Headlines:An early shift towards 'peak inflation' on the day?Bond sellers take their foot off the gas pedalECB's Lagarde: APP should be concluded early in Q3ECB's Vasle says supports further, faster policy actionECB's de Guindos: Euro area inflation to remain at 4% to 5% at year-endECB's Müller: Appropriate to raise rates into positive territory by year-endMore from Villeroy: ECB will start raising rates this summerECB's Villeroy: Inflation should be back at around 2% in 2024US MBA mortgage applications w.e. 6 May +2.0% vs +2.5% priorGermany April final CPI +7.4% vs +7.4% y/y prelimMarkets:AUD leads, USD lags on the dayEuropean equities higher; S&P 500 futures up 1.2%US 10-year yields down 6.3 bps to 2.930%Gold down 0.8% to $1,851.60WTI crude up 4.2% to $103.90Bitcoin up 1.7% to $31,517The focus on the day is on the US CPI release coming later at 1230 GMT but markets are seemingly running with the idea that we're settling into the 'peak inflation' narrative already.The dollar dropped while equities and bonds were bid throughout the session. European indices are posting solid gains of around 1.5% to 2.% while 10-year Treasury yields settled below the 3% mark, down 6 bps to 2.93% currently.In FX, the greenback held weaker across the board with AUD/USD up over 1% back above the 0.7000 mark while USD/JPY is down 0.5% to below 130.00 at around 129.70 levels at the moment.The better risk mood is helping with sentiment among commodity currencies, with USD/CAD dragged down 0.5% to 1.2960 - mired between large expiries at 1.2950 and 1.3000 on the day. The loonie is also benefiting from higher oil prices with WTI crude up over 4% to near $104 as Shanghai's COVID-19 situation saw an improvement, bringing about hope for loosening of restrictions.All eyes now turn towards the inflation data in the US, so let's see what that has to offer as it will likely set the tone for markets for the remainder of the week as well.

Prior +2.5% Market index 358.9 vs 351.8 prior Purchase index 255.4 vs 244.4 prior Refinancing index 913.6 vs 932.3 prior 30-year mortgage rate 5.53% vs 5.36% prior The average 30-year home loan rate in the US rose to its highest level since 2009 last week to 5.53% but that didn't quite stop demand for mortgages, as applications ticked higher for a second week running. Despite the improvement in purchases on the week, it still doesn't take away from the fact that the level is 8% lower than it was in the same week a year ago. The housing market continues to offer mixed signals with house prices still flashing double-digit annual price growth despite mortgage activity falling rather considerably since last year: US dollar

Lindner says that Germany must "find an exit from crisis mode", noting that it is possible to return to the 'debt brake' next year.But if there's one thing that we've learnt during the pandemic is that fiscal spending knows no bounds and the numbers don't really matter at the end of the day. If the rest of the world continues to get away with it, Germany might as well too.For some context, the 'debt brake' is meant to work in the sense that Germany's fiscal deficit should not exceed 0.35% of its GDP but has since been suspended due to the pandemic situation.