• European bourses are firmer across the board, Euro Stoxx 50 +0.3%, as the constructive APAC tone from China's reopening leads
• US futures are in the green, ES +0.4%, in-fitting with the above sentiment ahead of Fed speak and a NY Fed Consumer Expectations survey
• DXY continues to slip below the 104.00 mark between 103.860-420 parameters towards key technical support and its December low (103.380)
• Action which is benefitting peers across the board ex-JPY, which is suffering amid the easing in USTs/EGBs and a Japanese holiday, with USD/JPY above 132.50
• EGBs under pressure and continuing to retreat from Friday's best, with Bunds down by nearly 100 ticks and Gilts similarly dented though managing to retain 102.00 at present
• Crude benchmarks are bid this morning, with WTI Feb and Brent Mar posting upside in excess of 3.0% or USD 2.0/bbl respectively; given China's reopening and geopolitical developments
• Looking ahead highlights include speeches from Fed’s Bostic, Daly, BoE's Pill & NY Fed Consumer Expectations survey.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.3%, as the constructive APAC tone continues amid a limited European docket.
• Sectors are primarily in the green, with defensive names lagging somewhat in-fitting with the risk tone.
• US futures are in the green, ES +0.4%, in-fitting with the above sentiment ahead of Fed speak and a NY Fed Consumer Expectations survey
• Apple's (AAPL) iPhone exports from India have doubled to a record USD 2.5bln, via Bloomberg.
• Click here for more detail.

FX

• DXY continues to slip below the 104.00 mark between 103.860-420 parameters towards key technical support and its December low (103.380).
• Action which is benefitting peers across the board ex-JPY, which is suffering amid the easing in USTs/EGBs and a Japanese holiday, with USD/JPY above 132.50.
• Antipodeans are the current outperformers with AUD surpassing 0.69 and Kiwi eclipsing 0.64 vs USD, before waning slightly.
• EUR/USD hit, but failed to breach, 1.07 while Cable is off best but still above 1.21 in a 1.2089-1.2174 range.
• PBoC set USD/CNY mid-point at 6.8265 vs exp. 6.8276 (prev. 6.8912)
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FIXED INCOME

• EGBs under pressure and continuing to retreat from Friday's best, with Bunds down by nearly 100 ticks and Gilts similarly dented though managing to retain 102.00 at present
• USTs are similarly softer, though have largely been consolidating towards the APAC trough given the absence of Japanese participants ahead of Fed speak and NY survey, with yields modestly firmer across the curve.
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COMMODITIES

• Crude benchmarks are bid this morning, with WTI Feb and Brent Mar posting upside in excess of 3.0% or USD 2.0/bbl respectively.
• Action has been driven by China’s ongoing reopening and fresh geopolitical headlines, alongside other crude-specific developments (see below).
• Qatar set February marine crude OSP at Oman/Dubai plus USD 0.75/bbl and land crude OSP at Oman/Dubai plus USD 2.10/bbl. In relevant news, Qatar Energy is to sign Ras Laffan Petrochemicals Complex agreements with the project to cost USD 6bln and it created a JV with Chevron Phillips Chemicals of which it owns 70% and Chevron (CVX) owns 30%, according to Reuters.
• Iraq’s Oil Minister said the Karbala oil refinery will begin commercial production in mid-March, according to Reuters.
• US DoE rejected the initial batch of bids from oil companies to resupply a small amount of oil to the SPR in February, according to Reuters.
• Colonial Pipeline said repairs at the Witt Booster Station were completed and Line 3 returned to normal operations as of 17:51 EST on Sunday, according to Reuters.
• China has issued a second batch of 2023 crude oil import quotas to independent refiners totalling 111.82mln/T, via Reuters citing sources.
• Iraq February Basrah medium crude OSP to Asia -USD 1.40/bbl vs Oman/Dubai average, via Somo; to Europe at -USD 8.95/bbl vs Dated Brent.
• Spot gold is fairly contained around the mid-point of USD 1864-1880/oz parameters, with the yellow metal deriving some upside from the DXY struggling to attain a positive foothold; next resistance mark is USD 1885/oz from the 9th of May.
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NOTABLE HEADLINES

• BoE’s Mann said energy price caps could be lifting inflation in other sectors by boosting consumer spending and noted it is unclear what would happen to inflation when caps are removed, according to Bloomberg.
• UK PM Sunak said inflation is not guaranteed to decline this year and that the government will need to be disciplined to ensure inflation is brought down, according to Reuters. In other news, PM Sunak said he was willing to discuss pay increases for nurses in an effort to end strikes as ministers prepare to meet union leaders on Monday, according to FT.
• Czech Central Bank Governor Michl said they expect a significant drop in inflation from spring and are ready to raise rates further if the baseline scenario of a decline in inflation does not materialise, while he added that policy will be strict until inflation begins declining, according to Reuters.
• Supporters of former Brazilian president Bolsonaro invaded ministry buildings, Congress and the Presidential Palace in Brasilia, while the Brasilia Governor said all security forces have been deployed and the US Embassy in Brazil warned US citizens to avoid the central Brasilia area until further notice. Furthermore, President Lula declared a federal security intervention in Brasilia until January 31st and security forces later took back Brazil's Congress, Supreme Court and Presidential Palace, according to Reuters and GloboNews.
• South Africa’s Eskom said it will implement stage 3 electricity cuts from 05:00-16:00 local time and stage 4 cuts during 16:00-05:00 daily until further notice, according to Reuters.

NOTABLE DATA

• German Industrial Output MM (Nov) 0.2% vs. Exp. 0.1% (Prev. -0.1%, Rev. -0.4%)
• EU Sentix Index (Jan) -17.5 vs. Exp. -18.0 (Prev. -21.0)
• EU Unemployment Rate (Nov) 6.5% vs. Exp. 6.5% (Prev. 6.5%)

NOTABLE US HEADLINES

• White House said it is not considering going around Congress to raise the debt ceiling and that Congress will have to raise the debt limit without conditions, according to Reuters.
• US House of Representatives voted to elect Kevin McCarthy as House Speaker after a 15th ballot, while President Biden congratulated McCarthy and said that he is prepared to work with Republicans when he can, according to Reuters.
• A cargo vessel has run aground in the Suez Canal, via AP citing Leth (service firm), unclear as to what extent traffic is affected; tugs are currently trying to refloat the vessel. Subsequently, Suez Canal Chairman says the grounding of M/V Glory has not affected waterway traffic and Leth says 19 vessels are backed up in the Suez Canal due to the M/V Glory grounding. M/V GLORY has been refloated by the Suez Canal Authority tugs, via Leth Agency; "21 vessels going southbound will commence/resume their transits. Only minor delays expected."
• Click here for the US Early Morning note.

GEOPOLITICS

• Ukrainian President Zelensky said Ukrainian forces were repelling Russian attacks on Bakhmut in eastern Donbas and were holding position in nearby Soledar under very difficult conditions, according to Reuters.
• Russia’s Defence Ministry said it struck a building in eastern Ukraine which killed more than 600 Ukrainian troops in retaliation for Ukraine’s deadly strike against a Russian barracks, although Ukrainian officials denied there were any casualties and said the strike by Russia only damaged civilian infrastructure, according to Reuters and ITV.
• Russia and Belarus will conduct joint air force drills on January 16th-February 1st, according to the Belarusian Defence Ministry cited by Reuters.
• Russian Kremlin has rejected suggestions from Ukraine that Russian official Kozak is sounding out officials in Europe about a potential peace deal.
• Swedish PM Kristersson said they have fulfilled commitments made to Turkey at the Madrid summit but noted that Turkey is demanding concessions that Stockholm cannot give to approve its application to join NATO, according to FT.
• China's military said it carried out combat drills around Taiwan on Sunday, while Taiwan's Defence Ministry stated 28 Chinese aircraft crossed the Taiwan Strait median line and entered the air defence zone in the past 24 hours. Furthermore, Taiwan's presidential office said it condemns China's recent military drills around Taiwan and that Taiwan's position is very clear whereby it will not escalate conflict nor provoke disputes but added that it will firmly defend its sovereignty and national security, according to Reuters.

CRYPTO

• Bitcoin is firmer and has managed to surpass and gain a more convincing foothold above USD 17k, after fleeting breaches of the figure in recent sessions, with the 16th Dec USD 17524 peak into play.
• Bafin warns of Godfather malware attack on banking/crypto apps.

APAC TRADE

• APAC stocks gained with the MSCI Asia Pacific index on course to enter a bull market as the region took impetus from last Friday’s rally on Wall St.
• ASX 200 was led higher by strength in the commodity-related sectors and with sentiment also helped by China’s border reopening which JPMorgan predicts could boost Australia’s economy by nearly one percentage point over the next two years, although gains are capped following disappointing building approvals data.
• KOSPI outperformed with the index and shares in LG Electronics unfazed by the Co.’s softer preliminary Q4 earnings.
• Hang Seng and Shanghai Comp were supported after China’s border reopening over the weekend added to the hopes of an economic recovery and with Alibaba shares spearheading the advances in Hong Kong after Jack Ma ceded control of affiliate Ant Group.

NOTABLE ASIA-PAC HEADLINES

• Chinese President Xi Jinping stressed the importance of remaining committed to advancing reform, exploring new ground and carrying forward the fighting spirit, in a bid to modernize the work of judicial, procuratorial, and public security organs, according to China Economic Net.
• PBoC official Guo Shuqing said China’s growth will return to a normal path as China provides further support to households and companies to help recover following the end of the zero-Covid policy, according to People’s Daily.
• Tens of thousands of travellers began to fly in and out of mainland China on Sunday following the removal of nearly all of China’s border restrictions, according to WSJ.
• China’s health security administration said talks to include Pfizer’s (PFE) Paxlovid in the drug list for basic state health insurance failed due to the Co.’s high quotation for the antiviral medicine, according to Reuters.
• Six Chinese cities set GDP targets for this year ranging from 5.5%-7.0%, according to Securities Daily.
• Japanese PM Kishida said they must choose a successor to BoJ Governor Kuroda best suited for the post at the time when Kuroda’s term ends in April and must discuss with the next BoJ Governor the relationship between the government's and BoJ's policies. Kishida added that the government and BoJ must work closely together and each should play their own roles in achieving sustained price stability, while he noted that the government is ready to respond flexibly using reserves when asked if further steps could be taken to soften the blow on households from rising prices, according to Reuters.
• China reportedly considering a record special debt quota and a wider budget deficit, via Bloomberg; considering a deficit ratio of circa. 3% for the year. New special bond quota of up to CNY 3.8tln.

DATA RECAP

• Australian Building Approvals (Nov) -9.0% vs. Exp. -1.0% (Prev. -6.0%, Rev. -5.6%)