• European bourses are near unchanged levels, Euro Stoxx 50 +0.3%, though a very mild positive skew is seen in quiet post-earnings newsflow.
• LVMH slips with attention on lower margins, Intel (-9.5% pre-market) lags after a miss on the headline metrics and a weak market outlook; NQ -0.5% and lagging.
• DXY is firmer but somewhat mixed vs peers, with the index sub-102.00 as the JPY outperforms after hot Tokyo CPI.
• Core benchmarks have continued to slip despite a limited early-doors bounce/ any positivity from another well-received US auction.
• Both WTI and Brent have been moving higher throughout the European morning, with developments limited but fundamentals remain bullish.
• Looking ahead, highlights include US PCE Price Index, Personal Income & Consumption. Holiday in China (Lunar New Year). Earnings include Chevron and AMEX.

EUROPEAN TRADE

EQUITIES

• European bourses are near unchanged levels, Euro Stoxx 50 +0.3%, though a very mild positive skew is seen in quiet post-earnings newsflow.
• LVMH slips with attention on lower margins, Intel (-9.5% pre-market) lags after a miss on the headline metrics and a weak market outlook.
• US futures are lower across the board with the NQ -0.5% lagging post-INTC; focus for the session ahead is firmly on US PCE before next week's hefty Central Bank docket.
• Intel Corp (INTC) - Q4 adj. EPS 0.10 (exp. 0.20), Q4 revenue USD 14.04bln (exp. 14.45bln); Q4 Client Computing revenue USD 6.63bln (exp. 7.42bln), Q4 Network & Edge revenue USD 2.06bln (exp. 2.21bln), Q4 Mobileye revenue USD 565mln (exp. 435.1mln). CEO said it was seeing the largest inventory correction by customers in Q1, and added that persistent economic headwinds are expected through at least H1 2023, and semi ex-memory is expected to decline around mid-single digits. Sees macro difficulties lasting through H1, adding that consumption of servers in China was weak. Intel will not give annual forecasts for 2023.
• Click here for more detail.

FX

• DXY is firmer but somewhat mixed vs peers, with the index sub-102.00 as the JPY outperforms after hot Tokyo CPI.
• At best, USD/JPY tested but failed to move below 129.50 to the downside, and remains towards the lower-end of a 129.51-130.26 range.
• Overall, EUR, CAD and CHF are little changed awaiting impetus from the afternoon US data docket with specific developments elsewhere limited; pivoting, 1.0880, 1.3320 and 0.92 respectively.
• GBP is the main laggard for no obvious/specific reason, Cable has struggled to make any move above 1.24 stick, with EUR/GBP above 0.8800 at best though the move stalled ahead of the 0.8811 21-DMA.
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FIXED INCOME

• Core benchmarks have continued to slip despite a limited early-doors bounce/ any positivity from another well-received US auction.
• Bunds have given up a handful of touted interim levels during their descent to a 137.09 low, with the associated yield above 2.25%, though shy of the 2.27% 11th January best.
• Gilts fell to a 104.30 trough, but remain above recent lows, while the UST decline has seemingly paused for breath above 114.15 ahead of US PCE.
• Click here for more detail.

COMMODITIES

• WTI and Brent March futures have been moving higher since the European cash equity open, with the former back above USD 82/bbl (vs low USD 81.08/bbl) and the latter north of USD 88.50/bbl (vs low USD 87.55/bbl), in limited fresh newsflow.
• Gas markets are pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week.
• EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th.
• Strikes at TotalEnergies (TTE FP) sites have been suspended, will be proposed again on January 31st, via CGT Union.
• Spot gold is little changed in narrow sub-15/oz parameters with any potential upside capped by the firmer USD, base metals are mixed but contained overall.
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NOTABLE HEADLINES

• UK Chancellor Hunt says the best cut in tax right now would be a cut in inflation, today's announcement is more of a general plan/guide, will need to wait for budgetary events for further details. Should aim for the most competitive tax regime of any major nation but sound money needs to come first. Need restraint in public spending. Unlikely that we will have the headroom to cut business taxes in March.
• 7 EU nations Finance Ministers have sent a letter to Trade Commissioner Dombrovskis have pushed back on plans for "permanent or excessive non-targeted subsidies" in response to the US green subsidies/Inflation Reduction Act, via Politico.
• IMF Article IV review of Sweden: mild recession likely, 2023 growth -0.3%. HICP expected to moderate to 6.5% in 2023. Strong employment is a positive, should somewhat offset household burden from rates/inflation

NOTABLE DATA

• EU Money-M3 Annual Growth (Dec) 4.1% vs. Exp. 4.6% (Prev. 4.8%)
• EU Loans to Non-Financials (Dec) 6.3% (Prev. 8.4%); Households (Dec) 3.8% (Prev. 4.1%)

NOTABLE US HEADLINES

• US House GOP leaders consider extending debt limit to September 30th, according to Bloomberg.
• US Treasury Secretary Yellen says the US is in the middle of talks with the EU on the Russian price cap; adds, the US and China have made progress on resolving issues.
• Click here for the US Early Morning note.

GEOPOLITICS

• Japan is to impose additional sanctions against Russian individuals and entities, while it will impose an additional export ban on military-related items to Russia as part of sanctions. according to Reuters.

CRYPTO

• Bitcoin is little changed and holding around the USD 23k mark, with fresh catalysts limited and focus on upcoming key US data.

APAC TRADE

• APAC stocks traded with a positive bias after the mostly strong US data releases, albeit with advances capped as participants also digested earnings including disappointing results from Intel, and firm Tokyo CPI data.
• ASX 200 was marginally higher on return from holiday with the index propped up by tech and financials.
• Nikkei 225 lacked decisiveness following firm Tokyo CPI data in which core inflation rose at its fastest pace since 1981 and further added to the pressure for the BoJ to rethink its ultra-easy policy.
• Hang Seng was choppy and struggled to sustain early gains after data showed a wider contraction in Hong Kong’s exports and with Japan and the Netherlands set to join the US’s chip curbs on China.

NOTABLE ASIA-PAC HEADLINES

• Japan and the Netherlands agreed to join the US on China chip curbs with US, Dutch and Japanese officials set to conclude talks as early as today, while the Netherlands is to expand restrictions on ASML (ASML NA) and Japan will set similar limits on Nikon (7731 JT), according to Bloomberg and Reuters.

DATA RECAP

• Tokyo CPI YY (Jan) 4.4% vs. Exp. 4.0% (Prev. 4.0%)
• Tokyo CPI Ex. Fresh Food YY (Jan) 4.3% vs. Exp. 4.2% (Prev. 4.0%); Ex. Fresh Food & Energy YY (Jan) 3.0% vs. Exp. 2.9% (Prev. 2.7%)
• Australian PPI QQ (Q4) 0.7% (Prev. 1.9%); YY (Q4) 5.8% (Prev. 6.4%)
• New Zealand ANZ Business Confidence (Jan) -52% (Prev. -70.2%); Activity Outlook (Jan) -15.8% (Prev. -25.6%)