• APAC stocks traded mostly rangebound after the choppy but positive performance on Wall St.
• BoJ Governor nominee Ueda noted that current monetary policy is appropriate and Japan still needs more time for inflation to sustainably hit 2%.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.4% yesterday.
• DXY is steady around the 104.50 mark, USD/JPY was choppy alongside Ueda, EUR/USD oscillates around 1.06.
• Looking ahead, German GDP (Detailed), US PCE Price Index, New Home Sales, US President Biden visiting Europe, Speeches from BoE's Tenreyro, Fed's Collins, Mester & Waller, Supply from Italy.

US TRADE

EQUITIES

• US stocks ultimately closed higher after reversing an early sell-off seen in the NY morning as markets reacted to mixed data releases including a weaker second GDP reading for Q4 which included hot inflation metrics and there was also a fall in jobless claims, while desks also attributed the choppy price action to positioning into Friday's PCE data and further Fed Speak.
• SPX +0.53% at 4,012, NDX +0.94% at 12,180, DJI +0.33% at 33,153, RUT +0.71% at 1,908.
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NOTABLE HEADLINES

• US Assistant Secretary for Economic Policy Ben Harris is planning to leave, according to Axios.

APAC TRADE

EQUITIES

• APAC stocks traded mostly rangebound after the choppy but positive performance on Wall St where markets spent most of the session recovering from the initial data-induced selling.
• ASX 200 was positive with the index led by outperformance in tech although gains are limited amid another batch of earnings releases and continued weakness in the mining industry.
• Nikkei 225 outperformed as the focus centred on comments from BoJ Governor nominee Ueda at the lower house confirmation hearing in which he noted that current monetary policy is appropriate and that Japan still needs more time for inflation to sustainably hit the 2% target.
• Hang Seng and Shanghai Comp. were lower after a substantial liquidity drain by the PBoC and as the US looks to include Chinese companies in a fresh round of Russian sanctions, while Hong Kong underperformed amid heavy losses in tech owing to weaker earnings from NetEase.
• US equity futures (ES -0.1%) traded sideways heading into a slew of data releases including PCE Prices.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.4% yesterday.

FX

• DXY was flat around the 104.50 mark, while participants await the PCE Price Index due later which is the Fed’s preferred inflation gauge.
• EUR/USD lacked direction and continued to oscillate around the 1.0600 level.
• GBP/USD was off lows but remained contained after its recent brief slip to below 1.2000.
• USD/JPY was choppy as markets digested a slew of commentary from BoJ Governor nominee Ueda who said they will continue monetary easing but also suggested a data-dependant approach.
• Antipodeans were slightly firmer albeit with price action confined to within the prior day’s tight ranges amid a lack of data releases and the mixed risk tone.
• PBoC set USD/CNY mid-point at 6.8942 vs exp. 6.8948 (prev. 6.9028)

FIXED INCOME

• 10yr UST futures were little changed as price action quietened from yesterday’s fluctuations in which treasuries ultimately bull-flattened after reversing the initial data-triggered selling.
• Bund futures extended on their recent advances to surmount the 135.00 level.
• 10yr JGB futures were also firmer amid the dovish-leaning comments from the BoJ leadership nominees albeit with gains capped after weaker demand at the enhanced-liquidity auction.

COMMODITIES

• Crude futures were higher overnight as the benchmarks consolidated after recent heavy selling.
• Spot gold traded rangebound amid the uneventful dollar and as participants await PCE data.
• Copper futures languished at this week's lows after suffering in the wake of recent economic releases from the US and with price action not helped by the mixed overnight sentiment.

CRYPTO

• Bitcoin was contained after recently slipping beneath the 24,000 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ Governor nominee Ueda said current monetary policy is appropriate and that Japan still needs more time for inflation to sustainably hit the 2% target, while he added it is appropriate to continue monetary easing from now on. Ueda stated that if trend inflation improves significantly, the BoJ needs to move toward monetary policy normalisation but if it does not improve, the BoJ must consider ways to maintain YCC while being mindful of market distortions. He also stated that the BoJ won't conduct bond-selling operations and if it were to normalise policy, it would likely do so by raising interest paid to reserves parked with the central bank. Furthermore, he said must think about what to do with ETF holdings if the BoJ were to exit easy policy but now is not the time to do so and said the BoJ will stop massive bond buying if the 2% target is met.
• BoJ Deputy Governor nominee Uchida said uncertainty regarding Japan's economy is very high and BoJ must support Japan's economy by maintaining ultra-easy policy, while he added it is wrong to tweak monetary policy just to address side effects and the right approach is to come up with ways to mitigate side-effects and effectively maintain current policy.
• BoJ Deputy Governor nominee Himino said it is important to conduct economic policy flexibly and that current monetary policy is appropriate, while he added that they must aim for structural rises in wages. Furthermore, Himino said uncertainty over the global economy is very large and that they need to continue monetary easing for now.

DATA RECAP

• Japanese National CPI YY (Jan) 4.3% vs Exp. 4.3% (Prev. 4.0%)
• Japanese National CPI Ex. Fresh Food YY (Jan) 4.2% vs Exp. 4.2% (Prev. 4.0%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Jan) 3.2% vs Exp. 3.2% (Prev. 3.0%)

GEOPOLITICS

UKRAINE/RUSSIA

• Ukrainian President Zelensky said the military situation in the south is quite dangerous in some places and is very difficult in the east, according to Reuters.
• White House said the US will announce sanctions against Russian individuals and entities on Friday which will affect the banking, defence and tech sectors, while National Security Adviser Sullivan said G7 sanctions being announced on Friday will include countries that are trying to backfill products being denied to Russia.
• China and Russia are reportedly negotiating the purchase of 100 strike drones which could be delivered as early as April 2023, according to Der Spiegel.
• China's Foreign Ministry released a paper regarding China's position on the political solution to the Ukraine crisis which noted respect for the sovereignty of all countries and that regional security cannot be guaranteed by strengthening or expanding military blocs, while it also called for a cease-fire (which would see Russian troops remaining in in Ukraine territory) to prevent Ukraine crisis from further aggravating or getting out of control. Furthermore, it stated that dialogue and negotiation are the only viable ways to resolve the crisis and that nuclear weapons should not be used in the Ukraine war. The proposal was quickly rebuffed by US National Security Advisor Jake Sullivan
• China's Deputy UN envoy said all parties should join against the use or threat of use of nuclear weapons and said that one year into the Ukraine war, brutal facts offer ample proof that sending weapons will not bring peace, while it noted Beijing is ready to continue playing a constructive role in resolving the Ukraine crisis.
• EU delegation head in China said China should fulfil its responsibility to defend the UN Charter in the face of Russian aggression and that China's position paper on Ukraine is not a peace proposal, while Ukraine's Charge D'affaires said that they have a peace plan which they hope China supports and would like to see China do more to end the war.
• French Finance Minister Le Maire said the G20 must condemn Russia's aggression against Ukraine and must condemn Russia at the finance level, while he added Europe is thinking and working on new sanctions on Russia.

NORTH KOREA

• North Korea conducted "strategic cruise missile" launching drills in which it fired four strategic cruise missiles towards the East Sea at dawn on Thursday, according to state media.
• North Korea said if the US continues its hostile practices against the country, it will be considered a declaration of war, according to Yonhap.
• US and South Korea agreed to hold additional tabletop exercises to enhance joint deterrence against North Korean nuclear threats, according to the US DoD cited by Reuters and Yonhap

EU/UK

• Fitch said forthcoming European and US bank stress tests appear to be the toughest yet which may tighten large EU and US banks' capital-management plans.
• Former UK PM Johnson has refused to support PM Sunak's Brexit deal, which poses a major blow to Downing Street's hopes of avoiding a Eurosceptic Conservative rebellion, according to The Telegraph.

DATA RECAP

• UK GfK Consumer Confidence* (Feb) -38 vs. Exp. -43.0 (Prev. -45.0)