• European bourses are firmer and back in proximity to initial best levels after losing traction shortly after the cash open, Euro Stoxx 50 +1.3%; FTSE 100 +1.9% outperforms amid Basic Resources strength.
• US futures are lower across the board, ES -0.9%, after yesterday's significant intra-day reversal to close positive; albeit, action has been rangebound within the European morning.
• Europe is preparing additional Russian sanctions, US says they have room for further measures; French officials intimate SWIFT remains an option, but the last resort.
• Reports of gunfire in the gov't quarter of Kyiv; Ukraine's Zelensky has proposed that Russia's Putin meet him at the negotiating table.
• DXY is firmer and above 97.00 once more, Antipodeans outperform while Core Debt remains choppy and dictated by geopols.
• WTI and Brent have continued to pull back after overnight consolidation, Brent April notably below USD 99.00/bbl vs USD 101.99/bbl highs.
• Looking ahead, US PCE and Durable Goods, Speeches ECB's de Guindos and BoE's Pill, Eurogroup Meeting.

As of 11:20GMT/06:20EST

LOOKING AHEAD

• US PCE and Durable Goods, Speeches ECB's de Guindos and BoE's Pill, Eurogroup Meeting.
• Click here for the Week Ahead preview.

GEOPOLITICS

SANCTIONS

• US Senior US administration official said the US still has room to further tighten sanctions if Russian aggression accelerates further and is keeping the option open to impose import-export controls on less-advanced mainline chips such as those used in the Russian auto industry.
• European Commission President von der Leyen said steps agreed by EU leaders include financial sanctions and they are targeting 70% of the Russian banking market, as well as key state owned companies including defence. Furthermore, the export ban will impact Russia's oil sector by making it impossible to upgrade refineries and EU is limiting Russia's access to key technologies such as semiconductors.
• EU Council President Michel says they are urgently preparing additional sanctions against Russia, via AFP; subsequently, a German gov't spokesperson says a discussion of third sanctions package against Russia is in its early stages.
• French President Macron said EU sanctions will be followed by French national sanctions on certain people which are to be announced later, while they will offer EUR 300mln of aid to Ukraine and military equipment, as well as target Belarus for penalties.
• Russian Central Bank said it will provide any support needed for sanctions-hit banks and that banks have been well prepared in advance, while Ukraine's Central Bank banned operations with RUB and BYR, as well as banned banks from making payments to entities in Russia and Belarus.
• Russia may retaliate for UK ban on Aeroflot flights to Britain, according to Tass citing the aviation authority; subsequently, Russia banned London registered craft from its airspace.
• Russian Parliamentary Upper Chamber speaker says that Russia has prepared sanctions to hit the weak points of the West, according to Interfax.
• Australian PM Morrison announced the nation is to impose further sanctions on Russian individuals and said it is unacceptable that China is easing trade restrictions with Russia at this time. Taiwan will join democratic countries to put sanctions on Russia for invasion of Ukraine and Japanese PM Kishida said they will immediately impose sanctions in Russia in three areas including the financial sector and military equipment exports, while Russia's envoy to Japan later said there will be a serious Russian response to Japanese sanctions.
• UK Defence Minister Wallace says we would like to cut Russia off from SWIFT; French Finance Minister Le Maire says the option of cutting Russia off from SWIFT remains an option, but it a last resort.
• India is reportedly exploring setting up INR trade accounts with Russia to soften the blow on India from Russian sanctions, according to Reuters sources.

UKRAINE UPDATES

• There were reports of heavy explosions rocking the Ukrainian capital of Kyiv and US Senator Rubio tweeted it appeared that at least three dozen missiles were fired at the Kyiv are in 40 minutes, while Ukrainian Foreign Minister Kuleba confirmed Russian rockets fired at Kyiv and President Zelensky also noted Russia resumed missile strikes at 04:00 local time/02:00GMT.
• Note, Russia has not undertaken missile strikes on Kyiv, according to Russian press citing a source in the Defence Ministry.
• There is currently gunfire in Kyiv with Russians in the City, according to a reporter (08:45GMT/03:45EST)
• Gunfire has been heard near the government quarter of Kyiv, Ukraine, via LBC News (09:09GMT/04:09EST)
• Ukrainian military vehicles seized by Russian troops wearing Ukrainian uniforms, heading for Kyiv, defense official says - UNIAN, cited by BNO News.
• Russian paratroopers take control of Chernobyl nuclear power plant, according to the Ministry of Defence cited by Sputnik. Additionally, Ukraine nuclear agency says it is seeing higher radiation levels in Chernobyl; note, Sky News reports that the increase is insignificant and is due to military vehicles moving around the reactor.
• Ukraine President adviser says that Ukraine wants peace, if negotiations are still possible, they should be undertaken. Subsequently, Russian Foreign Minister Lavrov says that Ukraine President Zelenskiy is "lying" when he says he is prepared to discuss the neutral status of Ukraine; however, the Kremlin says it has taken note of Kyiv's willingness to discuss neutral status; will need to analyse this.
• Ukraine President Zelensky says the Russian assault is like a repeat of WW2, accuses Europe of an insufficient reaction, Europe can still stop the Russian aggression if they act quickly.
• Ukrainian President Zelensky has proposed Russian President Putin joins him at the negotiating table, according to Ria.

OTHER COMMENTARY/UPDATES

• House Speaker Pelosi said she wants to provide Ukraine with USD 600mln in lethal defence weapons.
• US President Biden will meet with heads of states and government from NATO countries at 14:00GMT/09:00EST Friday.
• EU Foreign Affairs ministers are due to meet at 14:00GMT/09:00EST, at the same time there will be a Finance Ministers press conference.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer and back in proximity to initial best levels after losing traction shortly after the cash open, Euro Stoxx 50 +1.3%; FTSE 100 +1.9% outperforms amid Basic Resources strength.
• US futures are lower across the board, ES -0.9%, after yesterday's significant intra-day reversal to close positive; albeit, action has been rangebound within the European morning.
• US SEC's EDGAR feed is reportedly down; fillings cannot be made.
• In Europe, sectors are all in the green featuring noted outperformance in Utilities and** Basic Resources, **Energy remains firmer in-spite of the crude benchmarks pullback.

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FX

• Aussie regroups alongside broad risk sentiment and rebound in Aud/Nzd cross amidst mixed NZ consumption and trade data - Aud/Usd near 0.7200 vs sub-0.7100 low yesterday.
• Buck bases after abrupt reversal from new 2022 highs in DXY terms and residual rebalancing may underpin alongside underlying safe haven bid - index above 97.000 again vs 96.770 low and 97.740 y-t-d best.
• Rouble supported by ongoing CBR intervention via higher repo auction cap - Usd/Rub around 84.000 compared to almost 90.000 record peak.
• Yen and Gold off best levels, but both retain elements of safety premium - Usd/Jpy circa 115.35 and Xau/Usd hovering above Usd 1900/oz.

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FIXED INCOME

• Bonds still choppy and subject to swings on headlines and reports from Ukraine.
• Gilts and EZ periphery debt showing a bit more resilience and recovery momentum after Thursday's sharp reversal.
• USTs relatively contained and curve fractionally flatter pre-US PCE metrics including the Fed's preferred core y/y inflation gauge.

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COMMODITIES

• WTI and Brent have continued to pull back after overnight consolidation, Brent April notably below USD 99.00/bbl vs USD 101.99/bbl highs.
• Focus remains firmly on geopolitics (see section above) while participants are also attentive to next week's OPEC+ meeting.
• Japan's Industry Minister said they will appropriately deal with an oil release from national reserves in cooperation with relevant countries and the IEA.
• Spot gold is rangebound after an initial move higher failed to gather steam and hit resistance at USD 1922/oz.
• Goldman Sachs recently commented that the rally for gold has a lot further to go on the situation in Ukraine and prices and that prices could reach as high at USD 2,350/oz if there is a build in demand for ETF.

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DATA RECAP

• UK GfK Consumer Confidence (Feb) -26 vs. Exp. -18.0 (Prev. -19.0)
• German GDP Detailed YY NSA (Q4) 1.8% vs. Exp. 1.4% (Prev. 1.4%, Rev. 2.8%); QQ SA (Q4) -0.3% vs. Exp. -0.7% (Prev. -0.7%)
• EU Consumer Confidence Final (Feb) -8.8 vs. Exp. -8.8 (Prev. -8.8)
• EU Economic Sentiment (Feb) 114.0 vs. Exp. 113.1 (Prev. 112.7); Consumer Inflation Expectations (Feb) 37.7 (Prev. 38.4)

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APAC TRADE

EQUITIES

• APAC stocks mostly gained after the firm rebound on Wall St.
• ASX 200 was capped amid a slew of earnings and with outperformance in tech offset by weakness in miners and financials.
• Nikkei 225 outperformed and reclaimed the 26k status with exporters underpinned by a more favourable currency.
• KOSPI gained with index heavyweight Samsung Electronics underpinned as it launched global sales of its flagship smartphone and latest tablet which have attracted record pre-orders.
• Hang Seng and Shanghai Comp. were mixed with the mainland underpinned after the PBoC boosted its daily liquidity operation which resulted in the biggest weekly cash injection in more than two years. although Hong Kong was constrained by losses in the energy majors and with financials subdued amid pressure in HSBC shares and after China Communist Party inspections on financial institutions.

NOTABLE APAC HEADLINES

• PBoC injected CNY 300bln via 7-day reverse repos with the rate at 2.10% for a CNY 290bln net injection.
• PBoC set USD/CNY mid-point at 6.3346 vs exp. 6.3363 (prev. 6.3280)

DATA RECAP

• Tokyo CPI YY (Feb) 1.0% vs. Exp. 0.6% (Prev. 0.5%); Ex. Fresh Food (Feb) 0.5% vs. Exp. 0.4% (Prev. 0.2%)
• Tokyo CPI YY Ex. Fresh Food & Energy (Feb) -0.6% vs. Exp.-0.6% (Prev. -0.7%)
• New Zealand Retail Sales Volumes QQ (Q4) 8.6% (Prev. -8.1%); YY (Q4) 4.4% (Prev. -5.2%)
• New Zealand Trade Balance (Jan) -1082M (Prev. -477.0M)
• New Zealand Exports (Jan) 4.86B (Prev. 6.07B); Imports (Jan) 5.94B (Prev. 6.55B)

CENTRAL BANKS

• Fed's Waller (voter) said it is too soon to judge how Ukraine conflict will impact the world or US economy and concerted action to rein in inflation is needed. Waller said rates should be raised by 100bps by mid-year and there is a strong case for a 50bps hike in March if incoming data indicates economy is still exceedingly hot, but added it is possible a more modest tightening is appropriate in wake of Ukraine attack, while he also stated the Fed should start trimming the balance sheet no later than the July meeting, according to Reuters.
• ECB's Lane said there would be a significant increase to 2022 inflation forecast amid the Ukraine crisis but hinted at inflation below target at end of horizon according to Reuters sources; Lane presented several scenarios: Mild scenario: no impact to EZ GDP; seen as unlikely; Middle scenario: 0.3-0.4ppts shaved off EZ GDP; Severe scenario: EZ hit by almost 1ppt. Note, sources cited by Reuters suggested these were rough calculations.
• BoE's Mann says all of the MPC agree that UK inflation is way above the BoE's goal; Mann added that domestic demand is strong and UK labour market is tight. BoE agents survey has been fundamental in guiding Mann's view on policy.