• European bourses are firmer, Euro Stoxx 50 +1.0%, with gains relatively broad based though the oil-exposed FTSE 100 lags given benchmark pricing.
• US futures, ES +0.6%, are also firmer as newsflow is comparably slower and as participants also take impetus from sanctions being less-stringent than some feared.
• EU Ambassadors have approved sanctions on Russia & US Secretary of State Blinken said it doesn't make sense to meet with Russian Foreign Minister Lavrov anymore
• DXY still hugging 96.000, as firmer US Treasury yields compensate for loss of safe haven premium; antipodeans bolstered by hawkish RBNZ.
• Crude benchmarks are experiencing a pull-back this morning as newsflow is comparably slower than at this point yesterday and in the context of yesterday's notable upside; Brent testing yesterday's trough.
• Multiple BoE, ECB & Fed speakers thus far, though focus remains firmly on geopolitics.
• Looking ahead U.N. General Assembly regarding Ukraine, Speeches from BoE's Tenreyro. Supply from the US.

LOOKING AHEAD

• U.N. General Assembly regarding Ukraine, Speeches from BoE's Tenreyro. Supply from the US.
• Click here for the Week Ahead preview

GEOPOLITICS

SANCTIONS

• EU Ambassadors have approved sanctions on Russia, according to a EU diplomat via Reuters. *Reminder, there is a 14:00GMT/09:0EST deadline for the EU Foreign Affairs Ministers to give their final approval to the full legal text of such sanctions.
• EU to sanction Russian Defense Minister Shoigu, and Russia's internet research agency, as part of first-wave restrictions, via WSJ.
• The UK is finalizing a stronger sanctions package to impose on Russia in the coming days, according to sources via Politico.
• Ukraine Foreign Minister Kuleba said sanctions from the US are specific and painful, while he added that pressure on Russia should be stepped up. Kuleba also stated that President Biden's sanctions announcement looks strong as a first move and they received a promise of more assistance from the US, while they are not seeking US troops on the ground, according to a Fox interview
• Canadian PM Trudeau announced sanctions on Russia in coordination with allies in which Canadians were banned from all dealing with the so-called independent states of Luhansk and Donetsk, while Canadians are also banned from engaging in purchases of Russian sovereign debt. Furthermore, they will apply additional sanctions on two state-backed Russian banks and will sanction Russian parliament members who voted to recognise the so-called republics.
• Australian PM Morrison announced he is to impose sanctions on some Russian individuals, travel bans and targeted financial sanctions, while PM Morrison said expect subsequent tranches of sanctions and that this is only the start of the process.
• Japanese PM Kishida announced a ban of Russian issue of bonds in Japan and said he doesn't see a big impact on energy supply in the short-term from current situation, while he announced a freeze of assets of certain Russian individuals.
• Russia Finance Ministry closely monitoring financial markets after US placed restrictions on Russian debt; OFZ auction to depend on market conditions; could issue with papers carrying lower level of interest rate risk, via Reuters.

US COMMENTARY/UPDATES

• US Secretary of State Blinken said it doesn't make sense to meet with Russian Foreign Minister Lavrov anymore now that Russia's invasion is beginning and he has sent a letter to Lavrov informing him of that.
• White House stated that a Biden-Putin summit is certainly not in the plans at this point and a Russian de-escalation would be needed for a Biden-Putin summit.
• US satellite image company Maxar said new images show new deployments in Belarus of over 100 vehicles and dozens of troop tents, while images show heavy equipment transporters and a new field hospital was added to a military garrison in western Russia

UKRAINE COMMENTARY/UPDATES

• Ukraine President said the main thing is to preserve the sovereignty and territorial integrity of Ukraine, while he added there is no need for general mobilization today and they are ready to end war through bilateral talks and with participation of other leaders.
• Ukraine is to introduce a state of emergency within all Ukraine regions ex-Donetsk/Luhansk, via Reuters; for 30-days, could be extended for another 30-days if required. Security official Danilov says that martial Law will only be introduced in Ukraine if necessary, according to Interfax.
• Ukraine has enforced new restrictions in areas bordering Russia, Belarus, Donbass, according to Sputnik citing a border guard.
• Ukraine urges citizens to leave Russia 'immediately', AFP reports.
• Ukraine Parliament has voted to grant permission for the right to self-defence and for civilians to carry firearms.
• Ukraine forces have deployed tanks near Vozdvizhenva, Donbass, according to Sputnik citing the DPR militia; additionally, Ukraine's President has called up reservists aged 18-60, maximum service period of one-year.

IRAN NUCLEAR TALKS

• US said discussions on Americans being held hostage by Iran are separate from nuclear deal talks.
• Iran's Foreign Minister says nuclear discussions in Vienna have now reached a "sensitive point", emphasised to the EU that they will never cross its red-lines, via Reuters; hopes to settle the remaining issues in the next few days. The remaining points of discussion require a realistic approach from Western counterparts.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer, Euro Stoxx 50 +1.0%, with gains relatively broad based though the oil-exposed FTSE 100 lags given benchmark pricing.
• US futures, ES +0.6%, are also firmer as newsflow is comparably slower and as participants also take impetus from sanctions being less-stringent than some feared.
• European sectors are predominantly in the green, though Energy lags given benchmark pricing while Autos and Food, Beverage & Tobacco outperforms on earnings.

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FX

• DXY still hugging 96.000, as firmer US Treasury yields compensate for loss of safe haven premium.
• Kiwi outperforms following hawkish guidance from RBNZ in wake of latest OCR hike that was finely balanced between the 25 bp delivered and 50 bp deliberated - Nzd/Usd eyes 0.6800.
• Aussie up due to ongoing improvement in risk appetite evident in commodities and Loonie also benefiting from similar factors, as Aud/Usd clears 0.7250 and Usd/Cad approaches 1.2700.
• Pound ponders BoE testimony implying more tightening but less hawkish dissent, with Cable cresting 1.3600.
• Euro holds firmly on the 1.130O handle and well flanked by decent option expiry interest either side of circa 1.1350+ to 1.1280 recent range.
• Rand awaits SA Budget around the 15.0000 mark and watches Gold attempting to stay within striking distance of Usd 1900/oz

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Notable FX Option Expiries, NY Cut:

• EUR/USD: 1.1200 (1.04BN), 1.1250 (601M), 1.1275-80 (1.32BN), 1.1300 (1.24BN), 1.1310-20 (480M), 1.1345-60 (1.57BN), 1.1375-85 (837M), 1.1435 (203M), 1.1475-80 (632M)
• AUD/USD: 0.7190-00 (1.7BN), 0.7225 (667M), 0.7295-00 (507M)
• Full list available here

FIXED INCOME

• UK bonds and STIR futures regain poise as BoE members signal a tempered tightening pace going forward.
• Bunds encouraged by a very strong 2036 German debt sale.
• US Treasuries lag awaiting USD 53bln 5 year issuance.

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COMMODITIES

• Crude benchmarks are experiencing a pull-back this morning as newsflow is comparably slower than at this point yesterday and in the context of yesterday's notable upside.
• Thus far, Brent has moved to a test of yesterday’s low at USD 95.80/bbl, though WTI remains someway from the comparable mark given the lack of settlement earlier in the week.
• US State Department official said US actions on Russia will not likely disrupt global energy markets and said officials did not discuss increasing oil output during the US trip to Saudi Arabia last week. US is coordinating with oil consuming countries to make sure all are able to respond if necessary and OPEC countries understand US concerns about importance of stability of global oil markets, while the official added that nothing currently happening on the ground in Ukraine risks oil flows.
• Spot gold remains in relative proximity to USD 1900/oz but with a negative bias while LME Copper retain an underlying bid but remains below the 10k handle.

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DATA RECAP

• EU HICP Final YY (Jan) 5.1% vs. Exp. 5.1% (Prev. 5.1%); Ex-Food & Energy Final YY (Jan) 2.4% vs. Exp. 2.5% (Prev. 2.5%)
• Ex-Food, Energy, Alcohol & Tobacco Final YY (Jan) 2.3% vs. Exp. 2.3% (Prev. 2.3%)

US-SPECIFIC HEADLINES

• Pentagon approves USCP and DC Police request for the National Guard to help with potential trucker protests, according to Fox.

Click here for the US Early Morning Note.

APAC TRADE

EQUITIES

• APAC stocks were positive but with upside capped after the S&P 500 closed in correction territory for the first time in two years and as participants digested the sanctions response to Russia's actions on Ukraine which targeted individuals and banks although the largest Russian banks Sberbank and VTB Bank avoided sanctions.
• ASX 200 was led higher by outperformance in tech and with focus also on a slew or earnings results.
• Nikkei 225 remained closed for the Emperor’s Birthday holiday.
• KOSPI gained but was restricted after daily COVID-19 cases surpassed 150k for the first time on Tuesday.
• Hang Seng and Shanghai Comp. rebounded from the prior day’s losses after the PBoC boosted its liquidity efforts heading into month-end and with tech stocks finding reprieve from yesterday’s crackdown fears, while Hong Kong's budget included counter cyclical measures of over HKD 170bln and HKD 54bln of anti-epidemic measures.

NOTABLE APAC HEADLINES

• Hong Kong Budget included counter cyclical measures of over HKD 170bln and the government will roll out over HKD 54bln of anti-epidemic measures, while it will reduce salaries tax payable by 8% capped at HKD 10k and issue HKD 10k electronic consumer vouchers for residents aged 18 years and older.

DATA RECAP

• Australian Construction Work Done (Q4) -0.4% vs. Exp. 2.5% (Prev. -0.3%, Rev. -1.2%)
• Australian Wage Price Index QQ (Q4) 0.7% vs. Exp. 0.7% (Prev. 0.6%)
• Australian Wage Price Index YY (Q4) 2.3% vs. Exp. 2.4% (Prev. 2.2%)

CENTRAL BANKS

• Fed's Bostic (2024 voter, hawk) said the economy is still quite strong as officials try to figure out the economy in real time, while companies and output remain restrained by inability to find workers. Fed's Bostic (2024 voter) says businesses are feeling need to adjust wages but it is not clear how long it will persist, adds have not seen worrisome changes yet in long-term inflation expectations
• RBNZ hiked the OCR by 25bps to 1.00% as expected and said the OCR is expected to peak at a higher level than assumed in the November statement, while the committee affirmed it was willing to move the OCR in larger increments if required over the coming quarters. RBNZ said many members saw this as a finely balanced decision whether to move OCR up by 25bps or 50bps and it noted more tightening is needed, as well as agreed to commence a gradual reduction of holdings under the LSAP programme in which it intends to commence bond sales in July. Furthermore, it said headline CPI is well above RBNZ target range but will return towards 2% mid-point in coming years. and sees the OCR at 2.84% in June 2023 (prev. 2.40%).
• RBNZ Governor Orr said cannot rule out 50bps hikes in the future and that rates do need to rise significantly but they will take their time step by step, while he added the amount of tightening through bond sales is very small and that it is all about the OCR.
• ECB's Holzmann said the council should consider two rate hikes this year and sees neutral rate at 1.50% as realistic by 2024.
• ECB's Villeroy says, re. Ukraine, we will assess in March the more indirect consequences on inflation/growth and will be facts driven.
• BoE Governor Bailey says there are two-sided risks to the inflation forecast, important not to suggest there is a difference in the view on the MPC about the level that rates need to reach, as opposed to the pace. Second-round effects present an upside risk to inflation. If second-round effects materialise, will need to react with higher interest rates.
• BoE Deputy Governor Broadbent says over the medium term, he thinks the risks to global goods prices are, like those of energy, skewed somewhat to the downside.
• BoE's Haskel says decision to vote for a 50bps hike at the February meeting was a finely-balanced one.
• BoE's Tenreyro says shocks that are being faced are still transitory but more persistent.