European and Asian stocks were modestly in the green, with U.S. futures higher, before a critical procedural vote on a Republican health-care bill to repeal Obamacare, while Janet Yellen is set to speak in Washington at 8:45am.

S&P 500 Index futures were 3 points in the green as of 6:45am ET as European shares edged higher, underpinned by the first gains for miners and health care stocks all week. Bonds of periphery countries gained before the European Central Bank’s last dose of free long-term cash through the final round of Targeted Longer-Term Refinancing Operations, which moments ago was announced at €233.5BN from 474 bidders, nearly double the €125BN expected. The yen gained for an eighth day, the longest winning streak in six years.

As Bloomberg notes, calm returned to the market after Tuesday’s selloff sparked by positioning ahead of the Republican health-care bill, set for a vote in Congress around 7pm ET on Thursday, which the market appears confident will pass despite numerous holdouts remaining into the 11th hour. Any setback could delay enactment of tax cuts and spending increases, the prospects for which have underpinned the rally in risk assets since Trump’s election in November. Below is a good summary of what is at stake from DB's Jim Reid:

Often in life and indeed in markets there are forks in the road with the knock-on impact and ultimate outcomes likely to be quite different depending on the initial path taken. Today's vote on AHCA in the House could be such an event. This might be slightly over dramatising things but it will give us big clues as to how revolutionary a Trump administration can be. If in the honeymoon period of the new administration they can't pass a bill replacing Obamacare (very unpopular with the GOP) then it clearly will dramatically reduce expectations of wider tax reform. Pass it and Trump trades may get back some of their recent lost energy.

The update yesterday was that more than 25 members of the Freedom Caucus still remain opposed to the bill, according to FT, which is enough to mean that there would be insufficient votes to pass (the general assumption is more 20 dissenters will result in it failing). This followed a day of extensive lobbying from Trump and House speaker Paul Ryan yesterday. According to multiple news reports, the suggestion however is that talks are still going on behind the scenes including discussions over revisions to the “essential benefits” requirements which appears to be the sticking point. Indeed the House Freedom Caucus is expected to come to the White House today prior to the vote and Mark Meadows, chair of the Caucus, said that “I’m very encouraged that we might be seeing some real headway” and also that “we are working very diligently tonight to try and get there”. So things are hanging in the balance and its set up to be an interesting day. While it’s clear that a loss for Trump would be a major legislative defeat with likely big ramifications for policies further down the line, what is less clear is what happens in the days following today’s vote if it fails and whether Trump would be prepared to go away and make the changes to allow the bill to pass in another vote. Indeed White House press secretary Sean Spicer offered zero hints on this front by saying that “there is no plan B” and instead “there’s a plan A and a plan A and we’re gonna get this done”. When asked if he would keep on pushing healthcare in the event of the House not passing the bill, President Trump also replied saying that he would “see what happens”. So that only adds to the uncertainty.

Trump and Republican leaders of the House of Representatives have said they were making progress in their efforts to win over conservative Republicans who have demanded changes to the legislation. The vote on the bill, Trump's first major legislation since he took office, is expected later on Thursday.

Perhaps only a successful passage of the vote provides some hope for a return to the Trump reflation trade, which has been almost entirely unwound by now, can come back: “The reflation rally in the U.S. stock markets appeared to have topped in March, causing a pullback after four months of unprecedented rise,” Ipek Ozkardeskaya, a market analyst at London Capital Group Ltd., wrote in a note. “Trump’s failure to push his plans through Congress dented investors’ appetite. Any positive news from today’s vote has the potential to revive the stock bulls.”

"If he can't push through the bill, it would further damage stocks. It also raises the risk of his other policies, like tax cuts, being delayed," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

So heading into today's critical vote, stocks and sterling hold their ground as markets took the latest European terror attack, this time in London, one of the world's financial capitals, largely in their stride. The FTSEurofirst 300 barely budged as London, Frankfurt and Paris started flat and the pound fared better than most as the dollar began to muscle higher again in the currency markets. The history of these attacks, including those in France, Germany and Belgium last year as well those in London and Madrid more than 10 years ago, show little lasting impact on economic confidence or financial markets in isolation.

Overnight in Asia MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2 percent. Japan's Nikkei closed 0.2 percent higher, as a weaker yen offset a political scandal over the relationship of Prime Minister Shinzo Abe and his wife with a Japanese nationalist education group that bought state-owned land. China's CSI 300 rose early on hopes that index compiler MSCI may include A-shares in its indices, but those gains were lost as money began flowing out of the mainland market through link to the Hong Kong exchange.

Wall Street futures were pointing to modest gains later too. On Wednesday the Nasdaq .IXIC jumped 0.5 percent and the S&P 500 closed 0.2 percent higher, while the Dow Jones was flat, after all three touched their lowest levels in about five weeks earlier in the session. [.N]

Having weakened as much as 0.4 percent after news of the London attack which killed five, sterling held steady overnight and then climbed swiftly above $1.25 after more-resilient-than-expected UK retail sales data The dollar was also creeping higher again with attention firmly on Donald Trump's first significant U.S. policy test, as he looks to gets a healthcare bill passed in U.S. congress.

"What we are getting this week is a questioning of how much of the risk rally is predicated on future Trump policy," said Michael Metcalfe, head of global macro strategy at State Street Global Markets. "There are concerns that this vote (on healthcare reform) will be a litmus test of how much fiscal expansion he can get through."

After losing 3.5 percent in the past 10 days, the dollar was roughly steady at 111.19 yen. It gained 0.1 percent to $1.0786 per euro and up 0.15 percent against the basket of currencies used to measure its broader strength.The euro and euro zone bond markets' focus was also on what the European Central Bank hopes will be its last offering of cheap, 3-year 'TLTRO' funding, once its main crisis fighting tool, and which today the ECB announced would amount to €233.5 billion.

Yields on Portuguese, Spanish and Italian debt fell 1-3 basis points ahead of the handout, continuing along with French bonds to close the spread on German Bunds.The bigger question for markets though is will it matter once these kinds of ECB loans are no longer available to banks. From now on they will only be able to get either 1-week or 3-month loans from Frankfurt. "Overall I do not think the absence of further longer-term operations will make much of a difference," said Francesco Papadia, the former head of ECB market operations who launched the offerings back in late 2011.

"LTROs (long term lending operations) are among the easiest measures to take, much easier than QE, so if there was a need for them the ECB Governing Council would not have too much of a problem in reinstating them."

With several major currency pairs steadying after a week of losses for the dollar, the biggest mover of the day was Australia's dollar, down half a percent on the back of nerves in China's money market and a slump in prices for its iron ore exports. The New Zealand dollar was steady at $0.7046 after its central bank held interest rates at a record low 1.75 percent, and reiterated it would remain there for a "considerable" period of time.

In commodities markets, gold dipped lower and oil prices rebounded, after touching their lowest level since November overnight on data that showed U.S. inventories, already at a record high, grew by far more than forecast. Analysts said oil had found technical support and was being pushed up as traders took new long positions after the overnight low, but supply concerns kept the gains in check. U.S. crude CLc1 added 0.75 percent to $48.40 a barrel and global benchmark Brent LCOc1 climbed 0.7 percent to $50.99.

Bulletin Headline Summary from RanSquawk

• Subdued affair in equity and bond markets, while focus in the latter will be the final TLTRO 2 release.
• GBP pops higher on the back of UK retail sales beating expectations
• Looking ahead, highlights include comments from Fed's Yellen, Kashkari and Kaplan as well as USWeekly Jobless data.

Market Snapshot

• S&P 500 futures up 0.2% to 2,346.25
• STOXX Europe 600 up 0.1% to 374.6
• MXAP up 0.06% to 147.40
• MXAPJ up 0.1% to 477.93
• Nikkei up 0.2% to 19,085.31
• Topix up 0.01% to 1,530.41
• Hang Seng Index up 0.03% to 24,327.70
• Shanghai Composite up 0.1% to 3,248.55
• Sensex up 0.3% to 29,262.30
• Australia S&P/ASX 200 up 0.4% to 5,707.95
• Kospi up 0.2% to 2,172.72
• German 10Y yield unchanged at 0.407%
• Euro down 0.1% to 1.0785 per US$
• Brent Futures up 0.4% to $50.82/bbl
• Italian 10Y yield fell 5.7 bps to 2.263%
• Spanish 10Y yield fell 3.2 bps to 1.705%
• Brent Futures up 0.4% to $50.82/bbl
• Gold spot down 0.1% to $1,247.51
• U.S. Dollar Index up 0.1% to 99.78

Top Overnight News

• Trump Discusses Changes to Health Bill to Win Over Conservatives
• U.K. Police: Seven Arrested in Westminster Terror Probe
• Apple Acquires Productivity App Workflow for Undisclosed Sum
• Arbitrage for U.S. Gas to Europe and Asia ‘Wide-Open’: Citi
• Amazon Plans to Enter Online Retail of Food in India, Badal Says
• Google Ad Crisis Spreads as Biggest Marketers Halt Spending
• Glaxo, Regeneron, Biobank Plan Largest Gene-Sequencing Program
• Microsoft, Toyota Form Patent Pact on Connected-Car Technologies
• Energy Transfer Seeks to Place Trans-Pecos Gas Line in Service

Asian equities traded mostly higher after the positive Wall St. close where tech names outperformed and US markets found reprieve from Tuesday's worst performance YTD. ASX 200 (+0.4%) was underpinned by strength in the utilities and energy sectors, while Nikkei 225 (+0.2%) was kept afloat as USD/JPY recouped losses. Elsewhere, earnings were in focus in China with financials supported after Ping An Insurance reported its FY net rose by 15% Y/Y. However, the Hang Seng (+0.1%) and Shanghai Comp. (-0.4%) pared gains amid weakness in telecoms and after a lacklustre liquidity operation by the PBoC. Finally, 10yr JGBs edged marginally higher despite the recovery of sentiment in Japan, with prices supported amid the BoJ presence in the market under its bond buying programme. PBoC injected CNY 10bIn in 7-day reverse repos, CNY 10bIn in 14-day reverse repos and CNY 10bIn in 28-day reverse repos.

Top Asian News

• MSCI Pares Down China Stock Inclusion Proposal as Hurdles Remain
• India Said to Plan Using New Tool From April to Manage Cash
• Templeton Said to Buy About $1.2 Billion of Indian Bonds
• Tencent-Led Funding Round Said to Value Kuaishou at Around $3b
• Activist Hedge Fund Effissimo Becomes Toshiba’s Top Shareholder
• India Tribunal Approves Vedanta, Cairn India Merger; Stocks Rise
• Toyota Industries to Buy Netherlands’ Vanderlande for EU1.16b
• TonenGeneral, Kansai Elec. Abandon Coal Plant Project
• Top Buffalo Meat Exporter on Edge Amid Pledge to Cut Slaughter

It has been a quiet start to trading in European bourses, where large moves are unlikely to happen ahead of today's House vote on Obamacare repeal. Although, the notable mover this morning has been Next with shares higher by over 8% after their earnings update subsequently boosting related names. The price rise came despite a 3.8% annual fall in profits, however, the Co. did maintain guidance it issued in its January trading statement for the 2017-18 year - full price sales, at constant currency, while weakness in earnings would have been priced in given the gloomy outlook they announced over Christmas. In credit markets, price action has also been somewhat muted with the German benchmark up a modest 8 ticks as participants await the final TLTRO. Outperformance has been seen in BTPs as the GER-ITA spread tightening some 3.5bps.

Top European News

• ECB Ending Four-Year Loans Makes Banks Focus on Stimulus Exit
• Banks Trimming Compliance Staff as $321 Billion in Fines Abate
• Trump’s Associates May Have Coordinated With Russians: CNN
• Vienna Insurance Outperforms; Baader-Helvea Flags Valuation
• Avoid ‘Expensive’ German Stocks, Deutsche Bank Recommends
• U.K. Police Revise Death Toll of London Attack Down to Four
• Nets Stuck With Private Equity Overhang Longer After Share Slide
• Intesa Has Rerating Potential, ‘Premium’ Dividend Safe: Barclays
• Next Warns of Tough Year Ahead as Britons Cut Clothing Outlays
• Danish Government Reaches North Sea Tax Deal With Maersk

In currencies, the Bloomberg Dollar Spot Index was 0.1 percent higher, rising the first time in seven days.The euro was down by 0.2 percent at $1.0778, following a 0.1 percent drop.the major movers on the week continue to grab the headlines this morning, and starting with the Pound, the UK retail sales data show the inflationary impact of the heavy GBP losses seen post Brexit are not having a detrimental effect — yet. Feb's rise of 1.4% was a full 1% above consensus expectations, and this naturally put a fresh bid under Sterling, but the Cable move through is proving hard fought, with a move to 1.2527 swiftly reversed. EUR/GBP also stopped just shy of 0.8600, but with Article 50 set to be triggered next week, it is no surprise to see buyers taking profit on what are moderate moves as yet.

In commodities, gold fell 0.2 percent to $1,246.06, after a six-day advance that totaled 4.2 percent. WTI Crude added 0.8 percent to $48.41 a barrel on speculation record U.S. crude stockpiles that have undermined OPEC’s output cuts may finally be set to shrink. Supply (and demand) issues are continually lurking in the background in all commodity classes with the exception of precious metals. Gold has hit levels just above USD1250 but failed to close above here — represents a key target/resistance levels. The rise in US treasuries alongside the fall in stocks/risk off have had a combined positive impact, but this may stabilise near term. Base metals prices have been under scrutiny given levels attained on future demand expectations, with iron ore price tumbling as China usage/stockpiles are brought to question — again. Copper and Nickel prices have been tempered by disruptions at some of the world's leading mines, but union leaders at Escondida set for a fresh meeting with BHP heads. Oil prices have again stabilised after fresh lows tested in WTI and Brent — the latter dipping under USD50.00. Pressure unlikely to subside as doubts over an agreement extension continue. Inventory levels unlikely to be moderated without this.

Looking at today’s calendar, this morning in Europe we get the last 4y ECB TLTRO II auction which is being highlighted as worth keeping an eye on for further signs of take-up. Bloomberg consensus is running at €110bn. Over in the US this afternoon we’ll get the latest weekly initial jobless claims print along with new home sales data in February and the Kansas City Fed’s manufacturing survey for March. Away from the data, as mentioned earlier Fed Chair Yellen is due to speak at 8:45am while Kashkari (at 1pm ET) and Kaplan (at 7pm GMT) are also scheduled today. BoE deputy governor Ben Broadbent is also due to speak this morning. The biggest event though for markets will likely be the House vote concerning the AHCA. Timing for this is still to be confirmed.

US Event Calendar

• 8:30am: Initial Jobless Claims, est. 240,000, prior 241,000; Continuing Claims, est. 2.04m, prior 2.03m
• 9:45am: Bloomberg Consumer Comfort, prior 51
• 10am: New Home Sales, est. 564,000, prior 555,000; New Home Sales MoM, est. 1.62%, prior 3.7%
• 11am: Kansas City Fed Manf. Activity, est. 14, prior 14

Central Banks

• 8:45am: Fed’s Yellen Speaks at Community Development Conference
• 1pm: Fed’s Kashkari Speaks on U.S. Education Outcomes in D.C.
• 7pm: Dallas Fed’s Kaplan Speaks on Economy in Chicago

DB's Jim Reid concludes the overnight wrap

Often in life and indeed in markets there are forks in the road with the knock-on impact and ultimate outcomes likely to be quite different depending on the initial path taken. Today's vote on AHCA in the House could be such an event. This might be slightly over dramatising things but it will give us big clues as to how revolutionary a Trump administration can be. If in the honeymoon period of the new administration they can't pass a bill replacing Obamacare (very unpopular with the GOP) then it clearly will dramatically reduce expectations of wider tax reform. Pass it and Trump trades may get back some of their recent lost energy. The update yesterday was that more than 25 members of the Freedom Caucus still remain opposed to the bill, according to FT, which is enough to mean that there would be insufficient votes to pass (the general assumption is more 20 dissenters will result in it failing). This followed a day of extensive lobbying from Trump and House speaker Paul Ryan yesterday. According to multiple news reports, the suggestion however is that talks are still going on behind the scenes including discussions over revisions to the “essential benefits” requirements which appears to be the sticking point. Indeed the House Freedom Caucus is expected to come to the White House today prior to the vote and Mark Meadows, chair of the Caucus, said that “I’m very encouraged that we might be seeing some real headway” and also that “we are working very diligently tonight to try and get there”. So things are hanging in the balance and its set up to be an interesting day. While it’s clear that a loss for Trump would be a major legislative defeat with likely big ramifications for policies further down the line, what is less clear is what happens in the days following today’s vote if it fails and whether Trump would be prepared to go away and make the changes to allow the bill to pass in another vote. Indeed White House press secretary Sean Spicer offered zero hints on this front by saying that “there is no plan B” and instead “there’s a plan A and a plan A and we’re gonna get this done”. When asked if he would keep on pushing healthcare in the event of the House not passing the bill, President Trump also replied saying that he would “see what happens”. So that only adds to the uncertainty.

As we mentioned yesterday our US economists place a low probability on the bill being blocked and instead their base case remains for it being passed. This is primarily based on their view that since much of the Trump agenda rests on the ability of the Republicans to pass healthcare reform, its failure would seriously dent the party’s political capital and imperil other legislative actions. They also believe that Senate opposition should lessen should the House pass the bill given it should become easier for more moderate Republican senators to support. It is worth noting though that the timeframe for all this is fairly tight. The effective deadline for the legislation to be passed by both chambers of Congress is April 28th. However with Congress effectively not in session from April 6th to April 24th there will only be four days to pass FY2017 budget legislation before the current continuing resolution expires. Otherwise the government could potentially shut down. This means that they expect the contours of the AHCA to take shape before April 6th.

Markets in the US are set to go into the vote in a slightly better mood following the steep selloff on Tuesday. While still well down over 2 days, the S&P 500 did close up +0.19% last night and so putting an end to that run of four consecutive down days. US Banks (-0.24%) did finish a bit weaker, not helped by a further decline for Treasury yields with the 10y (-1.3bps) down for thef ourth day in a row and to a new three week low of 2.406%. That had a greater supporting impact on credit indices though with CDX IG closing 1.3bps tighter and completely reversing Tuesday’s move wider. The same can’t be said for US HY energy cash spreads however which were another 10bps wider yesterday at 486bps, despite a bit of bounce for WTI back above $48/bbl. Spreads have now widened for 12 of the last 14 sessions and are at 3-month widths again. These moves are certainly worth keeping an eye on.

Meanwhile equity markets in Europe had previously finished a bit softer likely also reflecting some catch up from the prior US session. The Stoxx 600 closed -0.44% while in the UK the FTSE 100 ended -0.73% following the tragic attacks outside UK Parliament which authorities are treating as a terror attack. Sterling was weaker in the aftermath but reversed losses into the close to finish little changed.

Before we look at the latest in Asia this morning its worth highlighting that Fed Chair Yellen is scheduled to speak at lunchtime today (12.45pm GMT to be precise). She will speak at a community development research conference in Washington so it remains to be seen if she addresses monetary policy at all, but nevertheless it is worth keeping an eye on.

Refreshing our screens now, markets in Asia have largely followed the lead from the US with most major bourses posting small gains. The Nikkei (+0.12%), Hang Seng (+0.35%), Shanghai Comp (+0.31%), Kospi (+0.32%) and ASX (+0.29%) are amongst those higher. US equity index futures are posting similar gains while the Yen and Gold have both eased back about -0.20%.

Moving on. It’s flown under the radar a little recently given the focus on France but the latest polls in Italy are hinting at some rising support for the anti-establishment 5-Star movement. Indeed an Ipsos poll in the Corriere della Sera newspaper puts the 5-Star at 32.3% and 5.5% ahead of the Democratic Party at 26.8%. That is the highest reading we can find for the 5-Star movement. Other polls in recent days run by Demopolis, IPR and EMG show the margin lead for 5-Star at between 3% and 7% over the Democratic Party with the overall percentage for 5-Star between 30% and 31%. The vast majority of polls run in February showed the Democrats as holding a marginal lead. Unsurprisingly there are plenty of question marks about 5-Star actually being able to create a government given its aversion to forging coalitions but the moves in the polls are worth keeping an eye on.

Staying with politics, yesterday’s notable Brexit update was the comments from EU negotiator Michel Barnier. He said in a meeting of EU commissioners that there will be no talks on a future deal without agreement on the Brexit bill which runs against the UK government’s strategy of conducting talks on the exit and a deal at the same time. He also said that a transitional deal is possible but that it will still be governed by European law. Some interesting early signs then of the EU’s negotiating stance.

Away from politics, yesterday’s data was once again fairly second tier in nature and had little impact on markets. There was little to note in Europe while in the US existing home sales were reported as falling -3.7% mom in February and a bit more than expected. The FHFA house price index was also flat in January versus consensus expectations for a +0.4% mom rise.

Before we wrap up, yesterday our Global Economics Perspectives team published their latest note looking at how the US economy is performing in Q1. They argue that whilst indicators are suggesting that another Q1 growth disappointment is possible, there are five reasons why it should not be feared: (1) GDP growth is likely to be understated due to lingering issues with seasonal adjustment, perhaps depressing reported growth by 1pp; (2) the weak growth signal from hard data is inconsistent with more supportive indications from surveys, sentiment data, and financial conditions; (3) even if real GDP growth slows, private domestic demand growth looks solid, with capex and housing improving; (4) slowing real consumer spending growth is driven in part by an uptick in inflation and should thus prove temporary; and (5) prospects for President Trump's policy agenda will remain the key driver of shifts in the US growth outlook.

Looking at today’s calendar, this morning in Europe we’re kicking off shortly after this hits your emails with consumer confidence indicators in both Germany and France. Shortly after that we will get the February retail sales data in the UK before we then get the last 4y ECB TLTRO II auction which is being highlighted as worth keeping an eye on for further signs of take-up. Bloomberg consensus is running at €110bn. Over in the US this afternoon we’ll get the latest weekly initial jobless claims print along with new home sales data in February and the Kansas City Fed’s manufacturing survey for March. Away from the data, as mentioned earlier Fed Chair Yellen is due to speak shortly after lunch, while Kashkari (at 5pm GMT) and Kaplan (at 11pm GMT) are also scheduled today. BoE deputy governor Ben Broadbent is also due to speak this morning. The biggest event though for markets will likely be the House vote concerning the AHCA. Timing for this is still to be confirmed.