• European bourses are mixed/positive having pulled back modestly from a firmer cash open, individual movers heavily dictated by pre-market earnings.
• US futures are contained but with a modest negative bias apparent as we await US CPI and subsequent Fed speak.
• DXY somewhat deflated into US CPI even though expectations are lofty; JPY & SEK hampered on Central Bank activity.
• Core bonds back-off after a fade below midweek highs while JGBs jump on BoJ intervention.
• WTI and Brent remain choppy in fairly tight ranges in the context of recent performance, focus very much on geopols as Russian military drills commence.
• Looking ahead, highlights include US CPI, Initial Jobless Claims, New Zealand Manufacturing PMI, Chinese M2, Banxico Policy Announcement, Speeches from BoE's Bailey, ECB's Lane and de Guindos, Fed's Barkin, US supply, Earnings from Coca-Cola, Phillip Morris, Kellogg, Twitter.

As of 11:20GMT/06:20EST

LOOKING AHEAD

• US CPI, Initial Jobless Claims, New Zealand Manufacturing PMI, Chinese M2, Banxico Policy Announcement, Speeches from BoE's Bailey, ECB's Lane and de Guindos, Fed's Barkin, US supply, Earnings from Coca-Cola, Phillip Morris, Kellogg, Twitter.

Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are mixed/positive having pulled back modestly from a firmer cash open, individual movers heavily dictated by pre-market earnings.
• Sectors are mixed with Basic Resources outperforming while Consumer Products/Services are pressured on earnings dynamics.
• US futures are contained but with a modest negative bias apparent as we await US CPI and subsequent Fed speak.
• PepsiCo Inc (PEP) Q4 2021 (USD): EPS 1.53 (exp. 1.52), Revenue 25.3bln (exp. 24.24bln).

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CENTRAL BANKS

• BoJ to purchase unlimited 10yr JGBs on Feb 14th at 0.25% (#363, #364 and #365); decided on fixed rate operation given recent yield moves. Will firmly keep policy to keep 10yr yields around 0%.
• Riksbank maintains its Repo Rate at 0.00% as expected. QE maintained for Q2 (SEK 37bln for Q1 2022); three hawkish dissenters on QE. Q1 2024 rate path lifted marginally; even if the risk of too low inflation has declined, it still remains. Governor Ingves says a rate hike is inching closer than we earlier believed.
• RBI kept the Repurchase Rate unchanged at 4.00% and maintained accommodative policy stance, as expected, but also surprisingly held the Reverse Repo Rate at 3.35% (exp. 20bps increase). RBI Governor Das said the MPC flagged potential downside risks to activity from Omicron and they are seeing some loss of momentum for economic activity, while the MPC was of the view that continued policy support is warranted for a durable and broad-based recovery.
• ECB's Rehn says it is more preferable to progress one step at a time in normalising monetary policy in an uncertain environment; will use all tools to stabilise inflation around 2%.
• ECB announces it will not extend capital and leverage relief for banks, details here

FX

• DXY somewhat deflated into US CPI even though expectations are lofty, as Fed’s Mester sees no compelling case for 50bp March liftoff.
• Riksbank rattles SEK with only minor rate path tweak and no real tilt from transitory inflation view.
• BoJ undermines YEN by announcing unlimited JGB purchases to prevent 10 year yield spiking further from target.
• ZAR continues shine alongside Gold in the run up to SA State of Nation Address.
• Turkish Finance Minister is to announce "a new support package" on Feb 12th; will focus on measures to curb recent price rises whilst providing support to export firms, plans to bring "under-the-mattress gold" into the Turkish banking system.

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Notable FX Option Expiries, NY Cut:

• EUR/USD: 1.1250 (470M), 1.1290-00 (698M), 1.1315 (414M), 1.1330-40 (1.85BLN), 1.1375-80 (455M), 1.1410-15 (450M), 1.1420-30 (670M), 1.1440-50 (615M), 1.1460-65 (420M), 1.1490-00 (1.6BN), 1.1520-25 (637M), 1.1540 (289M), 1.1580-90 (605M), 1.1595-00 (1.6BN), 1.1620 (500M), 1.1720 (415M)
• AUD/USD: 0.7150-60 (1.48BN), 0.7170-80 (847M), 0.7190-00 (610M)
• Full list available here

FIXED INCOME

• Core bonds back-off after a fade below midweek highs as US CPI looms before the long bond refunding leg.
• JGBs buck the bearish trend as the BoJ steps in to defend its YCT via unlimited purchases of 10 year maturities from February 14th.

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COMMODITIES

• WTI and Brent remain choppy in fairly tight ranges in the context of recent performance, focus very much on geopols as Russian military drills commence.
• White House said President Biden and Saudi King spoke about commitment to ensure stability of global energy supplies, while Energy Intel noted that Saudi's King Salman stressed importance of maintaining balance and stability in oil markets, highlighting importance of maintaining the OPEC+ agreement.
• OPEC MOMR to be released at 12:45GMT/07:45EST.
• Spot gold trades sideways and confirmed support at USD 1,830/oz, which acted as resistance on the way up.
• Base metals derived support in APAC hours while Coal pulled-back given recent commentary.

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CRYPTO

• Crypto markets were mildly pressured overnight though this pressure has stabilised throughout the European morning and into the US session.

NOTABLE EUROPEAN HEADLINES

• EU draft outlook sees EU GDP at 4% in 2022 and 2.7% in 2023, while it sees CPI at 3.5% in 2022 and 1.7% in 2023, according to Reuters.

DATA RECAP

• UK RICS Housing Survey* (Jan) 74 vs. Exp. 68.0 (Prev. 69.0, Rev. 70)

US-SPECIFIC HEADLINES

• White House Economic Adviser Deese sees reason to think factors boosting inflation will moderate over time, while he said the US is seeing a strong labour market recovery and have recovered about 60% of the decline from the pandemic, according to Reuters.
• Biden administration is gearing up to begin tapping USD 5bln over five years from the bipartisan infrastructure law to expand electric vehicle charging on the nation's highways, Axios reports.

Click here for the US Early Morning note.

Click here for the newsquawk US CPI Preview.

APAC TRADE

EQUITIES

• Asian stocks traded mixed as participants digested another deluge of earnings and US-China frictions.
• ASX 200 (+0.3%) was supported by tech and with financials boosted after AMP and NAB reported higher H1 profits.
• Nikkei 225 (+0.5%) finished off highs with the index swayed by a choppy currency and numerous earnings.
• Hang Seng (-0.2%) and Shanghai Comp. (-0.3%) were subdued after Hong Kong reported its first COVID death in five months, while Biden administration is said to mull trade actions on China.
• Nifty 50 (+0.7%) was initially choppy heading into the RBI decision but was then lifted after the central bank kept the Repurchase Rate at 4.00% and unexpectedly maintained the Reverse Repo Rate at 3.35%.

NOTABLE APAC HEADLINES

• PBoC injected CNY 20bln via 7-day reverse repos with the rate at 2.10% for a CNY 180bln net drain
• PBoC set USD/CNY mid-point at 6.3599 vs exp. 6.3618 (prev. 6.3653)

DATA RECAP

• China M2 Money Supply (Jan): +9.8% YY (exp. +9.2%); New Yuan Loans 3.98tln (exp. 3.69tln), Outstanding Total Social Financing 320.05tln, +10.5% YY.

GEOPOLITICS

• UK ordered 1000 troops to be in a state of readiness to provide humanitarian support if a crisis is caused by Russian aggression against Ukraine, according to Reuters.
• US Pentagon said it has seen additional Russian military capabilities on the Russia-Ukraine border within the last 24 hours, according to Reuters.
• Russian Foreign Minister Lavrov says the EU is planning a collective response to Russian security proposals, adding that if this is the case, talks "will fail"; added, demand for the removal of Russian troops from their territory are regrettable.
• White House said talks with Iran have reached an urgent point and it will be impossible to return to Iran nuclear talks, if deal not reached in coming weeks, according to Reuters.
• NATO Secretary General Stoltenberg says Russian deployment in Belarus is being monitored, sent a letter to Russian Foreign Minister Lavrov to continue with their dialogue, will consider battle groups in South-Eastern territory and is prepared to have a serious conversation on nuclear arms.
• Saudi King Salman told US President Biden the kingdom supports efforts to prevent Iran from acquiring nuclear weapons and stressed importance of strengthening joint security cooperation in combating and financing terrorism, according to Reuters.
• Saudi Air Defense forces has destroyed a drone that was launched towards the Abha International Airport, according to Al Arabiya
• South Korea President Moon said new North Korean nuclear and long range missile tests would instantly cause a crisis, while he added that summit between US President Biden and North Korean Leader Kim is only a matter of time if tensions are to be averted and is open to a virtual inter-Korean summit, according to Reuters and Yonhap.