• European bourses are pressured across the board as geopolitics exacerbates a subdued APAC handover and soft end to the US week.
• Stateside, US futures are suppressed but faring better than EU comparables as participants await fresh Fed developments amid broader geopolitical focus.
• Dollar in demand alongside fellow safe haven currencies as investors fret about a Russian attack on Ukraine; JPY outperforms and eyes 115.00
• Core debt benefits from risk-aversion while Gilts lag on BoE rate expectations and EGB peripheries await Lagarde's remarks.
• Crude benchmarks are essentially unchanged as initial geopolitical premia was offset by a deterioration in broader risk sentiment, as the Russia/Ukraine situation remains tense.
• Looking ahead highlights include a Fed Closed Board Meeting, Fed’s Bullard, ECB’s Lagarde, German-Ukrainian meeting; earnings from Michelin

As of 11:15GMT/06:15EST

LOOKING AHEAD

• Fed Closed Board Meeting, Fed’s Bullard, ECB’s Lagarde, German-Ukrainian meeting; earnings from Michelin

Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board as geopolitics exacerbates a subdued APAC handover and soft end to the US week.
• Sectors are all in the red; Travel & Leisure and Banking names lag on Ukraine and yields respectively while Oil & Gas is somewhat cushioned via initial crude benchmark pricing.
• Stateside, US futures are supressed but faring better than EU comparables as participants await fresh Fed developments amid broader geopolitical focus.

Click here for more detail.

CENTRAL BANKS

• Fed's Daly (2024 voter) said a "balanced approach" to rate hikes is key, as sees March as an appropriate time to increase. She said inflation is too high and the Fed is actively focused on inflation. She said we need to pull some of the accommodation now but being too aggressive could be destabilising. She noted that markets have priced in both rate hikes and bond tapering, according to Reuters.
• Fed's George (2022 voter) says no need for FOMC to raise rates outside of a scheduled meeting; not yet clear whether March hike should be 25bps or 50bps; Fed should mull selling bonds to manage inflation. Not formed a view on the magnitude of hikes needed this year. Says, it is "always preferable to go gradual", via WSJ.
• ECB's Rehn said the central bank needs to look beyond the current spike in inflation to avoid dampening economic growth. Rehn added that wage development in the euro area remains subdued, according to YLE TV1.
• ECB's Visco sees short term risk of stronger price pressure, but the underlying assumptions for ECB policy are still valid, according to Reuters.
• ECB's Makhlouf has cautioned that it is "unrealistic" that the ECB will hike rates in June, adding that there is "a bit of a difference" between the ECB's schedule and market pricing. Makhlouf noted that the ECB could halt purchases in June or a few months after, according to Bloomberg.
• BoJ makes JPY 70.1bln of ETF purchases.

FX

• Dollar in demand alongside fellow safe haven currencies as investors fret about a Russian attack on Ukraine.
• Yen on the brink of breaching 115.00 in advance of Japanese GDP data and Franc firm following a pickup in Swiss produce and import prices.
• Euro and Pound vulnerable after losing a string of technical support levels.
• Rouble volatile and Hryvnia heavy amidst heightened geopolitical tensions and Lira hit by ratings cut by Fitch
• Turkish Finance Minister announced new economic policies which covers new loans, inflation and gold savings. Turkey reduced VAT on staple foods to 1% from 8%, according to President Erdogan.
• Fitch cuts Turkey's rating to B+ from BB-; outlook negative.

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Notable FX Option Expiries, NY Cut:

• AUD/USD: 0.6900 (1.0BN), 0.7100-10 (1.68BN), 0.7125 (305M), 0.7270 (242M)
• Full list available here

FIXED INCOME

• Core debt benefits from another bout of risk-aversion largely due to danger of Russian incursion on Ukraine.
• Gilts lag as another bank upgrades its BoE rate outlook.
• EZ peripheral bonds underperform amidst the safety flight awaiting further comments from ECB President Lagarde that may provide some comfort.

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COMMODITIES

• Crude benchmarks are essentially unchanged as initial geopolitical premia was offset by a deterioration in broader risk sentiment, as the Russia/Ukraine situation remains tense.
• Technically, Brent held touted support at the USD 93.60/bbl mark (current low 93.69) while any renewed upside faces Fibonacci resistance at USD 97.26/bbl (current high 96.16).
• Saudi crown prince Mohammed Bin Salman said around 4% of Aramco (valued at around USD 80bln) will be transferred to the Public Investment Fund, according to an official statement.
• IEA's Birol hopes that OPEC+ can close the space between actions and words, via Reuters citing state TV
• Spot gold and silver benefit from haven demand that has spurred the yellow-metal above the USD 1850/oz mark, with technicians noting that we have now eclipsed a weekly downtrend line
• Chinese Vice Premier said China is to effectively expand the production of soybean, via state media.
• US government has suspended all imports of Mexican avocados after a US plant safety inspector in Mexico received a threat, according to Yahoo.

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CRYPTO

• Treasury signalled that crypto miners will not face IRS reporting rules, according to CoinDesk.

NOTABLE EUROPEAN HEADLINES

• Europe is working on a EUR 20bln to counter China's reach over Africa, according to Business Standard.
• Greece will repay its final tranches of IMF loans by the end of March, finance minister says via Reuters, wants to exit post-bailout monitoring by the middle of this year.

US-SPECIFIC HEADLINES

• The busiest US-Canada border crossing has reopened after protests against COVID-19 restrictions closed it for almost a week, according to AP.
• Goldman has cut its S&P 500 year-end 2022 price target to 4900 from 5100, three months after hiking it from 4700.
• Apple (AAPL) has boosted retail worker pay, according to Bloomberg.
• Cisco (CSCO) has made an offer for Splunk (SPLK) in excess of USD 20bln, according to WSJ.

APAC TRADE

EQUITIES

• Asian stocks traded mostly lower with the region cautious following the sell-off on Wall Street.
  • Nikkei 225 slumped at the open as it played catch-up following its long weekend.
• ASX 200 bucked the trend as the index was supported by its commodity names.
• Hang Seng was pressured as daily COVID cases in Hong Kong continue picking up in pace.
• Shanghai Comp. saw its losses somewhat cushioned amid continued speculation that the PBoC could further ease its monetary policy soon.

NOTABLE APAC HEADLINES

• PBoC set USD/CNY mid-point at 6.3664 vs exp. 6.3665 (prev. 6. 3681)
• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 210bln net drain

DATA RECAP

GEOPOLITICS

Click here for detailed Newsquawk analysis on the Russian situation and its implications.

• US President Biden and Russian President Putin spoke on the phone on Saturday and agreed to stay engaged in the days ahead, according to Bloomberg.
• Putin told Biden that US responses to his demands for security guarantees do not address the Kremlin’s key concern, according to Bloomberg.
• Biden reiterated his warning to Putin that Russia will face severe consequences in the event of an invasion of Ukraine, according to Bloomberg
• Ukraine has requested a meeting with Russia and other members of a key European security group in the next 48 hours regarding Russia's plans, according to Bloomberg. Ukraine's President has invited US President Biden to visit Ukraine, according to Reuters.
• Russia President Putin to meet his foreign and defense ministers today; Kremlin says if Ukraine renounced joining NATO, would significantly help ease Russian concerns
• Ukraine's London ambassador says they are prepared for numerous concessions to avoid war, but they have nothing to do with NATO, via Reuters; not delaying plans to join NATO.
• US Secretary of State Blinken said the threat of a Russian invasion of Ukraine is high and imminent enough to justify the departure of US embassy staff in Kyiv.
• Russia said it chased away a US submarine in Russian waters in the pacific. The US military said "There is no truth to the Russian claims of our operations in their territorial waters.", according to Reuters' Ali
• Subsequently, a Russian senior millitary official says Russia ready to open fire on foreign ships and submarines that illegally enter its territorial waters, according to Interfax.
• German Vice Chancellor Habeck said we may be on the verge of a war in Europe, according to Reuters citing RTL/NTV. Subsequently, an airplane carrying German troop reinforcements has now landed in Lithuania, according to Reuters.
• Several nations have been downsizing their embassy personnel in Ukraine in anticipation of an escalation.
• A senior Iranian security official noted that progress in the Iranian nuclear talks to salvage was becoming "more difficult", according to Reuters. Subsequently, Iran's Foreign Ministry says if other parties respect Iran's rights than a revival of the nuclear deal could be possible soon and a US prisoner swap is on the agenda in parallel with nuclear discussions.