• US equities were firmer on Tuesday, led by the tech sector, while financials recovered some of the losses from Monday's sell-off
• APAC stocks followed suit with gains, as banking contagion fears eased, and markets found relief in the absence of additional bank failures
• FX markets were indecisive, with the DXY slightly softer, EUR/USD initially stronger, and GBP/USD choppy
• US military confirmed that a Russian fighter jet struck the propeller of a US military Reaper drone, Russian Defence Ministry said Russian fighters did not use onboard weapons
• Fed is to consider tougher rules for mid-sized banks after the recent bank failures, according to WSJ, while regulators began soliciting interest for Signature Bank
• Looking ahead, highlights include Swedish CPIF, EZ Industrial Production, US NY Fed, PPI & Retail Sales, UK Spring Budget, IEA OMR, Supply from Germany

US TRADE

EQUITIES

• US stocks were firmer on Tuesday as the tech sector prospered while financials also recovered some of the losses from Monday's bloodbath. NDX outperformed with tech lifted alongside a 7% jump in META shares after the tech giant announced a further 10k job cuts and the banking sector found some solace from the lack of news regarding any more bank failures reported, while participants also digested the latest US CPI data which printed mostly in line with expectations but remained at elevated levels.
• SPX +1.67% at 3,920, NDX +2.32% at 12,199, DJIA +1.06% at 32,155, RUT +1.87% at 1,776.
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NOTABLE HEADLINES

• Fed's Bowman (voter) noted the banking system has strong capital and liquidity, while she added that the Fed board is carefully monitoring developments and that the US banking system remains resilient and on a solid foundation.
• Fed is to consider tougher rules for mid-sized banks after the recent bank failures, according to WSJ
• Senior White House official said the US government is monitoring developments at First Republic and other individual banks carefully after emergency measures were taken on Sunday, while the official added the banking system is in a better position now than if federal action was not taken. Furthermore, the official said they need to monitor carefully if there is a significant outflow of money to larger banks as it is important to see a thriving banking sector with smaller players and banks.
• US Senate Banking Committee Chairman Brown (D) said they need stronger capital standards, stronger liquidity standards and stronger stress tests, according to Bloomberg. It was also reported that Democrats are to present a bill to end bank deregulation law, according to NBC.
• Creditors of SVB's parent formed a group in anticipation of a potential bankruptcy filing as they hope to profit from a sale of the collapsed firm’s private wealth and other units, according to WSJ.
• SVB Financial (SIVB) said Goldman Sachs (GS) had bought its bond portfolio before federal regulators placed SVB into receivership.
• Charles Schwab (SCHW) CEO said they have liquidity and are nowhere near a forced selling situation, while he added they have not raised capital and received USD 4bln net new asset inflow on Friday. Furthermore, he said 82% of deposits are insured and the probability seems extremely low for the bank to sell government securities, while it is adding market share and seeing clients move from other firms.
• US regulators began soliciting interest for Signature Bank (SBNY) and it was also reported that Signature Bank faced a criminal probe ahead of its collapse, according to Bloomberg.
• S&P said First Republic Bank's (FRC) 'A-' rating has been placed on Credit Watch Negative on funding profile risk and believes its deposit flows have been volatile following the government's closure of two banks.
• Bank of America (BAC) received over USD 15bln in deposits after the SVB failure.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive as they followed suit to the gains in global counterparts after banking contagion fears eased and markets found some relief in the absence of any additional bank failures, although the advances were limited as participants also digested mixed Chinese activity data.
• ASX 200 was led higher by strength in tech which took impetus from the outperformance of the sector stateside following Meta’s jobs and cost-cutting plans albeit with gains capped as the energy industry lagged after oil prices recently dipped to a fresh YTD low.
• Nikkei 225 initially climbed as banking stocks atoned for the recent turmoil although price action in Japan was choppy and the index eventually gave back all of its early gains heading into the conclusion of the spring wage negotiations while there are talks of solid wage increases among the large companies.
• Hang Seng and Shanghai Comp. traded higher with the outperformance in Hong Kong driven by strength in tech and developers, while sentiment in the mainland is underpinned after the PBoC injected funds via its 1-year MLF and 7-day reverse repos but with upside capped following mixed industrial production, retail sales and urban fixed asset investment data releases.
• US equity futures were contained after yesterday's rebound and ahead of several key data releases.
• European equity futures are indicative of a flat/firmer open with the Euro Stoxx 50 +0.1% after the cash market closed up 2.0% on Tuesday.

FX

• DXY marginally softened overnight and traded on either side of 103.50 amid the positive risk tone and after yesterday’s choppy price action in the aftermath of the US inflation data which mostly matched estimates and slowed from the previous but remained at elevated levels far from the central bank’s goal.
• EUR/USD initially strengthened following a brief incursion above resistance at 1.0750, but then failed to sustain the early momentum and gave back most of the advances.
• GBP/USD remained choppy and briefly dipped under 1.2150 after recent price swings and mixed jobs/earnings data, while the attention turns to the Budget announcement which is said to include a pledge of billions for businesses.
• USD/JPY found support near 134.00 but was indecisive following stale minutes from the BoJ’s January meeting where it reiterated the importance of the current monetary easing policy, while there were also comments from outgoing BoJ Governor Kuroda that they must maintain current monetary easing but will surely head for an exit and has the ability to do so when the inflation target is sustainably and stably met.
• Antipodeans lacked firm direction despite the positive risk tone with early momentum capped after the mixed Chinese trade data and weaker-than-expected New Zealand current account figures.
• PBoC set USD/CNY mid-point at 6.8680 vs exp. 6.8650 (prev. 6.8949)

FIXED INCOME

• 10yr UST futures were lower as yields continued their rebound and with the easing of the banking sector fears and persistently elevated inflation supporting the case for a Fed rate hike next week.
• Bund futures took a breather from an aggressive pullback and found support near the 134.00 level.
• 10yr JGB futures were lacklustre despite the BoJ’s presence in the market in which the central bank reduced its purchases for the 25yr+ maturities to JPY 50bln from a previous JPY 100bln.

COMMODITIES

• Crude futures steadily nursed some of their losses after recently slipping to a fresh YTD low.
• US Energy Inventory Data (bbls): Crude +1.2mln (exp. +1.2mln), Gasoline -4.6mln (exp. -1.8mln), Distillate -2.9mln (exp. -1.2mln), Cushing -0.9mln.
• Saudi Energy Minister reiterated that the only course of action in such an uncertain environment is to maintain the agreement OPEC struck last October for the rest of the year which they intend to do. He also said if price caps are imposed on oil exports, the Kingdom will not sell to any country that imposes them and if a price cap is imposed on Saudi Arabia, the Kingdom would cut its oil production, according to an Energy Intel interview.
• Spot gold was stuck around the USD1900/oz level after the mostly inline US inflation data.
• Copper futures were indecisive and failed to take advantage of the improved risk appetite.

CRYPTO

• Bitcoin remained afloat after the recent aggressive rebound and briefly tested the 25,000 level.
• Coinbase (COIN) said customers in Singapore can now transfer funds to and from their Coinbase accounts using any bank in Singapore for free, while it added that Singpass has been introduced to make joining the platform easier and it received in-principle approval from the MAS under the Payment Services Act to provide regulated digital payment token services.

NOTABLE ASIA-PAC HEADLINES

• PBoC announced to lend CNY 481bln through 1-year MLF vs. CNY 200bln maturing with the rate kept unchanged at 2.75% and injected CNY 104bln via 7-day reverse repos with the rate kept at 2.00%.
• PBoC said it will step up financing support for private small firms and will support reasonable bond financing needs of private companies, according to Reuters.
• China's FX regulator said it will prevent external shocks and risks, as well as deepen reforms and the opening up of the forex sector. It will continue pushing forward facilitating cross-border trade and financing, while it will guarantee the safety, liquidity and value of FX reserve assets, according to Reuters.
• China stats bureau said economic operations showed a stabilising and recovery although the foundation of the economic recovery is not solid yet and that China's economy still faces difficulties this year including global risks. Furthermore, it said China faces pressure and challenges in achieving the 2023 growth target but added that consumption will show a significant recovery this year and that China will continue to take measures to boost consumption.
• BoJ Governor Kuroda said the BoJ must maintain current monetary easing but there will also likely be scope to consider steps to address the side-effects of easy policy, while he added the BoJ will surely head for an exit from easy policy and has the ability to do so when the inflation target is sustainably and stably met.
• BoJ Minutes from the January meeting stated that members agreed Japan's economy is expected to recover and inflation is likely to slow towards the latter half of next fiscal year, while it reiterated the importance of current monetary easing policy and many members said more time was needed to gauge the impact of BoJ steps on market function.

DATA RECAP

• Chinese Industrial Production YTD YY (Feb) 2.4% vs. Exp. 2.6% (Prev. 1.3%)
• Chinese Retail Sales YTD YY (Feb) 3.5% vs. Exp. 3.5% (Prev. -1.8%)
• Chinese Urban Investment (YTD)YY (Feb) 5.5% vs. Exp. 4.4% (Prev. 5.1%)
• Chinese Unemployment Rate (Feb) 5.6% (Prev. 5.5%)

GEOPOLITICS

• US military confirmed that a Russian fighter jet struck the propeller of a US military Reaper drone, forcing the US to bring it down over the Black Sea.
• US summoned the Russian ambassador regarding the downing of the US drone over the Black Sea, while Russia views the drone incident as a provocation, according to RIA citing Russia's ambassador.
• US Pentagon said the State Department is raising concerns over the drone incident to the Russian government and the incident likely caused damage to the Russian aircraft as well.
• US Senate Majority Leader Schumer said the Russia Black Sea drone incident was another reckless attack by Russian President Putin and his military, while he added that aggressive actions by Russian aircraft are risky and could lead to unintended escalation.
• Russian Defence Ministry said Russian fighters did not use onboard weapons and did not come into contact with an American drone, while it added that the drone went into uncontrolled flight with loss of altitude and collided with the water's surface. Furthermore, it said the US drone flew over the Black Sea in the direction of the Russian border with its transponders turned off, according to TASS and RIA.
• Ukrainian President Zelensky said the top command's unanimous position is to strengthen Bakhmut's defence and inflict maximum losses on the enemy, according to Reuters.
• Yahoo News said it obtained Russia's secret document regarding a plan for destabilising Moldova and promoting Russian interests in the country.
• Honduras announced it is to establish diplomatic ties with China, while Taiwan's Foreign Ministry said it urges Honduras to carefully consider the decision to build ties with China and don't fall into China's trap. Taiwan added that China's only purpose to build ties with Honduras is to squeeze Taiwan's international space and that China has no intention of fostering the well-being of the Honduran people.
• US Congressional delegation is to visit Taiwan from March 15th-16th and will meet with senior Taiwan leaders to discuss US-Taiwan relations, regional security, trade and investment, and other significant issues of mutual interest, according to the American Institute in Taiwan.

EU/UK

• UK Chancellor Hunt is to unveil a budget for growth with billions pledged for businesses and is to announce a GBP 4bln boost for childcare in England, according to FT and The Guardian.