• Russian President Putin ordered to place Russia's nuclear deterrent forces on high alert citing aggressive statements by NATO leaders and economic sanctions
• G7 leaders declared they will remove selected Russian banks from the interbank SWIFT system; the EU said some Russian central bank assets will be frozen
• Russian Central Bank said it releases a capital buffer while it ordered market players to reject foreign clients' bids to sell Russian securities
• BP (BP/ LN) is to exit its 20% shareholding in Russian oil major Rosneft and will write down as much as USD 25bln at the end of Q1
• APAC stocks traded cautiously after the firm rebound on Wall Street on Friday; US equity futures slipped over 2% overnight but YM saw shallower losses
• In FX, DXY continued march above 97.000, EUR lagged in the G10 bunch, and RUB plunged nearly 30% to an all-time low vs the USD
• Crude futures surged overnight with Brent Apr firmly back above USD 100/bbl; Spot gold reclaimed USD 1,900+ status
• Looking ahead, highlights include Russian-Ukrainian officials meeting, US Chicago PMI, ECB’s Lagarde, Panetta; Fed’s Bostic; EU’s von der Leyen, China’s Foreign Minister Yi, earnings from ABF

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US TRADE

• US stocks finished higher on Friday where there was a broad risk-on mood as stock indices rallied in a cyclical manner and as other asset classes also unwound some of their recent Ukraine-induced price action.
• S&P 500 +2.2% at 4,384, Nasdaq 100 +1.5% at 14,189, Dow Jones +2.5% at 34,058, Russell 2000 +2.3% at 2,041.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin ordered to place Russia's nuclear deterrent forces on high alert citing aggressive statements by NATO leaders and severe economic sanctions against Moscow, according to Sky News.
• G7 leaders declared they will remove selected Russian banks from interbank SWIFT system, while US and allies vowed to block Moscow’s access to foreign currency reserves in the west.
• EU Foreign Policy Chief Borrell said they approved crippling measures to Russian financial markets including the exclusion of some Russian banks from SWIFT, while he added that about half the financial reserves of Russia’s central bank will be frozen and that the EU will continue support for Ukraine despite Russian President Putin’s reference to nuclear weapons.
• Russian Central Bank said it releases a capital buffer that banks hold in respect to unsecured consumer loans and mortgage loans in both RUB and foreign currency which frees up RUB 733bln in reserves, while it ordered market players to reject foreign clients' bids to sell Russian securities from 04:00GMT on February 28th, according to Reuters.
• EU states are to provide Ukraine with fighter jets and are considering sanctions against some of Russia’s wealthiest businessmen, while sources said Germany is in the process of approving shipment of 400 RPGs to Ukraine via a third country.
• Ukrainian and Russian officials will meet for talks at a venue on the Belarusian border with Ukraine, according to reports in Reuters citing President Zelensky's office.
• US official said Belarus is preparing to join the Russian invasion of Ukraine, according to Washington Post.
• EU Commission President von der Leyen said the EU will ban all Russian aircraft and will supply weapons to Ukraine. EU will also ban state-owned RT and Sputnik, while it will impose a new package of sanctions against Belarusian President Lukashenko’s regime. Furthermore, von der Leyen told euronews that Ukraine is one of us and that they want them in the bloc.
• Russia was reportedly struggling to take Kyiv and Kharkiv but was pushing across the Black Sea coast, while Maxar satellite imagery showed a large convoy of Russian ground forces and tanks are moving towards Kyiv, according to Reuters.
• Israeli PM Bennet spoke with Russian President Putin in which he proposed that Israel mediate the Russian-Ukraine crisis and stated that President Putin was “open” to mediate with Ukraine, according to an Israeli official.
• Russia’s Medvedev said diplomatic relations are not especially needed anymore and that it is time to padlock the embassies.
• Norway is removing Russian assets from its USD 1.3tln sovereign wealth fund and New York City Comptroller Lander said they will specify Russian assets to consider divestment.

OTHER

• Iran’s Foreign Minister tweeted that Iran is ready to immediately conclude a deal in talks to revive the 2015 nuclear deal if western powers show a real will. However, there were separate comments from Iran’s Foreign Ministry spokesman that Tehran will not accept a deadline set by the west to revive the nuclear agreement and said all politically-motivated claims by the IAEA about Tehran’s nuclear work must be dropped.
• North Korea fired what appeared to be a ballistic missile on Sunday, according to the Japanese Coast Guard, while North Korea later confirmed it tested a reconnaissance satellite on Sunday.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously after Russian President Putin ordered nuclear forces to be placed on high alert and with the west imposing further sanctions such as excluding some Russian banks from SWIFT and restrictions targeting CBR’s international reserves.
• ASX 200 shrugged off early weakness, helped by the commodity-related sectors and stronger than expected Retail Sales.
• Nikkei 225 swung between gains and losses with pressure from the haven flows into JPY.
• Hang Seng and Shanghai Comp. traded mixed with Hong Kong dragged lower by large tech and virus concerns with a lockdown for the city said to not be ruled out during mass COVID testing, while losses in the mainland were limited after the PBoC continued its firm liquidity effort and China’s Politburo reiterated to step-up implementation of macro policies to stabilise the economy.
• US equity futures declined with heavy pressure at this week's reopen following the latest geopolitical headlines.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -3.2% after the cash market closed higher by 3.7% on Friday.

FX

• DXY strengthened above 97.00 as the geopolitical concerns spurred a haven bid, while Credit Suisse suggests the SWIFT ban on Russian lenders could lead to missed payments and large overdrafts for the international banking system, as well as a need for monetary authorities to boost dollar supply.
• EUR/USD fell beneath 1.1200 amid the latest geopolitical tensions and sanctions including ban on all Russian jets in EU airspace.
• GBP/USD softened with the latest MRP model projection showing support for the Tory party at its lowest levels since 2005.
• USD/JPY traded sideways with the strength in both the USD and JPY virtually on par.
• Antipodeans weakened due to the broad risk aversion and despite the PBoC setting the strongest fix since April 2018.
• RUB weakened which saw USD/RUB up by over 40% to a record 119.00 via EBS.

FIXED INCOME

• 10yr USTs jumped higher by over a point following the reopen of futures trading amid a haven bid and despite moving off today’s best levels, prices remained above 127.00.
• Bunds gained by around a point to above 167.00.
• 10yr JGBs were also firmer but with gains limited by the indecisive mood in Tokyo and absence of BoJ buying.

COMMODITIES

• WTI and Brent gained amid the latest escalation in geopolitical tensions which saw Brent briefly test the USD 105/bbl level.
• OPEC+ revised its 2022 oil market surplus forecast down to 1.1mln bpd from 1.3mln bpd and it missed oil output targets by 972k bpd in Jan vs. 824k bpd in December, according to the JTC.
• BP (BP/ LN) is to exit its 20% shareholding in Russian oil major Rosneft and will write down as much as USD 25bln at the end of Q1 as a result of its Rosneft exit. Rosneft said it remains open for cooperation and that BP’s decision will ruin 30 years of successful cooperation, while UK Business Secretary Kwarteng said he welcomes BP decision and that Russia’s invasion of Ukraine must be a wake-up call for UK businesses with commercial interests in Russia, according to Reuters.
• UK Ministers are said to be preparing to release over 1mln barrels of the UK’s strategic oil reserve to tackle rising fuel prices, according to The Times.
• Asian oil buyers are reportedly attempting to secure more Saudi oil amid the Russia-Ukraine crisis, according to Bloomberg citing traders.
• Spot gold benefitted from the risk aversion and climbed back above the USD 1900/oz level.
• Copper marginally benefitted despite the cautious risk appetite.
• China state planner will step up supervision of iron spot and futures markets to ensure stable market operation, while it will hold a meeting with the market regulator and the Dalian exchange to look into irregular trading in iron ore spot and futures markets.
• Traders warned they are unlikely to make wheat offers from the Black Sea region at Monday’s Egyptian buying tender, according to Bloomberg.

CRYPTO

• Bitcoin traded choppy and heads into the European session with marginal gains.

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 6.3222 vs exp. 6.3196 (prev. 6.3346)
• China urged the US to resume rational policy towards China and bring US-China relations back on track at an early date, as well as uphold the One China principle, according to Global Times citing Chinese Foreign Minister Wang.

DATA RECAP

• Australian Retail Sales MM Final (Jan) 1.8% vs. Exp. 0.4% (Prev. -4.4%)
• New Zealand NBNZ Business Outlook (Feb) -51.8% (Prev. -23.2%)
• New Zealand NBNZ Own Activity (Feb) -2.2% (Prev. 11.8%)
• Japanese Industrial Production (Jan P) -1.3% vs. Exp. -0.7% (Prev. -1.0%)
• Japanese Retail Sales YY (Jan) 1.6% vs. Exp. 1.4% (Prev. 1.4%, Rev. 1.2%)

EUROPE

NOTABLE EUROPEAN HEADLINES

• Support for UK’s ruling Tory party fell to the lowest levels since 2005 following the Downing St. parties scandal with PM Johnson and half the cabinet seen to lose their seats if an election were held now, while Labour would gain 150 seats for a total of 352 seats and 14-seat overall majority, according to The Sunday Times citing the MRP model projection.
• ECB's Wunsch agrees with the market view if tightening and disagrees with the idea that ECB tightening will cripple the economy, according to Leader-Post.

DATA RECAP

• UK Lloyds Business Barometer (Feb) 44 (Prev. 39)

US

NOTABLE US HEADLINES

• Fed's Bullard (2022 voter, hawk) said on Friday that a direct link of Ukraine-Russia to the US economy is minimal, while he reiterated that he wants to see 100bps of hikes by July 1st and wants to start the balance sheet reduction by July 1st.