• Major European bourses are pressured as the Wall St. rally faded and reverberated through APAC trade; although, the Stoxx 600 remains +0.5% on the week.
• US futures have been lifting off overnight lows, though the NQ continues to lag post-Netflix.
• Buck betwixt and between as USTs rebound, but risk aversion gathers momentum; antipodeans lag while Yuan outperforms post-PBoC SLFs.
• WTI and Brent March contacts remain pressured by the broader risk tone, with focus on geopolitics as Blinken & Lavrov meet
• Spot gold came under pressure but holds around USD 1830/oz, copper retested USD 10k/T, but failed to breach.
• Looking ahead highlights include EZ Consumer Confidence, BoE's Mann; ECB's Lagarde, BoJ's Kuroda & US Treasury Secretary Yellen

Note, we have updated the format of this research report to make it more digestible and informative for clients. Any feedback on these changes would be greatly appreciated by the desk.

LOOKING AHEAD

• EZ Consumer Confidence, BoE's Mann; ECB's Lagarde, BoJ's Kuroda, US Treasury Secretary Yellen

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EUROPEAN TRADE

EQUITIES

• Major European bourses are pressured, Euro Stoxx 50 -1.3%; Stoxx 600 -1.5%, as the Wall St. rally faded and reverberated through APAC trade.
• Although, the Stoxx 600 remains +0.5% on the week.
• US futures have been lifting off overnight lows, though the NQ continues to lag post-Netflix.
• European sectors are all in the red, but defensives are faring slightly better than cyclicals.

Click here for a detailed summary.

FX

• Franc finally evades SNB clutches to rally and outshine other safe-haven currencies.
• Pound discounted after dire UK retail sales data and deterioration in consumer sentiment.
• Buck betwixt and between as USTs rebound, but risk aversion gathers momentum.
• Kiwi and Aussie lag due to unfavourable market conditions and their high beta characteristics, but Yuan continues to rally as PBoC adds SLFs to the list of official rates being cut to support the Chinese economy

Click here for a detailed summary.

Notable Expiries, NY Cut:

• EUR/USD: 1.1250 (1.05BN), 1.1450 (266M), 1.1470-75 (582M), 1.1500 (283M)
• USD/JPY: 113.50-55 (1.0BN), 113.80-90 (1.26BN), 114.00 (266M), 115.00 (620M)
• USD/CAD: 1.2450-60 (720M), 1.2500 (655M), 1.2545-50 (1.15BN), 1.2555-60 (1.52BN), 1.2600 (1.02BLN), 1.2650 (420M)
• AUD/USD: 0.7195-00 (1.2BN), 0.7270 (343M)
• Click here for the full list.

FIXED INCOME

• USTs extend rebound from post-20 year auction highs on amidst more pronounced risk-off positioning.
• Bunds play catch up with Treasuries as demand for safe-havens picks up.
• Gilts also correct higher and pay some heed to downbeat UK fundamentals via ONS retail sales and GfK consumer confidence.

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COMMODITIES

• WTI and Brent March contacts remain pressured by the broader risk tone, with focus on geopolitics.
• Morgan Stanley has increased its Q3 Brent price forecast to USD 100/bbl vs prev. view of around USD 90/bbl.
• Spot gold looks heavy as traders booked some profits from yesterday’s rally, while the yellow metal found support around the USD 1,830/oz.
• LME copper re-tested USD 10k/t to the upside but failed to mount the level

Click here for a detailed summary.

NOTABLE EUROPEAN HEADLINES

• UK Foreign Minister Truss says she spoke with EU's Sefcovic to 'take stock of negotiations', talks are ongoing today, will be an in-person meeting next week. (Truss' Twitter)

DATA RECAP

• UK Retail Sales MM (Dec) -3.7% vs. Exp. -0.6% (Prev. 1.4%, Rev. 1.0%); Ex-Fuel MM (Dec) -3.6% vs. Exp. -0.5% (Prev. 1.1%, Rev. 0.7%)
• UK Retail Sales YY (Dec) -0.9% vs. Exp. 3.4% (Prev. 4.7%, Rev. 4.3%); Ex-Fuel YY (Dec) -3.0% vs. Exp. 1.1% (Prev. 2.7%, Rev. 2.2%)

US-SPECIFIC HEADLINES

• Hospitals in early Omicron hot spots like New York and Washington D.C. said the pressure is starting to ease. (WSJ)
• US President Biden raised minimum wage for federal employees to USD 15/hr, according to Axios sources
• Netflix Inc (NFLX) Q4 2021 (USD): EPS 1.33 (exp. 0.82), Rev. 7.71bln (exp. 7.71bln), Q4 Net Subscriber Additions: 8.28mln (exp. 8.38mln), sees Q1 EPS USD 2.86 (exp. 3.46), sees Q1 Net Subscriber Additions 2.5mln (exp. 5.87mln). (PR Newswire) -20% after-market; -21% in pre-market trade
• Intel (INTC) confirms recent sources reports it is looking to build two new factories in the US for over USD 20bln; total investment in the site could hit USD 100bln in the next decade. (Newswires)

Click here for the US Early Morning note.

APAC TRADE

• APAC markets traded lower amid wide-spread risk aversion after late Wall Street selling.
• ASX 200 (-2.3%) underperformed as miners led the broad downturn.
• Nikkei 225 (-0.9%) dropped more than 500 points intraday on currency strength but finished off lows.
• Hang Seng (U/C) and Shanghai Comp. (-0.9%) downside was somewhat cushioned on subsequently confirmed reports of further PBoC action.
• US equity futures traded with losses across the board; NQ underperformed post-Netflix earnings.

NOTABLE APAC HEADLINES

• PBoC lowered interest rates on its Standing Lending Facility for all tenors by 10bps today with rates on Overnight, 7-day and 1-month SLF to be cut to 2.95%, 3.10% and 3.45% respectively. (Newswires) Confirms earlier source reports
• China and US are in discussion for a potential meeting between China top diplomat Yang Jiechi and US National Security Adviser Sullivan regarding core national security concerns although sides are divided on protocol and agenda, according to SCMP sources. (SCMP)
• Chinas Cabinet Adviser says China's potential economic growth rate is between 5-6%. (Newswires)
• BoJ December meeting minutes stated that they are actively monitoring the economic impact from COVID-19 and it will not hesitate to add easing if necessary, while a member said they must be vigilant to risk from Fed's tapering and expected rate could cause stocks to decline and an increase in JPY. (Newswires)

DATA RECAP

• Japanese National CPI YY (Dec) 0.8% vs. Exp. 0.9% (Prev. 0.6%)
• Japanese National CPI YY Ex. Fresh Food (Dec) 0.5% vs. Exp. 0.6% (Prev. 0.5%)
• Japanese National CPI YY Ex. Fresh Food & Energy (Dec) -0.7% vs. Exp. -0.6% (Prev. -0.6%)

GEOPOLITICS

• Russian Foreign Minister Lavrov informs US Secretary of State Blinken not to expect a breakthrough in discussions; US Secretary of State Blinken says the US is committed to the path of diplomacy. (Newswires)
• Russian Kremlin is not expecting Blinken to provide a formal reply to Russian proposals. (Newswires) Blinken & Lavrov are meeting today, press briefing approx. 12:00GMT/07:00EST
• Russia is looking for NATO forces to leave Bulgaria and Romania as an aspect of their security proposals, according to Ria; subsequently, Kremlin says it is important to avoid steps that would heighten tensions when questioned on the possibility of recognising the independence of two breakaway regions in the east of Ukraine.
• Ukrainian intelligence suggests occupying forces secretly brought fuel, several tanks and artillery from Russia. (Newswires)
• UK Foreign Secretary Truss warned Russia and China that the west will stand together against dictatorship, while she warned Russia to desist and step back from Ukraine and said the west must work with allies in Indo-Pacific to face down aggressors. (Newswires)
• US charged four Belarusian government officials with aircraft piracy for diverting Ryanair flight to arrest a journalist last year. (Newswires)