• US stocks rallied amid month-end rebalancing and in the aftermath of recent heavy selling. S&P 500 (+1.9%), Nasdaq (+3.4%). 
• Asian stocks were positive but with upside limited amid mass holiday closures for the Lunar New Year.
• European futures are indicative of a positive open with the Eurostoxx 50 future up by 1.0% after the cash market closed higher by 0.9% yesterday.
• DXY lacklustre ahead of the European open, EUR/USD capped by 1.1250, AUD lags a touch post-RBA. 
• RBA kept rates unchanged, announced an end to asset purchases, but maintained a dovish tone. 
• Looking ahead, highlights include German Retail Sales, EZ, UK, US Manufacturing PMIs, EZ Unemployment, US ISM Manufacturing PMI, New Zealand HLFS Unemployment, German Supply, Earnings from Alphabet, Exxon Mobil, EA, Gilead, AMD, PayPal, General Motors and UBS.

US TRADE

• US stocks rallied amid month-end rebalancing and in the aftermath of recent heavy selling.
• S&P 500 (+1.9%) reclaimed the 4500 level to claw back some of the losses from its worst January since 2009.
• Nasdaq (+3.4%) led the advances although still registered its worst monthly performance since March 2020.

APAC TRADE

EQUITIES

• Asian stocks were positive but with upside limited amid mass holiday closures for the Lunar New Year.
• ASX 200 (+0.5%) rose above 7,000 with the index further underpinned as the RBA stuck to a dovish tone.
• Nikkei 225 (+0.2%) was kept afloat after lower unemployment although retraced gains as JPY strengthened.
• Nifty 50 (+1.4%) outperformed as focus in India centred on earnings and the budget announcement.
• US equities futures were marginally lower overnight and slightly eased from yesterday's highs; E-mini S&P -0.3%
• European futures are indicative of a positive open with the Eurostoxx 50 future up by 1.0% after the cash market closed higher by 0.9% yesterday.

FX

• DXY was lacklustre after the prior day's selling pressure, while Fed rhetoric continues to point to a March lift off.
• EUR/USD held on to recent gains at the buck’s expense but with upside capped by resistance at 1.1250.
• GBP/USD kept afloat after Sue Gray’s redacted report had little impact on asset classes.
• USD/JPY remained choppy around 115.00.
• AUD/USD was briefly pressured after the RBA policy announcement in which the central bank kept rates unchanged and announced an end to asset purchases, but maintained a dovish tone and noted that easing bond purchases does not imply a near-term increase in interest rates.

FIXED INCOME

• 10-year USTs traded marginally higher and extended above 128.00.
• 10-year JGBs were choppy and eventually declined following a softer 10yr auction.
• Bunds are flat after support held near 169.00

COMMODITIES

• WTI and Brent maintained the prior day's gains helped by a weaker dollar and Wall St's month-end rally.
• Spot gold eked marginal gains and attempts to reclaim the USD 1800/oz status.
• Copper was rangebound amid absence of participants in Asia.
• EU's Dombrovskis stated NS2 is put on pause and they are looking to see if it is in compliance with EU's energy policy, according to Reuters.

CRYPTO

• Crypto markets were varied in which Bitcoin traded sideways above 38.5k and Ethereum gained around 2%.

NOTABLE APAC HEADLINES

• RBA kept Cash Rate Target at 0.10% and announced end to bond purchases, as expected, but reiterated the board is prepared to be patient. RBA said is still too early to conclude that inflation is sustainably within the target band and it will be sometime before aggregate wage growth is at a rate consistent with inflation being sustainably at target while, it will not increase Cash Rate until inflation is sustainably within 2%-3% target and noted that easing bond purchases does not imply a near-term increase in interest rates.
• Japan parliament adopted resolution on human rights situation in China which calls on PM Kishida's government to take steps to relieve the situation while working with the international community, according to Reuters.

Data Recap

• Australian Retail Sales MM Final (Dec) -4.4% (Prev. 7.3%)

GEOPOLITICS

• US State Department spokesperson said Russia delivered a written response to US proposals regarding Ukraine although the State Department didn't unveil the details of the response, according to Reuters.
• US is weighing deploying more troops to eastern Europe beyond the 8,500 on alert, according to Reuters.
• US State Department ordered families of US government staff in Belarus to evacuate the country due to Russian build up along Belarus' border with Ukraine, according to Axios.
• Russia President Putin and French President Macron discussed Ukraine in phone talks and have agreed to consider a meeting in person, according to Reuters.
• UK PM Johnson is to travel to Ukraine today for talks with President Zelensky and will urge for Russian President Putin to step back from the brink, according to the Mirror.
• US State Department official said talks to return to the Iran nuclear deal are in the "final stretch" and that given Iran's nuclear advances, they have only a "handful of weeks" left, while progress was made in narrowing down the differences and negotiators have returned to capitals for consultations. Furthermore, the official stated that Iran may not choose to go down the road of compliance and the US is ready to deal with that contingency, according to Reuters.
• Qatar Foreign Minister said their nation is using its open channels with US and Iran to bring views closer together, according to Reuters.

NOTABLE US HEADLINES

• Fed's George (2022 voter) said the current very accommodative stance of monetary policy is out of sync with the economic outlook and a more aggressive reduction of the Fed balance sheet could allow for a shallower rate path, according to Reuters.
• Fed's Barkin (2024 voter) would like the Fed to get better positioned and for them to be closer to neutral than they presently are, while he added the pace of rate hikes will depend on inflation and thinks prices of goods will ease, according to a CNBC interview.
• Fed's Bostic (2024 voter) said a 50bp hike is not his preferred policy action for March and the Fed is not fixed on a set policy progression, while he added that they should get a few rate moves in hand then reduce the size of the balance sheet, according to Reuters.
• Fed's Daly (2024 voter) sees rate hikes as early as March and said a policy shift should be gradual as she doesn't want to ratchet up the rates so quickly that it bridles growth too much. Daly added that if the Fed gets to 1.25% by the end of the year, it would be quite a bit of tightening but would still be supporting the economy. Furthermore, she later clarified that the Fed needs to keep its options open on rate hikes this year and that she doesn't want to predetermine what the end-of-year interest rate level should be, according to Reuters.
• US Treasury Chief Economist Harris said weaker demand for goods, easing supply bottlenecks and a receding pandemic is expected to cut inflationary pressures in 2022, according to Reuters.
• US CDC urged Americans to avoid travel to 12 destinations including Mexico, Singapore, Chile and Brazil due to COVID-19, according to Reuters.