• European bourses are posting tentative gains, Euro Stoxx 50 +0.2%, as the risk tone remains fragile given financial stability concerns.
• Stateside, futures are modestly firmer but have been unable to claw back any of Monday's marked downside, ES +0.4%, ahead of February's CPI.
• The European banking sector is under further pressure amid a Credit Suisse announcement of material weakness in their 2021/22 financial reporting.
• The DXY is firmer and benefitting from some consolidation/corrective price action in yields, with the index briefly surmounting 104.00 as the US 2 & 10yr yields convincingly reclaimed 4.20% and 3.50% respectively.
• WTI and Brent have been declining throughout the European morning after settling lower by around USD 2.0/bbl, with the front month futures below USD 73/bb; and USD 79/bbl respectively.
• Looking ahead, highlights include US CPI, Speech from Fed's Bowman, BoJ Minutes (Jan), NBH Minutes (Feb), OPEC MOMR (12:10GMT/08:10EDT)

SVB/BANKS

• Top Senate and top House Democrats said Congress will be looking closely at the causes behind the run on SVB and other banks, as well as how a similar crisis can be prevented in the future.
• Silicon Valley Bank N.A. CEO said they are conducting business as usual within the US and expect to resume cross-border transactions in the coming days, while the CEO added the FDIC transferred all deposits and all assets of former Silicon Valley Bank to the newly created, full-service FDIC-operated 'bridge bank' and all depositors have full access to their money with deposits protected.
• FDIC is still looking to sell SVB (SIVB) and told GOP senators it is planning another auction, according to WSJ sources.
• Moody's withdrew Signature Bank's (SBNY) long-term and short-term local currency bank deposit ratings, while it downgraded its subordinate debt to C from BAA3 and will withdraw ratings. Furthermore, Moody's placed multiple US banks under review for downgrade including Zions Bancorporation (ZION), Comerica (CMA), UMB (UMBF), Western Alliance (WAL), First Republic (FRC), Signature Bank (SBNY) and Intrust.
• Large US banks are reportedly inundated with new depositors as smaller lenders face turmoil with JPMorgan (JPM), Citigroup (C) and other large financial institutions trying to accommodate customers wanting to move deposits quickly, according to FT.
• Credit Suisse (CSGN SW) found material weakness in financial reporting for 2021 and 2022, though the reports fairly present the situation. Co. at its AGM is to discuss the proposal for a distribution of a dividend to shareholders of CHF 0.05 gross per registered share for the financial year 2022. Adding, it could require significant resources to correct the material deficiencies within report, developing a remediation plan to address this. Note, this update is not in relation to the SVB situation. On SVB, CEO adds credit exposure is not material.

EUROPEAN TRADE

EQUITIES

• European bourses are posting tentative gains, Euro Stoxx 50 +0.2%, as the risk tone remains fragile given financial stability concerns.
• Banking names in Europe remain softer, with Credit Suisse lagging after finding material weakness in its 2021/22 financial reporting; for the sector more broadly, GS highlights there is a limited risk of direct contagion to Europe.
• Stateside, futures are modestly firmer but have been unable to claw back any of Monday's marked downside, ES +0.4%, ahead of February's CPI.
• CATL's (3007540 CH) at least USD 5bln Swiss IPO is said to be delayed amid regulatory concern, according to Reuters sources; no new timetable for Swiss listing.
• Click here for more detail.

FX

• The DXY is firmer and benefitting from some consolidation/corrective price action in yields, with the index briefly surmounting 104.00 as the US 2 & 10yr yields convincingly reclaimed 4.00% and 3.50% respectively.
• Given the action in yields and the USD's recovery, the JPY is the clear underperformer giving back much of Monday's haven-premium; USD/JPY above 134.00 from a 133.04 base.
• As such, G10 peers are lower across the board though with the magnitude of downside less pronounced than the JPY move with EUR and GBP relatively unreactive to data prints; around 1.07 and 1.215 respectively vs the USD.
• Antipodeans are more rangebound with AUD and NZD around 0.665 and 0.621 respectively while the SEK as perhaps derived some incremental support from familiar Riksbank commentary.
• PBoC set USD/CNY mid-point at 6.8949 vs exp. 6.8933 (prev. 6.9375)
• Click here for more detail.

FIXED INCOME

• Core benchmarks have experienced a marked turnaround, after an initial move higher around Credit Suisse's update, with USTs now below 114.00 from a 115.07+ peak.
• Amidst this, yields are elevated across the curve with the US experiencing marked bear-flattening with US CPI due and potential remarks from Fed's Bowman.
• Within Europe, Bunds peaked just above 137 and have since reversed to below 135.00 while the UK sale was well-received and seemingly helped to lift Gilts off lows ahead of German Bobl supply.
• Click here for more detail.

COMMODITIES

• WTI and Brent have been declining throughout the European morning after settling lower by around USD 2.0/bbl, with the front month futures below USD 73/bb; and USD 79/bbl respectively.
• Nat Gas experiences some modest divergence with Henry Hub firmer and Dutch TTF softer, with ING highlighting renewable generation and milder forecasts for northern Europe as factors.
• Metals are mixed, spot gold is slightly softer but is holding above USD 1900/oz while base metals continue to slip given the broader tone.
• Indian oil ministry says there are no discussions on payments of Russian oil in CNY, according to Reuters sources; India has no obligation to purchase Russian oil below the price cap.
• Black Sea grain deal has been extended according to Tass citing the Russian Deputy Foreign Minister; under prior conditions. Ukraine will adhere to the terms of the prior 120-day corridor, via Reuters citing a senior gov't official. However, Turkey and the UN subsequently clarified that talks are ongoing on an extension.
• Click here for more detail.

NOTABLE HEADLINES

• UK PM Sunak invited US President Biden to visit Northern Ireland for the anniversary of the Good Friday Agreement, while President Biden said that he intends to go to Northern Ireland
• UK Chancellor Hunt is to set out plans for 12 new investment zones in the Budget to "supercharge" growth in hi-tech industries, while the scheme is to be backed by GBP 80mln of investment over five years in each of the new high-growth zones, according to Sky News.
• Germany has reportedly made last-minute demands on the reform of EU fiscal rules, according to Bloomberg, casting doubts on a draft proposal agreed by EU members. Follows reports that EU Finance Ministers are to discuss the Growth and Stability Pact on 14th March, draft conclusions show general support for the switch from a one-rule-fits-all approach to debt reduction to multi-year plans tailored to each nation, via Politico; Germany said to seek to ensure nations bring down debt by a common quantitative benchmark/target.

DATA RECAP

• UK ILO Unemployment Rate (Jan) 3.7% vs. Exp. 3.8% (Prev. 3.7%), Claimant Count Unemployment Change (Feb) -11.2k (Prev. -12.9k, Rev. -30.3k)
• UK Average Week Earnings 3M YY (Jan) 5.7% vs. Exp. 5.7% (Prev. 5.9%, Rev. 6.0%); (Ex-Bonus) (Jan) 6.5% vs. Exp. 6.6% (Prev. 6.7%)

NOTABLE US HEADLINES

• Click here for the US Early Morning note.

GEOPOLITICS

• US President Biden said alongside Australian PM Albanese that he doesn't view what they are doing as a challenge to anybody but is more about stability in the Indo-Pacific after AUKUS leaders met and agreed on a plan to deliver nuclear-powered submarines to Australia.
• North Korea fired two short-range ballistic missiles into the East Sea. South Korea said the missiles flew 620km and the repeated launches are a grave act of provocation threatening peace and security in the region. South Korea also said it will carry out combined drills with the US as planned and maintain readiness based on overwhelming capability, while the US military said North Korean missile launches do not pose an immediate threat to US personnel or territory or to their allies.
• Russian Deputy Foreign Minister says Washington seeks to create flashpoints for geopolitical confrontation with Russia in Moldova and Georgia, via Al Jazeera.

CRYPTO

• US DoJ is probing the collapse of Do Kwon's TerraUSD stablecoin and FBI and New York officials have questioned former Terraform Labs team members, according to WSJ.
• Crypto conglomerate Digital Currency Group (DCG) is reportedly trying to find new banking partners for portfolio companies following the collapse of SVB (SIVB), Signature Bank (SBNY), and Silvergate (SI), according to messages viewed by CoinDesk

APAC TRADE

• APAC stocks declined amid a continuation of the selling in financials and with risk appetite constricted amid the fallout from the recent US bank collapses.
• ASX 200 spent most of the session beneath the 7,000 level with the index pressured by substantial losses in nearly all sectors and amid headwinds from weak data releases in which Westpac consumer sentiment remained near historic lows and NAB business surveys deteriorated.
• Nikkei 225 slumped due to heavy losses in financial stocks which occupied the list of the 10 worst performers, while the Tokyo Stock Exchange banking index suffered its worst day in over three years.
• Hang Seng and Shanghai Comp. retreated albeit with less aggressive selling in the mainland on reopening news as China is to resume the issuance of all types of visas for foreigners from March 15th.

NOTABLE ASIA-PAC HEADLINES

• US President Biden said he will talk to Chinese President Xi soon but didn't specify when. Furthermore, National Security Adviser Sullivan said President Biden anticipates a call opportunity with Chinese President Xi once China's government returns to work after the NPC, while Sullivan added the US had communicated with China over the AUKUS submarine pact and China's military build-up.
• EU seeks new controls to limit China acquiring high-tech and is exploring ways to police how European companies invest in production facilities overseas, according to FT.

DATA RECAP

• Australian Westpac Consumer Confidence Index (Mar) 78.5 (Prev. 78.5)
• Australian NAB Business Confidence (Feb) -4 (Prev. 6); Conditions (Feb) 17 (Prev. 18)