• European bourses are firmer across the board, Euro Stoxx 50 +1.8%, after a cautious APAC handover following Friday's selling pressure.
• Stateside, futures are currently posting more modest upside of around 0.5% with Fed's Jefferson (voter) due.
• DXY is softer but remains above 105.00 with GBP outperforming on UK-EU N. Ireland deal optimism; Antipodeans lag slightly.
• Bonds remain underpressure though current losses are relatively modest, Germany 10yr yield at a fresh YTD peak.
• Crude benchmarks are slightly softer in indecisive trade with numerous geopolitical updates and Druzhba developments factoring.
• Looking ahead, highlights include US Durable Goods, Pending Home Sales; Fed's Jefferson; ECB's Lane & de Cos.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.8%, after a cautious APAC handover following Friday's selling pressure.
• Sectors are all in the green with Energy names at the top of the pile, given benchmark pricing and Shell's upgrade at GS.
• Stateside, futures are currently posting more modest upside of around 0.5% with Fed's Jefferson (voter) the session's main event.
• Tesla's (TSLA) German plant has hit a production level of 4,000 per week, three weeks ahead of schedule, according to Reuters.
• Click here for more detail.

FX

• DXY retained a bid between Fib and psychological level within 105.360-070 range; though has erred towards the lower-end of these parameters going into the US session.
• Sterling 'outperforms' after a dip through 200 DMA vs Buck on UK-EU NI trade deal optimism, with EUR/GBP within 10 pips of 0.8800 at worst.
• Kiwi flags as NZ Q4 retail sales fall and Aussie feels more contagion from Yuan weakness; antipodeans near 0.6150 and 0.6710 respectively.
• Euro pivots 1.0550 vs the Dollar and Yen pares back from sub-136.50 amidst Fib support nearby.
• PBoC set USD/CNY mid-point at 6.9572 vs exp. 6.9586 (prev. 6.8942)
• Click here for more detail.

FIXED INCOME

• Bonds remain in bear clutches after another failed recovery rally.
• Bunds probe new cycle low at 133.61 (session high 134.36) have fallen just shy of key resistance area, associated 10yr at a YTD peak of 2.57%.
• Gilts wane just two ticks below 101.00 and test bids/support into 100.00 and T-note hugs base of 111-07/16 range ahead of US data, Central Bank speakers and crunch UK-EU Brexit talks.
• Click here for more detail.

COMMODITIES

• WTI and Brent are a touch softer though have lifted off overnight USD 75.58/bbl and USD 82.38/bbl lows given the improvement in risk sentiment throughout the European morning.
• Though, the benchmarks are shy of USD 76.82/bbl and USD 83.60/bbl peaks with numerous geopolitical updates factoring into the overall indecisive price action.
• Russia halted supplies of oil to Poland via the Druzhba pipeline, according to PKN Orlen's CEO. Subsequently, Russia's Transneft says payment orders for oil shipments to Poland were not issued in the second half of February, no oil flows to Poland currently, via Tass; paperwork for oil supplies to Poland has not been completed.
• Crude oil deliveries via the Druzhba pipeline to the Czech Republic are running as planned, according to Mero.
• Spot gold is little changed with the yellow metal in a tight sub-10/oz range above the USD 1800/oz handle, taking its cue from the similarly cagey USD.
• Base metals are, broadly speaking, firmer following overnight weakness but remain in proximity to the troughs from Friday's session.
• Click here for more detail.

NOTABLE HEADLINES

• UK PM Sunak and European Commission President von der Leyen will meet at 12:00GMT/07:00EST in Windsor, according to BBC; if there is a deal, a press conference could be around 15:30GMT. Earlier, UK PM Sunak's office said UK PM Sunak will meet with EU's von der Leyen for talks on Northern Ireland Brexit deal late lunchtime on Monday and will hold a Cabinet meeting later on Monday. Furthermore, PM Sunak and von der Leyen will hold a news conference if a deal is reached, while Sunak will also address parliament if there is a deal.
• UK ministers are unlikely to quit re. the Brexit deal, with the likes of Steve Baker and others liking what they are hearing but waiting to see the full text, according to Times' Swinford; ERG say they would love to back the deal but if the DUP does not back the deal it cannot and won't support it.
• UK PM Sunak said they are giving it everything they’ve got regarding talks for a post-Brexit deal for Northern Ireland and he will try to resolve the concerns the DUP Party have regarding a new Brexit deal for Northern Ireland. It was later reported that PM Sunak said he won big concessions from the EU, according to The Sunday Times and The Times.
• UK Deputy PM Raab said there is real progress on a trade deal and he is hopeful for good news on the Brexit deal within days, not weeks, and also noted that Northern Ireland’s DUP does not have a de-facto veto over the Brexit deal. In other news, Raab said he will resign if an allegation of bullying against him is upheld, according to Reuters.
• ECB’s Lagarde said headline inflation is still unacceptably high and core CPI is at a record level, while she added that they want to bring inflation back to the 2% target and noted that rate decisions are to be data dependent.
• Magnitude 5.7 earthquake that struck the Eastern Turkey region has been revised to 5.2, according to the EMSC.

DATA RECAP

• EU Consumer Confidence Final (Feb) -19.0 vs. Exp. -19.0 (Prev. -19.0)
• EU Consumer Inflation Expectations (Feb) 17.7 (Prev. 17.7, Rev. 17.8); Selling Price Expectations (Feb) 23.8 (Prev. 31.9, Rev. 31.3)

NOTABLE US HEADLINES

• US Treasury Secretary Yellen said she expects readjustments of housing rental contracts to lower rates will help drive a reduction in inflation this year, while she added that the US consumer spending report shows that disinflation is not a straight line and inflation remains a problem. Furthermore, she disagrees with the premise that the Fed needs a recession to win the inflation fight and also said that she was willing to negotiate with Republicans regarding the budget proposal to be unveiled next month but not as a condition of raising the debt limit, according to Reuters.
• JPMorgan (JPM) reportedly considering cutting China's weighting in the new Asia credit index to circa. 30% (vs ~43% in the current index), via Reuters citing sources; proposes adding Australia, New Zealand & Japan. Proposal follows some fund managers pushing Co. to cut china exposure following poor performance and geopolitical tensions. Such an index would be in parallel to its existing Asia credit index.
• Click here for the US Early Morning note.

GEOPOLITICS

• Russia's Kremlin, on China's peace plan, says no conditions for peace 'at the moment' in Ukraine, according to AFP.
• G20 Finance Ministers meeting concluded without a joint communique as China and Russia opposed the draft with the two countries said to be upset by the use of a G20 platform to discuss political matters, according to sources cited by Reuters. India’s chair statement noted that there was a discussion about the war in Ukraine and it reiterated the G20 position on deploring in the strongest terms aggression by Russia, as well as reiterated the G20 position demanding Russia’s complete and unconditional withdrawal from Ukrainian territory.
• Russian President Putin said Russia has taken into account NATO’s nuclear potential and claimed that the west wants to liquidate Russia, according to TASS.
• Russian Wagner Group boss Prigozhin said his fighters captured the village of Yahinde which is north of Bakhmut, according to Reuters.
• US President Biden said on Friday that he is ruling out Ukraine’s request for F-16 aircraft for now but added they have to put Ukrainians in a position where they can make advances this spring and summer. Biden also said he doesn’t anticipate a major initiative on the part of China to provide weapons to Russia and that he hasn’t seen anything in the Chinese peace plan that would be beneficial for anyone but Russia, while he also suggested it is possible that Chinese President Xi did not know about the Chinese spy balloon, according to an ABC News interview.
• US National Security Adviser Sullivan said China has made the final decision regarding providing aid to Russia and has not taken the possibility of providing lethal aid to Russia off the table, while he noted the consequences have been made clear to China and warned there will be a real cost if China provides military assistance to Russia for the Ukraine war, according to an interview with ABC News. There were also comments from Republican lawmaker McCaul that China is thinking of sending drones and other lethal weapons.
• Belarus President Lukashenko will pay a state visit to China from February 28 to March 2. "The visit will serve as an opportunity for the two sides to further promote comprehensive cooperation", according to Global Times.
• Germany, France, and the UK are considering making concrete security guarantees to Ukraine as an incentive for Ukrainian President Zelensky to engage in peace talks with Russia, according to the WSJ.
• German Defence Minister Pistorius commented regarding the Chinese peace plan and stated that they will judge China by its actions, not its words, according to Reuters.

OTHER

• Taiwan's Defence Ministry says a US P-8A Poseidon maritime patrol and recon. military plane flew through the Taiwan Strait from north to south. Subsequently, China's military said the action deliberately interferes with and disrupts the regional situation and endangers the peace/stability of the Taiwan Strait.
• Saudi Foreign Minister Farhan visited Ukraine and discussed ways to reduce escalation with Ukrainian President Zelensky, as well as announced USD 400mln in humanitarian aid agreements.
• Israel and Palestinian officials agreed to de-escalate on the ground and prevent more violence, while they agreed to meet again next month and stressed the joint readiness and commitment to work immediately to stop unilateral measures for 3-6 months, according to the joint statement at the end of the meeting in Aqaba, Jordan.

CRYPTO

• Bitcoin is modestly firmer on the session, +1.0%, but off initial best levels and within recent sub-25k parameters.
• RBI Governor Das said at the G20 that there is now wide recognition of major risk with crypto.

APAC TRADE

• APAC stocks traded cautiously heading into month-end and a slew of upcoming releases including Chinese PMI data, with headwinds also from the US where firmer-than-expected Core PCE data spurred hawkish terminal rate bets.
• ASX 200 was negative as participants digested a deluge of earnings and with the mining industry leading the retreat seen across nearly all sectors aside from energy which benefitted from a jump in Woodside Energy’s profits.
• Nikkei 225 price action was contained by a lack of pertinent macro drivers and with BoJ Governor nominee Ueda’s largely reiterated prior comments at the upper house confirmation hearing.
• Hang Seng and Shanghai Comp. were choppy with initial pressure amid geopolitical frictions after the G20 finance ministers meeting failed to agree on a communique due to opposition from Russia and China, while National Security Adviser Sullivan also warned there will be a real cost if China provides military assistance to Russia for the Ukraine war. However, Chinese stocks gradually recovered from the early weakness and briefly turned positive with sentiment helped by a continued liquidity injection and after China drafted guidelines to regulate financial support in the housing rental market, although the gains proved to be short-lived.

NOTABLE ASIA-PAC HEADLINES

• China drafted guidelines to regulate financial support in the housing rental market and began to solicit public opinion, according to China.org.cn.
• Macau dropped COVID-19 mask mandates for most locations aside from public transportation, hospitals and some other areas, according to Reuters.
• BoJ Governor Kuroda commented that he is resolved to keep ultra-loose policy and that the BoJ expects core consumer inflation to slow beyond 2% in both fiscal 2023 and 2024, according to Reuters.
• BoJ Governor nominee Ueda says CPI growth will slow below 2% in fiscal 2023 and that it takes time for CPI to meet the 2% target stably and sustainably, while he added that the BoJ's current monetary easing is appropriate and that it is appropriate to continue monetary easing from now on as well. Adds, changing the 2% inflation target into a 1% target would strengthen the JPY in the short-term, weaken it long-term. Overshooting commitment is aimed at exerting powerful announcement effects on policy, need to be mindful of risk of inflation overshooting too much. Targeting shorter-dated JGBs than current 10yr yield is one idea if BoJ were to tweak YCC in the future, but there are many other options. Does not think Japan has reached the reversal rate, in which financial transmission channels are hurt so much that the demerits of easing exceed benefits.

DATA RECAP

• Australian Gross Company Profits (Q4) 10.6% vs. Exp. 1.5% (Prev. -12.4%, Rev. -11.5%); Business Inventories (Q4) -0.2% vs. Exp. -0.2% (Prev. 1.7%, Rev. 2.1%)