• Equities are under marked pressure as sentiment sees a significant deterioration as Banking names slump, SX7P -5%, amid renewed focus on Credit Suisse, -18%.
• Saudi National Bank said they will not provide more assistance to Credit Suisse; Saudi National Bank is the largest shareholder with a 9.9% stake.
• An update which has added to banking concerns globally and particularly within Europe, sparking a marked deterioration in sentiment and flight-to-quality.
• DXY has experienced a marked turnaround above 104.00, with JPY benefiting on haven-allure; core debt rampant, Bunds +200 ticks.
• Focus on geopolitics amid the US drone collision and separately China telling its military to deepen war preparedness planning.
• Looking ahead, highlights include US NY Fed, PPI & Retail Sales, UK Spring Budget.

SVB/BANKS

EUROPE

• Saudi National Bank head said will absolutely not provide more assistance to Credit Suisse (CSGN SW); The Saudi National Bank is happy with CS' transformation plan, does not think it will need extra money, Reuters reports. Saudi National Bank exec. says "I don't think they will need extra money; if you look at their ratios, they're fine" and added that "it is a very strong bank". Saudi National Bank says it cannot give more money to Credit Suisse (CSGN SW) because it cannot go above the 10% stake hold amid regulatory issues.. Reminder, the Saudi National Bank has a 9.9% stake in Credit Suisse.
• Credit Suisse halted amid volatility (10:19GMT/06:19EDT) after falling over 18%.

US

• 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.

EUROPEAN TRADE

EQUITIES

• European bourses are under marked pressure as sentiment sees a marked deterioration as Banking names slip, SX7P -5.3%, amid renewed focus on Credit Suisse, -18.0%; Euro Stoxx 50 -2.4%.
• Sectors are predominantly in the red with Banking names underperforming and more broadly there is a defensive bias emerging, as Healthcare remains the only sector in the green.
• Stateside, US futures are directionally in-fitting with the above though magnitudes slightly more contained at present, ES -1.1%.
• Click here for more detail.

FX

• The DXY has experienced a marked turnaround from initial 103.44 lows, with the index now comfortably above 104.00 amid the latest banking concerns.
• Action which has been exacerbated by a marked safe-haven spike in fixed income which has eroded the earlier EUR/USD upside on RTRS ECB sources around 50bp for Thursday; EUR/USD at 1.0667 trough vs 1.0759 peak.
• Given the size of the USD move, G10 peers ex-JPY are softer across the board with the CHF leading the downside given the latest focal point for banking sector concern is Credit Suisse; USD/CHF testing 0.92 and EUR/CHF above 0.98.
• As mentioned, JPY is the outperformer given its traditional haven allure and is below the 134.00 mark within 133.76-135.11 parameters.
• Elsewhere, GBP succumbs to the USD pre-budget while antipodeans and CAD slip as well though the latter is deriving some relative support from comparably resilient crude prices.
• PBoC set USD/CNY mid-point at 6.8680 vs exp. 6.8650 (prev. 6.8949)
• Click here for more detail.

FIXED INCOME

• EGBs lead broad and marked debt recovery as banking stocks tank, Bunds fade just shy of 136.00 vs a 133.33 low on ECB sources suggesting a 50bp hike is still favoured on Thursday.
• Gilts rebound in slipstream alongside US Treasuries within 104.47-103.12 and 114-15+/113-08+ respective ranges.
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month futures are on the backfoot amid the mentioned deterioration in risk sentiment, with the benchmarks trimming initial upside and are now near unchanged on the session.
• Specifically, WTI and Brent are at the lower end of USD 71.50-72.56/bbl and USD 77.69-78.73/bbl parameters respectively.
• Elengy confirms strikes on three French LNG terminals has been extended until 21st March.
• 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.
• Oil output at Kazakhstan's Tengiz refinery was at 645k BPD on March 10th (vs 563k between March 1-6), according to sources.
• IEA OMR (Feb): 2023 global oil demand upgraded 200k BPD to 101.9mln BPD (prev. 101.7mln BPD); oil supply is outstripping lacklustre demand, but market will balance in the middle of the year
• China is to lower steel production in order to attain climate goals, according to Bloomberg sources.
• Spot gold has managed to glean a haven bid from the latest turn in sentiment, with the yellow metal modestly firmer on the session and above USD 1900/oz compared to the earlier USD 1885/oz low; in contrast, given the tone, base metals are slumping.
• Click here for more detail.

NOTABLE HEADLINES

• ECB is still leaning towards a 50bp rate hike on Thursday, given calming markets, stubborn inflation and credibility concerns, via Reuters citing sources. New projections still show inflation significantly above 2% target in 2023, slightly above in 2025. To raise underlying inflation projections. Piece adds that dovish members felt vindicated by recent market turbulence and were likely to push back against committing to further hikes, instead saying any move would be data dependent.
• IFW, on Germany: sees inflation 5.4% in 2023, 2.1% in 2024. GDP at 0.5% (prev. 0.3%) in 2023 and 1.4% (prev. 1.3%) in 2024. Ifo says German inflation is to fall in to 6.2% in 2023, and 2.2% in 2024; sees GDP at -0.1% in 2023 and 1.7% in 2024.
• Turkey's Parliament will likely ratify Finland's NATO accession bid before it closes in mid-April, according to two Turkish officials.

DATA RECAP

• Swedish CPIF Ex Energy YY (Feb) 9.3% vs. Exp. 8.7% (Prev. 8.7%); MM (Feb) 1.5% vs. Exp. 1.0% (Prev. 0.4%)
• EU Industrial Production YY (Jan) 0.9% vs. Exp. 0.2% (Prev. -1.7%, Rev. -2.0%); MM (Jan) 0.7% vs. Exp. 0.4% (Prev. -1.1%, Rev. -1.3%)

NOTABLE US HEADLINES

• Click here for the US Early Morning note.

GEOPOLITICS

• China tells its military to deepen war preparedness planning, Xinhua reports.
• 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.
• 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.
• "Joint naval manoeuvers between Iran, China and Russia will begin in the northern Indian Ocean, starting today", via Sky News Arabia.

CRYPTO

• 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.
• Binance CEO says "Given recent events, we are moving 0 fee BTC trading from BUSD to TUSD", as a liquidity measure.

APAC TRADE

• 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.

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.
• Japan's Ruling Party proposes a JPY 30k cash handout to low-income households, with an additional JPY 50k per child, via Kyodo citing a senior official; Japan PM Kishida says the government is to mobilise all measures available to prepare the environment for wage hikes, to increase minimum wages beyond JPY 1k nationwide.

DATA RECAP

• Chinese Industrial Production YTD YY (Feb) 2.4% vs. Exp. 2.6% (Prev. 1.3%); 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%)