• US stocks finished lower (S&P 500 -1.6%) with Asian equities also seen softer overnight. 
• European equity futures are indicative of a soft open with the Euro Stoxx 50 future -0.1% after the cash market closed lower by 4.0% yesterday.
• In FX, the DXY extended on gains above 97.00, EUR/USD has reclaimed 1.1100 and cable sits on a 1.33 handle.
• US President Biden said getting prices under control is his highest priority.
• US President Biden announced that the US will join allies and ban Russian flights from using US airspace.
• Looking ahead, highlights include German Unemployment, EZ CPI (Flash), US ADP, BoC Policy Announcement, OPEC+, Ukraine-Russia Meeting (Time TBC), Speeches from Fed's Powell, Bullard & Evans, ECB's Lane, Schnabel, de Guindos & Nagel, Supply from UK & Germany.

US TRADE

• US stocks finished lower amid a flight to quality with Russia-Ukraine sanctions and conflict driving risk aversion.
• S&P 500 -1.6% at 4,304, Nasdaq 100 -1.6% at 14,005, Dow Jones -1.8% at 33,293, Russell 2000 -1.7% at 2,008.

GEOPOLITICS

RUSSIA-UKRAINE

• US President Biden announced that the US will join allies and ban Russian flights from using US airspace, while the DoJ is assembling a task force to go after the crimes of Russian oligarchs and the US is joining European allies to find and seize assets. Biden added that they are choking off Russia's access to technology that will sap its economic strength and weaken its military for years to come.
• US official said “he could imagine Putin detonating a nuclear weapon in the atmosphere over an unpopulated area as a warning to the West.”, according to Fox News' Bryan Llenas
• Ukrainian President Zelenskiy said he spoke to US President Biden and American leadership on anti-Russian sanctions in which defence assistance to Ukraine was discussed.
• Ukrainian Defence Intelligence said there are roughly 300 Belarusian tanks near the Belarusian-Ukrainian border and that Russia is preparing a deliberate provocation to justify entry of Belarusian troops into the conflict. The Ukrainian army also said that Russian airborne troops landed in Kharkiv, according to AFP.
• EU Council agreed on sanctions to exclude some Russian banks from the SWIFT system and voted to ban broadcasting of Sputnik and RT in the EU.
• Russian President Putin signed a decree on banning cash FX exports from Russia in amounts exceeding USD 10k from March 2nd, according to the Kremlin.
• Russia's Foreign Ministry said Russia will retaliate after the expulsion of 12 Russian diplomats at the UN.
• Russian envoy to UN Gatilov said the time has come to remove nuclear weapons from western and eastern Europe, while they see no desire on part of the Ukrainian regime to try and find a legitimate and balanced solution to problems.
• Turkish Presidential spokesman said Ukrainian and Russian delegations will most likely not meet on Wednesday and that Russia has an 'unrealistic' demand. However, the Turkish Foreign Minister expects Russia and Ukraine to reach ceasefire agreement in upcoming talks, according to Sputnik
• UK imposed sanctions on Belarus for its role in the Russian invasion of Ukraine, according to a statement.
• Trading platform MarketAxess will not provide trading for Russian sovereign bonds and corporates until further notice
• US nuclear power industry is lobbying the White House to allow continued uranium imports from Russia, according to Reuters sources.

APAC TRADE

EQUITIES

• APAC stocks traded mostly negative following the weak handover from Wall St where all major indices declined and bonds surged as the ongoing geopolitical turmoil surrounding Ukraine spurred a flight to safety and firm rally in oil prices.
• ASX 200 gained with the index led higher by the energy sector after Brent crude reclaimed the USD 110/bbl level.
• Nikkei 225 was pressured as exporters suffered the ill-effects of recent outperformance in the domestic currency and with automakers subdued after several reported a decline in US auto sales for last month.
• Hang Seng and Shanghai Comp. were subdued following a substantial liquidity drain by the PBoC but with losses cushioned by strength in China’s oil majors and with Baidu shares rallying after it beat on earnings.
• US equity futures nursed some of yesterday's losses but saw a muted reaction to the State of the Union Address.
• European equity futures are indicative of a soft open with the Euro Stoxx 50 future -0.1% after the cash market closed lower by 4.0% yesterday.

FX

• DXY extended on gains above 97.00 following the risk aversion on Wall St.
• EUR/USD lacked direction after recent losses but was off the prior day’s lows after bouncing off 1.1100.
• GBP/USD was subdued after collapse beneath 1.3400; BoE's Saunders suggested he may not back a 50bps hike again.
• USD/JPY reverted to the 115.00 level as JPY took a break from this week’s outperformance against the greenback.
• Antipodeans were higher in the aftermath of the stronger than expected Australian GDP data.

FIXED INCOME

• 10yr USTs eased slightly following the prior day's firm surge and brief approach of the 129.00 level.
• Bunds were steady after the recent rally was capped by resistance at 171.00.
• 10yr JGBs remained firm after climbing above 151.00 and with the BoJ in the market for JPY 1.2tln of JGBs.

COMMODITIES

• WTI and Brent extended on gains in which Brent reclaimed the USD 110.00 level amid geopolitical tensions.
• US Energy Inventory Data (bbls): Crude -6.1mln (exp. +2.7mln), Gasoline -2.5mln (exp. -1.4mln), Distillate +0.4mln (exp. -1.7mln), Cushing -1.0mln.
• US Department of Energy announced an emergency sale of 30mln bbls of crude oil from SPR and said the release is aimed at addressing market and supply disruptions related to the Russian invasion of Ukraine.
• US Senate GOP offered a bill to ban US purchase of Russian oil.
• US Transportation Secretary Buttigieg said everything is on the table when it comes to banning Russian oil imports to the US and that active discussions on that are being led by allies overseas, while he suggested there could be more heard about this in the coming days, according to Fox Business' Lawrence.
• Italian oil giant Eni (ENI IM) is to pull out of Russia-Turkey gas pipeline, according to AFP
• UK launched an urgent review of exposure to Russian gas and energy groups as industry heads express the need to examine ties between Gazprom and Britain, according to FT.
• Spot gold gave back some of yesterday's gains after hitting a ceiling at USD 1950/oz.
• Copper also partially faded the recent broad commodity strength.

CRYPTO

• Bitcoin was rangebound with most of its earlier losses reversed after support held near the 44,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 190bln net drain
• PBoC set USD/CNY mid-point at 6.3351 vs exp. 6.3347 (prev. 6.3014)
• Taiwan President Tsai said US President Biden sending US delegation shows rock-solid ties with the US and stated that China's military threat towards Taiwan and the region continues to rise, while she thanked the Biden administration for taking concrete actions to help Taiwan including arm sales packages and sending the delegation.

DATA RECAP

• Australian Real GDP QQ SA (Q4) 3.4% vs. Exp. 3.0% (Prev. -1.9%)
• Australian Real GDP YY SA (Q4) 4.2% vs. Exp. 3.7% (Prev. 3.9%)

EUROPE

DATA RECAP

• UK BRC Shop Price Index YY (Feb) 1.8% (Prev. 1.5%)

US

NOTABLE US HEADLINES

• US President Biden said getting prices under control is his highest priority and that he will soon send Congress a request for more pandemic-related funding. Biden outlined details of his plan to fight inflation called Building a Better America in which he called for the lowering of costs not wages such as through building cars in the US and wants to lower drug prices. Furthermore, he announced a new "test to treat" program in which people that test positive for COVID-19 at a pharmacy can get free antiviral pills on the spot.

CENTRAL BANKS

• BoE's Saunders (hawkish dissenter) said a vote for a 50bps hike in February does not necessarily imply that he believes the level of rates one or two years ahead will be higher than the yield curve used for the February MPR, while he said it is important to distinguish between the pace of tightening and the level of rates at the end of a tightening cycle.
• BoE's Mann (hawkish dissenter) said UK inflation is heading towards 7.25% in April with most inflation in energy and goods but expects good prices will ease. Mann also said oil prices today are accentuated by financial market bets and may not be what is paid, while there is a need to prevent high energy prices from becoming embedded in inflation expectations.
• SNB's Zurbruegg said it is important to keep lower interest rates than others to avoid excessive appreciation of CHF, while SNB will hike rates as soon as the situation requires and they will keep the ability to intervene in FX if needed.
• Fed's Mester (2022, 2024 voter) said Ukraine situation adds upside risk to inflation but downside risk on growth forecast.
• Fed's Bostic (2024 voter) said inflation is elevated well above Fed's 2% baseline and US 'hard pressed' to get inflation below 3% for all of 2022. Bostic is optimistic Fed actions will produce steady movements of inflation back to 2% but noted there is going to be significant upward pressure on energy prices. Furthermore, he reiterated he is open to four 25bps rate hikes this year if inflation continues to surprise on the upside and noted policy landscape has changed a lot since the previous meeting.