• European bourses are pressured across the board, Euro Stoxx 50 -0.6%, after a sluggish post-MSFT start to the session and thereafter a further waning in the general risk tone.
• Stateside, futures are all in the red with the NQ -1.2% lagging and the ES Mar'23 below 4k and its 200-DMA at 3999, to a 3996.5 session trough.
• DXY has benefitted from the decline in sentiment, to the detriment of GBP and EUR while AUD outperforms post-CPI.
• Core fixed benchmarks have continued to extend though with upside in Bunds capped by technicals/supply, USTs lagging in comparison pre-5yr supply.
• Crude benchmarks are little changed overall, relatively resilient to the above tone, while the USD has capped any haven allure for spot gold.
• Looking ahead, highlights include BoC Policy Announcement, BoJ SOO, Supply from the US. Earnings from AT&T, Tesla, Boeing, IBM & Abbott. Holiday in China (Lunar New Year).

EUROPEAN TRADE

EQUITIES

• European bourses are pressured across the board, Euro Stoxx 50 -0.6%, after a sluggish post-MSFT start to the session and thereafter a further waning in the general risk tone.
• Within Europe, a strong update from ASML has been overshadowed by the MSFT pressure, while the likes of Ryanair and IAG are buoyed by easyJet.
• Stateside, futures are all in the red with the NQ -1.2% lagging and the ES Mar'23 below 4k and its 200-DMA at 3999, to a 3996.5 session trough.
• Microsoft Corp (MSFT) Q2 2023 (USD): Adj. EPS 2.32 (exp. 2.30), Revenue 52.70bln (exp. 52.99bln), Co. Intelligent Cloud revenue USD 21.51bln (exp. 21.43bln), while it stated that Azure and other cloud revenue growth of 31% was driven by strong demand for consumption-based services. However, it noted growth is to slow in its commercial business for the rest of FY23 and that FY operating margins are expected to decrease around 2% Y/Y excluding Q2 charge and a favourable impact from the change in accounting method. -2.4% in the pre-market
• ASML (ASML NA) Q4 2022 (EUR): Revenue 6.43bln (exp. 6.38bln). Net 4.29bln (exp. 4.25bln). Sees Q1 2023 net sales 6.1-6.5bln (exp. 6.07bln); ASML intends to declare a total dividend for the year 2022 of EUR 5.80/shr. Click here for more detail. -1.5% in the pre-market
• NYSE said it is thoroughly examining the glitch and that the exchange ended Tuesday with a normal close, while a regular open is expected on Wednesday, according to Reuters.
• Click here for more detail.

FX

• The DXY has spent the morning in close proximity to the 102.00 mark and has most recently extended to fresh session highs of 102.12 amid a general decline in the risk tone.
• AUD is the standout outperformer after much hotter-than-expected CPI while the NZD was only able to derive fleeting support from its own inflation data, at best AUD/USD and NZD/USD above 0.71 and 0.65 respectively.
• JPY has settled down somewhat after Tuesday's pronounced action and was relatively resilient to Japan downgrading its economic assessment for the first time in almost a year.
• The aforementioned decline in sentiment that bolstered the USD did so at the expense of Cable and EUR/USD which moved below and further below 1.23 and 1.09 respectively.
• Click here for more detail.

FIXED INCOME

• Core EGBs have continued to extend with the Bund comfortably above 139.00, though the upside seemingly stalled after a brief breach of Fib resistance.
• An easing/pullback that was perhaps spurred by mixed German auction results; though, benchmarks remain elevated overall with Gilts once again outperforming and closer to 106.00 vs 105.08 low (current high 105.79).
• Stateside, USTs are firmer though lagging their EZ peers a touch ahead of a USD 43bln 5yr outing.
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month futures trade with no firm direction in early European hours, similar to yesterday’s price action, as market participants await the next catalyst for the complex.
• US Energy Inventory Data (bbls): Crude +3.4mln (exp. +1.0mln), Cushing +3.9mln, Gasoline +0.6mln (exp. +1.8mln), Distillate -1.9mln (exp. -1.1mln)
• US Treasury issued a licence allowing Trinidad and Tobago to develop Venezuela's Dragon offshore gas field.
• Spot gold and base metals have been impacted by the general risk tone with the yellow metal unable to glean any haven support as the USD remains firm.
• Click here for more detail.

NOTABLE DATA

• German Ifo Business Climate New (Jan) 90.2 vs. Exp. 90.2 (Prev. 88.6); there probably will not be a recession but GDP will probably shrink slightly in Q1.
• Inflationary pressures are easing with the balance of companies wanting to increase prices falling to 35.4 from 40.1, companies export expectations have somewhat brightened and cautious optimism is spreading.
• German Ifo Expectations New (Jan) 86.4 vs. Exp. 85.0 (Prev. 83.2); Current Conditions New (Jan) 94.1 vs. Exp. 95.0 (Prev. 94.4)

NOTABLE HEADLINES

• German Economy Minister sees 2023 German GDP at 0.2% (vs -0.4% in Autumn forecast); 2023 inflation seen at 6% (vs prev. 7%); "we do not see signs of marked recession as feared by many observers". In-fitting with earlier reports via the likes of Bloomberg and Reuters in recent sessions.

NOTABLE US HEADLINES

• US House Speaker McCarthy said they need to have a responsible debt ceiling and called for eliminating wasteful spending, while he added debt is the greatest threat to the nation and that President Biden needs to stop playing politics on the debt ceiling.
• US President Biden is close to naming the next National Economic Council head, Fed Vice Chair Brainard has emerged as the top contender, according to Washington Post sources; current NEC Director Deese is expected to leave soon, no decision made yet.
• US Senator Manchin is to reportedly introduce a bill to delay EV tax credit due to disagreements over how to implement the programme, according to WSJ.
• Click here for the US Early Morning note.

GEOPOLITICS

• Ukrainian President Zelensky said Russia is readying for new aggression and that Ukraine will prevent further Russian actions, while he added Russia is intensifying its offensive towards Ukraine's Bakhmut.
• Russian Ambassador to the US said Washington's possible deliveries of tanks to Ukraine would be a blatant provocation and it is clear Washington is trying to inflict a strategic defeat on us, according to Reuters.
• EU ambassadors have now formally given green light to roll over all the EU’s economic sanctions on Russia for an additional six months, via Radio Free Europe's Jozwiak.
• German government is to send Leopard 2 tanks to Ukraine, Germany is to approve re-export of Leopard 2 tanks.

CRYPTO

• Bitcoin is back below the USD 23k mark, though remains just above the WTD trough set on Monday at USD 22.3k.

APAC TRADE

• APAC stocks were mixed after the indecisive performance stateside owing to the varied data releases and geopolitical tensions, while the region also digested firmer-than-expected inflation data from Australia and New Zealand.
• ASX 200 failed to sustain an initial foray above 7,500 with the index subdued by hot CPI data which printed its highest since 1990 and boosted the market pricing for the RBA to continue with its hiking cycle next month.
• Nikkei 225 gradually edged higher with trade uneventful in the absence of any pertinent drivers although Dai Nippon Printing outperformed after Elliot Management built a stake in the Co. of slightly under 5%.
• KOSPI was among the biggest gainers on return from the Lunar New Year holiday with the index also driven by strength in top-weighted stock Samsung Electronics.

NOTABLE ASIA-PAC HEADLINES

• US Secretary of State Blinken is likely to warn China against aiding Russia when visiting Beijing, according to SCMP.
• Australian PM Albanese said there is increased engagement at different levels between Australian and Chinese agencies, according to Reuters.
• North Korea ordered a 5-day lockdown of its capital Pyongyang due to increasing cases of an unspecified respiratory illness, according to South Korean-based NK News.
• Japan lowers its overall economic view in January; first time in 11 months.
• Japanese Gov't official, citing BoJ's Kuroda, says the BoJ will resolutely keep monetary environment easy; BoJ aims to regain market functionality by tweaking YCC operations and maintaining an easy monetary environment.

DATA RECAP

• Australian CPI QQ (Q4) 1.9% vs. Exp. 1.6% (Prev. 1.8%); YY (Q4) 7.8% vs. Exp. 7.5% (Prev. 7.3%)
• Australian CPI YY (Dec) 8.4% vs Exp. 7.6% (Prev. 7.3%)
• New Zealand CPI QQ (Q4) 1.4% vs. Exp. 1.3% (Prev. 2.2%); YY (Q4) 7.2% vs. Exp. 7.1% (Prev. 7.2%)
• RBNZ Sectoral Factor Model Inflation Index (Q4) 5.8% (Prev. 5.4%)