Perhaps the most important "news" of the day is that it is non-Tuesday.

Yes, there was actual news news, like German factory orders dropping -2.8% on expectations of a 0.3% increase, French industrial production down -0.7% on expectations of a 0.3% increase (both misses driven by a soaring Euro which is now spitting distance away from the 1.40 ECB "redline"), the Nikkei tumbling 2.9% to just above 14000, the Shanghai Composite down 0.9%, SocGen Q1 profit plunging 13% and conveniently blaming it on Russia, speaking of Russia things continue to deteriorate even though Interfax reported that the country has received the first part, some $3.2 billion, of the promised IMF bailout - money which will be used to promptly pay Gazprom... and buy gold, a sudden conflict between China and Vietnam escalating over the placement of an offshore oil rig and so forth, but in the new normal, none of this matters.

If there is anything that does matter it will be that the central-planning Chairmanwoman of the "free" world, Janet Yellen will speak before the Joint Economic Committee of Congress at 10am. Algos are surely hoping that she reveals a USDJPY target, and thus S&P 500, EOD target at least 1% above the overnight lows. She better, because with the ongoing demolition of high beta stocks like TWTR and WFM, Alibaba's "largest ever tech IPO" may be Virtu'ed quite soon unless the Fed brings some spring momentum ignition step back to the "high freak" trading vacuum tubes. She better: adding complexity to the "trading" day is that there is no POMO today to spark an indiscriminate buying rampage.

Looking back at yesterday's performance, the S&P500 (-0.90%) fell for the third time in four days this month, with two notable sector underperformers in tech (-1.18%) and banks (-1.5%). The big underperformer was Twitter which fell 17.8% as the company’s insider share lockup expired yesterday. Twitter’s market cap fell to around US$19bn, which is incidentally roughly the same amount that Facebook paid for its Whatsapp acquisition earlier this year. Twitter dragged down other social media stocks including Facebook (-4.4%) and internet stocks in general such as Google (-2.4%) and Amazon (-4.1%).

There wasn’t a single bank in the S&P500 (and only a handful in the Stoxx600) which finished in the black. Barclays set a negative tone for financials at the start of the day when it surprised the market with a 41% drop in Q1 FICC trading revenues. Markets are expecting a significant change in strategy at the bank’s upcoming Strategy Day to be held tomorrow. Softer fixed income trading revenues certainly is a reccuring theme, coming after a number of global broker-dealers reported soft FICC revenues in Q1 and JPMorgan’s trading warning last Friday warning of weak FICC revenues for the current quarter. Low volatility, the Fed’s gradual taper and subdued volumes are all being blamed for the reduction in global FICC revenues. JPMorgan’s CEO also warned yesterday that companies such as Google and Facebook may eventually compete with banks in the global payments industry.

Turning to the day ahead, today’s tone will be largely dictated by the Fed Chair’s JEC testimony. We may get her prepared remarks shortly before the testimony begins at London 3pm. The European data flow includes German factory orders (+0.3% MoM expected) and industrial production numbers in France. Consumer credit is the major data release in the US.

Bulletin highlights from Bloomberg and RanSquawk

• Asian equities closed lower (Nikkei 225, -2.93%) as the sentiment following a lower close on Wall Street, led by tech & social media stocks, carried over, which was further augmented by the release of weaker than expected Chinese HSBC Services PMI (Apr) M/M 51.4 (Prev. 51.9), employment is at a 7-month low
• Cautious price action observed over in Europe, with stocks (Eurostoxx 50, -0.23%) seen lower across the board, amid weak earnings, tensions surrounding Ukraine and looming risk events (ECB policy decision on Thursday)
• Markets now await Fed’s Yellen who speaks on monetary policy and economy at 1500BST, the JPMorgan Global PMIs and a 10yr note auction, as well as earnings from Tesla and Allergan
• Treasuries gain, 10Y yield holding near YTD lows before $24b auction of the debt; focus on Yellen’s testimony before Congress this morning as Ukraine continues offensive against separatists.
• 10Y notes to be sold today yield 2.61% in WI trading after drawing 2.72% in April; stopout at that level would be lowest since June
• Land sales in 20 major Chinese cities fell 5% in March from a year earlier, the biggest drop in at least a year, according to China Real Estate Information Corp. data compiled by Bloomberg
• The value of land sales in third-tier cities declined 27% last month, according to SouFun Holdings Ltd., the nation’s biggest real-estate website owner
• German factory orders fell 2.8% in March; economists forecast a gain of 0.3%, according to the median of 37 estimates in a Bloomberg News survey
• The parts of Ukraine where separatists and loyalists face off in ever-more violent clashes are home to the most valuable assets of the nation’s defense industry, with more than 50 factories forming an arms cluster that caters to Russia
• David Einhorn said he found a recent dinner conversation Bernanke scary: “I got to ask him all these questions” and “it was sort of frightening because the answers were not better than I thought they would be”
• Higher fees that have helped replenish the FHA’s coffers have also prevented hundreds of thousands of first-time purchasers from getting FHA loans, according to the National Association of Realtors
• Richard Hornsby, COO of FHFA, is facing a felony charge for threatening to kill Ed DeMarco, the agency’s former top official, according to Washington, D.C. police and Superior Court records.
• U.S.-backed leaders in the Syrian opposition have come to Washington to lobby for better arms, challenging the Obama administration’s position that providing advanced anti-tank and anti-aircraft missiles is too risky
• Thai Prime Minister Yingluck Shinawatra was removed from office by the Constitutional Court, raising the risk of fresh protests in the capital after months of unrest
• Sovereign yields higher. Asian stocks slide, with Nikkei falling 3%, Shanghai -0.9%. European equity markets, U.S. stock futures fall. WTI crude and gold higher, copper falls

US Event Calendar

• 7:00am: MBA Mortgage Applications: + 5.3; prior -5.9%
• 8:30am: Non-farm Productivity, 1Q preliminary, est. -1.2% (prior 1.8%); Unit Labor Costs, 1Q preliminary, est. 2.8% (prior -0.1%)
• 3:00pm: Consumer Credit, March, est. $15.5 (prior $16.489b))
• 10:00am: Fed’s Yellen testifies to Joint Economic Committee Supply
• 1:00pm: U.S. to sell $24b 10Y notes
• NO POMO

EU & UK Headlines

Despite stocks recovering off the worst levels of the session, positioning into the upcoming ECB, as well as BoE policy meetings, together with the ongoing uncertainty surrounding Ukraine, meant that the sentiment remained somewhat cautious. So much so that even technically uncovered Bobl auction by Buba failed to result in a sustained move lower, with Bunds gradually recovering the initial fast money reaction. At the same time, cautious sentiment continued to support gold, which in spite of somewhat choppy price action, topped yesterday's high of USD 1314.16.

US Headlines

Fed's Stein (Voter, Neutral) said QE reduction is not a pre-set course and the Fed is in a 'very good position' on asset purchases given market expectations for ending them.

Equities

Heading into the North American open, stocks in Europe are seen lower across the board, as less than impressive earnings and looming risk events prevent stocks from recovering from a lower open. Nevertheless, German DAX index staged an impressive recovery off the worst levels of the session, primarily driven by Siemens, who's shares reversed initial earnings and M&A inspired lower open, due to the CEO announcing restructuring, trimming business divisions from 16 to 9. In terms of other notable equity movers, HSBC reported Q1 profit before tax down 20% at USD 6.8bln vs. Exp. USD 6.77bln

Of note, after the closing bell on Wall Street yesterday, Alibaba filed an initial public offering (IPO) prospectus, in what could be the largest technology debut in history.

FX

The lower Nikkei close weighed on USD/JPY, which trades down 16 pips, however, the USD-index recovering from multimonth lows yesterday has kept EUR/USD and GBP/USD on the backfoot. Of note, RBNZ Governor Wheeler said NZD is overvalued and may intervene if fundamentals worsen.

Commodities

Both WTI and Brent futures edged higher overnight underpinned by bubbling tensions in Ukraine. Brent has seen support this morning from reports out of Yemen that a pipeline has been attacked and oil flow has ceased. WTI supported further from the 1.8mbbls drawdown shown in the APIs yesterday with WTI  crude futures taking out the weekly highs earlier of USD 100.44/bbl, taking out stops to top USD 100.50/bbl.

July '14 copper futures contract seen lower this morning testing the 50DMA line at USD 3.0404 after Chinese one-year swap rates rose for a second day as the PBOC refrain from changing policy course despite recent weak PMI data. The cost of the one-year swap rate rose 5bps overnight in Shanghai after the quarterly report from the PBOC failed to signal potential policy loosening inspite of the Chinese manufacturing PMI at the weekend coming in at 48.1 vs Exp. 48.4, which was the fourth consecutive month of sub 50 readings.

- As a guide China is the largest consumer of copper and as such fears of a slowing economy have been closely linked to some of the recent downside movement in copper prices.

- Copper declined for the first time in four days overnight with particular focus on the property sector after the China Securities Journal reported that some small and mid-sized property developers are facing liquidity problems.

US API Crude Oil Inventories (May 02) W/W -1820k vs. Prev. 3000k

- Cushing Crude Inventories (May 02) W/W -1460k vs. Prev. 202k
- Gasoline Inventories (May 02) W/W 2450k vs. Prev. -49k
- Distillate Inventories (May 02) W/W 763k vs. Prev. 688k

* * *

Jim Reid's overnight recap traditionally recaps the market summary

Central banks are the main focus over the next 48 hours with Janet Yellen speaking before the Joint Economic Committee of Congress at LDN 3pm (NY 10am). This will be followed up tomorrow with part 2 of her testimony at the Senate Budget Committee and the ECB meeting/Draghi press conference. In terms of today’s JEC testimony, DB’s Joe Lavorgna highlights that Ms. Yellen is testifying on behalf of the FOMC so the tone of her testimony may be modestly less dovish than what has been the case in some of her more recent speeches. Yellen’s prepared remarks will likely focus on the FOMC’s broader views on the economic outlook, but the Q&A will be equally as important. It is possible she may be asked by Senate Committee members for more clarity on the Fed’s exit strategy and/or its view on the terminal funds rate—a heavily debated topic in the financial markets at the moment. DB’s Alan Ruskin writes that Yellen will want to avoid creating volatility. She will be encouraged by the recent mix of stronger data, subdued inflation and a very well behaved bond market. However, with the market rate expectations even more dovish than the median FOMC dots, if anything there is still more risk that she is less dovish than the market has priced in, and if anything fractionally more USD friendly, but this will be subtle and not her intention, and therefore unlikely to support the USD on a sustained basis. Alan thinks that other topics that will get some air time include how much weight she puts on the backward looking data versus the relative strength of the Q2 data, her view on key labour market indicators, the time gap between the end of QE and the start of rate hikes and whether the Fed Chair sees any signs of financial market excess.

This morning, Asia is trading with a slightly weaker tone as a follow up to a soft session in the US yesterday. Japanese markets have reopened after holidays with a 2% drop in both the TOPIX and Nikkei, weighed by a fall in USDJPY which is below 102 again. Other Asian bourses are down around 0.3% to 0.5% today. Indeed, a strong dollar is weighing on other markets outside of Japan, including in Korea where the KOSPI is on track for its longest losing streak since 2008 just as the Korean Won hits cyclical highs against the USD. The USD index remains at the lows overnight, while gold is up 0.3%. On the  fixed income side, reports of strong EM inflows is helping absorb new EM bond supply while cash continues to chase EM sovereigns such as Indonesia, whose bonds are up between half a point to a point today.

Coming back to yesterday, the S&P500 (-0.90%) fell for the third time in four days this month, with two notable sector underperformers in tech (-1.18%) and banks (-1.5%). The big underperformer was Twitter which fell 17.8% as the company’s insider share lockup expired yesterday. Twitter’s market cap fell to around US$19bn, which is incidentally roughly the same amount that Facebook paid for its Whatsapp acquisition earlier this year. Twitter dragged down other social media stocks including Facebook (-4.4%) and internet stocks in general such as Google (-2.4%) and Amazon (-4.1%).

On the banks side, there wasn’t a single bank in the S&P500 (and only a handful in the Stoxx600) which finished in the black. Barclays set a negative tone for financials at the start of the day when it surprised the market with a 41% drop in Q1 FICC trading revenues. Markets are expecting a significant change in strategy at the bank’s upcoming Strategy Day to be held tomorrow. Softer fixed income trading revenues certainly is a reccuring theme, coming after a number of global broker-dealers reported soft FICC revenues in Q1 and JPMorgan’s trading warning last Friday warning of weak FICC revenues for the current quarter. Low volatility, the Fed’s gradual taper and subdued volumes are all being blamed for the reduction in global FICC revenues. JPMorgan’s CEO also warned yesterday that companies such as Google and Facebook may eventually compete with banks in the global payments industry.

The weakness in stocks accelerated after the release of a below-consensus US trade report which led to downward Q1 GDP revisions across the Street. The March trade balance printed weaker than expected (deficit -$40.4bn vs -$40.0 expected and -$41.9bn previous) mainly due to higher imports. As a result, a number of banks cut their Q1 GDP growth estimates below the initial +0.1% reported last week. Though the quantum of the GDP cuts was not large, they do result in a number of forecasters calling for negative growth in Q1. DB’s Joe Lavorgna writes that the +0.1% increase in Q1 GDP now looks to have been an overstatement, based on data reported subsequently. Weaker data on construction spending, inventories and net exports imply that Q1 GDP will now show a contraction, when the next set of revisions are reported on May 29. DB now projects a GDP decline of -0.8%. The trade data caused the USD index to fall 0.46% yesterday while 10yr yields fell back below 2.6% (2.58% as we type).

Across the Atlantic, Ukraine fears took the backstage to stronger service PMIs with above-expectation readings across almost all major Euroarea countries. The exception was Germany (54.7 vs 55.0 expected) where the PMI tracked backwards. EURUSD added 0.4% following the PMI data, and is currently trading at close to two-and-a-half year highs. The EUR joined the sterling in trading at multiyear highs against the USD. EM proved a bright spot yesterday with the MSCI EM index adding 0.29% and the latest flow data showing a pickup in inflows in hard and local currency EM funds. Russian stocks strengthened by 1.56% and Russia 5yr CDs tightened by 15bp. Russia called for Ukraine to delay the May 25th elections (an idea opposed by the US) and Russia’s finance minister questioned the value of another round of Geneva talks unless pro-Russian separatists were involved in the negotiations.

Scanning some of the headlines this morning, outgoing Fed Governor Jeremy Stein warned that some investors are “underestimating the degree of uncertainty about the future path of policy” and are placing levered bets accordingly. He said that markets will experience “further bumps in the road” as this plays out and as we get further uncertainty with the evolving nature of the Fed’s forward guidance. This is in somewhat contrast to the FT’s Martin Wolf who argues today that low interest rates are here to stay and that cautious savers “no longer serve a useful economic purpose” in an environment of weak demand and sluggish investment, instead calling for greater activity from risk-taking investors.

Turning to the day ahead, today’s tone will be largely dictated by the Fed Chair’s JEC testimony. We may get her prepared remarks shortly before the testimony begins at London 3pm. The European data flow includes German factory orders (+0.3% MoM expected) and industrial production numbers in France. Consumer credit is the major data release in the US. On the earnings front, it’s a big day for European results with SocGen, ING, Credit Agricole and HSBC reporting Q1 numbers today. French conglomerate Alstom, which has been the subject of a takeover bid involving the French government, will also report earnings today.