• APAC stocks began the week mostly subdued as geopolitical tensions lingered and with markets bracing for Tuesday's US CPI data.
• US military shot down a fourth flying object due to its potential surveillance capabilities after it flew in proximity to sensitive military sites.
• DXY is marginally firmer, EUR/USD is on a 1.06 handle, JPY lags peers ahead of BoJ Governor announcement.
• European equity futures are indicative of a contained open with the Euro Stoxx 50 Unch. after the cash market closed down -1.2% Friday.
• Looking ahead, highlights include Swiss CPI, Japanese GDP

US TRADE

EQUITIES

• US stocks were mixed on Friday in which the SPX finished with slight gains after choppy/tight trade but the NDX held onto its losses as duration took a hit. A strong University of Michigan consumer sentiment survey was the only US data point of note and included a bounce in the short-term inflation expectations, albeit the more Fed-focal longer-term gauge remained unchanged, while the strong consumer survey was enough to add to concerns of a potential bounce in the January CPI report and contributed to the selling pressure in bonds.
• SPX +0.22% at 4,090, NDX -0.62% at 12,304, DJIA +0.50% at 33,869, RUT +0.18% at 1,918.
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NOTABLE HEADLINES

• US House Oversight Committee Chair Comer said Republicans will not cut social security or Medicare but everything else is on the table in discussions regarding the debt ceiling, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks began the week mostly subdued as geopolitical tensions lingered after the US shot down a fourth flying object and with markets bracing for Tuesday's US CPI data, while the region also digested earnings releases and news that Japan's government is likely to nominate academic and former BoJ member Ueda to head the central bank.
• ASX 200 was lacklustre with earnings in focus and the Consumer Discretionary sector was pressured alongside a more than 20% drop in Star Entertainment shares after it flagged an impairment charge of up to AUD 1.6bln.
• Nikkei 225 underperformed as participants pondered over the future of the BoJ with the government likely to nominate Ueda as the next central bank chief after dovish continuation candidate and BoJ’s QE policy architect Amamiya was said to turn down the role.
• Hang Seng and Shanghai Comp. were mixed with Hong Kong pressured early on by weakness in property and tech, while the mainland was kept afloat after China’s recent loans and aggregate financing data topped forecasts with New Yuan Loans at a record high for January.
• US equity futures (ES -0.3%) were a touch softer with price action tentative ahead of tomorrow's inflation data.
• European equity futures are indicative of a contained open with the Euro Stoxx 50 Unch. after the cash market closed down -1.2% Friday.

FX

• DXY eked mild gains amid the mostly risk-averse mood heading into tomorrow’s US CPI data and after last Friday’s strong UoM consumer sentiment survey which included a bounce in the short-term inflation expectations.
• EUR/USD languished at a monthly low on a 1.06 handle despite comments from ECB’s Visco who noted there is no question that the restriction of the euro area monetary stance must continue, while it was reported that German Chancellor Scholz’s SPD suffered a heavy blow in the Berlin election which the party lost for the first time in 22 years.
• GBP/USD was uneventful with price action stuck around 1.2050 after last week's pressure.
• USD/JPY edged higher with price action helped by a firmer dollar and as markets second-guessed the BoJ’s future policy path with academic Ueda at the helm who is seen to bring a balanced leadership to the BoJ.
• Antipodeans were rangebound amid the cautious mood in stocks and across the commodities complex.
• PBoC set USD/CNY mid-point at 6.8151 vs exp. 6.8160 (prev. 6.7884)

FIXED INCOME

• 10yr UST futures remained lacklustre after the bear-steepening during Friday's US session where flatteners took profits on the strong University of Michigan survey and ahead of Tuesday's CPI data.
• Bund futures were contained after last week’s selling pressure and recent hawkish ECB commentary.
• 10yr JGB futures nursed some of their losses but with upside capped amid uncertainty regarding touted BoJ governor nominee Ueda’s views.

COMMODITIES

• Crude futures trickled lower throughout the session with WTI retreating from near the USD 80/bbl level albeit with downside limited amid expectations for higher oil demand and last week's reports that Russia is to cut production.
• OPEC Secretary General Haitham Al Ghais said OPEC remain committed to stabilising global oil prices and their latest forecast shows oil demand will exceed pandemic levels this year to reach nearly 102mln bpd, while oil demand is expected to reach 110mln bpd by 2025, according to Reuters.
• Azerbaijani oil shipments at Turkey’s Ceyhan terminal resumed after the recent earthquake, according to a (BP/ LN) representative cited by Reuters.
• IEA sees the power sector set for a tipping point on emissions in 2025 and for electricity demand to increase by an average 3% through to 2025 with more than 70% of the global electricity demand increase over the next 3 years to come from China, India and south-east Asia, according to FT.
• Spot gold was marginally lower owing to a slightly firmer dollar.
• Copper futures briefly dipped below USD 4/lb with early pressure from the mostly negative mood.

CRYPTO

• Bitcoin was contained after prices pulled back from resistance at 22,000 during the weekend.
• India’s Finance Minister said the G20 is exploring collectively regulating cryptocurrencies, according to Reuters.
• Binance and TRON reached an agreement in which Binance will reduce transaction fees on the Tron network with withdrawal frees returned to previous levels, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• PBoC and CBIRC published rules on the risk classification of banks’ financial assets which will take effect on July 1st, with the tightened management regulations aimed at assessing banks’ credit risks more accurately, reflecting lenders’ real asset quality, according to Reuters.
• Japan's Upper House of Parliament is to hold confirmation hearings on the government's nominations for the BoJ Governor and Deputy Governors on February 27th, according to sources cited by Reuters.
• BoJ's expected next chief Ueda is likely to allow the data to guide the exit timing, according to Tetsuya Inoue who was Ueda's former staff secretary during his time as a BoJ board member, according to Reuters.

DATA RECAP

• Singapore GDP QQ (Q4) 0.1% vs. Exp. 0.3% (Prev. 0.8%)
• Singapore GDP YY (Q4) 2.1% vs. Exp. 2.3% (Prev. 2.2%)

GLOBAL

• Former Cypriot Foreign Minister Christodoulides won the presidential election with 51.9% of votes vs Andreas Mavroyiaanis at 48.1% of votes, according to Reuters.
• Iranian President Raisi will travel to China this week at the invitation of Chinese President Xi, according to China’s Foreign Ministry.

GEOPOLITICS

• Russian Deputy Foreign Minister said Russia is ready for negotiations with Ukraine but without preconditions and noted that any negotiations should take into account current realities on the field, according to TASS.
• Russia said it hit energy facilities in Ukraine on Friday, according to RIA. it was also reported that Russian troops took the village of Krasna Hora which is north of Bakhmut in Ukraine’s Donetsk region, according to Reuters.
• Canada’s Defence Minister announced that a fighter jet shot down an object about 100 miles from the US-Canadian border which was a small cylindrical object and had posed a reasonable threat to civilian aviation, while the Defence Minister added it is not prudent to speculate on the origin of the object, according to Reuters.
• US military shot down a fourth flying object over Lake Huron in Michigan which was an octagonal structure with no discernible payload, while the US did not assess the latest object to be a military threat and was shot down due to its potential surveillance capabilities after it flew in proximity to sensitive military sites, according to Reuters.
• China spotted a mystery flying object over the waters near the coastal city of Rizhao in the Shandong province which authorities were preparing to shoot down, according to SCMP.
• Taiwan has observed dozens of Chinese military balloon flights in its airspace in recent years, according to FT.
• UK is to launch a security review related to China's spy balloons, according to The Telegraph
• China is reportedly contemplating tripling its stockpile of nuclear warheads to 900 by 2035, according to sources cited by Japan Times.

EU/UK

• UK PM Sunak has reportedly asked ministers and officials to draw up plans for rebuilding the UK's relations with the EU, according to Bloomberg.
• UK employers are expected to increase wages by the most since 2012 with median expectations for a 5% pay rise, while 55% of recruiters were planning to lift base or variable pay this year, according to a CIPD survey cited by Reuters.
• UK fire brigades union said the leadership unanimously recommended that members accept the revised pay offer from service employers, according to Reuters.
• ECB’s Visco said there is no question that the restriction of the euro area monetary stance must continue and reiterated the pace of any further rate hike will continue to be decided based on incoming data and their impact on the inflation outlook, according to Reuters.
• Germany’s CDU is set to win in the repeat election in Berlin with 28% of votes, while Chancellor Scholz’s SDP party received just 18% of votes in a blow for the party which has governed the city-state for 22 years, according to ZDF.
• Moody’s affirmed Germany at AAA; Outlook Stable on Friday.