• Major bourses in Europe are nursing the post-Fed pressure with the complex now mixed.
• US futures saw an initial recovery but have since dipped back into modest negative territory, though they remain off overnight troughs.
• USD bid post-Fed with the DXY eyeing 97.00, to the detriment of peers across the board.
• Debt is pressured but off-lows, while BTPs outperform as we await the 4th round of Italian voting.
• WTI and Brent have trimmed APAC losses, while focus remains very much on geopolitics as Russia receives the US' written response.
• Looking ahead, highlights include the SARB rate decision, US durable goods & GDP, PCE prices and IJC, US 7yr supply. Earnings from Altria, McDonald's, Visa, Apple.

As of 11:20GMT/06:20EST

LOOKING AHEAD

• SARB rate decision, US durable goods & GDP, PCE prices and IJC, US 7yr supply. Earnings from Altria, McDonalds, Visa, Apple.

Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• Major bourses in Europe are nursing the post-Fed pressure with the complex now mixed, Stoxx 600 -0.1%.
• US futures saw an initial recovery but have since dipped back into modest negative territory, ES -0.4%, though they remain off overnight troughs.
• In Europe, sectors are mixed with Tech lagging post-Intel (-3.1% pre-market) in-spite of strong numbers given soft guidance, with European comparables pressured post respective earnings this morning. While Financials outperform post-Fed.

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FX

• Hawkish Fed Powell overshadows official FOMC policy message to give Greenback a fresh boost.
• Franc, Yen and Euro underperform as Fed gets set to widen the gap between policy stances of SNB, BoJ and ECB.
• Kiwi fails to benefit much from hot NZ CPI and Aussie via a poll predicting RBA tightening in November amidst the Buck’s latest bill run.
• Rand stands firm awaiting a SARB hike and Rouble regains some poise on technical grounds rather than any real improvement in Russian relations with the US or western nations.
• CBRT Minutes: the policy stance will be set taking into account the source/permanence of risks, expects the disinflation process to start on the back of measures taken. Will develop tools to support the increase of TRY assets.

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Notable Expiries, NY Cut:

• USD/JPY: 112.50 (1.1BLN), 113.00-05 (860M), 113.50-60 (1.0BN), 113.90-00 (745M), 114.15 (310M), 114.75-80 (1.16BN), 115.50 (775M)
• Click here for the full list.

FIXED INCOME

• Bonds trying to draw some lines in the sand after hawkish rate guidance from Fed chair Powell.
• BTPs bounce ahead of the 4th round of voting in Italy that only needs the winner to emerge via a majority.
• Debt curves retain a flatter bias overall before USD 53bln 7 year notes round off this week's Treasury auction schedule.

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COMMODITIES

• Crude benchmarks have trimmed post-Fed downside in tandem with the equity recovery, as focus remains very much on geopolitics as Russia receives the US' written response.
• WTI and Brent have recaptured USD 87.00/bbl and USD 90.00/bbl respectively, and are now holding near session highs.
• Spot gold lies near the post-Fed trough and as such the 200- & 50-DMAs are back in view at USD 1805/oz and USD 1803/oz respectively.
• China Gold Association said 2021 gold consumption increased 36.5% Y/Y to 1,220.9 tons and gold output rose 10.0% Y/Y to 329.0 tons, according to Bloomberg.

Click here for a detailed summary.

CRYPTO

• Crypto markets declined amid broad weakness in risk assets during APAC hours; in-fitting with broader performance, crypto has staged a modest recovery during the European session.

NOTABLE EUROPEAN HEADLINES

• Italian centre-right declared it will abstain from today's presidential election; subsequently, the centre-left said it will cast blank ballots, according to Reuters sources.
• UK Foreign Minister Truss, on Northern Ireland Protocol, says there is a deal to be done but the EU needs to be more flexible and pragmatic, via PoliticsHome's Payne citing sources.
• ECB's Kazimir says EZ inflation should peak in the nearest months before declining; sees signs of stabilisation in global supply markets, via Reuters.

DATA RECAP

• German GfK Consumer Sentiment (Feb) -6.7 vs. Exp. -7.8 (Prev. -6.8, Rev. -6.9).

US-SPECIFIC HEADLINES

• Nomura forecasts Fed to hike by 50bps in March and then 25bps in May, June, July and December.
• US House and Senate appropriators are making progress on an omnibus spending deal to cover the rest of the fiscal year (through Sept. 30) but there’s no deal yet, according to Punchbowl sources; a topline number might be agreed upon as early as next week, giving Congress a chance to finish an omnibus by the Feb. 18 funding deadline.

Click here for the US Early Morning note.

APAC TRADE

• APAC markets sold off with risk appetite hit as the region digested the hawkish FOMC meeting.
• Nikkei 225 (-3.1%) suffered losses of more than 3% and with the index down more than 10% from January highs.
• KOSPI (-3.5%) was mired by another North Korean launch and with Samsung Electronics dwindling post-earnings.
• Hang Seng (-1.9%) and Shanghai Comp. (-1.7%) declined amid a slowdown in Chinese Industrial Profits and with the CSI 300 Index slipping into bear market territory after falling 20% from its February 2021 peak, while developers are hit including Evergrande as investors will have to wait six months for an initial restructuring plan.

NOTABLE APAC HEADLINES

• PBoC injected CNY 200bln via 14-day reverse repos with the rate at 2.25%, according to Reuters.
• China's profit growth dropped significantly in last two months of 2021 and downstream industries, especially SMEs remain under great operating pressure, while it added that a number of loss-making enterprises is still large and the industrial economy still faces many challenges this year, according to the NBS.
• China is said to weigh breaking up Evergrande (3333 HK) to contain the situation, according to Bloomberg.

DATA RECAP

• Chinese Industrial Profit YY (Dec) 4.2% (Prev. 9.0%)
• New Zealand CPI QQ (Q4) 1.4% vs. Exp. 1.3% (Prev. 2.2%); YY (Q4) 5.9% vs. Exp. 5.7% (Prev. 4.9%)
• RBNZ Q4 Sectoral Factor Model Inflation Index YY (Q4) 3.2% (Prev. 2.7%)

GEOPOLITICS

• US Secretary of State Blinken spoke with China's Foreign Minister Wang Yi and underscored global security and economic risks posed by further Russian aggression against Ukraine, according to Reuters.
• Russian forces will leave Belarus after drills, according to IFX
• Russian Foreign Minister Lavrov says there is no positive response from the US on the main issue, according to Interfax; US response provides hope of commencing serious dialogue but only on secondary questions.
• Subsequently, Russia's Kremlin says their main security demand have not been taken into account; remarks by US and NATO that main demands are unacceptable do not give much cause for optimism, according to Reuters; no agreement on Lavrov/Blinken meeting.
• North Korea fired an unidentified projectile towards the East Sea, according to Yonhap, while the South Korean military said the launch is presumed to be ballistic missiles, while Reuters reported the US State Department condemns North Korea's missile tests.