• European bourses are lower across the board, Euro Stoxx 50 -0.6%, as the upside after France's CPI fizzled out and reverted back to softer APAC performance.
• Stateside, futures are similarly pressured and have been in-fitting with European peers throughout the session ahead of key Employment Cost data, ES -0.5%.
• USD is on the front foot amid the downturn in risk sentiment, EUR pressured post-French CPI while Antipodeans lag despite strong Chinese PMIs
• EGBs are currently mixed/flat, despite pronounced action throughout the session in the wake of French and EZ data points, Bunds are currently towards the lower-end of 136.54-137.30 parameters.
• Crude benchmarks have been moving lower throughout the session as sentiment sours somewhat as we move closer to the week's key risk events
• Looking ahead, highlights include US Employment Costs, Consumer Confidence. Earnings from Exxon Mobil, Marathon Petroleum, General Motors, Phillips 66, UPS, Pfizer, SYSCO, Caterpillar, AMD, Electronic Arts & Snap.

EUROPEAN TRADE

EQUITIES

• European bourses are lower across the board, Euro Stoxx 50 -0.6%, as the upside after France's CPI fizzled out and reverted back to APAC performance.
• Sectors are mostly in the red with Banking names outperforming post-earnings while Basic Resources lag given the risk tone and USD.
• Stateside, futures are similarly pressured and have been in-fitting with European peers throughout the session ahead of key Employment Cost data, ES -0.5%.
• United Parcel Service Inc (UPS) Q4 2022 (USD): EPS 3.96 (exp. 3.59), Revenue USD 27bln (exp. 28.09bln).
• Click here for more detail.

FX

• The USD is on the front-foot as the DXY benefits from the downturn in risk sentiment and as such continues to extend above 102.00 to a 102.61 peak, though the 102.50 mark is proving sticky ahead of data.
• EUR/USD tested 1.08 to the downside following below/in-line with consensus French inflation while the subsequent Flash/Prelim. GDP print for Q4, which was unexpectedly positive, failed to spur any sustained EUR upside.
• Antipodeans are the current laggards with soft Australian retail sales hampering the AUD and more-than-offsetting any positivity from China's PMIs; AUD/USD down to 0.6999 and NZD/USD to 0.6421 troughs vs 0.7065 and 0.6479 peaks.
• JPY is little changed overall with comparably softer USD yields and the risk tone offsetting the USD's dominance, USD/JPY in a narrow 130.05-130.53 range.
• PBoC set USD/CNY mid-point at 6.7604 vs exp. 6.7607 (prev. 6.7626)
• Click here for more detail.

FIXED INCOME

• EGBs are currently mixed/flat, despite pronounced action throughout the session in the wake of French and EZ data points, Bunds are currently towards the lower-end of 136.54-137.30 parameters.
• The complex experienced an initial bid on the in-line/slightly cooler than consensus French inflation metrics before slipping following unexpectedly positive EZ Q4 QQ GDP, as the more resilient economy provides the ECB with the necessary cover to continue tightening.
• Amidst this, Gilts and USTs have been directionally in-fitting but with magnitudes more contained ahead of Thursday's BoE and today's key US data ahead of the FOMC; currently, US yields are a touch softer with action slightly more pronounced at the short-end of the curve.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have been moving lower throughout the session as sentiment sours somewhat as we move closer to the week's key risk events.
• Thus far, WTI March has dipped under USD 77/bbl (from a USD 78.14/bbl high) while its Brent April counterpart fell under USD 83.50/bbl (from a USD 84.80/bbl high).
• Russia banned domestic oil exporters from adhering to Western price caps and called on the energy ministry to devise an approach for monitoring prices of Russian oil exports by March 1st.
• Spot gold has tested USD 1900/oz to the downside, though the figure at 21-DMA at USD 1901/oz is seemingly providing support with the yellow metal yet to move below the figure; LME Copper is downbeat given the above risk tone and firmer USD.
• Click here for more detail.

NOTABLE HEADLINES

• IMF raised its 2023 global GDP growth forecast to 2.9% from 2.7% citing resilience in advanced economies and China reopening but cut its 2024 global GDP growth forecast to 3.1% from 3.2% due to steeper monetary policy tightening. Click here for more detail.
• French and German Economy Ministers are to head to the US on February 6th-7th, to attempt to "iron out" the disagreement sparked by the US' Inflation Reduction Act, via Politico citing sources.
• UK PM Sunak has been warned by two former negotiators, including Lord Frost not to trade off the power to overrule the EU in Northern Ireland in order to make a deal with Brussels, according to The Telegraph.
• Riksbank Governor Thedeen says high inflation and increasing interest rates are testing the resilience of the Swedish financial system.

NOTABLE DATA

• French CPI Prelim. YY NSA (Jan) 6.0% vs. Exp. 6.1% (Prev. 5.9%); HICP Prelim. YY (Jan) 7.0% vs. Exp. 7.0% (Prev. 6.7%)
• French CPI Prelim. MM NSA (Jan) 0.4% vs. Exp. 0.5% (Prev. -0.1%); HICP Prelim. MM (Jan) 0.4% vs. Exp. 0.4% (Prev. -0.1%)
• EU GDP Flash Prelim QQ (Q4) 0.1% vs. Exp. -0.1% (Prev. 0.3%); YY (Q4) 1.9% vs. Exp. 1.8% (Prev. 2.3%)
• German Retail Sales MM Real (Dec) -5.3% vs. Exp. 0.2% (Prev. 1.1%, Rev. 1.9%); YY Real (Dec) -6.4% vs. Exp. -1.8% (Prev. -5.9%)
• German Unemployment Rate SA (Jan) 5.5% vs. Exp. 5.5% (Prev. 5.5%); Change SA (Jan) -15k vs. Exp. 5.0k (Prev. -13.0k)
• Citi/YouGov UK Inflation Expectations (Jan): 5-10yrs ahead 3.5% (3.6%), one-year 5.4% (prev. 5.7%)
• Kantar UK Supermarket update (Jan): grocery price inflation 16.7%, +2.3pp MM to a record level.

NOTABLE US HEADLINES

• US President Biden is to end COVID-19 emergency declarations on May 11th, according to the White House.
• US President Biden announces funding for major transportation projects funded by the bipartisan infrastructure law; USD 1.2bln across nine projects.
• The Biden administration plans to release the president’s budget on March 9th, according to Punchbowl sources.
• Click here for the US Early Morning note.

GEOPOLITICS

• Russia and Belarus began joint military staff training, according to the Belarusian Defence Ministry.
• US President Biden said the US will not send Ukraine F-16 jets, according to CBS News.
• S. Korean and US Defence Chiefs pledge to expand the level and scale of joint military drills.
• NATO Secretary General Stoltenberg said to Japan that the war in Ukraine demonstrates that their security is closely interconnected and he appreciates the support Japan provides including cargo capabilities, while he added that they will continue to strengthen the partnership between Japan and NATO, according to Reuters.

CRYPTO

• Bitcoin is essentially unchanged within very narrow USD 22.48-22.99k parameters as participants await afternoon US data.

APAC TRADE

• APAC stocks declined following the weak lead from global counterparts added to the cautiousness heading into the upcoming risk events, while a rebound in Chinese PMI data failed to inspire a rally as the region also digested a slew of earnings updates.
• ASX 200 was subdued as the outperformance in defensives was offset by losses in tech and with Retail Sales at a larger-than-expected contraction.
• Nikkei 225 softened amid a deluge of earnings releases which impacted several of the largest movers in the index, although losses were contained by better-than-expected data releases.
• KOSPI suffered amid losses in its largest constituent Samsung Electronics which posted its lowest quarterly operating profit in 8 years and flagged macroeconomic uncertainties will persist this year.
• Hang Seng and Shanghai Comp. were pressured despite the strong Chinese PMI data which topped forecasts and returned to expansion territory, while attention was also on preliminary earnings and reports that US President Biden's team is weighing fully cutting off Huawei from US suppliers.

NOTABLE ASIA-PAC HEADLINES

• US Commerce Department notified companies it would no longer grant them licences to export to Huawei as the White House mulls fully cutting off Huawei from US suppliers, according to FT and Bloomberg.
• US is pushing for military sites in the Philippines to counter China, according to WSJ.
• Indian Gov't Economic Survey: 2023/24 GDP Growth 6.0-6.8%, baseline GDP growth pegged at 11% nominal and 6.5% in real terms.
• Chinese Premier Li says will keep economic operations within a reasonable range, according to state media; maintaining financial stability and fending off risks still long-term and arduous tasks, will keep the Yuan exchange rate basically stable.

DATA RECAP

• Chinese NBS Manufacturing PMI (Jan) 50.1 vs. Exp. 49.8 (Prev. 47.0); Non-Manufacturing PMI (Jan) 54.4 vs. Exp. 51.0 (Prev. 41.6)
• Chinese Composite PMI (Jan) 52.9 (Prev. 42.6)
• Japanese Industrial Production Prelim. MM (Dec) -0.1% vs. Exp. -1.2% (Prev. 0.2%); Retail Sales YY (Dec) 3.8% vs. Exp. 3.0% (Prev. 2.6%, Rev. 2.5%)
• Australian Retail Sales MM Final (Dec) -3.9% vs. Exp. -0.3% (Prev. 1.4%)