• European bourses are softer across the board, Euro Stoxx 50 -0.5%, though off lows with limited reaction to EZ HICP ahead of minutes/Schnabel.
• US futures are similarly pressured, NQ lags given yield upside; CRM +15% and TSLA -6.% pre-market.
• USD has been aided by yields and geopolitical jitters, to the detriment of peers across the board with EUR unreactive overall to HICP.
• A hawkish release which sent Bunds to just shy of earlier lows, though the complex is now little changed overall.
• Crude climbs after APAC consolidation with focus on geopols though spot gold fails to glean any support thus far.
• Reports of a Ukrainian DRG group entering Russia's Bryansk; Putin to hold a Security Council meeting on Friday.
• Looking ahead, highlights include US IJC, Japanese CPI & ECB Minutes, Speeches from Fed's Waller & Kashkari, ECB's Schnabel, BoE's Pill, Tenreyro.

EUROPEAN TRADE

EQUITIES

• European bourses are softer across the board, Euro Stoxx 50 -0.5%, though off lows with limited reaction to EZ HICP ahead of minutes/Schnabel.
• Sectors are mixed with Construction names outperforming post-CRH while Real Estate is recouping from recent pressure after Taylor Wimpey's FY update.
• Stateside, futures are under similar pressure, ES -0.5%, though the NQ -0.7% lags as yields continue to rise.
• Salesforce Inc (CRM) - Q4 2023 (USD): Adj. EPS 1.68 (exp. 1.36), Revenue 8.38bln (exp. 7.99bln), increases share repurchase program to USD 20bln. Co. sees Q1 Adj. EPS USD 1.60-1.61 (exp. 1.32), sees Q1 rev. 8.16bln-8.18bln (exp. 8.05bln), sees FY Adj. EPS 7.12-7.14 (exp. 5.78), sees FY rev. 34.5bln-3.7bln (exp. 34.05bln). (businesswire) +15.0% in pre-market trade
• Tesla (TSLA) - Investor day: CFO said the Co. could spend up to USD 175bln to reach 20mln vehicle production and noted of possible share buyback as use of excess capital. -6.0% in pre-market trade, desks said the event was light on details re. new models/outlook.
• Click here for more detail.

FX

• Higher yields help Dollar recover from midweek malaise, DXY firmer within 104.830-330 range.
• Yuan hands back some post-Chinese PMI upside, as USD/CNY and USD/CNH rebound through 6.9000 and retest 200 DMAs.
• Kiwi loses momentum irrespective of a surprise rise in NZ terms of trade and Aussie undermined by much weaker than forecast building approvals.
• Euro and Pound retreat vs bouncing Buck as former shrugs off hot EZ inflation data and latter heeds softer DMP CPI expectations and DUP doubts over NI trade pact
• PBoC set USD/CNY mid-point at 6.8808 vs exp. 6.8809 (prev. 6.9400)
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FIXED INCOME

• Core benchmarks remain softer on the session despite a pause for breath before and ultimately after the EZ HICP metrics, Bunds currently lower to the tune of just 15 ticks.
• On the data, EGBs came under pressure given the hawkish numbers; though, Bunds ultimately held above their earlier 131.31 low and the associated 10yr yield has eased from a 2.77% peak.
• Gilts are directionally in-fitting with EZ peers with Gilts little changed ahead of commentary from BoE's Pill and Tenreyro after the DMP was broadly in-fitting with recent data/Bailey.
• USTs are similarly softer with yields steeper across the curve though action is more pronounced at the long-end thus far with Fed's Waller and Kashkari due.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are firmer intraday after a stronger settlement on Wednesday, action comes after APAC consolidation and with attention on increasing geopolitical risk amid reports of Ukrainian DRG activity within Russia.
• Currently, WTI Apr and Brent May are at the top-end of circa. USD 1/bbl parameters.
• Saudi Aramco CEO sees very strong oil demand from China and excellent demand in US and Europe.
• Oman's energy ministry is to offer new oil and gas concessions, to be announced in the end of Q1 2023; to offer offshore oil and gas concessions in Q2 2023.
• Dutch TTF and Henry Hub are diverging very modestly, with TTF slipping further below EUR 50/MWh this morning.
• Spot gold is a touch softer as the USD continues to benefit from markedly elevated yields and risk sentiment, with the yellow metal seemingly unable to glean any support from the tone thus far.
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NOTABLE HEADLINES

• DUP MP Ian Paisley said that the Windsor Framework agreement does not meet the party’s seven tests, according to BBC's Darren Marshall via Twitter.
• ECB's Lagarde says a 50bp hike for March remains on the table, as inflation is still too high; future rate path will be data-dependent.
• BoE Monthly Decision Maker Panel data - February 2023. Click here for details.

DATA RECAP

• EU HICP Flash YY (Feb) 8.5% vs. Exp. 8.2% (Prev. 8.6%); X Food & Energy Flash YY (Feb) 7.4% (Prev. 7.1%)
• EU HICP-X Food, Energy, Alcohol & Trade Flash YY (Feb) 5.6% vs. Exp. 5.3% (Prev. 5.3%)
• EU Unemployment Rate (Jan) 6.7% vs. Exp. 6.6% (Prev. 6.6%, Rev. 6.7%)

NOTABLE US HEADLINES

• Kansas City Fed Economists wrote "A return to pre-pandemic rates of rent inflation could remain elusive" and tight labour markets suggest "rent inflation is likely to remain elevated even after the dust settles on pandemic-driven swings", according to WSJ.
• China's MOFCOM says China is willing to talk to the US to reduce trade restrictions; US restrictive measures hurt US-China trade potential.
• Click here for the US Early Morning note.

GEOPOLITICS

• US is reportedly lobbying allies on possible China sanctions if Beijing gives Russia military aid in Ukraine, according to Reuters citing sources.
• "Reports that a Ukrainian DRG group has entered Bryansk oblast, Russia...reports that Ukrainian soldiers have captured inhabitants in the village of Sushany.", according to Faytuks News. Subsequently, Military administration in Odessa says "No Ukrainian forces infiltrated into Russian Bryansk, and perhaps Wagner took the hostages", according to Al Jazeera.
• In the wake of this, Russian Lawmakers say President Putin is to chair an emergency meeting of the Russian Security Council, following the Bryansk events.. The Kremlin subsequently pushed back on this and clarified that Russian President Putin will chair a security council meeting on Friday.
• Israel's Minister for Strategic Affairs and National Security Adviser are expected to visit Washington early next week for meetings with senior Biden administration officials that will focus on Iran, according to Axios citing officials.

CRYPTO

• Crypto bank Silvergate is evaluating the ability to survive as an ongoing concern, according to FT.

APAC TRADE

• APAC stocks were choppy and mostly traded rangebound after the uninspiring handover from Wall Street where risk appetite was hampered by the latest ISM data and hawkish Fed rhetoric.
• ASX 200 was indecisive as weakness in the financial, tech and consumer sectors offset the resilience in commodity-related industries, with sentiment not helped by a slump in building approvals.
• Nikkei 225 failed to sustain early advances with the index stuck around the 27,500 level after data showed Japanese recurring profits declined Y/Y for the first time in eight quarters.
• Hang Seng and Shanghai Comp. were mixed with underperformance in Hong Kong as investors booked profits from yesterday’s tech-led rally, while sentiment in the mainland was clouded by several weak earnings and ongoing frictions as the US was reportedly lobbying allies on possible China sanctions should Beijing provide Russia with military aid in Ukraine.

NOTABLE ASIA-PAC HEADLINES

• China may aim for a higher 2023 GDP growth target than the 4.5%-5.5% proposed in November, while its target could range between 5.0%-5.5% and be as high as 6.0%, according to sources involved in policy discussions cited by Reuters.
• China's Human Resources Minister said China's employment will continue to improve this year and remains stable overall, while the minister added China's employment is better than expected for January-February, according to Reuters.
• US State Department approved the potential sale of F-16 munitions and related equipment to Taiwan for an estimated cost of USD 619mln, according to the Pentagon.
• China and Australian trade officials are set to continue their "productive dialogue" with negotiations expected to pave the way for an eventual visit to Beijing by Australia's Farrell, via SCMP sources; however, there was reportedly a "snag" in talks.
• China is reportedly pledging USD 1.9bln toward the country's top memory chipmaker Yangtze Memory Technologies, according to Bloomberg sources.
• BoJ is said to prefer watching how the impact of earlier policy tweaks works out for now, according to Bloomberg sources. Note, this echoes earlier commentary from BoJ's Takata who said he does not see a need now to take additional steps to improve market function, will need some time to gauge impact of the December measures.

DATA RECAP

• Australian Building Approvals (Jan) -27.6% vs. Exp. -8.0% (Prev. 18.5%, Rev. 15.3%)