• European bourses are softer across the board as hawkish price action remains in full swing, US futures contained pre-Minutes.
• DXY remains underpinned by haven dynamics to modest detriment of peers ex-NZD after a 50bp RBNZ hike and guidance for further tightening.
• Core fixed has bounced following well-received EZ/UK supply, in a rebound from marked initial pressure with Bunds printing a fresh YTD trough.
• Commodities are underpressure by the above risk tone/hawkish dynamics with specific drivers limited though geopols remain in focus.
• Looking ahead, highlights include Fed's Williams, FOMC Minutes (Feb), S. African Budget Presentation, Supply from the US, Earnings from NVIDIA.

EUROPEAN TRADE

EQUITIES

• European bourses are softer across the board, Euro Stoxx 50 -0.8%, as hawkish price action remains in full swing.
• Sectors are lower across the board ex-Media following individual earning updates, while Basic Resources lag as underlying commodities are dented.
• Stateside, futures are flat/negative with the ES holding around the 4k mark having briefly and incrementally dipped below the figure in European trade.
• Click here for more detail.

FX

• The DXY remains underpinned on haven dynamics and as yields continue to climb across the board, index continues to climb above a 104.00 base with the current high at 104.33
• As such, peers are generally softer across the board with the AUD lagging post-data and as the NZD clings onto gains following the hawkish RBNZ announcement; AUD around 0.6810 and NZD near 0.6210 vs USD.
• EUR was generally unreactive to the morning's Ifo data while dovish commentary from Villeroy prompted some pressure, but this was brief and limited given his remarks are a repeat of Friday's, EUR/USD at the lower-end of 1.0630-1.0663 parameters.
• JPY and CHF are rangy and narrowly mixed against the USD, after the JPY regrouped on some convergence in JGB-UST yields irrespective of BoJ buying while CHF shrugged off an upbeat domestic investor survey.
• GBP is giving back some of Tuesday's marked upside, with caution around N. Ireland Protocol progress perhaps weighing though the focus is firmly on BoE-related dynamics; Cable around 20 pips shy of 1.21 though off worst.
• EUR/SEK continues to test 11.00 with Riksbank's Thedeen assisting while the ZAR is a touch softer heading into the budget announcement from 12:00BST/07:00ET onwards.
• PBoC set USD/CNY mid-point at 6.8759 vs exp. 6.8776 (prev. 6.8557)
• Yonhap reports that as USD/KRW soared "the foreign exchange authorities called an emergency market situation inspection meeting this afternoon.".
• Riksbank's Thedeen says inflation is far too high; January's inflation data was a negative surprise, it is worrying.
• Click here for more detail.

FIXED INCOME

• EGBs have experienced a modest bounce in the wake of well-received EZ & UK supply, with Bunds now back to 104.00 from the new 133.63 YTD low and Gilts firmly above 101.00 in a similar fashion.
• Prior to this, the complex had been under marked pressure in a continuation of recent hawkish price action with the German 10yr yield as high as 2.57%; though, pre-supply this eased following a rerun of recent dovish remarks from Villeroy.
• Stateside, USTs have been moving in-tandem with EGBs with specific catalysts thin ahead of FOMC minutes and a 5yr sale, as such USTs are flat within 110.30+ to 111.08 parameters.
• Click here for more detail.

COMMODITIES

• Crude benchmarks remain underpressure with specific developments limited and focus on the broader risk tone; WTI & Brent Apr at the lower end of USD 74.96-76.55/bbl and USD 81.70-83.25/bbl intraday parameters respectively.
• Nat Gas futures are mixed, though remain pressured vs recent levels as desks continue to cite relatively mild weather in the US and Europe.
• Kazakhstan may send the first batch of oil to Germany in the coming days which could possibly occur today, according to RIA citing the Energy Minister.
• Morgan Stanley sees Brent trading in a USD 90-100bbl range in H2 vs. its prev. view of USD 100-110bbl; raises estimate for oil demand growth to 1.9mln BPD from 1.4mln BPD.
• Nigeria raises March Bonny Crude OSP to +0.95/bbl vs dated Brent; Qua Iboe raise to +1.27/bbl vs dated Brent.
• Spot gold is little changed as any haven allure is offset by the USD's strength, while base metals are lower given the tone and with focus on commentary from Rio Tinto overnight.
• Ukraine could export a total of 8mln tonnes of agricultural good a month for Odesa and Mykolaiv ports; will talk to UN to extend the grain deal for another year, according to Ukrainian Deputy Minister.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Villeroy reiterates that there is excessive volatility of the market view on the terminal rate. Already in restrictive territory with a 2.5% rate, ECB is not obliged to hike at every meeting to September, via Les Echos. Remarks which echo his commentary from last Friday.
• UK PM Sunak reportedly secured the backing of two key Brexiteers for the Northern Ireland trade deal with Heaton-Harris and Braverman getting behind the outline agreement, according to FT.
• DUP's Donaldson reportedly told an ERG meeting on Tuesday that UK PM Sunak was just halfway to meeting the DUP's seven tests re. N. Ireland Protocol, having made progress towards three or four of them, via Politico citing sources; added that progress towards the remaining DUP tests is critical, telling PM Sunak to abandon the "arbitrary deadline" of April 10th.

DATA RECAP

• German Ifo Business Climate New (Feb) 91.1 vs. Exp. 91.2 (Prev. 90.2, Rev. 90.1); domestic economy will not get around a recession, but it will be mild.
• German Ifo Current Conditions New (Feb) 93.9 vs. Exp. 95 (Prev. 94.1); Expectations New (Feb) 88.5 vs. Exp. 88.4 (Prev. 86.4)

NOTABLE US HEADLINES

• China urges state firms to drop the Big Four auditors over data risks, via Bloomberg, suggesting that local auditors should be utilised instead.
• There has been a security alert at the US embassy in London, according to the Daily Mail, and staff have been evacuated.
• Click here for the US Early Morning note.

GEOPOLITICS

• Russia reportedly conducted an ICBM test when US President Biden was recently in Ukraine although the test was said to have failed, while an official stated that Russia notified the US in advance of the launch through deconfliction lines, according to CNN.
• Russian PM Medvedev says Russia is ready to defend itself with any weapon, including nuclear.
• Russian Foreign Minister Lavrov says relations between Moscow and Beijing are developing despite the tense international situation; China's Top Diplomat says we continue to maintain close communication with Russia, via Sky News Arabia. Subsequently, Russian Kremlin says President Putin is to meet with China's Top Diplomat Wang Yi on Wednesday (as touted).
• US President Biden’s administration is expected to impose fresh sanctions on about 200 Russian individuals and entities this week, according to WSJ citing sources.
• North Korea could fire ICBMs at a normal angle and conduct its seventh nuclear test this year, according to South Korean lawmakers citing intelligence officials.

CRYPTO

• Coinbase (COIN) executive said they are seeing increased regulatory scrutiny in the wake of the FTX and other crypto company failures, according to Reuters.

APAC TRADE

• APAC stocks were subdued after the declines on Wall St where the major indices were pressured on return from holiday as strong PMI data from Europe and the US spurred hawkish central bank repricing.
• ASX 200 briefly dipped below 7,300 amid a slew of earnings releases although clawed back most of its losses after weak data releases including a surprise contraction in Construction Work and softer-than-expected Wage Price Index, which removes some of the hawkish impulses for the RBA.
• Nikkei 225 underperformed and approached closer to testing the 27,000 level to the downside.
• Hang Seng and Shanghai Comp. conformed to the subdued mood in which weakness in tech briefly pulled the Hong Kong benchmark into correction territory although losses were then pared after the budget announcement which included a giveaway of HKD 5,000 in consumption vouchers and a cut to salary taxes, while there was also strength in HSBC and Hang Seng Bank post-earnings.

NOTABLE ASIA-PAC HEADLINES

• Hong Kong Finance Secretary Chan delivered the Budget and confirmed the government will provide HKD 5k in consumption vouchers to residents aged 18 years old and above, while they will reduce salaries tax with a ceiling of HKD 6,000 which will benefit 1.9mln taxpayers and lower government revenue by HKD 8.5bln. Chan also noted that the city is at the beginning of a recovery and that GDP contracted by 3.5% in 2022, although the government expects Hong Kong GDP growth of 3.5%-5.5% in 2023.
• China's top diplomat Wang Yi met with Russia's security chief and said the two sides discussed their willingness to oppose all forms of unilateral bullying and discussed ways to improve global governance. Furthermore, the two sides believe peace and stability in the Asia-Pac region should be resolutely upheld and they oppose the introduction of a cold war mentality, according to Reuters.
• RBNZ hiked the OCR by 50bps to 4.75%, as expected, while it maintained its view for rates to peak at 5.50% and considered hikes of 50bps and 75bps at the meeting. RBNZ stated that although there are early signs of price pressure easing, core consumer inflation remains too high and the Committee agreed it must continue to raise the OCR to return inflation to the target and to fulfil its remit.

DATA RECAP

• Australian Construction Work Done (Q4) -0.4% vs. Exp. 1.5% (Prev. 2.2%, Rev. 3.7%)
• Australian Wage Price Index QQ (Q4) 0.8% vs. Exp. 1.0% (Prev. 1.0%); YY (Q4) 3.3% vs. Exp. 3.5% (Prev. 3.1%)