• European bourses are contained around the unchanged mark, Euro Stoxx 50 +0.2%, as an initially positive open on geopolitical developments waned as we await further drivers.
• US futures are deriving greater upside from the reported meeting of US-Russian officials today and next week; however, focus turns to Fed's Williams & Brainard
• Additionally, Russia's Defence Minister is to speak over the phone with his US counterpart on Friday, at the request of the US
• USD remains bid but the index is capped by 96.00 amid antipodean & GBP strength.
• Core debt retains a decent underlying bid awaiting fresh developments, while Bunds respect near-term resistance
• WTI and Brent have experienced a marked pullback amid the constructive geopolitical updates, causing the benchmarks to erode all of the week's upside and approach last week's troughs.
• Looking ahead, highlights include US Existing Home Sales, EZ Consumer Confidence (Flash), Fed’s Williams, Brainard, Evans; ECB’s Elderson, Panetta.

As of 11:10GMT/06:10EST

LOOKING AHEAD

• US Existing Home Sales, EZ Consumer Confidence (Flash), Fed’s Williams, Brainard, Evans; ECB’s Elderson, Panetta.
• Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• European bourses are contained around the unchanged mark, Euro Stoxx 50 +0.2%, as an initially positive open on geopolitical developments waned as we await further drivers.
• US futures are deriving greater upside from the reported meeting of US-Russian officials today and next week; however, focus turns to Fed's Williams & Brainard
• Sectors are mixed with upside performance on the back of equity specifics in the pre-market while Energy Names lag amid EDF updates and given benchmark pricing.
• Deere & Co (DE) Q1 2022 (USD): EPS 2.92 (exp. 2.26), Revenue 9.569bln (exp. 8.19bln).

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FX

• Greenback grinding awaiting more geopolitical developments and talks between top level Russian and US officials rather than data or Fed speakers, with the DXY hovering sub-96.00.
• Kiwi continues to outperform on the 0.6700 handle pre-RBNZ amidst some speculation of a double consensus 50 bp OCR hike.
• Aussie up in slipstream and acknowledging further Yuan appreciation instead of dovish RBA rhetoric and another slump in iron ore prices.
• Sterling supported by solid UK consumption data, but confined by big option expiries alongside Euro and Yen - Eur/Gbp at 0.8350 strike, Eur/Usd either side of 1.1345-90 and Usd/Jpy from 114.70-15.
• Rouble firm as Ukraine Defence Chief sees low risk of large scale Russian invasion.
• Swedish Crown aloft as inflation tops expectations

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Notable FX Option Expiries, NY Cut:

• EUR/USD: 1.1175 (928M), 1.1200 (428M), 1.1225-30 (533M), 1.1275-80 (960M), 1.1320-30 (730M), 1.1335-40 (750M), 1.1345-55 (2.14BN), 1.1365-70 (460M), 1.1375-90 (3.76BN), 1.1420-25 (300M), 1.1450-60 (775M), 1.1465-75 (630M), 1.1500 (590M), 1.1525-30 (1.07BN)
• USD/JPY: 112.35-40 (1.31BN), 113.95-05 (1.7BN), 114.15-114.70 (4BN), 114.90-00 (556M), 115.45-50 (880M), 116.00 (435M), 117.00-10 (2.25BN)
• EUR/GBP: 0.8300 (502M), 0.8350 (1.32BN), 0.8370-75 (290M), 0.8400-05 (600M), 0.8425-35 (945M), 0.8465-75 (780M)
• Full list available here

FIXED INCOME

• Core debt retains a decent underlying bid awaiting any positive news or progress from US-Russian dialogue.
• Gilts shrug off robust UK sales data as the next BoE hike is discounted already.
• Bunds respect near term resistance and support in the form or a 50% Fib retracement level at 165.61

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COMMODITIES

• WTI and Brent have experienced a marked pullback amid the constructive geopolitical updates, causing the benchmarks to erode all of the week's upside and approach last week's troughs.
• Focus in Brent, for instance, now turns to the USD 90.00/bbl mark and levels just above the handle.
• Iron ore saw another session of pain with the futures lower by over 5% in early trade in a continuation of China’s crackdown on rising raw material prices.
• Spot Gold briefly eclipsed USD 1900/oz but has failed to retain the handle amid USD upside and the waning of geopolitical-premia.
• US officials spoke to Saudi regarding market pressures given the geopolitics with Russia, according to Reuters.
• China NDRC issues rules to promote steady industrial growth; will ensure supply and stabilise prices of key raw materials, including iron ore and fertilisers.

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GEOPOLITICS

• US Secretary of State Blinken is to meet Russian Foreign Minister Lavrov late next week, according to the US State Department. Additionally, Russia's Defence Minister is to speak over the phone with his US counterpart on Friday, at the request of the US, RIA reports; timing of call not confirmed.
• Russian Foreign Minister Lavrov reportedly agreed to the talks on the US condition that there will be no invasion of Ukraine, according to CNBC's Tausche.
• Russia to conduct strategic drills on Saturday, which President Putin will personally oversee, IFX reports; drills will involve the launching of ballistic and cruise missiles.
• Clashes in Eastern Ukraine on Thursday were the biggest since 2015, according to a diplomatic source cited by Reuters; OSCE has already recorded 80 ceasefire violations along the line of contact as of Friday morning.
• US Defence Secretary reiterates that Russia is not withdrawing, and there is no evidence that Russian President Putin is moving forces away from borders, via Reuters.
• US President Biden is to hold a meeting on Friday with the heads of NATO, EU, France, Germany, UK, Italy, Poland, and Romania, according to the Canadian PM's office.

NOTABLE EUROPEAN HEADLINES

• An interim UK/EU deal on customs is unlikely at Monday's joint committee meeting, according to a EurAsia Group analyst; Big gaps remain, and no side wants a 'bust up'.

DATA RECAP

• UK Retail Sales MM (Jan) 1.9% vs. Exp. 1.0% (Prev. -3.7%, Rev. -4.0%); YY (Jan) 9.1% vs. Exp. 8.7% (Prev. -0.9%, Rev. -1.7%)
• Ex-Fuel MM (Jan) 1.7% vs. Exp. 1.2% (Prev. -3.6%, Rev. -3.9%); Ex-Fuel YY (Jan) 7.2% vs. Exp. 7.9% (Prev. -3.0%, Rev. -3.8%)
• Swedish CPIF Ex Energy YY (Jan) 2.5% vs. Exp. 2.00% (Prev. 1.70%); MM (Jan) 0.1% vs. Exp. -0.50% (Prev. 0.40%)

CRYPTO

• Bitcoin remains under pressure and in-proximity to the USD 40k mark, after printing fresh weekly lows overnight.
• US President Biden to issue an executive order on regulating crypto next week, according to Yahoo! Finance. This has been subsequently denied by the White House, according to Bloomberg.

US-SPECIFIC HEADLINES

• Senate has voted to pass the stopgap funding bill until March 11th, according to Reuters.

Click here for the US Early Morning Note.

APAC TRADE

EQUITIES

• APAC stocks traded with a mild downside bias but off worst levels amid confirmation of a meeting between the US Secretary of State and Russian Foreign Minister late next week.
• ASX 200 continued to be pressured by its tech and healthcare sectors, albeit gold miners saw a decent outperformance.
• Nikkei 225 saw losses across energy names but the recent weakening in the Yen kept the index underpinned.
• Hang Seng was pressured by EV names and some oil giants.
• Shanghai Comp. narrowly outperformed as hopes of monetary policy easing supports the index.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos at a maintained rate of 2.10% for a daily drain of CNY 10bln; PBoC drained a net CNY 150bln for the week via OMO, including the MLF injection earlier in the week
• PBoC set USD/CNY mid-point at 6.3343 vs exp. 6.3332 (prev. 6.3321)
• China halted flights to Beijing from Zhuhai amid COVID, according to reports citing CCTV.
• Japanese Finance Minister said the prices increase was driven mostly by energy, but FX had some impact, according to Reuters.

DATA RECAP

• Japanese CPI, Overall Nationwide (Jan) 0.5% (Prev. 0.8%)
• Japanese CPI, Core Nationwide YY (Jan) 0.2% vs. Exp. 0.3% (Prev. 0.5%)
• Japanese CPI Index Ex Fresh Food* (Jan) 100.1 (Prev. 100.0)

CENTRAL BANKS

• Fed's Mester (2022 voter) reiterated support for a March hike. She said it will be appropriate to hike Fed Fund at a faster pace than after the GFC and can hasten H2 tightening pace if inflation doesn't ease. She expects inflation above 2% and noted that risks tilted to the upside. She supports selling some MBS at some point during the balance sheet reduction process and suggested the pace will be data-driven.
• ECB's Kazmir backs QE end in August; is flexible on rate hikes, but says more data is needed to determine whether a 2022 rate rise is appropriate.
• ECB's Vasle favours a quicker adjustment of monetary policy.
• RBA's Harper said financial markets are misguided in thinking the RBA will follow the Fed when raising interest rates, and added that the RBA has good reasons to wait, via a WSJ interview