• Reports over the weekend noted heavy fighting between Ukraine’s armed forces and Russian-backed separatists along the contact line
• US President Biden and Russian President Putin have separately agreed in principle to meet
• APAC stocks traded mostly negative before trimming losses on the Biden-Putin update
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.4% after cash markets closed lower by 1.0% on Friday
• DXY heads into the European open on a softer footing. Antipodeans lead in the G10 FX space
• Looking ahead, highlights include EZ & UK Flash PMIs, Blinken/Lavrov Meeting (Date & Time TBC), EU-UK Brexit Meeting, Holiday Closures in the US for Presidents' Day and Canada Observes Family Day.

US TRADE

• US stocks declined on Friday as the Ukraine-induced haven bid grew into the session alongside the expiry of monthly options.
• CLOSES: S&P 500 -0.7% at 4,350, Nasdaq 100 -1.1% at 14,009, Dow Jones -0.7% at 34,079, Russell 2000 -1.1% at 2,006.

Click here for a detailed summary.

NOTABLE US HEADLINES

• US President Biden signed stopgap funding bill (through March 11th) into law on Friday.

GEOPOLITICS

• Reports noted heavy fighting between Ukraine’s armed forces and Russian-backed separatists along the contact line with both sides accusing each other of serious ceasefire breaches, according to Ebcnews.
• Russia will open criminal cases over reports of civilian casualties following an alleged attack by the Ukrainian army on the self-proclaimed Luhansk People’s Republic.
• Russia and Belarus extended drills for thousands of troops and are to continue inspection of readiness of military forces of the two countries, according to the Belarus Defence Ministry citing increased military activity near borders of Russia and Belarus.
• US President Biden and Russian President Putin have separately agreed in principle to a French proposal to meet, according to the French Presidency which added that the summit can only happen if Russia does not invade Ukraine, while the content of the summit will be prepared by US Secretary of State Blinken and Russian Foreign Minister Lavrov.
• US President Biden's administration prepared an initial package of sanctions that would ban US banks from processing transactions with large Russian banks, while the plan would cut correspondent banking ties between targeted Russian banks and US banks, according to sources.
• White House reiterated that Russia could launch an attack on Ukraine at any time, while US President Biden said he is convinced Russian President Putin has decided to invade Ukraine. US Secretary of State Blinken said Russia and Belarus continuing exercises makes him concerned about an invasion of Ukraine and said that everything leading up to an invasion of Ukraine appears to be taking place but added that until the tanks are actually rolling, they will use every opportunity to see if diplomacy can dissuade Russian President Putin, according to CNN.
• Russian Kremlin said repeated western naming of dates for a Russian invasion of Ukraine is provocative and could have adverse consequences, while it added that Russian President Putin takes no notice of western statements regarding invasion dates
• CLICK HERE FOR ALL THE NOTABLE RUSSIA-UKRAINE WEEKEND HEADLINES
• Iranian lawmakers urged President Raisi to obtain guarantees from the US and three European countries that they won't exit the nuclear deal being renegotiated in Vienna, according to Reuters citing state media

APAC TRADE

EQUITIES

• APAC stocks traded mostly negative but off their lows as risk appetite hanged on the situation surrounding Ukraine and with US and Russia said to agree in principle to a French proposal for a Biden-Putin summit.
• ASX 200 rebounded into the green with the index also cushioned by the reopening of Australia’s borders.
• Nikkei 225 retreated beneath 27k amid early haven flows into the JPY and deterioration of Japanese PMI data.
• KOSPI suffered after daily COVID-19 cases topped 100k for a third consecutive day
• Hang Seng and Shanghai Comp. were lacklustre with weakness in property names amid a further slowdown in property prices and after Zhenro Properties warned it may not be able to meet debt payments.
• US equity futures initially declined on US warnings of an imminent Russian invasion of Ukraine but then recovered due to hopes of Biden-Putin summit.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.4% after cash markets closed lower by 1.0% on Friday.

FX

• DXY was initially kept afloat by early haven flows after US warnings of an imminent Russian invasion on Ukraine, but retreated beneath 96.00 after France's proposal for a Biden-Putin summit was agreed in principle.
• EUR/USD nursed most of Friday’s losses and climbed above the 1.1350 level amid the recent Dollar swings.
• GBP/USD reclaimed the 1.3600 status amid USD softness
• USD/JPY was choppy around 115.00 although JPY-crosses rebounded as risk sentiment somewhat improved.
• Antipodeans found reprieve from hopes of a de-escalation of Ukraine tensions to lift AUD/USD and NZD/USD above the 0.7200 and 0.6700 handles, respectively.
• RUB gained against the Dollar amid reports of a potential Biden-Putin summit.

FIXED INCOME

• 10yr UST futures gained at the open on the concerns of an imminent Russian invasion of Ukraine but then returned flat after news that the US and Russian presidents agreed in principle on a French proposal to conduct a Biden-Putin summit, with the closure North American cash markets on Monday also limiting price action for T-note futures. Bunds pared the majority of opening gains and breached support near 166.50, while 10yr JGBs were kept afloat by the mostly risk averse tone and with the BoJ present in the market for over JPY 1.3tln in 1yr-10yr maturities.

COMMODITIES

• WTI and Brent were choppy in which the latter eventually fell beneath the USD 90/bbl as some of the geopolitical risk premium was unwound by reports of a potential Biden-Putin summit.
• Saudi Arabia’s crude stocks rose 2.284mln bbls to 134.7mln bbls in December and its exports fell by 12k bpd M/M to 6.937mln bpd in December, according to JODI data.
• Saudi Energy Minister said OPEC+ believes it has delivered for members and the entire industry, while he added that they have been transparent but are not getting reciprocity. There were also comments from the Iraq Oil Minister that OPEC+ need to stick to the current agreement to avoid surprises and the Kuwait Oil Minister said that OPEC+ is very sensitive on how markets react. Furthermore, the UAE Energy Minister said tensions are the cause of high prices not supply and demand, while he hopes for de-escalation for oil prices to decline.
• European Commission President von der Leyen told CNBC that energy sanctions against Russia are still an option if Russia invades Ukraine. She said “everything is on the table” when asked about the possibility of imposing sanctions on Russian gas giant Gazprom. She said Europe imports around 40% of its gas supply from Gazprom.
• Spot gold failed to sustain an incursion above the USD 1900/oz level.
• Copper futures were rangebound amid the ongoing geopolitical uncertainty.

CRYPTO

• Bitcoin nursed some of last week's losses with support seen as some of the geopolitical fears subsided.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a net neutral daily position.
• PBoC set USD/CNY mid-point at 6.3401 vs exp. 6.3390 (prev. 6.3343)
• PBoC 1-Year Loan Prime Rate (Feb) 3.70% vs. Exp. 3.70% (Prev. 3.70%)
• PBoC 5-Year Loan Prime Rate (Feb) 4.60% vs. Exp. 4.60% (Prev. 4.60%)

DATA RECAP

• Chinese China House Prices YY (Jan) 2.3% (Prev. 2.6%)
• Japanese Manufacturing PMI (Feb P) 52.9 (Prev. 55.4)
• Japanese Services PMI (Feb P) 42.7 (Prev. 47.6)
• Australian Manufacturing PMI (Feb P) 57.6 (Prev. 55.1)
• Australian Services PMI (Feb P) 56.4 (Prev. 46.6)

EUROPE-SPECIFIC HEADLINES

• UK PM Johnson refused to say whether he will resign if police say he broke lockdown laws, according to BBC.
• UK PM Johnson is expected to announce that the legal requirement to self-isolate after catching COVID-19 in England as part of a "living with Covid" plan, according to BBC.
• Queen Elizabeth tested positive for COVID-19 and was experiencing mild cold like symptoms, according to Buckingham Palace.
• UK is set to reject Canada’s hormone beef demands in early trade talks setback, according to The Telegraph.

DATA RECAP

• UK Rightmove House Prices MM (Feb) 2.3% (Prev. 0.3%)
• UK Rightmove House Prices YY (Feb) 9.5% (Prev. 7.6%)

CENTRAL BANKS

• Federal Reserve Chair Pro Tempore Powell will give his regular semiannual monetary policy update to Congress on March 2 before the US House Financial Services Committee and on March 3 before the Senate Banking Committee, according to Reuters.
• Fed's Brainard (voter) said it is appropriate to begin a series of rate hikes in March and believes they will turn next to the balance sheet runoff, which she sees starting in the next few FOMC meetings, according to Reuters.
• JPMorgan Chase & Co. economists said the Fed is likely to hike interest rates by 25bps in nine consecutive meetings in an effort to tamp down inflation, according to Bloomberg.