• APAC stocks traded mostly rangebound after the choppy performance in the US, while the region also digested weak data including softer-than-expected Chinese inflation.
• European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 -0.1% after the cash market closed up 0.2% on Wednesday.
• DXY is contained and holding onto gains on a 105 handle, EUR/USD and Cable remain on 1.05 and 1.18 handles respectively, JPY leads G10 FX.
• Looking ahead, highlights include US IJC, Challenger Layoffs, New Zealand Manufacturing PMI, Speech from Fed's Barr, Supply from the US.

US TRADE

EQUITIES

• US stocks finished mixed with price action choppy after Fed Chair Powell reaffirmed his hawkish view but also clarified that the Fed has not made a decision ahead of the March meeting, while a bounce into the close helped the SPX settle in the black. Participants also digested data releases in which the February ADP came in on the firmer side of expectations 242k (exp. 200k), but was not enough to extend on recent hawkish Fed pricing, which instead spurred a wave of short-covering in stocks and Treasuries after the data, while a smaller than expected decline in January JOLTS job openings provided further evidence of little progress in a loosening labour market and capped the upside in the NY morning.
• SPX +0.14% at 3,992, NDX +0.52% at 12,215, DJIA -0.18% at 32,798, RUT +0.04% at 1,879
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Beige Book for March stated overall economic activity increased slightly in early 2023 and wages generally increased at a moderate pace but some noted some easing. It also noted that wages and inflation are expected to moderate further through the year.
• Cleveland Fed said small businesses saw normalising business conditions in 2022 and profitability improving in 2022. It also noted small firms expect revenue and hiring challenges going forward, while a majority of small firms reported troubles hiring workers in 2022.
• Northwestern University Professor Janice Eberly is reportedly the frontrunner in the White House's search for Brainard's successor as Fed Vice Chair, according to sources cited by Bloomberg.
• US President Biden proposes tax on income over USD 400k at 39.6% in the budget and raising corporation tax to 28% from 21%, while he urges a 25% minimum tax on billionaires and the budget plan would nearly double capital gains tax for investment to 39.6% from 20%, according to Reuters. President Biden's budget will eliminate tax subsidies for oil and gas and will also eliminate 'like-kind exchange' subsidy for real estate, as well as eliminate tax subsidies for crypto transactions, limit retirement benefits for high earners and end carried interest 'loophole'. Furthermore, a US official said President Biden's budget plan aims to cut deficits by nearly USD 3tln over 10 years, according to AP.
• GOP lawmakers on the House Ways and Means Committee will hold a panel to discuss debt prioritisation in which the government would prioritise paying certain obligations over others should the US default, according to Washington Post.

APAC TRADE

EQUITIES

• APAC stocks traded mostly rangebound after the choppy performance in the US where Fed Chair Powell reaffirmed his hawkish view but clarified that the Fed has not yet made a decision, while the region also digested weak data including softer-than-expected Chinese inflation.
• ASX 200 was kept afloat amid outperformance in tech and energy albeit with upside limited by weakness in the mining and materials industries, while sentiment is also clouded following confirmation of a substantial drop in building approvals.
• Nikkei 225 rose to its highest level since August after downward revisions to Q4 GDP added to the case for a slower exit from the BoJ’s ultra-easy policy and as the central bank kick-started the final 2-day policy meeting before the end of the Kuroda era.
• Hang Seng and Shanghai Comp. were indecisive as participants reflected on the soft inflation data from China which showed consumer price growth was at its slowest pace in a year.
• US equity futures were contained (ES -0.1%) as markets now look to upcoming data for clues on the Fed.
• European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 -0.1% after the cash market closed up 0.2% on Wednesday.

FX

• DXY was rangebound but held onto most of the gains from Powell's testimony on Tuesday which he followed up yesterday by clarifying that the Fed has not made any decision about the March meeting and is data-dependent but reiterated that the terminal rate will likely be higher than previously expected.
• EUR/USD was stuck firmly below the 1.0600 handle with price action sideways after soft EU data, while ECB's Visco pushed back on statements regarding prolonged increases in interest rates.
• GBP/USD attempted to nurse some of this week's losses after yesterday’s soft rebound from 1.1800.
• USD/JPY faded some of its recent advances after oscillating around the 137.00 focal point amid a tentative mood during BoJ Governor Kuroda’s final monetary policy meeting.
• Antipodeans eventually gained on the session amid some optimism on improving Aussie-Sino ties.
• PBoC set USD/CNY mid-point at 6.9666 vs exp. 6.9668 (prev. 6.9525)

FIXED INCOME

• 10yr UST futures took a breather after yesterday’s whipsawing which was spurred as investors digested the latest bout of central bank rhetoric and jobs data including ADP Employment and JOLTS openings, while the return journey from above 111.00 was facilitated by the weak US 10yr auction.
• Bund futures were contained beneath resistance at the 132.00 level but held on to most of the prior day’s advances.
• 10yr JGB futures declined with demand dampened by a weaker enhanced liquidity auction and as participants await tomorrow’s BoJ policy meeting conclusion.

COMMODITIES

• Crude futures remained despondent after this week's selling pressure as hawkish central bank pricing continued to weigh on the demand outlook and after mixed inventory data.
• US Interior Department said it expects to approve the next five-year offshore oil and gas development programme in December 2023.
• Freeport LNG received regulatory approvals to restart the last of three train liquefaction facilities.
• Spot gold was stuck near a weekly low owing to an uneventful dollar which held on to recent gains.
• Copper futures were contained amid the mixed risk appetite and lingering recession fears.

CRYPTO

• Bitcoin remained lacklustre after its recent retreat to below the 22,000 level, with prices not helped by the announcement of crypto lender Silvergate's intention to shut down.
• Silvergate Capital (SI) announced its intent to wind down operations and voluntarily liquidate the bank. Coinbase (COIN) later stated it has no client or corporate cash at Silvergate and that client funds continue to be safe, accessible and available.

NOTABLE ASIA-PAC HEADLINES

• Australia will end COVID testing for travellers from China, while Australia's Trade Minister separately noted that progress is being made on almost all instances of trade blockages with China.
• Japan's lower house approved the appointment of Kazuo Ueda as the next BoJ Governor, while it approved the appointment of Shinichi Uchida and Ryozo Himino as the next Deputy Governors, which was as expected and with the upper house set to vote on the nominations tomorrow.
• Dutch government is to inform parliament of its plan to further restrict chip tech exports, according to Reuters sources.

DATA RECAP

• Chinese CPI MM (Feb) -0.5% vs. Exp. 0.2% (Prev. 0.8%)
• Chinese CPI YY (Feb) 1.0% vs. Exp. 1.9% (Prev. 2.1%)
• Chinese PPI YY (Feb) -1.4% vs. Exp. -1.3% (Prev. -0.8%)
• Japanese GDP Revised QQ (Q4) 0.0% vs. Exp. 0.2% (Prev. 0.2%)
• Japanese GDP Rev QQ Annualised (Q4) 0.1% vs. Exp. 0.8% (Prev. 0.6%)

GEOPOLITICS

• Twitter sources noted a major Russian air attack was underway in Ukraine, while regional officials said strikes hit many Ukrainian regions including Kharkiv and Odesa with power cuts in some places, while explosions were also heard in Kyiv and Dnipro.
• Ukraine's Energoatom said the Zaporizhzhia nuclear power plant lost electro power supply due to the Russian missile attack on Ukraine, according to Reuters.
• US Justice Department said the US obtained a warrant for the seizure of an aeroplane owned by a Russian oil company valued at more than USD 25mln, according to Reuters.
• UN and Russian officials are to meet in Geneva next week to discuss a renewal of the Ukraine grain deal, according to a UN spokesperson.

EU/UK

• US President Biden and European Commission President von der Leyen are expected to agree on Friday to work towards a trade deal that would give the EU free-trade agreement-like status, according to Reuters sources. It was separately reported that the US and the EU are to start trade negotiations on minerals, according to WSJ.

DATA RECAP

• UK RICS Housing Survey (Feb) -48 vs. Exp. -49.0 (Prev. -47.0, Rev. -46)