• European bourses are firmer across the board, Euro Stoxx 50 +0.9%, in a continuation of the firmer Wall St./APAC handover; US futures bid, though to a lesser extent.
• DXY is under pressure with G10 peers firmer across the board as UST yields ease across the curve, CHF the main beneficiary.
• Fixed income benchmarks are bid across the board as yields continue to pullback in an extension of APAC action with EZ PPI data assisting.
• Crude benchmarks have been choppy, indecisive and rangebound throughout APAC and European hours, residing within sub-USD 1/bbl parameters.
• Looking ahead, highlights include US Composite & Services PMIs, US ISM Services, Speeches from Fed's Logan, Bostic, Bowman, Barkin.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.9%, in a continuation of the firmer Wall St./APAC handover.
• Sectors are predominantly in the green with Media lagging post-UMG while Basic Resources outperforms amid benchmark/overnight action while Tech recoups as yields ease.
• Stateside, futures are all in the green though only modestly so vs Europe, with the ES having eclipsed Thursday's peak but is yet to convincingly test 4k.
• Click here for more detail.

FX

• The DXY is under pressure with G10 peers firmer across the board as UST yields ease across the curve following Thursday's Fed commentary, DXY at the lower-end of 104.64-104.98 parameters.
• Given the yield action, the CHF is the main beneficiary vs the USD and also against the EUR, with EUR/CHF pulling further back from parity to near-0.9950.
• EUR is bid, though to a lesser extent than peers, following a mixed bag of final PMIs and in particular markedly softer January PPI, though hawkish ECB speak has helped to pare the PPI pullback; EUR/USD around 1.0628 high vs 1.0596 low.
• GBP benefits from favourable PMI revisions and EUR/GBP action; currently, Cable is at 1.20 though is yet to convincingly test the figure.
• USD/JPY is neared to 136.00 vs the 136.77 high after firmer-than-expected Tokyo CPI while the antipodeans are bolstered to a similar degree despite softer data prints.
• PBoC set USD/CNY mid-point at 6.9117 vs exp. 6.9132 (prev. 6.8808)
• Click here for more detail.

FIXED INCOME

• Benchmarks are firmer across the board as yields continue to pullback in an extension of APAC action with EZ PPI data assisting.
• Specifically, Bunds have eclipsed Thursday's 132.13 peak by a handful of ticks, though 2.70% in the 10yr yield is proving sticky; the periphery is bid to a slightly larger extent, though BTPs have pulled-back from best levels to 112.00.
• Stateside, USTs are at the top-end of 110.15+ to 111.00 parameters with yields lower across the curve and action currently most pronounced at the long-end ahead of multiple Fed speakers and S&P Global & ISM PMIs.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have been choppy, indecisive and rangebound throughout APAC and European hours, residing within sub-USD 1/bbl parameters.
• Specific developments have been somewhat limited while we await a full readout from Putin's Security Council meeting after limited Kremlin commentary.
• PetroChina International executive said China gas demand is expected to pick up in 2023 from last year's level but does not expect a quick rebound in China LNG imports this year if spot prices are as high as last year, while they expect business as usual in Russia-China gas trade, according to Reuters.
• BoE on LME Clear: "Collectively, these reviews pointed to several shortcomings across LME Clear’s governance, management and risk management capabilities". Click here for more detail.
• China state planner NDRC says experts suggest strengthening regulation and supervision of the iron ore market to curb unreasonable price increases.
• Nat Gas futures diverge between the US and Europe given the weekly inventory data and weather/reduced demand factoring respectively.
• Spot gold is modestly firmer given the softer USD and as the yellow metal extends incrementally above its USD 1844/oz 21-DMA, while base metals are supported by the broader risk tone.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Wunsch said the ECB could consider raising its key interest rate to as high as 4% if underlying inflation remains persistently high and noted if core inflation remains above 5% and there is no clear signal it is going down, they would have to do more, according to Reuters.
• ECB's Vasle expects March rate hike to be followed by additional hikes.
• ECB's de Guindos believes headline inflation will continue to decline, and around mid-year it could fall under 6%; says however core inflation could have a more stable performance.
• ECB's Muller says it is most likely that the March rate hike is not the last; rates will have to stay high for some time; core inflation is more worrisome than headline inflation.
• UK Chancellor Hunt is set to extend GBP 2,500 energy price guarantee for an additional three months, according to The Times.

DATA RECAP

• German Trade Balance, EUR, SA (Jan) 16.7B vs. Exp. 11.0B (Prev. 10.0B)
• EU S&P Global Composite Final PMI (Feb) 52.0 vs. Exp. 52.3 (Prev. 52.3); Services Final PMI (Feb) 52.7 vs. Exp. 53.0 (Prev. 53.0)
• "...concern, however, that signs of persistent elevated selling price inflation, combined with the surprising resiliency of the economy, will embolden the ECB into more aggressive monetary policy tightening..."
• EU Producer Prices YY (Jan) 15.0% vs. Exp. 17.7% (Prev. 24.6%); MM (Jan) -2.8% vs. Exp. -0.3% (Prev. 1.1%)
• UK Composite PMI Final (Feb) 53.1 vs. Exp. 53.0 (Prev. 53.0); Services PMI Final (Feb) 53.5 vs. Exp. 53.3 (Prev. 53.3)

NOTABLE US HEADLINES

• Fed's Waller (voter) said the Fed may need to raise rates beyond the December central tendency view of 5.1%-5.4% if incoming jobs and inflation data does not pull back from the strong readings for January, while Waller added that his view will depend on what the data says.
• Click here for the US Early Morning note.

GEOPOLITICS

• US senior official said Ukraine will be a major topic in talks between US President Biden and German Chancellor Scholz, while the leaders are also expected to discuss challenges posed by China. Furthermore, the US has so far not seen that China has provided lethal aid to Russia and it is engaging with partners in Europe on sanctions against third countries aiding Russia, according to Reuters.
• Russian Kremlin says that Russia will take measures to prevent a repeat of the border incursion on Thursday by Ukraine-backed nationalists.

CRYPTO

• Bitcoin remains underpressure and lower by circa. USD 1k at USD 22.3k, after seeing pronounced downside in short-order overnight with fresh catalysts light but some attention placed on liquidation action amid concerns of the viability of Silvergate.
• Three US Senators requested that Binance and its US partner provide information about their regulatory compliance and finances, according to Reuters.

APAC TRADE

• APAC stocks traded mostly higher amid tailwinds from the US where risk appetite was bolstered by comments from Fed's Bostic that they could be in a position to pause by mid-to-late summer and as the region also digested further strong Chinese Caixin PMI data.
• ASX 200 was led by strength in telecoms, healthcare and financials albeit with gains limited ahead of next week’s RBA meeting where the central bank is widely expected to hike again.
• Nikkei 225 outperformed after recent data which showed Tokyo-area headline and core inflation began to soften and the Unemployment Rate edged lower, while a recent source report noted that the BoJ is to prefer watching how the impact of earlier policy tweaks works out for now.
• Hang Seng and Shanghai Comp. gained after strong Caixin Services and Composite PMI data which showed the fastest pick-up in activity since August. However, upside was capped heading into China’s ‘Two Sessions’ where participants will be eyeing a major overhaul of President Xi’s leadership team and the Government Work Report including this year’s official growth target, while US-China frictions continued to linger with the Biden administration adding 28 Chinese entities to the US trade blacklist.

NOTABLE ASIA-PAC HEADLINES

• PBoC Governor Yi said they will keep the yuan exchange rate and prices stable, while he added that the yuan has become more flexible and helps stabilise the economy. Yi stated they will safeguard the bottom line for preventing systemic risks and will support the healthy development of platform companies. Yi also noted that China's real interest rates are at an appropriate level now and using RRR to release long-term liquidity will still be an effective tool for the economy, according to Reuters.
• PBoC Deputy Governor Liu said China's economy is improving but there are still uncertainties and they will adjust policy in a timely way, but will not resort to flood-like stimulus and will steer monetary policy based on domestic conditions.
• US President Biden's administration added 28 Chinese entities to the US trade blacklist, according to a filing cited by Reuters. US Commerce Department later confirmed that it added 37 entities to the entities list with many of them from China, while the additions were due to nuclear and missile-related activities, supporting China's military, human rights violations and support for the Russian military.
• Japan's Chief Cabinet Secretary Matsuno says they will consider taking necessary steps to curb inflation, incl. using the reserve budget.
• China's two-session will commence at 07:00GMT/02:00EST on March 4th and end on March 13th.

DATA RECAP

• Chinese Caixin Services PMI (Feb) 55.0 vs. Exp. 54.7 (Prev. 52.9); Composite PMI (Feb) 54.2 (Prev. 51.1)
• Tokyo CPI YY (Feb) 3.4% vs. Exp. 3.3% (Prev. 4.4%)
• Tokyo CPI Ex. Fresh Food YY (Feb) 3.3% vs. Exp. 3.3% (Prev. 4.3%); Ex. Fresh Food & Energy YY (Feb) 3.2% vs. Exp. 3.1% (Prev. 3.0%)
• Japanese Unemployment Rate (Jan) 2.4% vs. Exp. 2.5% (Prev. 2.5%)