• Equities are firmer, ex-FTSE 100, as the constructive APAC tone continues
• Though, action is contained in pre-FOMC action while the FTSE 100 lags post UK CPI
• A release that was unexpectedly hot and sparked a marked hawkish reaction, with Cable outperforming and Gilts lagging as such
• DXY pressured on this with antipodeans also firmer while the safe-havens are little changed pre-Fed
• Commodities are diverging slightly; crude softer while metals are flat/firmer
• Looking ahead, highlights include FOMC Policy Announcement & Fed Chair Powell's Press Conference, BoC Minutes, Speeches from ECB's, Panetta, Nagel & Rehn.

BANKS

• First Republic Bank (FRC) reportedly tapped Lazard for help with reviewing strategic options and picked global management consulting firm McKinsey for its post-crisis planning, according to WSJ. It was also reported that the First Republic Bank rescue may rely on US backing to facilitate a deal, while bankers at JPMorgan (JPM) working on a First Republic Bank deal are said to be facing difficulties finding a buyer without a significant government backstop, according to FBN's Gasparino..
• US SEC scrapped plans for a vote today on a rule that would have increased regulators’ visibility into financial risks at some hedge funds and private equity funds, according to WSJ.

EUROPEAN TRADE

EQUITIES

• European bourses are mostly in the green, Euro Stoxx 50 +0.3%, as the constructive APAC tone continues though benchmarks are confined to pre-FOMC ranges.
• Upside with the exception of the FTSE 100 -0.2% following hot UK CPI and a subsequent hawkish shift in pricing for Thursday's BoE; 25bp now priced, ~10% chance of 50bp implied.
• Sectors are mixed with Banking names outperforming once again while defensively-biased sectors are lagging and incrementally softer.
• Stateside, futures are confined to narrow pre-FOMC parameters and are little changed/slightly softer, ES -0.1%
• Nike (NKE) Q3 2023 (USD): EPS 0.79 (exp. 0.55), Revenue 12.39bln (exp. 11.47bln). Co. said quarterly gross margin decreased primarily due to higher markdowns to liquidate inventory. Sees Q42023 rev. at flat to low single digit growth. Sees FY2023 rev. growth at a high single digit (exp. 7.2%). -1.5% in pre-market trade
• Nike executive says North America apparel units were down by high single-digits in Q3, while it began to see a rebound in China brick-and-mortar traffic with strong retail momentum around the Lunar New Year accelerating into February.
• Boeing (BA) secures order from Japan for 21 737 Max jets, via Reuters citing sources.
• Tencent (0700 HK) Q4 (CHY): Revenue 144.9bln (prev. 144.1bln), Attributable Profit 106.3bln (prev. 94.9bln); recommend payment of HKD 2.40/shr.
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FX

• The USD is on the back-foot ahead of the FOMC and Powell's presser with the index's downside largely a function of hot UK CPI.
• Specifically, DXY slipped below 103.00 to a 10297 trough as Cable has been lifted to an unsuccessful test of 1.23 from a 1.2209 trough alongside a marked hawkish shift in BoE pricing.
• Action which has prevented the EUR from extending convincingly beyond Tuesday's ranges, with EUR/GBP down to a 0.8773 low.
• Antipodeans are the next best performers, though this action occurs following marked pressure in recent sessions and is more of a consolidation than a concerted move higher thus far.
• At the bottom of the G10 pile are the JPY and CHF with the havens little changed overall given the firmer risk tone but with pre-FOMC tentativeness preventing any real downside thus far.
• PBoC set USD/CNY mid-point at 6.8715 vs exp. 6.8710 (prev. 6.8763)
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FIXED INCOME

• Gilts are under marked pressure following February's CPI release showing an unexpected uptick in price pressures, with EGBs down in sympathy.
• Specifically, Gilts dropped below 104.00 to a 103.53 trough with the 10yr yield testing 3.50% while Bunds slipped to a 135.24 low.
• Stateside, USTs came under some modest pressure but remain flat/firmer around 114.10 ahead of the US policy announcement with the yield curve mixed and slightly steeper currently.
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COMMODITIES

• Commodities are experiencing some modest divergence, with crude softer while metals are flat/firmer.
• WTI & Brent are in the red but holding around the mid-point of circa. USD 1/bbl parameters with specific drivers limited aside from weekly crude reports.
• Spot gold resides just under USD 1950/oz ahead of the afternoon's risk events while base metals glean support from the firmer risk tone.
• Petroecuador declared a force majeure on three oil blocks due to community protests.
• JPMorgan sees iron ore at USD 100/t in Q4 2023 (vs current spot USD 120/t).
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NOTABLE HEADLINES

• UK government said GBP 1.8bln was awarded to boost energy efficiency and cut emissions of homes and public buildings across England, according to Reuters.
• ECB's Nagel said the fight against inflation is not over and that rate-setters must be more stubborn in the inflation fight, while he added there is still some way to go but we are approaching restrictive territory, according to FT.
• ECB's Lagarde says they are neither committed to hiking nor is the ECB finished with hiking; can see a more-prolonged cost-push coming from wage growth.
• ECB Lane says there are reasons to believe that underlying inflation measures will ease over time; inflation falling is predicated on wage growth peaking this year.
• Greek PM announces May elections following the rail disaster, according to AFP News Agency.
• French and German banks reportedly are facing "a 500-fold increase" in capital requirements for trades in India from May after the ESMA said there were no talks with India to resolve a dispute, FT reports.

NOTABLE DATA

• UK CPI YY (Feb) 10.4% vs. Exp. 9.9% (Prev. 10.1%); Core CPI YY (Feb) 6.2% vs. Exp. 5.7% (Prev. 5.8%)
• UK CPI MM (Feb) 1.1% vs. Exp. 0.6% (Prev. -0.6%); Core CPI MM (Feb) 1.2% vs. Exp. 0.8% (Prev. -0.9%)

GEOPOLITICS

• Ukrainian President Zelensky invited China for talks on Ukraine but is waiting for an answer. it was separately reported that Zelensky said they need ammunition from partners and need it now, according to Reuters.
• Russian forces have almost completely surrounded Bakhmut, according to Donetsk's pro-Russian authorities cited by Al Jazeera.
• US said there are no signs that the summit between Chinese President Xi and Russian President Putin will lead to peace in Ukraine, according to FT.
• Syrian Defence Ministry said an Israeli air strike targeted Syria's Aleppo International Airport and caused some damage to it, according to Reuters.
• US and South Korea are planning to conduct South Korea's "largest ever" live-fire drills in June as part of a program for the 70th anniversary of the alliance between the two countries, according to Bloomberg.
• North Korea is suspected to have fired a cruise missile on Wednesday, according to South Korean press Chosun; "North Korea launches several cruise missiles", according to Yonhap.

CRYPTO

• Deutsche Boerse (DB1 GY) says Eurex is the first European exchange to launch Bitcoin index futures, scheduled for 17th April.

APAC TRADE

• APAC stocks sustained the momentum from Wall St where the major indices rallied for a second consecutive day.
• ASX 200 was firmer as energy and the consumer sectors spearheaded the advances in the index which climbed back above the psychological 7,000 level.
• Nikkei 225 was boosted as it played catch-up on its return from holiday amid notable strength in the banking industry and with Japan set to allocate more than JPY 2tln from reserves for measures to cushion the blow to the economy from rising prices.
• Hang Seng and Shanghai Comp. conformed to the upbeat mood with initial outperformance in Hong Kong, while the advances in the mainland were limited after the PBoC’s liquidity drain and with with reports yesterday suggesting the US is seeking to prevent China from benefitting from its USD 52bln chip funding.

NOTABLE ASIA-PAC HEADLINES

• Taiwan’s President Tsai plans to transit through New York and LA as part of her trip to Central America, while the Deputy Defence Minister said the Defence Ministry has contingency plans for all moves by China during President Tsai's overseas trip, according to Reuters.
• Japanese Chief Cabinet Secretary Matsuno said they will allocate more than JPY 2tln from reserves for measures to cushion the blow to the economy from rising prices, according to Reuters.
• Japan maintains overall economic view; cuts Industrial Output view for first time since December 2022; cuts Corporate Profits view for first time since April 2020.