• European bourses are firmer across the board with the region benefitting from a heavy earnings docket, heavyweights including Siemens and AstraZeneca were particularly well received.
• Stateside, futures are firmer across the board as the region recovers from Wednesday's Fed-speak-induced downside, NQ +1.2% modestly outperforms as yields ease.
• DXY continues to pull back and is sub-103.00, with high-betas and cyclicals outperforming. SEK bolstered by a hawkish Riksbank hike.
• EGBs are bid and at the top-end of the session's ranges following the delayed release of sub-consensus German Prelim. CPI.
• Commodities are consolidating somewhat, though are beginning to benefit from the USD's pullback and broader tone.
• Looking ahead, highlights include EU Leaders Summit, Speeches from ECB's de Guindos, Supply from US, Earnings from L'Oreal, Euronext Phillip Morris, AbbVie, PayPal & Kellogg.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.5%, with the region benefitting from a particularly heavy earnings docket with heavyweights including Siemens and AstraZeneca particularly well received.
• As such, sectors are in the green and feature outperformance in Industrial and Healthcare names.
• Stateside, futures are firmer across the board as the region recovers from Wednesday's Fed speak induced downside, NQ +1.2% modestly outperforms as yields ease.
• Click here for more detail.

FX

• Swedish Crown flies following hawkish Riksbank hike and comments from the new Governor, EUR/SEK breaches tech and psych supports on the way down from 11.3510 to sub-11.1600.
• Dollar suffers fallout as DXY slips through 103.000 with additional loss of safety premium amidst buoyant risk appetite; down to 102.80 at worst.
• Kiwi, Aussie and Pound post strong gains due to high beta and cyclical properties, NZD/USD scales 0.6350, AUD/USD above 0.6975 and Cable over 1.2150.
• PBoC set USD/CNY mid-point at 6.7905 vs exp. 6.7900 (prev. 6.7752)
• Click here for more detail.

FIXED INCOME

• Core benchmarks are bid and at the top-end of the session's ranges following the delayed release of sub-consensus German Prelim. CPI.
• Specifically, Bunds have tested 137.00 at best while Gilts are just above 105.50 and USTs at the top-end of 113.23 to 113.13+ parameters.
• Stateside, yields are lower across the curve after Wednesday's upside following hawkish Fed speak and ahead of IJC and a 30yr outing.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are consolidating in relatively narrow sub-USD 1/bbl parameters after yesterday's stronger settlement and amid a weaker USD and improving broader risk sentiment.
• Spot gold has been meandering higher as the USD continues to retreat, though the yellow metals remains someway from USD 1900/oz near Wednesday's USD 1886/oz peak.
• Russia's Kremlin says there could be delays in the Turkish Gas Hub implementation following quakes, but plans will be fulfilled.
• Click here for more detail.

CENTRAL BANKS

• Riksbank raises its Policy Rate by 50bps vs exp. 50bps to 3.00%; decided to reduce Riksbank asset holding at a faster pace, effective from April; The policy rate will probably be raised further during the spring. Peak 3.33% (prev. 2.84%). adding, a stronger SEK would be desirable.
• Riksbank's Governor Thedeen says the rate path indicates either a 25bps or 50bps hike in April, recent weakness in the SEK is hard to explain.
• BoE Governor Bailey says expects inflation to come down rapidly this year, very tight labour market. Current high level of inflation reflects the very high level of first-round effects, not second-round effects. Base effects will provide powerful negative trajectory on UK inflation in 2023.
• BoE Chief Economist Pill says we are now seeing some signs of loosening in labour market data; expect some margin of economic slack to emerge. There is substantial monetary policy tightening still to come through as a result of lags in transmission; that said, there is no room for complacency. Inflation remains unacceptably high.
• BoE's Tenreyro says in her views rates are currently too high.
• BoE's Haskel says he finds his expectations for inflation to be towards the upper part of that distribution. Economic theory suggests that uncertainty around the persistence of inflation should be met with more forceful action, and so shall remain alert to indications that inflation is more persistent than we expected, and act forcefully if necessary.
• Japan's ruling LDP is said to be divided if PM Kishida seeks a BoJ pivot. Reports notes that people say Yamaguchi as BoJ head choice would be controversial. Elsewhere, the Japanese government plans to present nominees for new BoJ governor and officials with parliament early next week, according to NHK; TBS suggest February 14th.

NOTABLE HEADLINES

• UK Chancellor Hunt is under pressure from the CBI to provide tax breaks in the budget to avert a recession, according to The Times.
• Germany's DIHK expects the German economy to stagnate this year vs. prev. forecast of a 3% contraction; firms are also more optimistic about the outlook.

DATA RECAP

• UK RICS Housing Survey (Jan) -47 (Prev. -42.0)
• German CPI Prelim YY (Jan) 8.7% vs. Exp. 8.9% (Prev. 8.6%); MM (Jan) 1.0% vs. Exp. 0.8% (Prev. -0.8%)
• German HICP Prelim YY (Jan) 9.2% vs. Exp. 10.0% (Prev. 9.6%); MM (Jan) 0.5% vs. Exp. 1.2% (Prev. -1.2%)

NOTABLE US HEADLINES

• US Treasury Secretary Yellen says that increases in interest rates are a drag on the federal budget although have been built into budget projections.
  • Click here for the US Early Morning note.

CRYPTO

• Coinbase (COIN) CEO Armstrong said he's heard rumours that the US SEC would like to ban cryptocurrency staking, but added that he hopes this is not the case as it would be a terrible path for the US if it happens, according to CoinDesk.

GEOPOLITICS

• German Chancellor Scholz said will continue to support Ukraine as long as necessary, while he added Russia must not win the war and that Ukraine belongs to the European family, according to Reuters.
• Russian Kremlin, on Ukraine's request for UK fighter planes, says this will draw out the conflict.
• North Korea unveiled a potentially new solid-fuel ICBM during a night-time parade, according to analysts citing commercial satellite imagery. Yonhap reported that North Korean leader Kim oversaw the military parade and North Korean state media later confirmed that a military parade was held in Pyongyang which displayed ICBMs and demonstrated the greatest nuclear strike capability, as well as featured tactical nuclear operations units, according to KCNA

APAC TRADE

• APAC stocks traded mixed with some cautiousness after the losses in the US where risk assets were pressured as markets focused on the hawkish aspects of the recent two-sided remarks from Fed officials.
• ASX 200 was dragged lower by underperformance in tech and utilities with the latter not helped by a near-10% slump in AGL Energy after H1 generation volumes fell 7% Y/Y and it cut its FY guidance.
• Nikkei 225 was subdued with individual stock movers influenced by the slew of earnings results.
• Hang Seng and Shanghai Comp. were initially lacklustre amid the absence of any major catalysts but shrugged off the opening losses and edged higher after the PBoC’s liquidity injection which provided some relief against the rising funding costs from a recent jump in loan demand.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 453bln via 7-day reverse repos at a rate of 2.00% for a CNY 387bln net injection.
• US President Biden answered no when asked if relations with China have taken a big hit, while he added that the US is going to compete fully with China but is not looking for conflict which has been the case so far, according to a PBS interview.
• White House said Chinese balloons have been spotted over countries across five continents and the US has been in touch with allies on this issue, while Japanese Chief Cabinet Secretary Matsuno said Japan is exchanging information with the US on China's spy balloon, according to Reuters.
• China's Foreign Ministry regarding Australia ordering checks on China-made cameras within defence offices, says they hope Australia provides a fair environment for Chinese Cos.; welcomes US Treasury Secretary Yellen's willingness to visit China.
• Chinese Defence Ministry says it declined a proposed phone call with the US because the US side did not create an appropriate atmosphere.