• European bourses are modestly firmer with US futures similar but slightly more contained ahead of Tuesday's CPI and the week's Fed speak.
• USD is bid though peers, ex-JPY, are generally fairly contained overall; USD/JPY up to 132.76 as we await confirmation of Ueda's nomination.
• EGBs have experienced a firm bounce with technicals and ECB speak perhaps factoring, USTs more contained with yields flat/mixed.
• WTI March and Brent April futures are softer and towards the bottom of intraday ranges as the complex takes a breather from last week’s gains.
• US military shot down a fourth 'flying object' while China has spotted a mystery object near Rizhao, Shandong
• Looking ahead, highlights include Japanese GDP, NY Fed Survey of Consumer Expectations, Fed's Bowman & ECB's Centeno.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer, Euro Stoxx 50 +0.5%, with fresh developments limited and the schedule relatively sparse ahead of Tuesday's key events.
• Sectors are predominantly in the green, featuring outperformance in Travel and Construction names while Energy and Real Estate lag on benchmark pricing and broker activity respectively.
• US futures are incrementally in the green with the NQ leading slightly though overall performance is contained as we look towards Tuesday's CPI with Fed's Bowman due beforehand.
• Turkey is reportedly considering extending its stock market closure, according to Bloomberg sources.
• Click here for more detail.

FX

• USD is bid though peers, ex-JPY, are generally fairly contained after Friday's DXY rebound and ahead of US Tier 1 data and Fed speak throughout the week.
• At best, the USD has been up to 103.84 with USD/JPY as high as 132.76 as we await confirmation of Ueda's nomination for the BoJ and after reports indicate he will be data-driven when deciding on the appropriate point to end ultra-accommodation.
• At the other end of the spectrum, NZD is the relative outperformer and holding above 0.6300 as it pares losses vs AUD with data due overnight for the region; AUD/USD holding near 0.6900.
• CHF saw some fleeting strength in wake of hot domestic CPI while both EUR and GBP were unreactive to respective Central Bank speakers; around 0.923, 1.067 and 1.204 vs USD respectively.
• PBoC set USD/CNY mid-point at 6.8151 vs exp. 6.8160 (prev. 6.7884)
• Click here for more detail.

FIXED INCOME

• EGBs have experienced a firm bounce with Bunds comfortably above 136.00 to a peak circa. 30 ticks above, with technicals and perhaps ECB speak factoring.
• Amidst this, Gilts are more contained as they struggle to convincingly eclipse 104.00 while USTs reside at the top-end of narrow 112.18 to 11224 intra-day parameters.
• As such, EGB yields are modestly softer while the US curve is flat to mixed pre-Bowman.
• Click here for more detail.

COMMODITIES

• WTI March and Brent April futures are softer and towards the bottom of intraday ranges as the complex takes a breather from last week’s gains.
• While today's commodity-related schedule is limited, we do have the Olso Energy Conference (14-16th Feb) and the IEA-IEF-OPEC Symposium (15th Feb) in the near term.
• 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.
• Russian Deputy PM Novak says Russia is looking to sell over 80% of its oil exports and 75% of its oil product exports to "friendly" nations in 2023; sees potential for increase of Russian natural gas exports to the APAC region.
• China's CNPC is reportedly close to sealing a long-term agreement to purchase LNG from QatarEnergy's north field expansion, via Reuters citing sources.
• Spot gold is slightly softer with a stronger USD factoring and pressuring the yellow metal to a test of Friday's USD 1852/oz trough at worst, while base metals are softer amid the tentative tone and USD.
• Click here for more detail.

CENTRAL BANKS

• 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.
• ECB's Centeno says they need to be open minded with data, via Bloomberg TV; inflation surprised the ECB to the downside. Smaller hikes would need mid-term (i.e. 2024/2025) inflation nearing 2%. Labour market is a positive surprise, no signs of second round effects re. wages.
• BoE's Haskel says "it is true that when we raise rates that is not good for investment. I absolutely accept that, and therefore we are potentially contributing to that very poor capital investment", according to an interview with Matthew Klein; would prefer to make policy with much more attention on the data flow over the next few months.

NOTABLE HEADLINES

• 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.
• 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.
• EU Commission Forecasts: EZ to avoid the prev. expected technical recession, 0.1% QQ growth in Q4-2022 and 0.00% QQ in Q1-2023. Click here for more detail.
• Ship traffic has Turkey's Bosphorus strait has been suspended amid salvage operations of a ship, according to Tribeca shipping agency.

DATA RECAP

• Swiss CPI YY (Jan) 3.3% vs. Exp. 2.9% (Prev. 2.8%); MM (Jan) 0.6% vs. Exp. 0.4% (Prev. -0.2%)

NOTABLE US 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.
• 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.
  • Click here for the US Early Morning note.

GEOPOLITICS

• EU set to propose new Russia sanctions, potentially targeting tech exports used for military purposes, heavy vehicles and rubber, as well as dozens of listings, according to Bloomberg's Nardelli citing sources.
• 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.
• China's Foreign Ministry says that since last year US high-altitude balloons flew over Chinese airspace without their permission on over 10 occasions.
• 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.

CRYPTO

• Stablecoin issuer Paxos has been directed to stop minting Binance Coin (BUSD) by the US SEC; following on from WSJ reporting over the weekend that US SEC intends to sue stablecoin issuer Paxos, which is behind the Pax Dollar (USDP) and Binance USD (BUSD) tokens, over the latter stablecoin.
• 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.

APAC TRADE

• 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.

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.
• China's Foreign Ministry says senior diplomat Wang Yi will visit France, Italy, Russia and Hungary this month and attend the Munich Security Conference.

DATA RECAP

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