• European bourses are firmer across the board, Euro Stoxx 50 +0.5%, though price action has been fairly contained in slim pre-CPI newsflow with US futures essentially unchanged.
• Yomiuri Yen revival keeps Greenback grounded awaiting US CPI data; reports the BoJ is to review the effects of its massive monetary easing at next week's gathering.
• Bonds wane after an early bull run to and through new big figure levels for Bunds and Gilts at 138.45 and 104.14 respectively, USTs more reserved pre-CPI/Fed speak.
• Crude and precious metals have benefitted from the USD's pullback, though are yet to eclipse recent bests.
• Looking ahead, highlights include US CPI & IJC, speeches from Fed's Barkin, Bullard & Harker and supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.5%, though price action has been fairly contained in slim pre-CPI newsflow.
• US futures are essentially unchanged, ES -0.1%, ahead of December's CPI and Fed speak before and after the key data.
• TSMC (2330 TT) Q4 (TWD) net 295.9bln (exp. 289.4bln), rev. 625.5bln (prelim. 625.5bln), says smartphone and PC demand dropped more severely than expected. Guides Q1 (TWD) rev. 16.7bln-17.5bln (exp. 16.4bln) and sees H1 revenue down mid-to-high single digit percentage.
• Tesla's (TSLA) expansion of its Shanghai plant has been delayed, according to Bloomberg sources; cites concerns in Chinese government over CEO Musk's Starlink having such a large presence in China.
• Click here for more detail.

FX

• Yomiuri Yen revival keeps Greenback grounded awaiting US CPI data.
• USD/JPY probes 131.00 vs almost 133.00 on Wednesday and DXY tethered to pivotal 103.000 level.
• Pound perks up on 1.2100 handle as Dollar drifts, Euro consolidates around 1.0750 axis and Aussie pivots 0.6900 with support from a wider than forecast trade surplus.
• PBoC set USD/CNY mid-point at 6.7680 vs exp. 6.7698 (prev. 6.7756)
• S. African Finance Minister says they want to resolve the Eskom issue ASAP, part of this is sorting the balance sheet. Appropriate announcement will be made on February 22nd.
• Click here for more detail.

FIXED INCOME

• Bonds wane after an early bull run to and through new big figure levels for Bunds and Gilts at 138.45 and 104.14 respectively.
• US Treasuries more reserved ahead of inflation report as T-note holds just under w-t-d peak and resistance within a 114-11/22 range.
• Click here for more detail.

COMMODITIES

• Upside for the crude space has occurred this morning seemingly without a fresh specific catalyst or driver, with the space perhaps taking advantage of a pre-CPI softening in the USD and the somewhat constructive European risk tone.
• Lifting WTI Feb’23 to a new WTD peak of USD 78.29/bbl, though this is someway shy of last week’s USD 81.50/bbl best.
• China's customs officials in the Guangdong province reportedly received notice from the local gov't that they can clear Australian coal shipments, via WSJ citing sources.
• Morgan Stanley expects Brent prices to remain range-bound for remainder of Q1, around current USD 80-85/bbl range.
• Spot gold is similarly taking advantage of the USD’s pullback but remains slightly shy of yesterday’s USD 1886/oz best thus far, while base metals are softer across the board.
• Magnitude 6.4 earthquake strikes Coquimbo, Chile, according to EMSC.
• Click here for more detail.

NOTABLE HEADLINES

• ECB Consumer Expectations Survey: Inflation is seen at 5% (vs. prev. view of 5.4%) over the next 12 months; 3 year inflation is seen at 2.9% vs. prev. view of 3.0%.
• UK and EU are preparing to enter an intense phase of negotiations from next week, via Bloomberg citing sources; aim of this is to move into the negotiating "tunnel", ahead of the April N. Ireland agreement anniversary.

NOTABLE US HEADLINES

• WSJ's Timiraos tweeted Fed research presented at the recent AEA meetings suggests average underlying job growth of around 300k per month last year, which is not as strong as reported in the monthly BLS payroll reports".
• Click here for the US Early Morning note.

GEOPOLITICS

• US Defence Secretary Austin said China's military is engaging in provocative behaviour around Taiwan to try to establish a new normal, but added that he seriously doubts Chinese provocations are a prelude to an imminent invasion of Taiwan, according to Reuters.
• Taiwan's Defence Ministry said five Chinese air force planes crossed the Taiwan Strait median line in the past 24 hours, according to Reuters.

CRYPTO

• Bitcoin has eclipsed the USD 18k mark, with today's action bringing it back towards its 14th December best, which itself is just shy of USD 18.5k.
• Coinbase (COIN) is reportedly considering exiting the Japanese market, via Nikkei.

APAC TRADE

• APAC stocks traded mixed as the major indices failed to fully sustain the early momentum from Wall St.
• ASX 200 was led higher by outperformance in the commodity-related industries and the top-weighted financial sector, while the latest trade data showed a wider trade surplus.
• Nikkei 225 faded early gains after a report that the BoJ is to review the side effects of its monetary easing.
• Hang Seng and Shanghai Comp swung between gains and losses with the Hong Kong benchmark initially boosted by the reopening play which helped energy, auto and casino names. However, Chinese markets then failed to sustain the early moment amid losses in tech and as participants digested mixed inflation data from the mainland in which CPI matched estimates but factory gate prices fell by more than expected.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 65bln via 7-day reverse repos with the rate kept at 2.00% and CNY 52bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 115bln net daily injection.
• US and Taiwan intend to focus on five areas this weekend during their first round of negotiations towards a trade agreement and indicated a readiness for subset deals as the sides make progress, according to WSJ.
• BoJ is to review the side effects of its massive monetary easing at its policy meeting next week due to skewed interest rates in markets despite last month's tweak in its bond yield control policy, according to Yomiuri.

DATA RECAP

• Chinese CPI YY (Dec) 1.8% vs. Exp. 1.8% (Prev. 1.6%); PPI YY (Dec) -0.7% vs. Exp. -0.1% (Prev. -1.3%)
• Japanese Current Account (JPY) (Nov) 1803.6B vs. Exp. 471.1B (Prev. -64.1B)
• Australian Trade Balance (AUD) (Nov) 13.2B vs. Exp. 10.5B (Prev. 12.2B)
• Australian Exports (Nov) 0.0% (Prev. -1.0%); Imports (Nov) -1.0% (Prev. -1.0%)