• European bourses are modestly firmer, Euro Stoxx 50 +0.3%, in relatively limited newsflow following a mixed APAC with US futures in-fitting pre-CPI.
• The DXY has been pushed modestly below 103.00 and resides at the lower-end of 102.90-103.26 parameters pre-CPI; GBP & EUR outperform, NZD lags.
• Reports that the UK & EU could announce a customs deal within two-weeks to resolve the N. Ireland trading dispute
• Core-EGBs/USTs are firmer but off best levels ahead of the sessions' US events, with Gilts lagging below 104.00 post-supply
• WTI and Brent continue to slip following earlier SPR reports, while spot gold is benefitting from the USD's downside
• Looking ahead, highlights include US CPI, OPEC MOMR, Speeches from Fed's Williams, Barkin, Harker & Logan. Earnings from Coca-Cola & GlobalFoundaries.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer, Euro Stoxx 50 +0.3%, in relatively limited newsflow following a mixed APAC handover ahead of US CPI.
• Stateside, futures are essentially flat with an incremental positive bias pre-CPI and Fed speak, newsquawk CPI preview available here.
• Within Europe, sectors are all in the green with Telecom's outperforming on the back of Vodafone while *Travel & Leisure *benefits from a Tui update and easyJet broker move.
• Boeing (BA) has cut its outlook for India's commercial aviation market to circa. 2.21k planes over the next decade (prev. forecast 2.240k), via APAC MD at Aero India.
• Tesla (TSLA) workers a New York are said to launch a union campaign, according to Bloomberg.
• TSMC (TSM/2330 TT) is to increase its investment at the Arizona plant by up to USD 3.5bln, according to Bloomberg.
• Turkey is reportedly planning to resume stock trading on Wednesday, via Bloomberg; Reuters sources add that authorities are taking steps to reduce the market impact of the earthquake.
• Click here for more detail.

FX

• The DXY has been pushed modestly below 103.00 and resides at the lower-end of 102.90-103.26 parameters pre-CPI.
• Action which initially saw JPY outperformance and NZD underperformance, in a reversal of Monday's direction, as Ueda's nomination was confirmed and New Zealand declared a post-cyclone state of emergency; NZD/USD below 0.6350.
• Though, the upside in JPY has dissipated with USD/JPY at the top-end of 132.46-131.79 boundaries.
• Most recently, GBP and EUR have taken pole position amid employment data and reports of Brexit/N. Ireland progress; with Cable above 1.22 and EUR/USD surpassing 1.0750.
• Amidst this, EUR/GBP is slightly softer as GBP outpaces its single currency peer, though the EUR is besting the CHF despite firmer Swiss PPI.
• Brazil's President Lula and Finance Minister Haddad to meet at 13:00GMT/08:00EST to discuss the possible change in the inflation target, via Estadao; on Thursday, the National Monetary Council (CMN) may debate the issue if there is a decision by the president on the subject.
• PBoC set USD/CNY mid-point at 6.8136 vs exp. 6.8138 (prev. 6.8151)
• Click here for more detail.

FIXED INCOME

• EGBs remain firmer but well off initial best with core-pressure occurring amidst the morning's UK & Italian sales, with Gilts lagging and BTPs slightly outperforming in the aftermath.
• Specifically, Bund are holding above 136.00 but are some 40 ticks shy of best while Gilts have been an equal margin below 104.00 at worst.
• Stateside, USTs are in-fitting with EGBs but with some slim relative outperformance and thus lie closer to the top-end of 112.26+ to 113.01+ ranges with yields lower across the curve pre-CPI.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are hampered following earlier reports that the Biden admin. intends to sell 26mln more from the SPR; as such, WTI Mar and Brent Apr are below USD 79.00/bbl and USD 86.00/bbl respectively.
• UAE Energy Minister says UAE is committed to the OPEC deal lasting until end-2023; more worried about supply than demand next year.
• Russian Urals crude supplies to China increased to a 7-month high of 230k BPD in January, according to Reuters sources; ports loaded 360k BPD of Urals to vessels heading to China over February 1-10th.
• Phillips (PSX) 66 Wood River refinery (380k BPD) reports flaring and a unit upset.
• Spot gold has been moving at the whim of the USD, with the yellow metal testing USD 1850/oz to the downside, though has recuperated somewhat as the DXY loses 103.00; 50-DMA resides at USD 1857/oz.
• Click here for more detail.

NOTABLE HEADLINES

• UK and EU could announce a new customs deal within the next two weeks to resolve the dispute over post-Brexit trading rules in Northern Ireland, according to The Telegraph.
• "Negotiations over the Northern Ireland protocol are in the crucial final phase with a potential deal as early as next week"", according to UK government sources cited by The Guardian.
• A Reuters poll showed about three-quarters of respondents expect the BoE to hike rates by 25bps in March and then pause. Furthermore, the median view is for the UK economy to contract in Q1, Q2 and Q3, while the economy is expected to contract by 0.8% in 2023 (prev. forecast for 0.9% contraction) and expand by 0.8% in 2024 (prev. forecast 0.8%).
• German Finance Minister Lindner says cannot back current EU Commission fiscal-rule proposals.
• Turkey is reportedly to temporarily suspend some gold imports, according to Bloomberg; Wealth Fund is to support equities with a new mechanism.

DATA RECAP

• UK ILO Unemployment Rate (Dec) 3.7% vs. Exp. 3.7% (Prev. 3.7%); Claimant Count Unemployment Change (Jan) -12.9k (Prev. 19.7k, Rev. -3.2k)
• UK Average Earnings (Ex-Bonus) (Dec) 6.7% vs. Exp. 6.5% (Prev. 6.4%, Rev. 6.5%); "For regular pay, this is the strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period."; 3M YY (Dec) 5.9% vs. Exp. 6.2% (Prev. 6.4%, Rev. 6.5%)
• German Wholesale Price Index YY (Jan) 10.6% (Prev. 12.8%); MM (Jan) 0.2% (Prev. -1.6%)
• EU GDP Flash Estimate QQ (Q4) 0.1% vs. Exp. 0.1% (Prev. 0.1%); YY (Q4) 1.9% vs. Exp. 1.9% (Prev. 1.9%)
• EU Employment Flash QQ (Q4) 0.4% vs. Exp. 0.2% (Prev. 0.3%); YY (Q4) 1.5% (Prev. 1.8%)

NOTABLE US HEADLINES

• US President Biden is to name Fed's Brainard as his top economic adviser as early as Tuesday, according to a source familiar with the matter cited by Reuters.
  • Click here for the US Early Morning note.

GEOPOLITICS

• US State Department said the US stands with the Philippines in the face of the Chinese Coast Guard's reported use of laser devices against the crew of a Philippines Coast Guard ship on February 6th in the South China Sea. US added that China's conduct was provocative and unsafe which resulted in the temporary blindness of crew members and that China's dangerous operational behaviour directly threatens regional peace and stability, while it reaffirmed any attack on Philippine armed forces, public vessels or aircraft would invoke mutual defence commitments under their treaty, according to Reuters.
• Russian Kremlin says that NATO is an organisation that is hostile to Russia and proves its hostility every day; NATO is trying to make its involvement in the conflict ever clearer.

CRYPTO

• Bitcoin is firmer on the session and at the top end of USD 21.61-21.88k boundaries which are by extension well within the week's existing parameters.

APAC TRADE

• APAC stocks eventually traded mixed with a slight positive bias following the firm handover from Wall St where the major indices gained and the Treasury curve flattened ahead of US inflation data.
• ASX 200 was led by tech and telecoms after similar outperformance of their US counterparts but with gains capped as an improved business survey was offset by a deterioration in consumer confidence.
• Nikkei 225 was marginally firmer as participants digested GDP data which showed Japan’s economy returned to growth albeit at a slower-than-expected pace, while the government nominated academic Ueda as the next BoJ Governor, as expected.
• Hang Seng and Shanghai Comp. were indecisive after the PBoC’s liquidity drain and amid the current balloon-related frictions, although reports noted US Secretary of State Blinken is considering meeting with China's Foreign Minister Wang which could provide an opportunity to diffuse the tensions.

NOTABLE ASIA-PAC HEADLINES

• Japan's government nominated academic Kazuo Ueda as the next BoJ Governor, while it nominated BoJ Executive Director Shinichi Uchida and former FSA chief Ryozo Himino as Deputy Governors, as expected.
• China's MOFCOM says China will take necessary measures to resolutely safeguard legitimate rights and interests of Chinese enterprises, with regards to US adding Chinese firms to the export control list.

DATA RECAP

• Japanese GDP QQ (Q4) 0.2% vs. Exp. 0.5% (Prev. -0.2%, Rev. -0.3%); QQ Annualised (Q4) 0.6% vs. Exp. 2.0% (Prev. -0.8%, Rev. -1.0%)
• Japanese Real GDP YY (2022) 1.1% (Prev. 2.1%)
• Australian Westpac Consumer Confidence Index (Feb) 78.5 (Prev. 84.3); MM (Feb) -6.9% (Prev. 5.0%)
• Australian NAB Business Confidence (Jan) 6 (Prev. -1.0); Conditions (Jan) 18 (Prev. 12.0)
• New Zealand Inflation Forecast 1 Year (Q1) Q1 5.11% (Prev. 5.08%); 2 Years (Q1) Q1 3.30% (Prev. 3.60%)