• European bourses are mixed/flat, Euro Stoxx 50 +0.1%, as the initial pressure from hot French/Spanish inflation readings has eased through the morning.
• US futures in-fitting with the above ahead of Fed speak; AAPL lower on Foxlink, CVX higher post-buyback update.
• DXY is firmer, but is closer to the session trough, while EUR has faded initial CPI-induced upside, GBP outperforms & JPY lags.
• Debt futures fade with Bunds at a fresh cycle low and curves re-steepening, JGBs outperform following a 2yr sale and dovish BoJ nominee testimony.
• Crude is firmer and seemingly continues to consolidate while metals generally are mixed given the above.
• Looking ahead, highlights include Canadian GDP, US Chicago PMI, Consumer Confidence, Fed Discount Rate Minutes, International Energy Week (1/3), Speeches from BoE's Pill & Fed's Goolsbee. Earnings from Target & HP.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed/flat, Euro Stoxx 50 +0.1%, as the initial pressure from hot French/Spanish inflation readings has eased through the morning.
• Sectors, are mixed with Banking/Financial names outperforming as yields lift alongside specific stock updates.
• Stateside, futures are little changed overall with the morning's action moving in-tandem with European performance ahead of earnings/Fed speak, ES +0.1%
• Foxlink, an Apple (AAPL) supplier, will not be able to resume full operations at its India plant for two months following a fire, via Reuters citing sources. Apple could potentially face disruptions in supply chain for iPhones due to Foxlink incident.
• Chevron (CVX) reaffirms higher returns and lower carbon objectives, lifts share buyback guidance to USD 10-20bln/year; increases targeted annual share buyback rate to USD 17.5bln from Q2.
• Apple (AAPL) probe by Brussels into the Co.'s restriction of certain apps has been narrowed, according to FT sources.
• The US is to prevent businesses from using cash for buybacks in the CHIPS Act, according to the Commerce Department; Additionally, cannot make new, high-tech investments in China or other “countries of concern” for at least a decade. A release that is in-fitting with recent press reports.
• Click here for more detail.

FX

• The DXY is firmer on the session, though remains closer to its 104.57 trough then the 104.90 high, a low that printed in wake of shortlived EUR upside following February flash CPI metrics from France/Spain.
• Specifically, the price points lifted EUR/USD to a 1.0625 peak, though this has proved shortlived as the USD remains resilient and given unfavourable EUR/GBP action as the mood-music re. N. Ireland remains positive, on balance.
• As such, GBP is the G10 outperformer with Cable testing the 1.21 mark vs a 1.2028 base following a favourable face-value take from DUP's Donaldson; though, sources indicate the parties' review could potentially take weeks.
• JPY is the G10 laggard given unfavourable yield action and more dovish remarks from the BoJ deputy nominees; USD/JPY at the top-end of 136.12-84 parameters.
• PBoC set USD/CNY mid-point at 6.9519 vs exp. 6.9515 (prev. 6.9572)
• Click here for more detail.

FIXED INCOME

• Debt futures fade after the latest dead cat bounce and curves re-steepen.
• Bunds hit a fresh 132.51 cycle low, Gilts down to 99.38 and T-note retreats within 111-21+/10 range, solid 2025 German auction, albeit after heavy concession helps Schatz pare some losses between 115.52-114.95 parameters.
• JGBs outperform after more dovish testimony from BoJ nominees and decent 2 year sale.
• Click here for more detail.

COMMODITIES

• WTI and Brent are firmer on the session and currently reside at the top-end of narrow circa. USD 1/bbl parameters which are just about within Monday’s range, with newsflow limited and the complex seemingly continuing to consolidate.
• Japan plans to emphasise the importance of investments into natgas, LNG, hydrogen and ammonia during its G7 presidency, according to a METI official.
• LME announces immediate suspension of warranting, applicable to LME-listed warehouses located in the US of any new primary aluminium, copper, lead, nickel or aluminium alloy (in form of NASAAC). Currently Russian NASAAC on warrant, 400/T, in LME-listed warehouses within the US. Suspending use of such warrants for use in settlement of LME NASAAC futures.
• Spot gold is a touch softer on the session as initial USD-induced upside has faded as the index moves back into positive territory, albeit only modestly so; more broadly, base metals are mixed given the USD's resilience and inflation metrics weighing.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Lane says positive supply shocks since December and rate hikes have curbed inflationary pressures, forward looking indicators for food, energy and goods suggests inflation slowdown. Rate plateau should be held for some time, rates could be in restrictive territory for a number of quarters; hikes to end when it is clear inflation is heading to target.
• Northern Ireland DUP leader Donaldson says the Stormont Break in the Northern Ireland deal at first glance does give Stormont the ability to apply the break. Continue to have some concerns with the deal.
• EIB President proposes a new fund to see off US subsidies, via Der Spiegel; concerned that entire industries will migrate to the US given the subsidies on offer there.

DATA RECAP

• French CPI Prelim. YY NSA (Feb) 6.2% vs exp. 6.1% (prev. 6.0%); MM 0.9% vs exp. 0.7% (prev. 0.4%)
• Spain CPI Flash (Feb): 6.1% vs exp. 5.7% (prev. 5.9%) YY; 1.00% (prev. -0.20%) MM
• UK Lloyds Business Barometer (Jan) 21 (Prev. 22)

NOTABLE US HEADLINES

• Click here for the US Early Morning note.

GEOPOLITICS

• Kremlin spokesperson Peskov said Russia will not resume participation in START talks until Washington listens to Moscow's position, while he added that NATO no longer acts as Russia's conditional opponent but as an enemy.
• Russian Defence Ministry said the US is planning provocation in Ukraine using toxic chemicals, according to TASS.
• Russian domestic flights heading for St Petersburg are reportedly turning around, via Reuters citing a flight radar tracking site; Pulkovo airport has been closed to air traffic, due to an unidentified object with fighter jets responding, via BAZA. Airspace around the airport has subsequently reopened.
• Russian Defence Ministry says Ukraine attempted to attack two Russian regions with drones overnight, via Ria.

CRYPTO

• Bitcoin is unchanged on the session. Currently, residing within tight sub-USD 400 parameters with specific drivers limited and little fresh/pertinent commentary from BoE's Cunliffe on crypto thus far.

APAC TRADE

• APAC stocks eventually traded mixed heading into month-end and despite the early momentum from the positive close on Wall St where risk sentiment benefitted as yields softened amid mixed data.
• ASX 200 was led by strength in the mining-related industries and after mostly encouraging data releases including a stronger-than-expected rebound in retail sales.
• Nikkei 225 initially gained amid the upper house confirmation hearings where the BoJ Deputy nominees reiterated the need to continue monetary easing, although the gains were gradually pared as participants also digested mixed data including the largest monthly decline in industrial production in 8 months.
• Hang Seng and Shanghai Comp. failed to sustain opening advances despite a substantial liquidity injection and reports the White House is scaling back plans to regulate US investments in China.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 481bln via 7-day reverse repos at 2.00% for a CNY 331bln net injection.
• White House is scaling back plans to regulate US investments in China with US President Biden expected to forego expansive new restrictions on American investment in China, according to Politico.
• White House gave federal agencies 30 days to ensure they have TikTok bans on federal devices and systems, while it directed federal agencies to adjust contracts to ensure IT vendors keep US data safe by eliminating the use of TikTok on devices and systems, according to Reuters.
• BoJ Deputy Governor nominee Uchida reiterated that the BoJ needs to continue monetary easing for the time being to support the economy and shouldn't review easy monetary policy just because there are side effects. Uchida added the BoJ will conduct policy flexibly and will firmly continue monetary easing to lay the ground for companies to raise wages, while he added that it is too early to seek an exit from monetary stimulus and that widening the yield target band itself would weaken effects of easing.
• BoJ Deputy Governor nominee Himino said NIRP has negative impacts on financial institutions' profits and that they must be mindful of the impact to banks from negative rates but the focus now should be on keeping easy policy to support the economy. Himino stated that if conditions fall in place for BoJ to exit easy policy, that would be good for both the public and banks but added that the best approach is to support the economy with easy policy until inflation can achieve the BoJ's price target excluding the impact of import price increases.
• BoJ Quarterly Schedule of Outright Purchases of Japanese Government Bonds; click here for more detail.

DATA RECAP

• Japanese Industrial Production MM (Jan P) -4.6% vs. Exp. -2.6% (Prev. 0.3%); Retail Sales YY (Jan) 6.3% vs. Exp. 4.0% (Prev. 3.8%)
• Australian Current Account Balance (AUD) (Q4) 14.1B vs. Exp. 6.5B (Prev. -2.3B); Net Exports Contribution (Q4) 1.1% vs. Exp. 1.3% (Prev. -0.2%)
• Australian Retail Sales MM Final (Jan) 1.9% vs. Exp. 1.5% (Prev. -3.9%)
• New Zealand ANZ Business Outlook (Feb) -43.3% (Prev. -52.0%); Own Activity (Feb) -9.2% (Prev. -15.8%)