• APAC stocks were mixed with most major indices rangebound following the negative lead from Wall St (S&P 500 -1.56%).
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.6% after the cash market closed flat yesterday.
• DXY is contained on a 102 handle, EUR/USD and USD/JPY are back below 1.08 and 128 respectively, antipodeans lag.
• Crude futures weakened after the bearish private sector inventory data, fixed income markets remain underpinned.
• Looking ahead, highlights include US Building Permits/Housing Starts, IJC, Norges Bank & CBRT Policy Announcements, ECB Minutes, Speeches from Fed's Williams, Brainard & Collins, ECB's Lagarde, Schnabel & Knot, Supply from Spain, France & UK, Earnings from Procter & Gamble and Netflix.

US TRADE

• US stocks finished lower on a rollercoaster session in which the post-BoJ strength was unwound after a slew of disappointing US data releases and hawkish Fed rhetoric.
• SPX -1.56% at 3,929, NDX -1.27% at 11,410, DJIA -1.81% at 33,297, RUT -1.59% at 1,854.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Harker (voter) repeated that Fed needs to get the Fed Funds Rate north of 5% and that policy is nearing the end game, while he noted it is good to approach the terminal rate slowly and reiterated support for 25bp hikes ahead. Harker also stated that the time for supercharging rate hikes is over and he expects the Fed to raise rates a few more times this year.
• Fed's Logan (voter) said they need to be flexible and robust and that it is not helpful to lock in a peak rate or precise rate path at this time, while she supports slowing rate hike pace at upcoming meeting and noted that if a slower rate hike pace eases financial conditions, they can offset this by gradually raising rates to a higher level than previously expected. Logan said the most important risk she sees is tightening policy too little and failing to keep inflation in check, but added that tightening too much or too fast could weaken the labour market more than necessary.
• Fed's George (non-voter, departing) said the Fed must restore price stability and that means returning to 2% inflation, while she added markets might have a different view of what the Fed needs to do.
• Fed's Beige Book in January noted overall economic activity was relatively unchanged since the previous report and that five districts reported slight or modest increases in overall activity, six noted no change or slight declines, and one cited a significant reduction.
• Atlanta Fed GDPNow Q4 tracker declined to 3.5% from 4.1%.

APAC TRADE

EQUITIES

• APAC stocks were mixed with most major indices rangebound following the negative lead from Wall St, where risk sentiment deteriorated after a slew of disappointing US data and hawkish Fed rhetoric.
• ASX 200 climbed above 7,400 with the index led by miners after an increase in BHP’s quarterly iron ore output although gains were capped by disappointing jobs data and losses in the energy sector amid a pullback in oil prices and with Santos pressured due to a reduction in its FY output guidance.
• Nikkei 225 underperformed after markets mostly faded the BoJ-rally with many viewing the central bank’s decision to refrain from policy adjustments as a fleeting effort to delay the inevitable.
• Hang Seng and Shanghai Comp swung between gains and losses with price action cautious as the upside in the property sector counterbalanced the notable weakness in the large tech names.
• US equity futures (ES -0.2%) languished near the prior day's lows owing to the poor data releases.
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.6% after the cash market closed flat yesterday.

FX

• DXY traded rangebound on a 102 handle after an indecisive performance during the prior day with the pressure from disappointing data releases offset by a slew of hawkish Fed rhetoric including from Fed’s Bullard, Harker, Logan and Mester who mostly pointed to the need to further lift rates.
• EUR/USD is back below 1.08 after venturing as high as 1.0887 yesterday.
• GBP/USD lacked firm direction amid the absence of fresh catalysts and only partially held on to the gains seen following yesterday's CPI data which showed headline inflation remained north of 10%.
• USD/JPY underperformed after staging a full reversal of the post-BoJ reaction with the pair back below 128.
• Antipodeans lagged major counterparts vs. the USD with price action not helped by disappointing Australian jobs data and the announcement by New Zealand PM Ardern to step down.
• PBoC set USD/CNY mid-point at 6.7674 vs exp. 6.7680 (prev. 6.7602).

FIXED INCOME

• 10yr UST futures remained underpinned after the weak US data slate and solid US 20yr auction.
• Bund futures held on to the gains from yesterday’s broad rally across global bonds.
• 10yr JGB futures sat near their post-BoJ highs as the 10yr JGB yield trickled to around 0.41% and with firmer demand seen at the 20yr JGB auction.

COMMODITIES

• Crude futures weakened after the bearish private sector inventory data including a large surprise build to headline crude inventories, added to the headwinds from the disappointing US data releases.
• US Energy Inventory Data (bbls): Crude 7.6mln (exp. -0.6mln), Gasoline 2.8mln (exp. 2.5mln), Distillate -1.8mln (exp. 0.1mln), Cushing 3.7mln.
• Qatar Energy set March-loading Al-Shaheen crude term price at a premium of USD 1.37/bbl above Dubai quotes which is the lowest in 21 months, according to Reuters citing traders.
• Spot gold marginally benefitted from a slight bounce off support at the USD 1900/oz level.
• Copper futures extended on yesterday's pullback after the weak activity data stateside.

CRYPTO

• Bitcoin gained overnight but remained beneath 21,000 following its decline yesterday as risk assets were pressured in the aftermath of dismal US data releases.

NOTABLE ASIA-PAC HEADLINES

• Chinese President Xi expressed concern about the spread of COVID-19 to rural areas as China heads towards the Lunar New Year, according to FT.
• Hong Kong Chief Executive Lee said the government will scrap the quarantine order for people infected with COVID-19 from January 30th, according to Reuters.
• New Zealand PM Ardern announced to step down on February 7th and the Labour party is to vote on a new leader on January 22nd which Deputy PM Robertson will not stand in. Furthermore, PM Arden said she no longer has enough in the tank to do the job justice and that the general election will be held on October 14th.

DATA RECAP

• Japanese Trade Balance Total (JPY)(Dec) -1448.5B vs. Exp. -1652.8B (Prev. -2029.0B)
• Japanese Exports YY (Dec) 11.5% vs. Exp. 10.1% (Prev. 20.0%)
• Japanese Imports YY (Dec) 20.6% vs. Exp. 22.4% (Prev. 30.3%)
• Australian Employment (Dec) -14.6k vs. Exp. 22.5k (Prev. 64.0k, Rev. 58.3k)
• Australian Unemployment Rate (Dec) 3.5% vs. Exp. 3.4% (Prev. 3.4%)
• Australian Participation Rate (Dec) 66.6% vs. Exp. 66.8% (Prev. 66.8%)

GEOPOLITICS

• US Secretary of State Blinken tweeted that the US announced an additional USD 125mln in funding to support Ukraine’s energy and electric grid against Russian attacks designed to leave millions without power during the winter months.
• US is finalising a large package of military aid to Ukraine which officials said will likely total as much as USD 2.6bln, according to AP.
• NATO Secretary General Stoltenberg said NATO allies are to pledge heavier weapons to Ukraine, while a US DoD official said the US and its allies want to change the dynamic in the Ukraine war with new arms.
• Polish President Duma said he is concerned Russia is preparing a new offensive in a few months.

EU/UK

DATA RECAP

• UK RICS Housing Survey (Dec) -42 vs. Exp. -30 (Prev. -25, Rev. -26)