• European bourses are under pressure, Euro Stoxx 50 -1.2%, in a continuation of APAC/US trade that was exacerbated by the latest geopolitical developments re. Romanian airspace.
• Stateside, futures are directionally in-fitting with Europe given broader geopolitics-induced action though with marked NQ -1.0% underperformance as yields pick up globally.
• JPY soared on reports that Ueda will be the gov'ts nomination for BoJ Governor, with USD/JPY dropping to 129.82 from 131.55; however, Ueda announcing he is happy with easy policy saw this unwind back towards 131.00.
• Amidst this, the DXY was pushed down to 102.89 though has since been revitalised by the above Ueda commentary and geopolitics, taking the index to a session peak of 103.50.
• Core fixed benchmarks came under JGB-led pressure on the initial Ueda reports, sending Bunds, Gilts and USTs to 135.88, 104.07 and 112.29+ lows.
• WTI and Brent are bolstered following Novak announcing that Russia is to cut oil production by 500k BPD in March, posting upside in excess of USD 2/bbl.
• Looking ahead, Canadian Jobs Report, US Uni. of Michigan Prelim, EU Leaders Summit (2/2), Speeches from Fed's Waller & Harker, ECB's Schnabel, BoE's Pill.

EUROPEAN TRADE

BOJ

• Japanese gov't is reportedly likely to nominate Kazuo Ueda as the new BoJ Governor, via Nikkei; to nominate Himino as the new Deputy. Japanese gov't initially approached BoJ deputy Amamiya as a possible successor but was met with a firm refusal. Click here for more detail.
• Touted BoJ Governor nominee Ueda said the BoJ's monetary policy is appropriate and they need to continue easy policy, speaking on NTV; when asked if he will be nominated as the next BoJ Governor, says nothing has been decided. Adds, it is important to make decisions logically and explain them clearly.
• Japan's government is to present the nominees for the BoJ leadership on February 14th at 02:00GMT/21:00EST, while the ruling and opposition parties are considering holding a hearing on the nominees in the lower house on February 24th, according to officials cited by Reuters. Subsequently confirmed by PM Kishida

GEOPOLITICS

• "Ukrainian commander in chief Zaluzhny says 2 Russian kalibr missiles entered Moldovan and NATO-member Romanian airspace on their way to targets in Ukraine", via The Economists' Carroll; subsequently, Romania says it cannot confirm at this point that a Russian missile crossed its airspace though Moldova confirms it entered Moldovan airspace.
• Most recently, Romania's Defence Ministry says Russian missile did not reach Romanian airspace, but crossed Moldovan airspace.
• Ukrainian Energy Minister says Russian attacks hit power facilities in six regions, emergency shutdowns reported in many regions.
• French President Macron said he doesn't rule out sending fighter jets to Ukraine but added that it is not a priority for now, according to Reuters.
• Brazil reportedly bowed to US pressure and agreed to delay Iranian warships from docking in Rio de Janeiro until after President Lula meets with US President Biden, according to sources cited by Reuters.

RUSSIAN OIL

• Russian Deputy PM Novak says Russia is to voluntarily cut production by 500k BPD in March (oil only); price cap on Russian oil and oil products interferes with market relations; reiterates will not sell oil to those who adhere to the price cap. There is a risk that oil price caps will be applied to other global economic sectors. Will take further actions depending on the market situation.
• Russia did not consult with OPEC+ on its March oil production reduction, it was an independent decision, according to a source cited by Reuters. Subsequently, Russia's Kremlin says Russia held talks with some OPEC+ members on its decision to cut its oil output.
• OPEC+ will not boost supply in reaction to the Russian cut, according to delegates cited by Reuters.
• Most recently, Russian Deputy PM Novak says Russia has not held any consultations on oil cuts.

EQUITIES

• European bourses are under pressure, Euro Stoxx 50 -1.2%, in a continuation of APAC/US trade that was exacerbated by the latest geopolitical developments re. Romanian airspace.
• Sectors are predominantly in the red with the exception of Energy given benchmark pricing while Retail names post marked underperformance amid heavy losses in Adidas.
• Stateside, futures are directionally in-fitting with Europe given broader geopolitics-induced action though with marked NQ -1.0% underperformance as yields pick up globally.
• Click here for more detail.

FX

• JPY soared on reports that Ueda will be the gov'ts nomination for BoJ Governor, with USD/JPY dropping to 129.82 from 131.55; however, Ueda announcing he is happy with easy policy saw this unwind back towards 131.00.
• Amidst this, the DXY was pushed down to 102.89 though has since been revitalised by the above Ueda commentary and geopolitics, taking the index to a session peak of 103.50.
• More broadly, GBP and EUR initially benefitted from the above gyrations, but have since succumbed to the USD's strength and thus have been below 1.21 and 1.07 respectively.
• SEK continues to extend post-Riksbank while NOK benefited from very hot CPI which adds to conviction to the calls for more policy tightening than flagged by Governor Bache at the last gathering.
• PBoC set USD/CNY mid-point at 6.7884 vs exp. 6.7885 (prev. 6.7905)
• Banxico hiked rates by 50bps in a unanimous decision (exp. 25bps hike) and said for the next policy meeting, the upward adjustment to the reference rate could be of a lower magnitude.
• Click here for more detail.

FIXED INCOME

• Core benchmarks came under JGB-led pressure on the initial Ueda reports, sending Bunds, Gilts and USTs to 135.88, 104.07 and 112.29+ lows.
• However, this pressure has since eased a touch for EGBs given risk gyrations though USTs remain at session lows as the initial JGB-induced move was less pronounced stateside.
• Click here for more detail.

COMMODITIES

• WTI and Brent are bolstered following Novak announcing that Russia is to cut oil production by 500k BPD in March.
• Currently, the benchmarks are firmer by circa. USD 2/bbl, though they have eased slightly from best levels as the USD lifts alongside the risk tone slipping somewhat.
• MMG (1208 HK) said the Las Bambas copper mine in Peru secured critical supplies that have enabled production to continue at a reduced rate and the property remains secure but transport disruptions continue and critical supplies remain low. Furthermore, it warned that if the situation of critical supplies persists, it would be forced to commence a period of care and maintenance.
• Damage assessment and repairs are taking place in Turkey's Ceyhan oil terminal and exports from BTC could begin on Sunday, according to a Turkish official and industry source cited by Reuters.
• Spot gold is modestly firmer and seemingly torn between geopolitical-induced haven appeal, though perhaps impacted by JPY action, and the associated pick up in the USD, as such the yellow metal is at the mid-point of USD 1852-1877/oz parameters.
• Click here for more detail.

NOTABLE HEADLINES

• UK Treasury officials are in discussions to speed up Solvency II reforms and are considering whether to pursue a two-stage implementation, according to FT.
• ECB's Vujcic says core inflation is too high and ECB needs to see a sustained decline in the core rate. Not the time to discuss terminal, once the peak is reached will need to hold there for some time. Even if headline inflation fell below core, policy would need to remain restrictive.
• ECB TLTRO.III February 10th window repayment figure (EUR): 36.6bln vs exp. 60-320bln (prev. 62.75bln).
• Russian Federation Central Bank Key Rate (Feb) 7.50% vs. Exp. 7.5% (Prev. 7.5%); if pro-inflationary risks intensify will consider the necessity of hikes.

DATA RECAP

• UK GDP Estimate MM (Dec) -0.5% vs. Exp. -0.3% (Prev. 0.1%); YY (Dec) -0.1% vs. Exp. -0.2% (Prev. 0.2%, Rev. 0.6%); 3M/3M (Dec) 0.0% vs. Exp. 0.0% (Prev. -0.3%)
• UK GDP Prelim QQ (Q4) 0.0% (Prev. -0.3%, Rev. -0.2%); YY (Q4) 0.4% vs. Exp. 0.4% (Prev. 1.9%)
• Norwegian Consumer Price Index YY (Jan) 7.0% vs. Exp. 6.5% (Prev. 5.9%); MM (Jan) 0.2% vs. Exp. -0.2% (Prev. 0.1%)
• Norwegian Core Inflation YY (Jan) 6.4% vs. Exp. 6.1% (Prev. 5.8%); MM (Jan) 0.2% vs. Exp. -0.1% (Prev. 0.4%)

NOTABLE US HEADLINES

• Fed released 2023 bank stress test scenarios which include heightened stress in commercial and residential real estate markets, as well as a new 'exploratory market shock' for eight of the largest banks.
  • USTR chief agricultural negotiator said they asked Mexico to respond by February 14th to questions regarding the science behind the GMO corn ban decree and its response will help USTR decide on the next steps in resolving the GMO corn dispute including whether to escalate a USMCA dispute.
  • Click here for the US Early Morning note.

APAC TRADE

• APAC stocks were mostly negative after the losses on Wall St where the major indices wiped out initial gains and virtually spent the entire session on the back foot with sentiment hampered and recession fears stoked amid the deepest 2s/10s yield inversion since the 1980s.
• ASX 200 was dragged lower as underperformance in tech led the declines seen in almost all sectors and after the latest RBA Statement on Monetary Policy reaffirmed that further rate hikes will be needed.
• Nikkei 225 bucked the trend amid an overload of earnings releases and softer PPI data, although advances were capped as participants second-guess who will succeed BoJ Governor Kuroda.
• Hang Seng and Shanghai Comp. were lower with Hong Kong pressured by weakness in the property and tech industries, while frictions lingered as the US seeks to take action against Chinese entities linked to the surveillance balloon and reportedly aims to curtail technology investment in China.

NOTABLE ASIA-PAC HEADLINES

• RBA Statement on Monetary Policy noted that the board's priority is to return inflation to the target and that the board expects further increases in rates will be needed, while it is mindful that a considerable adjustment to interest rates has already been made and that monetary policy affects activity and inflation with a lag and through different channels. RBA also stated there are considerable uncertainties surrounding the outlook, and so around the level of interest rates needed to achieve the Board’s objectives.

DATA RECAP

• Chinese CPI MM (Jan) 0.8% vs. Exp. 0.7% (Prev. 0.0%); YY (Jan) 2.1% vs. Exp. 2.2% (Prev. 1.8%)
• Chinese PPI YY (Jan) -0.8% vs. Exp. -0.5% (Prev. -0.7%)
• Japanese Corp Goods Price MM (Jan) 0.0% vs. Exp. 0.3% (Prev. 0.5%)
• Japanese Corp Goods Price YY (Jan) 9.5% vs. Exp. 9.6% (Prev. 10.2%)