• Sentiment remains constructive in Europe after a similar APAC handover with specific European-banking drivers limited.
• Stateside, the tone is in-fitting but to a slightly lesser extent awaiting updates to First Republic and the FDIC before Wednesday's FOMC.
• DXY has been pressured by the tone, with JPY giving back Monday's gains while the CHF attempts to recover.
• EGBs & USTS continue to pullback from earlier haven-induced peaks with well-received UK supply having little impact
• Commodities are, generally, benefitting from the risk tone; though, spot gold continues to retreat from Monday's USD 2009/oz peak
• Looking ahead, highlights include Canadian CPI, Retail Sales, US Existing Home Sales, Xi & Putin (2/3), Speeches from ECB's Lagarde & Enria, Supply from the US.

BANKS

• US officials are examining ways to permit the FDIC to temporarily insure deposits beyond the current USD 250k cap on most accounts without the need for congressional approval, according to Bloomberg. There were also earlier reports that the House Freedom Caucus is against raising bank deposit guarantees.
• US banking executives are to discuss at a Financial Services Forum event on Tuesday the next steps for First Republic (FRC), via FT citing sources.
• Swiss Banking Association says Swiss banking credibility has not been destroyed by the Credit Suisse (CSGN SW) crisis, but the situation is not good.
• ESMA Chair says reforms to make money market funds more resilient to economic shocks are needed sooner rather than later.
• Australia's prudential regulator has begun asking banks to declare their exposures to start-ups and crypto-focused ventures following the collapse of Silicon Valley Bank and volatility at global lenders, according to AFR.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer on the session, Euro Stoxx 50 +1.7%, as the region continues the positive APAC handover with specific banking-sector updates slim.
• Sectors are all in the green with Banking names the outperformer, SX7P +3.5%, and back at Friday's best levels; albeit, the index has someway to go to recoup the pressure of recent days/weeks.
• Stateside, futures are similarly in the green though magnitudes are much more contained as participants await updates to First Republic (FRC) and the FDIC ahead of Wednesday's FOMC, ES +0.6%.
• Click here for more detail.

FX

• The DXY is underpressure as the risk tone takes a more constructive tilt, with the index at the low-end of 103.24-103.51 parameters.
• Amidst this, the EUR is the marginal outperformer as the single currency extends above 1.07 though has seemingly paused for breath at 1.0750 with specific catalysts thin.
• Next best is the CHF, though this is more a recuperation of recent depreciation than any concerted upward move vs the USD while EUR/CHF is essentially flat, given the EUR's relative strength.
• Antipodeans are at the bottom of the G10 pile following data and RBA minutes which suggested that a pause could occur in April, currently AUD/USD and NZD/USD are below 0.67 and 0.62.
• Additionally, given the above, the JPY has pared back much of Monday's haven allure with USD/JPY around 25pips shy of Monday's 132.64 high at best.
• PBoC set USD/CNY mid-point at 6.8763 vs exp. 6.8753 (prev. 6.8694)
• Click here for more detail.

FIXED INCOME

• Bonds extend retreat from Monday's lofty safe haven peaks as risk appetite continues to pick up amidst less financial sector stress.
• Bunds down to 136.62 vs yesterday's 140.30 Eurex best, Gilts to 104.65 from 107.33 and T-note 114-18+ compared to 116-24.
• Solid 2053 DMO issuance provides UK debt with little support and 20 year US supply still to come.
• Click here for more detail.

COMMODITIES

• WTI and Brent are firmer in-fitting with the risk sentiment seen in European trade and with the complex attentive to commentary from Goldman Sachs, among others.
• Specifically, the benchmarks are towards the top-end of USD 66.77-68.500/bbl and USD 72.82-7466/bbl parameters respectively.
• Spot gold is softer given the relatively constructive tone with the yellow metal retreating further from Monday's USD 2009/oz peak to USD 1963/oz at worst while base metals are benefitting from broader action and reports relating to China's steel output.
• Goldman Sachs' Commodities Head Currie sees upside of USD 5-10/bbl for crude, saying a Fed pause would be bullish for oil.
• Trafigura says they do not see major impact on industry from Credit Suisse (CSGN SW); current oil prices are not encouraging production. Still moving limited Russian refined products and considering whether to resume more Russian oil trade, CEO does not see much downside for oil at this point. Adds, that the existing LME Nickel contract is not fit for purpose.
• Gunvor Co-head of trading says with all these new refineries coming on stream, we are not very bullish on refined products down the road; does not think oil price can go over USD 100/bbl by December.
• Pierre Andurand of Andurand Capital sees oil price at USD 140/bbl at year end.
• TotalEnergies (TTE GP) Normandy refinery (250k BPD) is to be shutdown amid strike action, according to a statement.
• Norwegian oil production (Feb) 1.776mln BPD (vs. prev. M/M 1.754mln BPD), gas production 9.9bcm (vs. prev. M/M 11.1mln BPD).
• China is reportedly considering cutting 2023 crude steel output by circa. 2.5%, via Reuters citing sources.
• Click here for more detail.

NOTABLE HEADLINES

• The Times shadow monetary policy committee urges the BoE to continue raising interest rates this week. Two members said the Bank should stick to 50bps, five said 25bps and one said unchanged.
• ECB's Kazaks said uncertainty in financial markets is high and it is not possible to say that we have stopped hiking, while he added that European banks are well capitalised and financial resources are available, according to Bloomberg.
• ECB's de Cos says he cannot validate the markets expectation of a 3.25% peak rate, via Expansion.
• Swiss KOF: Inflation forecast at 2.6% (prev. 2.3%) and 1.5% (prev. 1.1%) in 2023 and 2024. Click here for more detail.

NOTABLE DATA

• UK PSNB, GBP (Feb) 15.859B GB (Prev. -6.242B GB, Rev. -9.104B GB); Ex Banks GBP (Feb) 16.680B GB vs. Exp. 11.4B GB (Prev. -5.421B GB)
• UK PSNCR, GBP (Feb) -0.227B GB (Prev. -28.962B GB, Rev. -29.327B GB)
• German ZEW Economic Sentiment (Mar) 13.0 vs. Exp. 16.4 (Prev. 28.1); Current Conditions (Mar) -46.5 vs. Exp. -44.3 (Prev. -45.1)
• EU ZEW Survey Expectations (Mar) 10.0 (Prev. 29.7)

GEOPOLITICS

• Chinese President Xi said China will continue to play a constructive role in promoting a political settlement of the Ukraine crisis, while President Xi told Russian President Putin that ties with Russia are China's strategic choice.
• Chinese President Xi has invited Russia President Putin to visit China, via Ria. Subsequently, Russia's Kremlin says Putin and Xi had a throughout exchange on Monday including on Chinese peace proposal for Ukraine, declined to give more details.
• Iran is interested in developing peaceful nuclear and renewable energy cooperation with Russia, according to RIA.
• Japanese PM Kishida said he will visit Kyiv and meet with Ukrainian President Zelensky, according to NHK. It was later reported that Japan's Ministry of Foreign Affairs said Japan and Ukraine leaders will hold a summit today.
• South Korea imposed sanctions on four individuals and six entities linked to North Korea's weapons programmes, while it announced a watch list to ban the export of items related to North Korea's satellite development, according to Reuters.

CRYPTO

• Bitcoin is little changed on the session after marked upside recently, currently holding around the USD 28k mark; though, it remains towards the top end of USD 27.4-28.28k parameters.

APAC TRADE

• APAC stocks mostly tracked the gains on Wall St where some of the banking sector jitters dissipated following the Credit Suisse rescue and amid hopes FDIC’s deposit insurance amount could be increased.
• ASX 200 was led by outperformance in energy, financials and the mining-related sectors, while the RBA Minutes from the March meeting noted that the Board agreed to reconsider the case for pausing at the April meeting.
• Nikkei 225 was closed as Japanese participants observed the Vernal Equinox holiday.
• Hang Seng and Shanghai Comp. gained as Hong Kong benefitted from strength in consumer stocks and the mainland was buoyed by the PBoC’s liquidity injection albeit with upside capped on higher money market rates.

NOTABLE ASIA-PAC HEADLINES

• China is giving chipmakers new powers to guide a recovery in the industry with a handful of China's most successful chip companies to get easier access to subsidies and more control over state-backed research, according to FT.
• RBA March Minutes said the Board agreed to reconsider the case for pausing at the April meeting and that a pause would allow time to reassess the outlook for the economy, while it added that further tightening of monetary policy is likely required to lower inflation. RBA noted monetary policy was in restrictive territory and the economic outlook was uncertain, while these considerations meant that it would be appropriate at some point to hold the cash rate steady to assess more fully the effect of the interest rate increases to date. Furthermore, it said inflation is too high, the labour market is tight, business surveys are solid and sluggish productivity could lead to more persistent inflation.