• European bourses & US futures are pressured amid a myriad of hawkish factors, Euro Stoxx 50 -1.0% & ES -0.8%, with more Fed officials scheduled.
• As such, the USD is bolstered with Antipodeans lagging while EUR & GBP are the relative outperformers, though lower vs USD, given domestic hawkish drivers.
• Specifically, explicitly hawkish commentary from ECB's Schnabel, hotter-than-expected German PPI and UK Retail Sales exert influence.
• In the wake of this, Bunds down to a 133.67 trough with Gilts similarly downbeat while the US yield curve is elevated & slightly flatter.
• The commodity complex is under pressure given the above risk tone and as the USD picks up.
• US Pentagon's top China official Chase has arrived in Taiwan, via FT.
• Looking ahead, highlights include US Export/Import Prices, Speeches from Fed's Bowman & Barkin.

EUROPEAN TRADE

EQUITIES

• European bourses & US futures are pressured amid a myriad of hawkish factors, Euro Stoxx 50 -1.0% & ES -0.8%, with more Fed officials scheduled.
• Sectors are predominantly in the red, with only Autos bucking the trend following earnings from Mercedes-Benz while Tech slumps on elevated yields.
• Stateside, futures are all in the red and given the session's action has been driven by hawkish developments, the NQ -1.0% is underperforming.
• Click here for more detail.

FX

• The USD is bolstered with multiple hawkish factors in play, DXY holding just under 104.50 within 104.15-104.51 parameters.
• As such, peers are lower across the board with Antipodeans lagging given the double-whammy of USD and commodities weighing; AUD/USD near 0.68 and NZD/USD sub 0.62.
• Additionally, the comparatively lower-yielding nation's FX are towards the bottom of the pile with CHF and JPY above 0.93 and 135.0 respectively vs the USD.
• Next up, and despite domestic hawkish factors, EUR and GBP are lower though faring much better than their aforementioned peers given some of the USD's upside has been offset by ECB's Schnabel/German PPI and UK Retail Sales.
• PBoC set USD/CNY mid-point at 6.8659 vs exp. 6.8674 (prev. 6.8519)
• Click here for more detail.

FIXED INCOME

• Core benchmarks are under marked pressure as Bullard, German PPI and Schnabel weigh ahead of Fed's Bowman and Barkin.
• Specifically, Bunds down to a 133.67 trough post-Schnabel while Gilts slipped and pricing for a 25bp BoE hike in March lifted slightly on Retail Sales.
• Similarly, the EGB periphery is downbeat and interestingly the action has seen the BTP-Bund spread widen to near 190bp, the widest for several weeks given Schnabel's overt hawkishness.
• Stateside, USTs slump as Bullard and GS' latest FFR call continue to weigh, yields elevated across the curve which is slightly flatter given the short-term implications of the referenced drivers; Bowman & Barkin ahead.
• Click here for more detail.

COMMODITIES

• The commodity complex is under pressure given the above risk tone and as the USD picks up.
• WTI and Brent are subdued with the benchmarks at the lower end of circa. USD 2/bbl parameters and Nat Gas contracts are lower both side of the pond.
• Qatar Energy set April-loading Al-Shaheen crude term price at a premium of USD 2.58/bbl above Dubai quotes, according to traders cited by Reuters.
• Russian President Putin says demand for natural gas will increase; half of the demand will come from APAC, mainly China.
• China's Dalian Commodity Exchange says price fluctuations of commodities, including iron ore, are relatively huge; alerts investors to participate rationally.
• Similarly, metals are slumping on the USD's upside with spot gold down to a sub-1820/oz trough and LME Copper falling further below USD 9k/T.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Schnabel says it is not easy to say if policy is already restrictive, via Bloomberg. Wage growth is up strongly, may be more persistent; risk markets will underestimate inflation. QT could be sped up after June, nothing has been decided yet. The broad disinflation process has not even started yet. 50bp hike in March is needed under virtually all scenarios. Weaker transmission may require more forceful action.
• Diplomats in Brussels suggest a deal on the Northern Ireland Protocol "isn't quite there, yet", according to BBC's Parker; Northern Ireland Alliance party leader says that after meeting UK PM Sunak, it seems that "things are gradually moving towards a protocol deal", though adds “We are not over the line yet - there is still heavy lifting to do,”

DATA RECAP

• German Producer Prices YY (Jan) 17.8% vs. Exp. 16.4% (Prev. 21.6%); MM (Jan) -1.0% vs. Exp. -1.6% (Prev. -0.4%)
• UK Retail Sales MM (Jan) 0.5% vs. Exp. -0.3% (Prev. -1.0%, Rev. -1.2%); YY (Jan) -5.1% vs. Exp. -5.5% (Prev. -5.8%, Rev. -6.1%)
• UK Retail Sales Ex-Fuel MM (Jan) 0.4% (Prev. -1.1%, Rev. -1.4%); YY (Jan) -5.3% vs. Exp. -5.3% (Prev. -6.1%)

NOTABLE US HEADLINES

• Goldman Sachs expects three more 25bp hikes from the Fed in March, May and June to a peak FFR of 5.25-5.50%; due to stronger growth and firmer inflation news.
• Click here for the US Early Morning note.

GEOPOLITICS

• Pentagon's top China official Michael Chase will visit Taiwan in the coming days, according to FT sources; subsequently, clarified that Chase has arrived in Taiwan.
• Ukrainian President Zelensky has ruled out giving up any of Ukraine's territory in a potential peace deal with Russia, according to the BBC.
• North Korea said planned US-South Korean military drills will lead to increased tensions in the region and warned that the US and South Korea will face an unprecedently strong response if they go ahead with planned military drills, while it will also consider additional military action in protest against US pressure at the UN Security Council, according to KCNA.
• Chinese Foreign Ministry, on President Biden suggesting he will speak to his Chinese counterpart Xi, says the US cannot ask for communications and dialogue while escalating the crisis.
• Japan, US, Australia, and India are to hold a foreign ministers' meeting in March, according to Japanese press Sankei.

CRYPTO

• US SEC filed a securities fraud lawsuit against Terraform Labs and founder Do Hyeong Kwon which alleged that the defendants perpetrated a fraudulent scheme that led to at least USD 40bln of losses in market value, according to Reuters.
• Senior BoJ official Uchida said the BoJ decided to launch a pilot program this April on a CBDC which aims to test technical feasibility, as well as utilise skills and insights of private businesses.

APAC TRADE

• APAC stocks traded negatively as the regional bourses took their cues from the weak performance stateside after firmer-than-expected PPI data and hawkish Fed rhetoric.
• ASX 200 was dragged lower by weakness in tech following the underperformance of the Nasdaq in the US and with sentiment also dampened as the RBA Governor Lowe reiterated the view for higher rates.
• Nikkei 225 suffered from the tech rout and as earnings began to quieten, although Bridgestone was among the best performers after a jump in revenue and forecasts for a 12% increase in FY23 profits.
• Hang Seng and Shanghai Comp. declined with Hong Kong pressured by tech losses and with frictions stoked after China unveiled sanctions against US firms related to Taiwan arms sales, while the mainland initially bucked the trend after a substantial liquidity injection by the PBoC.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 835bln via 7-day reverse repos at 2.00% for a CNY 632bln net injection.
• RBA Governor Lowe said high inflation is damaging and that they will do what is necessary to make sure inflation returns to the target range, while he noted the Board expects that further increases will be needed over the months ahead. Lowe also reiterated that they are not on a predetermined path on interest rates and have an open mind but their assessment is that they have to go up further on rates. Furthermore, he added that they will slow down on rates if needed and that rates could start to come down next year if they get on top of inflation but a few things would have to go right for that to happen.