Opens Lower, But Off Worst Levels Shortly After

TYM2 opened on the back foot after the long weekend, but moved away from early lows to last trade -0-06 at 119-24. Most of the major headlines witnessed since Thursday’s NY close have been risk-negative, with e-minis trading lower as a result (the 3 major contracts sit little changed to ~0.5% below their respective settlement levels)

• To recap, weekend headline flow was dominated by no sign of let-up when it comes to the ongoing Russia-Ukraine conflict, continued focus on the widening of the percentage of China covered by localised COVID-related mobility restrictions (although Shanghai has published its road map to move out of its current state of restrictions) and a shallower than expected headline 25bp RRR cut from the PBoC after hours on Friday, for those banks not already at the RRR lower bound of 5% (releasing ~CNY530bn of liquidity, while an extra 25bp RRR cut was afforded to select city and rural commercial banks that have an RRR of above 5%).
• We would suggest that Shanghai’s road to re-opening may have been the driver behind the early downtick in e-minis, with WTI futures adding over $1/bbl to most recent settlement levels. Elsewhere, continued speculation surrounding the timeliness re: wider a European embargo of Russia energy may also be supporting oil early on.
• The Asia-Pac docket is headlined by China’s Q1 GDP reading, with March’s economic activity data also due. Looking ahead to the NY docket, we will get the latest NAHB housing market reading & Fedspeak from St. Louis Fed President Bullard (’22 voter). A quick reminder that holidays in the UK, European, Australia & Hong Kong will thin out wider liquidity on Monday.