130.71-98).
• We have seen a 35K lot trade in the RXM4 131.00/132.50/134.00/135.50 call condor vs. the RXN4 131.50/133.00/134.50/136.00 call condor (-M4/+N4).
• This likely represents a rolling ‘up and out’ of an existing position.
• German and French cash yields are little changed, while 10-year peripheral spreads to Bunds are biased a touch tighter.
• Today’s Eurozone calendar is very light, with little data and no scheduled ECB speakers.
• We remain on syndication watch.
• The EU has a syndication scheduled for the week ahead with an RfP having been sent out already. The most likely new bonds would be conventional 15/30-year EU-bonds but the EU could also choose to just tap existing issues.
• Also on the syndication side, we see Austria and the ESM (or possibly the EFSF) as the most likely candidates to conduct additional transactions.

FOREX: Placeholder Trade Ahead of US CPI Risks

• Early G10 trade this week has been largely a placeholder, with recent ranges being respected and price action lacking any meaningful conviction. The EUR is the firmest performing currency, helping EUR/GBP hold the recent bounce and keep prices anchored to the 200-dma of 0.8605.
• Pre-positioning and tactical trade is likely ahead of this Wednesday's CPI release, at which markets expect inflation to slow to 3.4% from 3.5%.
• EUR/CHF is trading on the front foot, helping the cross show above last week's highs and retrace the sell-off posted off 0.9837. Clearance here would open 0.9849 and levels last seen in May last year.
• Japanese intervention risks remain in the background, with the PM Kishida again commenting overnight that his staff watching FX moves "closely". USD/JPY is continuing to fade the late April intervention sell-off, with prices creeping to 155.96 early today. The pair has now printed higher lows for six consecutive sessions.
• The data and speaker schedule is typically light for a Monday, with no tier 1 releases on the docket. This leaves focus on Fed's Mester and Jefferson who appear at a Cleveland Fed event to discuss central bank communications strategy.

EQUITIES: EuroStoxx Futures Top Bull Trigger

S&P E-Minis traded higher last week, extending the current bull cycle. Price has moved through resistance at the 20-day EMA - a bullish development. This highlights scope for a continuation higher that would expose the key resistance. Eurostoxx 50 futures build on the recent firm tone and the contract has traded higher to top the bull trigger. Recent gains have resulted in a breach of the 20-day EMA, resistance at 4990.00, as well as the bull trigger at 5079.00, Apr 2 high.

• Japan's NIKKEI closed lower by 49.65 pts or -0.13% at 38179.46 and the TOPIX ended 4.13 pts lower or -0.15% at 2724.08. Elsewhere, in China the SHANGHAI closed lower by 6.526 pts or -0.21% at 3148.021 and the HANG SENG ended 151.38 pts higher or +0.8% at 19115.06.
• Across Europe, Germany's DAX trades lower by 34.96 pts or -0.19% at 18737.76, FTSE 100 higher by 2.57 pts or +0.03% at 8437, CAC 40 down 6.76 pts or -0.08% at 8212.38 and Euro Stoxx 50 down 7.66 pts or -0.15% at 5077.42.
• Dow Jones mini up 13 pts or +0.03% at 39655, S&P 500 mini up 4.75 pts or +0.09% at 5249.5, NASDAQ mini up 29.25 pts or +0.16% at 18282.5.

COMMODITIES: Bearish WTI Theme Remains Intact

A bearish theme in WTI futures remains intact and the contract traded to a fresh short-term cycle low last week. Gains off this mark are considered corrective for now. Price has recently breached the 50-day EMA, strengthening a short-term bearish theme that highlights potential for a deeper correction. Gold rallied well for two consecutive sessions as markets undergo a corrective bump higher. This breaks the consolidation phase and concludes the bearish short-term condition. The end of the corrective leg lower has unwound the overbought condition.

• WTI Crude up $0.33 or +0.42% at $78.55
• Natural Gas up $0.04 or +1.82% at $2.288
• Gold spot down $16.45 or -0.7% at $2343.38
• Copper up $5.4 or +1.16% at $471.85
• Silver down $0.02 or -0.07% at $28.142
• Platinum up $2.35 or +0.24% at $999.62