• European bourses are pressured, Euro Stoxx 50 -0.6%, with the exception of the FTSE 100 +0.3% amid crude action.
• US futures remain softer, ES -0.3%, but haven't slipped much further amid the above pressure in Europe as Russia-Ukraine tensions remain elevated
• DXY remains bid amid hawkish Fed rhetoric, USD/JPY continues to climb while Riksbank/CNB support SEK & CZK
• Fed's Mester (2022, 2024 voter) thinks 50bps increases will be needed at some meetings  based on her forecasts
• Bonds bounce as risk wobbles and bulls pounce, but sellers remain prevalent; Gilts & USTS bid pre-Sunak/20yr supply
• Crude benchmarks continue to grind higher, perhaps drawing some geopolitical premia. as broader sentiment slips
• Looking ahead, US New Home Sales, EZ Consumer Confidence (Flash), Australian Flash PMIs, UK Spring Statement, BoJ Minutes, Speeches from ECB's Lagarde, Fed's Bullard & Fed's Daly, US 20yr Auction.

As of 10:30GMT/06:30EDT

LOOKING AHEAD

• US New Home Sales, EZ Consumer Confidence (Flash), Australian Flash PMIs, UK Spring Statement, BoJ Minutes, Speeches from ECB's Lagarde, Fed's Bullard & Fed's Daly, US 20yr Auction.
• Note; US Clocks Changed to EDT from EST on Sunday, March 13th. London to New York time gap is four-hours until the UK change on March 27th.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

DISCUSSIONS/NEGOTIATIONS

• Ukrainian President Zelensky said talks with Russia are difficult and sometimes confrontational, while he also commented that 100k people are living in Mariupol under inhumane conditions without food, water or medicine.
• Governor of Luhansk, Ukraine says a local ceasefire has been agreed to evacuate civilians from some towns; Ukrainian Deputy PM says nine humanitarian corridors have been agreed for Wednesday.
• Russian Foreign Minister Lavrov says that NATO's eastward expansion continues irrespective of whether a particular nation is a member, via Sky News Arabia; adding that Russia has warned that its interest will be at stake if Ukraine joins the EU but Russia has not been listened to.
• Russian ambassador has been summoned to the Polish Foreign Ministry with circa 40 Russian diplomats set to be expelled from Poland, according to PAP sources; in response, the Russian Foreign Ministry says it will retaliate to Poland if it expels Russian diplomats.
• Russian Kremlin says the military operation within Ukraine is going according to plan, any possible contact of Russian forces with NATO's could cause consequences that would be hard to correct.

ENERGY/ECONOMIC UPDATES

• US President Biden is to announce sanctions on more than 300 members of Russia's lower chamber of parliament as soon as Thursday, according to WSJ citing administration officials.
• US Senators are to discuss freezing Russian gold assets with US Treasury Secretary Yellen, according to Axios.
• EU Ambassadors latest draft text, for discussion on Wednesday, calls for the Commission to unveil proposals by end-May on reducing Europe's "dependency on Russian gas, oil and coal imports", via Politico. Click here for more detail.
• Russian Deputy PM Novak says they are in talks with Asian partners regarding increasing oil exports if required.
• Russian National Settlement Depositary says Russian holders of domestic corporate Eurobonds could experience delays in receiving payments, may be caused by the requirement to seek clarification from European regulators.

DEFENCE/MILITARY

• UK Ministry of Defence said the Ukrainian civilian population in Russian-occupied cities continue to protest against Russian control, while Russia's efforts to subdue population have failed and it will probably employ increasingly violent and coercive measures.
• Ukraine President Zelenskiy says that Russian forces are utilising the exclusion zone in Chernobyl to prepare fresh attacks.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured, Euro Stoxx 50 -0.6%, with the exception of the FTSE 100 +0.3% amid crude action.
• US futures remain softer, ES -0.3%, but haven't slipped much further amid the above pressure in Europe as Russia-Ukraine tensions remain elevated.
• Spanish PM Sanchez says they are to reach an agreement with truckers this week. Following strike action against rising fuel prices
• China has found one black box of the Boeing (BA) 737 China Eastern jet crashed earlier in the week, according to a CAAC official, black box is "severely damaged", unsure if it is the flight data or cockpit voice recorder. Weather conditions along the flight path of the China Eastern plane that crashed did not pose a danger to the craft and air controllers maintained normal communication with jet and before rapid descent.

Click here for more detail.

FX

• Buck bounces as Fed officials line up behind bigger 50 bp hikes and Russian Foreign Minister Lavrov lambasts EU and NATO; DXY tops 98.700 vs a sub-98.500 low.
• Sterling deflated despite stronger than expected UK inflation data as risk sentiment sours ahead of Spring Statement, Cable closer to 1.3200 compared to almost 1.3300 at one stage and EUR/GBP holding above 0.8300.
• Yen regains some composure after latest collapse as global bond yields relapse, USD/JPY probing 121.00 having topped out near 121.41.
• Euro slips as crude rebounds and Russia-Ukraine rift rages on, EUR/USD circa 1.1000 after another fade into 1.1050.
• Hawkish rhetoric underpins Swedish Crown and Czech Koruna.
• Riksbank's Breman says that given high inflation, rates might need to be raised earlier and bond purchases can be unwound at a faster pace, important not to wait too long to take action.
• Czech Central Bank Deputy Governor says rates may peak "well above 5%" (vs current 4.5%).

Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/CAD: 1.2630-40 (1.0BN), 1.2650-60 (665M)
• Click here for more detail.

FIXED INCOME

• Bonds bounce as risk wobbles and bulls pounce, but sellers remain prevalent.
• US Treasuries also wary of looming 20 year supply that could need concession to draw decent demand.
• Gilts take strong UK inflation data largely in stride, but Spring Statement may highlight strained fiscal situation.
• Italian Treasury has commenced marketing a new 2030 CCTeu bond, via Reuters citing lead managers.

Click here for more detail.

COMMODITIES

• Crude benchmarks continue to grind higher, perhaps drawing some geopolitical premia. as broader sentiment slips.
• Currently, WTI resides north of USD 111/bbl (vs low 108.38/bbl whilst Brent breached USD 118/bbl in recent trade.
• US Energy Inventory Data (bbls): Crude -4.3mln (exp. +0.1mln), Cushing +0.6mln, Gasoline -0.6mln (exp. -2.0mln), Distillate -0.8mln (exp. -1.4mln)
• Black Sea crude exports face a prolonged outage as repairs may take as long as two months with the outage at 1mln bpd, according to Energy Intel's Bakr.
• Kazakhstan's Energy Ministry says they are working on alternative supply route for oil exports, following CPC damage.
• Belgium PM Croo says the EU needs to make a combined effort to secure large quantities of gas, to avoid competition for bilateral deals, suggesting a solidarity mechanism and a ceiling on gas prices, according to the FT.
• Trafigura CFO says if the futures market situation does not normalise, there will be an impact on physical trade.
• Nigeria increases its Bonny crude OSP for April to +USD 2.02bbl vs. dated Brent, increases Qua Iboe OSP to +USD 2.37bbl vs. dated Brent.
• Spot gold/silver are underpinned from haven-flows and in-spite of the USDs bid.
• LME Nickel hits 15% limit up.

Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK and US agreed to allow historically-based sustainable levels of steel and aluminium goods from the UK to enter the US without being subject to Section 232 tariffs, effective June 1st. Furthermore, the UK will suspend retaliatory tariffs on US products including whiskey, blue jeans and motorcycles which would lift retaliatory tariffs on more than USD 500mln of American goods.
• UK Treasury sources have warned that Chancellor Sunak’s room for manoeuvre is limited with inflation expected to stay high for months. Sources added that a fuel duty reduction of less than GBP 0.05/litre is anticipated, according to The Times.
• The UK government is said to be drawing up contingency plans for a potential collapse of Russia’s Gazprom’s UK-based global energy trading business, according to The Times.
• Germany’s Ifo cuts 2022 GDP growth forecasts to 2.2-3.1% (prev. 3.7% in Dec), amid the war; lifts inflation forecast to 5.1-6.1% (prev. 3.3% in Dec)
• EU budget chief Hahn has downplayed the need for fresh joint debt issuance as the bloc has available funds.

DATA RECAP

• UK CPI YY (Feb) 6.2% vs. Exp. 5.9% (Prev. 5.5%); MM (Feb) 0.8% vs. Exp. 0.6% (Prev. -0.1%)
• Core CPI YY (Feb) 5.2% vs. Exp. 5.0% (Prev. 4.4%); Core CPI MM (Feb) 0.8% vs. Exp. 0.5% (Prev. -0.4%)

NOTABLE US HEADLINES

• Fed's Mester (2022, 2024 voter) said she fully supports the Fed's actions last week and that raising the Fed Funds Rate to about 2.5% this year will be appropriate, with further hikes next year. Mester added that front-loading rate hikes is appealing and they can slow or speed up in H2 depending on data, while she doesn't think a 50bps rate hike should be off the table and thinks 50bps increases will be needed at some meetings based on her forecasts.
• White House Press Secretary Psaki said she has tested positive for COVID-19, while she had two socially distanced meetings with US President Biden on Monday and he tested negative on Tuesday.

Click here for the US Early Morning Note

CRYPTO

• Bitcoin is modestly pressured this morning, but lies within yesterday's parameters and hasn't strayed too far from the weeks peak just yet.

APAC TRADE

EQUITIES

• APAC stocks were positive as the regional bourses took impetus from Europe and the US where stocks gained despite the continued upside in yields and lack of fresh developments on the Ukrainian front.
• ASX 200 was led higher by tech and financials but with upside capped by weakness in miners.
• Nikkei 225 surged on ongoing currency weakness and reclaimed the 28,000 level.
• Hang Seng and Shanghai Comp. were underpinned as tech stocks gained including Xiaomi post-earnings and buyback announcement, while ZTE surged as much as 60% on a favourable court ruling.

NOTABLE APAC HEADLINES

• PBoC injected CNY 20bln via 7-day reverse repos with the rate at 2.10% for a CNY 10bln net injection.
• PBoC set USD/CNY mid-point at 6.3558 vs exp. 6.3522 (prev. 6.3664)
• Japanese PM Kishida is likely to order compiling an additional economic stimulus package by month-end to cushion the impact from rising oil and goods prices, according to Yomiuri.
• IMF's Rhee was nominated for the BoK Governor position by outgoing South Korean President Moon.