• European bourses are firmer taking the lead from the resurgence in Wall St. trade that they failed to benefit from yesterday, Euro Stoxx 50 +0.7%.
• Stateside, US futures are pressured with the NQ (-1.4%) the current underperformer after yesterday's turnaround and as yields climb.
• DXY nudges further over 96.000 as hawkish FOMC expectations overshadow less supportive risk dynamics, safehavens and EUR underperform.
• Core bonds make way for partial recovery in risk sentiment, with yields elevated as such though we remain in familiar parameters.
• WTI and Brent March contracts have continued to nurse yesterday’s losses, with the benchmarks picking up further with geopolitics around Ukraine, China and North Korea dominating newsflow.
• Ahead of US Consumer Confidence, US 5yr note auction. Earnings from Microsoft, J&J, American Express, Lockheed Martin and Verizon.

As of 11:15GMT/06:15EST

LOOKING AHEAD

• US Consumer Confidence, US 5yr note auction. Earnings from Microsoft, J&J, American Express, Lockheed Martin and Verizon.

Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are firmer taking the lead from the resurgence in Wall St. trade that they failed to benefit from yesterday, Euro Stoxx 50 +0.7%.
• Sectors are all in the green in Europe though defensives are the relative laggards.
• Stateside, US futures are pressured with the NQ (-1.4%) the current underperformer after yesterday's turnaround and as yields climb
• Volkswagen (VOW3 GY) is to collaborate with Bosch on automated driving software, could be sold to other autos in the future. Level 2 'hands free' technology to be deployed in the Volkswagen fleet in 2023. (Newswires)
• Nvidia (NVDA) is said to be preparing to ditch its takeover of Arm, according to reports; subsequently, a spokesperson states that they continue to hold views expressed in detail in the latest regulatory filing. (Newswires)

Click here for a detailed summary.

FX

• DXY nudges further over 96.000 as hawkish FOMC expectations overshadow less supportive risk dynamics, but the Franc loses safe haven appeal across the board in what appears to be an orchestrated effort to curb demand.
• Euro fails to benefit from a better than expected German Ifo survey on balance, as technical impulses and yield differentials weigh.
• Pound relatively resilient as policy probe PM Johnson and Tory party for potential lockdown breaching events.
• Loonie holds off lows awaiting BoC amidst forecasts for an early hike.
• Aussie also underpinned by further predictions for the RBA to bring forward tightening after stronger than anticipated Q4 inflation data.
• CBRT opens a gold swap auction via the traditional method for 20/T of gold, three-month maturity. (Newswires)

Click here for a detailed summary.

Notable Expiries, NY Cut:

• EUR/USD: 1.1165-75 (400M), 1.1200 (317M), 1.1225M (443M), 1.1250-55 (512M), 1.1300-10 (1.7BN), 1.1330-40 (800M), 1.1400 (314M), 1.1450-55 (1.36BN), 1.1495-00 (900M).
• EUR/CHF: 1.0325 (1.09BN), 1.0725 1.07BN)
• Click here for the full list.

FIXED INCOME

• Core bonds make way for partial recovery in risk sentiment, with yields elevated as such though we remain in familiar parameters.
• UK debt also anticipates forthcoming 2073 DMO syndicated issuance, modestly underperforming core EGBs as such.
• BTPs remain relatively firm pending progress on the Italian Presidential front after the first round of votes fails to find a clear favourite.

Click here for a detailed summary.

COMMODITIES

• WTI and Brent March contracts have continued to nurse yesterday’s losses, with the benchmarks picking up further with geopolitics around Ukraine, China and North Korea dominating newsflow.
• WTI March is back on a USD 84/bbl handle (vs USD 83.43 intraday low) while its Brent counterpart reclaims USD 87/bbl from a USD 86.50/bbl daily low.
• Spot gold and silver are subdued amid USD upside, and as such remain comfortable above a number of DMAs that have drawn recent focus; while LME Copper is modestly softer in familiar ranges.

Click here for a detailed summary.

NOTABLE EUROPEAN HEADLINES

• ECB's Lane says "So far, we do not see a big response of wages. We do expect a response of wages but what is critical is how big" and "We are not, right now, seeing wage increases in that zone. But of course, we will continue to look at this throughout the year." (ECB)
• Sue Gray's investigation into Downing Street events has been delayed and won't be published this week due to the London Met announcement, according to FT's Payne; follows the Met Police announcing they will be investigating lockdown breaches. (FT/Newswires)
• Italian centre-right is to announce its Presidential candidates at a press conference later today, according to a political source cited by Reuters. (Newswires)

DATA RECAP

• German Ifo Business Climate New (Jan) 95.7 vs. Exp. 94.7 (Prev. 94.7, Rev. 94.8); Current Conditions New (Jan) 96.1 vs. Exp. 96.3 (Prev. 96.9)
• Expectations New (Jan) 95.2 vs. Exp. 93.0 (Prev. 92.6, Rev. 92.7)
• Ifo says it is too early to talk about a turnaround in the economic situation and there is no easing of prices and at least every second industrial firm is planning additional price hikes.
• UK CBI Trends - Orders (Jan) 24 vs. Exp. 22.0 (Prev. 24.0)

CRYPTO

• Crypto markets were subdued although off their lows with Bitcoin back above 36k.
• Kazakhstan's electricity utility is to cut power to all crypto miners for one-week, due to electrical problems, according to journalist Lookner. (Twitter) Note, the journalist subsequently deleted the tweet, due to the original source pulling the report - reasoning unclear

US-SPECIFIC HEADLINES

• US FDA limited the use of certain monoclonal antibodies to treat COVID-19 due to the Omicron variant in which it revised authorisation for BAMLANIVIMAB administered with ETESEIVIMAB and authorisation for REGEN-COV, while it stated that the data shows treatments are highly unlikely to be active against the Omicron variant. (Newswires)

Click here for the US Early Morning note.

APAC TRADE

• APAC markets were heavily pressured after yesterday's whirlwind session in the US.
• ASX 200 (-2.5%) slumped with losses exacerbated as firm CPI supports RBA tightening calls.
• Nikkei 225 (-1.7%) briefly fell beneath 27,000 for the first time since August last year.
• KOSPI (-2.6%) ignored strong GDP as South Korea reported record daily COVID-19 cases and North Korea fired cruise missiles.
• Hang Seng (-1.7%) and Shanghai Comp. (-2.5%) conformed to the downbeat mood with Hong Kong dragged by notable losses in its tech sector and with Chinese property names also subdued amid ongoing Evergrande woes.

NOTABLE APAC HEADLINES

• PBoC injected CNY 150bln via 14-day reverse repos with the rate at 2.25% for a CNY 50bln net injection. (Newswires)
• MAS announced to slightly raise the appreciation of the SGD NEER policy band but left the width of the band and level of which it is centred unchanged in an unscheduled policy meeting, while it said the move was appropriate for ensuring medium-term price stability. (Newswires)
• South Korea is considering extending USD/KRW trading hours and improving access of foreign dealers to USD/KRW, while it also plans to start talks on seeking inclusion to MSCI Developed Market Index from February. (Newswires)

DATA RECAP

• Australian CPI QQ (Q4) 1.3% vs. Exp. 1.0% (Prev. 0.8%); YY (Q4) 3.5% vs. Exp. 3.2% (Prev. 3.0%)
• Australian RBA Trimmed Mean CPI QQ (Q4) 1% vs. Exp. 0.7% (Prev. 0.7%); YY (Q4) 2.6% vs. Exp. 2.4% (Prev. 2.1%)
• Australian NAB Business Confidence (Dec) -12 (Prev. 12.0); Conditions (Dec) 8 (Prev. 12.0, Rev. 11)
• South Korean GDP QQ (Q4 A) 1.1% vs. Exp. 0.9% (Prev. 0.3%); YY (Q4 A) 4.1% vs. Exp. 3.7% (Prev. 4.0%)
• South Korean GDP grew 4.0% annually for 2021 which would be the fastest pace since 2010, according to BoK estimates. (Newswires)

GEOPOLITICS

• US Secretary of State Blinken said returning to the Iranian nuclear deal is still the preferred option and talks cannot be allowed to drag on for too long. In relevant news, the State Department announced that Richard Nephew is no longer the Deputy Special Envoy for Iran (Newswires)
• North Korea fired two cruise missiles on Tuesday morning; subsequently, Japan said they have not confirmed any missiles flying into their EEZ/territory. (Newswires/NK News)
• Ukraine Defense Minister, on Russia, says there are no reasons to expect an open invasion. (Newswires)
• Russia's Kremlin says that conversation between President Putin and French President Macron will happen this week; move by the US to put troops on alert does not impact discussions, current stage of discussions is completed, though tensions are being escalated by US actions/statements. (Newswires)
• Combat preparedness inspection has commenced in the Southern Military district of Russia; involves over 6k troops, according to Interfax. (Newswires)
• A large-scale power blackout has occurred in central-Asia, according to AFP