• European bourses are firmer across the board, Euro Stoxx 50 +0.4%, as recent liquidity action settles sentiment on Quad Witching Friday.
• Stateside, futures are essentially unchanged having eased from initial best levels around the European open with attention on US banking names
• DXY is subdued, though back above, 104.00 to the broad-based benefit of peers; PBoC cut its RRR by 25bp.
• EGBs/USTs action has been markedly more contained thus far, though the Bund range is still over 100ticks, while the US yield curve is slightly mixed.
• Commodities are, generally, deriving support from the firmer risk tone and as the USD remains under pressure; with the crude benchmarks choppy but most recently extending to incremental session highs.
• Looking ahead, highlights include US Industrial Production, Leading Index Change, Univ. of Michigan (Prelim.) and Quad Witching.

BANKS

• PBoC cuts Reserve Requirement Ratio (RRR) by 25bps, effective 27th March; PBoC reiterates prudent and forceful policy. Weighted average RRR for financial institutions at around 7.6% following the cut, RRR cut will exclude financial institutions that have implemented 5% RRR.

US

• Fed blocked the mention of regulatory flaws in the SVB rescue, while government officials wanted their joint statement to reference regulatory shortcomings they believed contributed to the demise, according to NYT.
• US Senators Sinema and Tillis led a bipartisan group of Senators questioning the Fed regarding its oversight of Silicon Valley Bank and urged the Fed to focus its internal review on how industry concentration within a bank's customer base could constitute a financial risk.
• Charles Schwab (SCHW) clients pulled USD 8.8bln from its prime funds in 3 days, according to Bloomberg.
• US regulators confirmed that 11 banks announced USD 30bln in deposits into First Republic Bank (FRC).
• S&P affirmed the US at AA+; Outlook Stable, while S&P said US ratings are constrained by a high general government debt burden but the stable outlook indicates an expectation of continued resilience in the US economy.

ECB

• ECB convened an ad-hoc supervisory board meeting today to review developments in the banking sector following market turmoil, according to a spokesperson cited by Reuters.
• ECB's Simkus does not believe this was the last rate hike.
• ECB's Villeroy says the priority is to fight inflation; French and European banks are "very solid".
• ECB's Muller says would not want to forecast the next rate decisions; latest inflation forecasts assume more rate hikes.
• ECB's Kazmir says need to continue with rate hikes, no need to speculate about the May decision; not at the finish line. Core inflation is sticky, upside risks dominate.
• HSBC now sees the ECB hiking by 25bps in both May and June (vs prev. forecast of a 50bps hike in May).

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.4%, as recent liquidity action settles sentiment on Quad Witching Friday.
• Sectors, are all in the green with the defensively-inclined names lagging and upside in Basic Resources and Banking names, SX7P +0.4%; note, Credit Suisse has dropped into negative territory despite opening in the green.
• Stateside, futures are essentially unchanged having eased from initial best levels around the European open ahead of Michigan data and as attention turns to the upcoming FOMC.
• Click here for more detail.

FX

• The USD is subdued, though has convincingly reclaimed the 104.00 mark after dropping to a 103.89 low earlier; action which comes to the benefit of G10 peers.
• Antipodeans are the stand-out outperformers given their high-beta status amid the improvement in risk appetite, though NZD/USD peaked above 0.6250 and AUD/USD failed to surpass the 0.6720 21-DMA convincingly.
• Other G10s are deriving upside, though magnitudes slightly less pronounced, with USD/JPY holding above 133.00, Cable above 1.21 and EUR around 1.0650.
• Yuan saw some modest, but ultimately shortlived, pressure on the PBoC's 25bp cut while the Scandis are benefitting from risk, though the SEK less so given unfavourable unemployment data.
• PBoC set USD/CNY mid-point at 6.9052 vs exp. 6.9017 (prev. 6.9149).
• Click here for more detail.

FIXED INCOME

• EGBs are markedly more contained thus far, though Bunds have still posted a +100tick range and are currently holding near 136.40 with the 10yr yield around 2.25%.
• EGBs have largely disregarded numerous ECB speakers, who overall have added little, and the final EZ HICP reading for February while Gilts are following suit given a lack of specific drivers ahead of next week's BoE.
• Stateside, the direction and magnitude of price action is in-fitting with the above though the US yield curve is slightly mixed with the short-end a touch firmer and the long-end end dipping slightly.
• Click here for more detail.

COMMODITIES

• Commodities are, generally, deriving support from the firmer risk tone and as the USD remains under pressure; with the crude benchmarks choppy but most recently extending to incremental session highs.
• Albeit, this upside places WTI Apr'23 just USD 0.30/bbl above USD 69.00/bbl and as such well within the week's USD 65.65-77.47/bbl parameters.
• Spot gold is similarly bid and at the top-end of USD 1918-1934/oz ranges, with base metals benefitting from the improved tone though the complex is still in the red for the week.
• OPEC+ delegates are reportedly still encouraged by Asian demand; Delegates largely blame the recent sell-off on speculative money leaving the derivatives oil market rather than weakness in the physical market, according to Bloomberg.
• US energy envoy Hochstein said US President Biden is committed to replenishing the petroleum reserve.
• China to lower retail fuel prices from Saturday, according to NDRC.
• Increasing oil demand from China has lifted shipping costs markedly, via WSJ; highlighting that the daily chartering cost for VLCC has roughly doubled MM.
• Russia's Kremlin said Russia is extending the Black Sea grain deal for 60 days.
• China is reportedly mulling efforts to maintain iron ore supply and prices, according to NDRC; warn iron ore trading firms to avoid hoarding and price gouging.
• Click here for more detail.

NOTABLE HEADLINES

• UK Chancellor Hunt abandoned plans for sovereign wealth funds to pay corporation tax on property and commercial enterprises, according to FT.
• Negotiations for the UK's re-entry into the EU's Horizon research scheme may begin within weeks following a resolution, in principle, of the post-Brexit Northern Ireland dispute, according to BBC's Parker.
• German Chancellor Scholz said he does not see the threat of a new financial crisis and the monetary system is no longer as fragile as it was before the financial crisis, according to Handelsblatt. It was also reported that Germany's Economy Ministry said a technical recession can now no longer be ruled out.

NOTABLE DATA

• EU HICP Final YY (Feb) 8.5% vs. Exp. 8.5% (Prev. 8.5%); X Food & Energy Final YY (Feb) 7.4% vs. Exp. 7.4% (Prev. 7.4%)

NOTABLE US HEADLINES

• China's Finance Ministry has fined Deloitte's Beijing unit and suspends its operations for three months, in relation to a Huarong Asset Management auditing issue.
• Click here for the US Early Morning note.

GEOPOLITICS

• North Korea said its missile launch on Thursday was a Hwasong-17 ICBM which sent a warning to enemies and proved the capability to respond overwhelmingly if needed. North Korea added its launch was a response to US-South Korea military drills and its leader Kim called for boosting deterrence of nuclear war, while it noted the launch did not have any negative impact on the safety of neighbouring countries, according to NK News and KCNA.
• Chinese President Xi is to visit Moscow on March 20-22, according to state media; Both presidents are set to sign "important documents", and discuss strategic partnership, according to Tass.
• Russia's Kremlin said President Putin and President Xi will meet on March 20th, hold negotiations on March 21st, and there will be a press statement.
• German Federal Education/Research minister is to visit Taipei, Taiwan on Tuesday, via FT citing sources; Foreign Minister Baerbock intends to visit Beijing, China in April/May.

CRYPTO

• Citadel reportedly offered to buy Circle's SVB deposits that were backing USDC before regulators took control, according to WSJ.

APAC TRADE

• APAC stocks were positive amid the improved global risk appetite after recent bank lifelines including the SNB liquidity backstop for Credit Suisse and with large US banks teaming up to deposit USD 30bln in First Republic Bank.
• ASX 200 was marginally higher with the index kept afloat amid outperformance in energy and as the top-weighted financial industry benefitted from the recent banking sector relief, although gains were limited by losses in real estate and the defensive sectors.
• Nikkei 225 made headway above the psychological 27,000 level with railway stocks among the top gainers, while automakers lagged at the opposite end of the spectrum.
• Hang Seng and Shanghai Comp. were in an upbeat mood as energy and tech spearhead the advances in Hong Kong and with Baidu eyeing double-digit percentage gains, while the mainland also benefitted from the PBoC’s continued liquidity efforts.

NOTABLE ASIA-PAC HEADLINES

• China Securities Journal noted that the Chinese economy requires more fiscal and monetary support, as well as reiterated that the economic rebound is not yet solid.
• Japan's government and BoJ will hold a meeting on Friday evening after the SVB collapse, with the MoF, FSA and BoJ poised to exchange information on financial markets, according to Nikkei.
• Japanese Finance Minister Suzuki said Japanese financial institutions have ample capital base and liquidity, while the financial system is stable as a whole. Suzuki added they are closely coordinating with the BoJ and other central banks regarding responding to financial situations.
• Japanese Union Rengo says overall wages to rise 3.8% in Spring wage talks.

DATA RECAP

• Singapore Non-Oil Exports MM (Feb) -8.0% vs. Exp. -0.5% (Prev. 0.9%); YY (Feb) -15.6% vs. Exp. -16.0% (Prev. -25.0%)