• European bourses are modestly firmer, Euro Stoxx 50 +0.2%, amid a relatively quiet start to the week given the mass APAC closures from the Lunar New Year holiday.
• Stateside, futures are essentially unchanged, with the ES capped by 4k and the Fed blackout period underway going into the second busiest week of earnings this season.
• The DXY has eased further to the benefit of most peers across the board as the Fed blackout period commences.
• Crude benchmarks are somewhat choppy in contained ranges of circa. USD 1/bbl given the mass APAC closures; though, prices overall are underpinned by a rosier demand picture.
• EGBs continue to be influenced by hawkish ECB commentary while USTs are somewhat more resilient given 25bp is almost entirely priced for the Fed.
• Looking ahead, highlights include EZ Consumer Confidence (Flash), US Leading Index, Speeches from ECB’s Lagarde & Panetta, Supply via EU Syndication. Holiday closures include China, Hong Kong, Taiwan, South Korea & Singapore.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer, Euro Stoxx 50 +0.2%, amid a relatively quiet start to the week given the mass APAC closures from the Lunar New Year holiday.
• Sectors have a similar mild positive bias with Tech and Basic Resources the marginal outperformers.
• Stateside, futures are essentially unchanged, with the ES capped by 4k and the Fed blackout period underway going into the second busiest week of earnings this season.
• Banks including Wells Fargo (WFC), Bank of America (BAC) and JPMorgan (JPM) are said to be planning payment wallets to compete with the likes of PayPal (PYPL) and Apple Pay (AAPL), according to WSJ.
• Click here for more detail.

FX

• The DXY has eased further to the benefit of most peers across the board as the Fed blackout period commences with a 25bp hike almost entirely priced in.
• AUD and NZD are among the outperformers ahead of inflation data, with AUD/USD surpassing 0.70 and NZD/USD testing 0.65.
• EUR continues to benefit from hawkish ECB guidance, EUR/USD above 1.09 at best, while JPY is the relative laggard after dovish December minutes.
• CHF gleans modest support from Credit Suisse lifting its SNB forecast for March to 50bp vs prev. 25bp while the CAD is relatively steady pre-data/Wednesday's BoC.
• Brazil and Argentina aim for greater economic integration and decided to advance discussions regarding a common South American currency that could be used for financial and commercial flows, according to an article jointly penned by the countries' leaders.
• Click here for more detail.

FIXED INCOME

• Hawkish ECB vibes continue to hold sway as sellers fade upticks in debt, Bunds sub-138.00, Gilts under 104.00 after brief bounces to 138.44 and 104.63 respectively.
• T-notes a bit more resilient as Fed hawk Waller joins 25bp hike advocates for February's FOMC, 10 year bond within 115-07/114-30 range vs last Friday's 115-02 close
• Click here for more detail.

COMMODITIES

• Crude benchmarks are somewhat choppy in contained ranges of circa. USD 1/bbl given the mass APAC closures; though, prices overall are underpinned by a rosier demand picture.
• Kuwait temporarily suspended operations at three ports on Sunday due to bad weather, according to state news agency KUNA.
• US Treasury Secretary Yellen said western countries are working on price caps for Russian refined petroleum products to ensure the continued flow of diesel but added it is complicated and there is a possibility that things may not go to plan, according to Reuters.
• G7 is considering two price caps for Russian oil products, one for expensive products such as diesel or gasoline and another for cheaper products e.g. fuel oil, via Politico citing EU diplomats.
• EU Securities Watchdog ESMA says EU gas price cap could impact the orderly functioning of markets and impact financial stability, according to a draft report cited by Reuters.
• Japanese insurers will raise insurance by about 80% on ships carrying LNG in Russian waters, according to Nikkei.
• Netherlands seeks to close the Groningen gas field this year which is the largest in Europe and earthquake-prone, while an official noted that it was very dangerous to keep operating the field and that they aim to shut it by October 1st but would wait to see if there is a shortage of gas after the winter, according to FT.
• India is planning to lower gold import duty to prevent the increase in smuggling, according to Reuters sources.
• Spot gold has been waning from its USD 1,935.41/oz overnight peak, with traders citing profit-taking following the yellow metal’s recent run higher.
• LME Copper printed a +6month peak overnight given the positive demand picture and supply-side concerns regarding Peru.
• Click here for more detail.

ECB

• ECB’s Knot said to expect the ECB to hike by 50bps in February and March, followed by more steps in May and June, according to Reuters.
• ECB's Nagel says ECB is to return inflation to target without causing a recession, via Econostream; thinks this will be achieved by the end of 2024/25.
• ECB's Villeroy said the ECB will continue to raise rates, but possibly at a slightly slower pace than in recent months, but will do so to a level necessary to keep inflation under control, via Econostream.

NOTABLE HEADLINES

• UK electricity network operator National Grid had emergency coal-fired plants warm up amid expectations of tight supply and increased demand due to cold weather, while it will pay households to use less power during early Monday evening, according to FT.
• UK has started a post-Brexit review of EU's investor fund regulations amid concerns that Europe is not acting fast enough on appropriate safeguards, according to FT.
• Ireland’s Foreign Affairs Minister has described ongoing NI Protocol talks as "very challenging", according to BBC's Parker; “We would hope that those negotiations would be successful but they are very challenging.”
• French President Macron said Germany is to join the new hydrogen pipeline project between Spain and France, according to Reuters.
• Fitch affirmed Ireland at AAA; Outlook Stable and affirmed Norway at AAA; Outlook Stable, while it affirmed Hungary at BBB; Outlook Cut to Negative from Stable.

NOTABLE US HEADLINES

• WSJ’s Timiraos writes Fed officials are preparing to slow interest-rate increases for the second consecutive meeting and debate how much more they would need to raise rates after gaining more confidence inflation will ease further this year, while Timiraos added the Fed could start to deliberate at the upcoming meeting how much more softening in labour demand, spending and inflation they would need to see before pausing rate hikes in the spring.
• US Treasury Secretary Yellen said she believes China understands the need to address debt issues, while she warned that a failure by heavily indebted countries to reduce the debt overhang would set back development in poor countries and could increase the risk of war, terrorism and migration for those countries, according to Reuters.
• Turkish President Erdogan announced that the election will take place on May 14th which is a month earlier than scheduled, according to Reuters.
• US Department of Justice searched US President Biden’s home on Friday and found 6 additional documents with classified markings which were from President Biden’s time in the Senate and when he was Vice President, while President Biden’s lawyer said the President and First Lady were not present during the search and that Biden had offered access to allow the DoJ to conduct the search, according to Reuters.
• White House Chief of Staff Klain is reportedly planning to leave the role in the approaching weeks and President Biden is to name Jeff Zients as the new Chief of Staff, according to sources cited by Reuters and Washington Post.
• NABE survey showed 53% of respondents see more than an even chance the US will enter a recession in the next 12 months, while 3% of respondents from private-sector firms and industry trade associations said the economy is already in a recession, according to Reuters.
• Click here for the US Early Morning note.

GEOPOLITICS

• Joint French-German statement following a summit between French President Macron and German Chancellor Scholz stated they will support and assist Ukraine for as long as necessary and they support efforts to prosecute perpetrators of war crimes, according to Reuters. Furthermore, French President Macron commented at the summit that he doesn’t rule out sending Leclerc tanks to Ukraine and that training time needs to be taken into account, while he added that sending tanks should not endanger France’s own security.
• German Defence Minister Pistorius said he thinks there will be a decision soon regarding tanks for Ukraine whichever way it may fall, while it was also reported that German Foreign Minister Baerbock said Germany would not stand in the way if Poland sends Leopard tanks to Ukraine, according to Reuters and French television LCI.
• A Russian warship armed with hypersonic missiles will participate in joint naval exercises with China and South Africa in February, according to Reuters.
• Russian Kremlin says that there have been no announcements yet on whether President Putin will run for another term in office in 2024.
• EU ministers have agreed a new sanctions package against Iran, according to the Swedish EU Presidency.

CRYPTO

• Bitcoin is supported on the session and resides at the top-end of a USD 22.94k-22.30k range, albeit it is yet to re-test the January 21st YTD peak of USD 23.35k.

APAC TRADE

• APAC stocks began the week with a positive bias but with gains capped amid mass closures across the region.
• ASX 200 was rangebound as weakness in the defensive sectors was counterbalanced by gains in energy and tech, in which the latter took impetus from last Friday’s outperformance in the Nasdaq after Netflix’s strong subscriber numbers and Google’s announcement to cut its workforce by 12,000.
• Nikkei 225 was the biggest gainer and rose above 26,900 to print a fresh monthly high where it then met some resistance, while overnight newsflow was extremely light and China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia, Indonesia and Vietnam are all closed for the Lunar New Year holiday.

NOTABLE ASIA-PAC HEADLINES

• China's box office film sales totalled CNY 1.34bln on the first day of the Lunar New Year holiday (2022 1.45bln YY; 2021 1.67bln YY), via SCMP.
• China CDC chief epidemiologist said the possibility of a large-scale rebound of a COVID outbreak during the next two or three months is very small as 80% of China’s population has already been infected, according to Reuters. Furthermore, China reported that COVID-19 deaths in the week leading to the Lunar New Year topped 12,600.
• Japanese PM Kishida said will pick the new BoJ Governor by taking the economic situation in April into account and it is too soon to say if there is a need to change the government-BoJ accord, according to Reuters. It was also separately reported that PM Kishida said the government will nominate the new BoJ Governor in February.
• BoJ December meeting minutes stated the central bank will add some easing if necessary and several members said the effect of powerful monetary easing will continue even if the BoJ widens the yield target band. Furthermore, a few members said the BoJ must clearly explain that widening of the yield band is not a move eyeing the exit from ultra-loose policy, while a member said the BoJ must conduct a review of its policy framework sometime in the future.
• New Zealand’s ruling Labour Party voted to choose Chris Hipkins as the new PM and Carmel Sepuloni was named as the Deputy PM, while incoming PM Hipkins stated that Finance Minister Robertson indicated that he wants to continue in the role, according to Reuters.