• European bourses are posting modest gains of circa. 0.3% in a continuation of the firmer APAC handover where the upside was capped by China's GDP targets.
• US futures are essentially unchanged given the above and as participants await the week's commentary from Fed officials, incl. Chair Powell, and Friday's NFP report.
• China set its 2023 GDP target at circa. 5.0% (exp. 5.0-5.5%), CPI target around 3%, jobless-rate around 5.5%.
• The DXY is slightly softer with CHF outperforming post-CPI while the Yuan slides on the above with Antipodeans pressured alongside this.
• Core fixed income has managed to recover well from initial bouts of pressure, with yields softer across the curve in Europe and the US.
• Crude benchmarks are softer and at the lower-end of circa. USD 1/bbl parameters, following the underwhelming GDP targets set by the market's largest buyer China.
• Looking ahead, highlights include US Factory Orders.

EUROPEAN TRADE

EQUITIES

• European bourses are posting modest gains of circa. 0.3% in a continuation of the firmer APAC handover where the upside was capped by China's GDP targets.
• Though, the SMI and FTSE 100 buck the trend slightly and are mostly softer, given pressure in Credit Suisse and Basic Resources following Harris Associates divestment and benchmark pricing respectively.
• US futures are essentially unchanged given the above and as participants await the week's commentary from Fed officials, incl. Chair Powell, and Friday's NFP report.
• Apple (AAPL) initiated with Buy at Goldman Sachs; price target USD 199/shr.
• Click here for more detail.

FX

• The DXY is softer on the session, but has found a foothold above 104.50 within 104.34-63 extremes as participants look to Chair Powell and data later in the week.
• CHF is the current outperformer following unexpectedly hot Swiss CPI, with USD/CHF down to within reach of 0.9300 (vs 0.9373 peak) while EUR/CHF slipped to an eventual 0.9924 low.
• The next best, but little changed overall, is the EUR; though, the single currency has recouped from soft Sentix to reside at the mid-point of 1.0616-57 parameters and proved largely unreactive to ECB's Lane on inflation.
• Antipodeans and the Yuan are the laggards, in the wake of China's 5.0% (exp. 5.0-5.5) 2023 GDP target; AUD down to 0.6728 with attention also on the upcoming RBA meeting where 25bp is expected, but a pause cannot be outruled.
• SEK failed to benefit from Q4 current account given dovish-impulses via a weekend interview from Riksbank's Thedeen, in which he dismissed intra-meeting action and dialled down the importance of the SEK on mon pol.
• PBoC set USD/CNY mid-point at 6.8951 vs exp. 6.8932 (prev. 6.9117)
• Norway’s government lowered its 2023 mainland GDP growth forecast to 0.9% from 1.7% and lowered the 2024 GDP growth forecast to 1.4% from 2.0%, while the government is to present a financially responsible budget which prioritises the expense imposed by the war in Ukraine, public services and helping those who are most in need, according to Reuters.
• Click here for more detail.

FIXED INCOME

• Core benchmarks have managed to recover well from initial bouts of pressure, with yields softer across the curve in Europe and the US.
• Specifically, Bunds and Gilts were pressured to 131.22 and 99.85 troughs respectively, but recording to around 131.50 and closer to 100.50.
• Stateside, USTs are at the top-end of a 111.01+ to 111.13+ range, with the curve softer and action most pronounced in the long-end going into a relatively quiet US session before the week ramps up from Tuesday with the first of Chair Powell's testimonies.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are softer and at the lower-end of circa. USD 1/bbl parameters, following the underwhelming GDP targets set by the market's largest buyer China.
• Specifically, WTI Apr and Brent May are at the trough of USD 78.69-79.92/bbl and USD 84.71-85.83/bbl parameters respectively.
• Saudi Arabia raised most of its official selling prices for April with the Arab light crude OSP to Asia set at Oman/Dubai + USD 2.50/bbl (prev. +2.00/bbl) and to Northwest Europe was set at ICE Brent + USD 1.00/bbl (prev. +0.50/bbl), while the OSP to the US was maintained at ASCI + USD 6.65/bbl, according to Reuters.
• Goldman Sachs expects Brent to begin grinding higher this month and reach USD 100/bbl in December.
• Spot gold is little changed above USD 1850/oz, and as such is between the 50- and 21-DMAs at USD 1869/oz and USD 1844/oz respectively; base metals are subdued given the aforementioned growth target from China.
• Click here for more detail.

NOTABLE HEADLINES

• ECB President Lagarde said underlying inflation will stay high in the near term and that a 50bp rate hike later this month is increasingly certain, while she added that they must continue to take whatever measures necessary to bring inflation back to 2%, according to Spanish media group Vocento cited by Reuters.
• ECB's Lane says current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting and "While there has been a clear turnaround in energy inflation and there are some signs of deceleration for food inflation, momentum for core inflation has not declined. In particular, momentum in the goods category remains strong.". Click here for more detail.
• ECB's Centeno says "rates increased too quickly. Now patience, the prices go down", via La Stampa; ECB targets headline not core inflation. Lower inflation forecasts should be heeded in March. Responded that the decision must be based on data, when asked about possible 50bps hikes after March.
• French Finance Minister Le Maire says they have come to an agreement with retailers to contain food inflation, worth several-hundreds-of-millions.

DATA RECAP

• Swiss CPI YY (Feb) 3.4% vs. Exp. 3.1% (Prev. 3.3%); MM (Feb) 0.7% vs. Exp. 0.4% (Prev. 0.6%)
• EU Sentix Index (Mar) -11.1 vs. Exp. -6.3 (Prev. -8.0)
• EU S&P Global Construction PMI (Feb) 47.6 (Prev. 46.1); German S&P Global Construction PMI (Feb) 48.6 (Prev. 43.3)
• UK S&P Global/CIPS Construction PMI (Feb) 54.6 vs. Exp. 49.1 (Prev. 48.4)

NOTABLE US HEADLINES

• Fed’s Daly (non-voter) said they will continue policy tightening and hold rates for a longer time until the job on inflation is done. Daly added she would adjust her rate path higher and longer if inflation data comes in hot again and interest rates need to be higher if the labour market continues to accelerate. Furthermore, Daly said she would need to be certain about how high rates need to rise to support a 50bps hike but noted that she now has less certainty, while she also commented that the work on inflation is far from done and the disinflation momentum they need is far from certain, according to Reuters.
• Fed's Barkin (non-voter) says he could envisage rates going to 5.5-5.75% if inflation is persistent.
• US Treasury Department is preparing new rules on investing in technology abroad which could prohibit US investment in certain sectors of adversary nations, according to WSJ.
• US Republican Senator Hawley is expected to introduce legislation on Monday that would ban senior executive branch officials from owning or trading individual stocks, according to WSJ.
• Click here for the US Early Morning note.

GEOPOLITICS

• UK military intelligence said Ukrainian defence of the Donbas town of Bakhmut is under increasingly severe pressure with intense fighting taking place in and around the city, while regular Russian army and Wagner Group forces have made further advances into the suburbs of the city.
• US Chairman of the Joint Chiefs of Staff General Milley made an unannounced visit to Syria to assess the mission, while the visit drew condemnation from Syria which stated that the visit was illegal and a flagrant violation of the country’s sovereignty, according to SANA.
• IAEA report stated that Iran has given high-level assurances that it is open to resolving the safeguards issues and engaging in follow-up technical discussions. IAEA chief Grossi stated that he believes they can start implementing very concrete measures soon and that they agreed on access to information and places, according to Reuters.
• North Korea said US-South Korea military drills are raising tensions to an extremely dangerous level and called on the UN to demand an immediate end to US-South Korea military drills. Furthermore, it said the US is causing the collapse of international arms control systems and the US, South Korea and Japan are crossing a dangerous line which cannot be tolerated, while North Korea said its nuclear weapons will ensure the balance of power in the region, according to KCNA.

CRYPTO

• Crypto exchange Bybit has suspended Dollar payments via bank transfers, according to Bloomberg.

APAC TRADE

• APAC stocks were mostly positive as the majority of bourses took impetus from last Friday’s gains on Wall St where the Nasdaq outperformed amid a softer yield environment, although gains were capped after China announced a modest growth target of about 5% for 2023.
• ASX 200 was positive as strength in tech, financials and the consumer sector offset the weakness in the mining industry but with further upside limited heading into the RBA rate decision tomorrow where the central bank is widely expected to deliver a 10th consecutive rate hike.
• Nikkei 225 outperformed after topping the 28k level for the first time this year with SoftBank leading the advances following reports that its Arm unit is seeking to raise at least USD 8bln from a US IPO.
• KOSPI gained as softer-than-expected CPI data eased the pressure for the BoK to resume rate hikes and with South Korea unveiling a plan to ease tensions with Japan regarding wartime forced labour compensation.
• Hang Seng and Shanghai Comp. traded mixed with early pressure after China set its slowest growth target in over two decades and with the PBoC’s operations resulting in a significant net liquidity drain of CNY 329bln, although some of the losses were pared given that China also made several support pledges and following the announcement of further inclusions to the Stock Connect.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li announced at the National People’s Congress that China’s 2023 GDP growth target is about 5.0% (exp. 5.0%-5.5%), while the target for CPI is around 3% and the jobless rate at around 5.5% for 2023. Premier Li also stated that China aims to create 12mln urban jobs and that it is essential to prioritise the economic recovery, as well as reiterated to expand domestic demand and prioritise the consumption recovery. China will step up proactive fiscal policy and effectively boost investment, extend and further refine policies on tax and fee cuts, and will implement prudent monetary policy in a targeted way.
• China will prevent and control the epidemic in a more scientific, precise and efficient way, according to the work report. China is to support financial institutions to meet the effective needs of the real economy and will increase the proportion of direct financing, while it will increase loans to small and micro businesses, as well as further enhance credit support to tech and innovative SMEs. Furthermore, China’s public expenditure will grow 5.7% this year and military spending will increase at a faster pace of 7.2%, according to Reuters and FT.
• NDRC Vice Chairman said China's economy is steadily improving and consumption will be the main driver for growth this year, while they will prudently tackle risks related to real estate, finance and local government debt.
• Taiwan’s government said China should respect the Taiwanese people’s commitment to core concepts of sovereignty, democracy and freedom, while it added that China should deal with cross-strait affairs pragmatically in a rational, equal and mutually respectful manner, according to Reuters.
• South Korean Foreign Minister Park announced a plan for South Korea to compensate victims of Japan's forced labour through its public foundation in which companies will voluntarily donate to the fund and said that cooperation between the two nations is critical in the face of the serious international security situation. It was later reported that Japanese PM Kishida said they welcome the South Korean government's measures on wartime labour compensation and will work closely with South Korean President Yoon, while Japan's Foreign Minister noted that South Korea's plan will help restore healthy ties.
• Hong Kong’s stock market operator is expected to reduce the proposed listing threshold for “specialist” technology companies as it dials up its overtures to allow eligible start-ups to raise funds, according to SCMP sources.
• CME to launch offshore Renminbi options on April 3rd, will be listed on and subject to the rules of CME.

DATA RECAP

• South Korean CPI MM (Feb) 0.3% vs. Exp. 0.5% (Prev. 0.8%); YY (Feb) 4.8% vs. Exp. 5.1% (Prev. 5.2%)