• European bourses are pressured across the board, Euro Stoxx 50 -1.2%, as ECB officials continue to pushback on dovish reports.
• US futures are lower across the board, as the ES continues to move below 4k ahead of more earnings and key Fed speak, ES -0.5%.
• DXY was seemingly capped on approach to 102.50 amid a general downturn in risk with the USD facing pressure from the Euro and Yen while antipodeans lag.
• ECB's Knot says planning to hike by 50bp multiple times; Norges Bank and CBRT both left rates unchanged, as expected.
• EGBs have retreated from initial peaks given the above, dragging USTs and Gilts down with them.
• Looking ahead, highlights include US Building Permits/Housing Starts, IJC, ECB Minutes, Speeches from Fed's Williams, Brainard & Collins, ECB's  Schnabel & Knot, Earnings from Procter & Gamble, KeyCorp, Fifth Third & Netflix.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -1.2%, as ECB officials continue to pushback on dovish reports.
• Sectors are all in the red with Basic Resources and Energy names lagging given underlying commodity pricing.
• US futures are lower across the board, as the ES continues to move below 4k ahead of more earnings and key Fed speak, ES -0.5%.
• Click here for more detail.

FX

• DXY was seemingly capped on approach to 102.50 amid a general downturn in risk with the USD facing pressure from the Euro and Yen.
• With the JPY continuing its post-BoJ reversal and EUR/USD comfortably reclaiming 1.08+ in wake of ECB's Knot pushing back on earlier dovish reports.
• Antipodeans are the stand-out laggards with Australian labour data and the unexpected resignations of New Zealand's PM contributing; AUD/USD sub-0.69 and NZD/USD sub-0.64.
• NOK experienced modest gyrations around 10.75 against the EUR post-Norges Bank, with this perhaps just an unwinding of the minority hawkish positioning going into the announcement.
• Norges Bank holds its Key Policy Rate at 2.75% (vs. split expectation for 25bps/Unch. but bias towards unchanged), decision was unanimous; "The policy rate will most likely be raised in March”. Subsequently, Governor Bache says they have not yet made new forecasts for rate developments beyond March.
• CBRT holds its Weekly Repo Rate steady at 9.00% as expected.
• PBoC set USD/CNY mid-point at 6.7674 vs exp. 6.7680 (prev. 6.7602).
• Click here for more detail.

FIXED INCOME

• EGBs and particularly Bunds have retreated from initial peaks and have dragged Gilts and USTs lower in tandem.
• Downside that was initially sparked by ECB's Knot sticking to his hawkish lines and thereafter irrespective of well covered French and Spanish issuance.
• USTs themselves have been dragged down to unchanged levels, with attention turning to a busy docket of Fed speak, with Brainard perhaps the highlight.
• Click here for more detail.

COMMODITIES

• WTI and Brent March’23 futures are softer intraday with prices meandering around USD 0.50/bbl above APAC lows of USD 78.10/bbl and USD 83.76/bbl respectively.
• 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.
• IEA's head Birol says he does not see tightness in (the oil) market currently but have to be aware of uncertainties, via Reuters; may see tighter markets in 2023, more than some others may think. If China's economy rebounds this year as expected, will see stronger demand that will pressure the market. Russian oil exports seem more resilient than initially thought but will fall further in Q1 and beyond.
• LME CEO says there is untapped demand for trading in Asian hours, via CNBC.
• Spot gold mirrors Dollar action but the yellow metal found some overnight support around the USD 1,900/oz mark but remains off yesterday’s 1,925.79/oz peak.
• Citi released some metal forecasts this morning and upgraded its 0-3month copper and aluminium forecasts to USD 10k/T (prev. 7.8k/T) and USD 2.7k/T (prev. 2.35k/T) respectively.
• Click here for more detail.

NOTABLE HEADLINES

• ECB'S Knot says market developments of late are not entirely welcome, via CNBC; ECB won't stop after a single 50bp hike, planning to hike by 50bp multiple times. No signs of underlying inflation pressures abating; core inflation shows no signs of abating. Currently only focused on the risk of doing too-little. Will be in "tightening mode" until at least mid-year.
• ECB President Lagarde says economic news has become much more positive; may only see a small contraction in GDP in the Eurozone; 2023 will be better than feared. Will stay the course with rate hikes.
• Irish PM Varadkar has said the 25th Anniversary of the Good Friday Agreement was not an absolute deadline in law for the EU and UK to secure agreement on the Northern Ireland Protocol, according to RTE's Connelly.

NOTABLE DATA

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

NOTABLE US 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.
• Click here for the US Early Morning note.

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.

CRYPTO

• Bitcoin is little changed overall with numerous speakers ahead including ECB's Knot explicitly on crypto, currently holding within USD 20.6k-20.8k parameters.

APAC TRADE

• 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.

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.
• China is preparing for a new trading link with Hong Kong for foreigners to hedge bonds; PBoC shared draft riles for the Swap Connect to Chinese financial institutions last month, according to Bloomberg citing sources.

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%); 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); 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%)