• Equities are back under marked pressure as banking sector concern re-intensifies within Europe, Euro Stoxx 50 -2.3% & ES -0.8%.
• Specifically, the European banking index SX7P -5.0% is the standout laggard as CDS' for the stocks continue to rise & focus on the redemption of notes by Deutsche Bank and Lloyds; DBK -12%.
• USD and JPY benefit from the risk move with other G10 peers all succumbing to the USD's upside, DXY above 103.25 at best.
• Core fixed benchmarks are bid with yields lower and a marked dovish re-pricing been seen for Central Banks.
• Commodities diverge given the marked risk-off action with crude and base metals pressured while precious metals glean incremental support as the USD offsets the benefit of haven demand.
• Looking ahead, highlights include US Flash PMIs, US Durable Goods, Speeches from Fed's Bullard & BoE's Mann.

BANKS

• Deutsche Bank (DBK GY) announces a decision to redeem its USD 1.5bln fixed to fixed reset rate subordinated Tier 2 notes, due 2028. Lloyds (LLOY LN) has issued a notice of redemption for the entire outstanding principal amount of the USD 1bln 0.695% senior callable fixed-to-fixed rate notes due 2024. In terms of the accompanying risk-off price action, the desk notes the early redemption(s) can perhaps be taken as a negative if we assume the justification is that the bank(s) expect to see more dovishness/risk-off before the next fixed-to-fixed rate adjustment.
• UBS Wealth Management head Khan offered a retention package to Credit Suisse's Asia staff in Hong Kong town hall which focuses on stabilising the Credit Suisse Asia team and boosting banker confidence, according to sources.
• Credit Suisse (CSGN SW) and UBS (UBSG SW) are among the banks facing a US Russia-sanctions probe.
• Fed Balance Sheet: 8.784tln (prev. 8.689tln); Total factors supplying reserve funds 8.784tln (prev. 8.689tln); Loans 354.191bln (prev. 318.148bln); Bank Term Funding Program 53.669bln (prev. 11.943bln); Other credit extensions 179.8bln (prev. 142.8bln).

EUROPEAN TRADE

EQUITIES

• Equities are back under marked pressure as banking sector concern re-intensifies within Europe, Euro Stoxx 50 -2.3% & ES -0.8%.
• Specifically, the European banking index SX7P -5.0% is the standout laggard amid broad-based pressure in banking names as CDS' for the stocks continue to rise alongside focus on the redemption of notes by Deutsche Bank and Lloyds; currently, Deutsche Bank -12% is the Stoxx 600 laggard.
• Stateside, futures are pressured in tandem with the above price action though with the magnitude less pronounced ahead of the arrival of US players and as we await potential updates to the regions own banking names.
• Apple (AAPL) supplier Pegatron (4982 TW) is reportedly looking to open a second factory within India, to construct the latest iPhone models, via Reuters citing sources.
• Click here for more detail.

FX

• The USD is benefitting from the marked risk-off move with the index surpassing 103.00 from a 102.50 base in short-order and extending further to a 132.25+ peak since.
• Action which comes to the detriment of peers ex-JPY, as USD/JPY has been lower by roughly a full point at worse (best) given its haven allure and with JPY repatriation factoring.
• Notably, CHF is outperforming its peers, ex-JPY, but is still softer overall as its proximity/exposure to the European banking situation continues to overshadow traditional haven status vs USD though it is markedly outperforming the EUR as the focus is on EZ banks this morning.
• As such, EUR is the standout laggard with EUR/USD down to a 1.0722 trough vs initial 1.0830 best, antipodeans are similarly hampered given their high-beta status and after Thursdays firmer action.
• Cable failed to see a lasting benefit from the morning's retail data while the subsequent PMIs were slightly softer than expected; but, again, the action is very much USD-driven.
• PBoC set USD/CNY mid-point at 6.8374 vs exp. 6.8367 (prev. 6.8709)
• Click here for more detail.

FIXED INCOME

• Core benchmarks are experiencing a marked bid given the risk-off price action that we are seeing with an accompanying dovish re-pricing being seen for Central Banks.
• Specifically, Bunds have surpassed 139.50 and USTs above 1.17 with the respective 10yr yields down to 2.02% and 3.29% with market pricing in favour of an unchanged outcome at the next ECB and Fed meetings as such.
• Gilts are moving in tandem with EGB/UST peers and have eclipsed 107.00; BoE pricing is now heavily in favour of an unchanged outcome at the May meeting.
• Click here for more detail.

COMMODITIES

• Commodities diverge given the marked risk-off action with crude and base metals pressured while precious metals glean incremental support as the USD offsets the benefit of haven demand.
• Specifically, WTI and Brent are under USD 68.00/bbl and USD 74.00/bbl respectively which places them at the mid/lower-end of the current WTD USD 64.12-71.67/bbl and USD 70.12-77.44/bbl parameters.
• Spot gold is incrementally firmer though is yet to convincingly surpass USD 2k/oz while base metals are dented by the aforementioned tone with 3-month LME Copper slipping further below 9k to a USD 8940 low.
• Russia could recommend a temporary halt to wheat and sunflower exports, via Vedomosti; due to the sharp decline in prices.
• US base at North-east Syria's Al-Omar oil field has been targeted in an attack, according to security sources cited by Reuters.
• UBS maintains a positive outlook on Gold and targets USD 2050/oz by the end of the year.
• Click here for more detail.

NOTABLE HEADLINES

• ECB is likely to reassure EU leaders regarding bank stability on Friday and is to call for EU deposit insurance, according to Reuters.
• ECB's Nagel says it is necessary to increase policy rates to sufficiently restrictive levels, whilst the APP wind down should accelerate from Q3. Domestic price pressures are likely to last for longer, whilst underlying inflation is increasingly concerning. There are signs of second-round effects from inflation-induced higher wage increases.
• ECB's Nagel says there is often a bumpy road after similar instances in the banking sector, not surprising there have been market moves. On Deutsche Bank's share slide, ECB's Nagel will not comment.
• BoE's Bailey says rates will rise again if firms hike prices, via BBC; "If all prices try to beat inflation we will get higher inflation,"

DATA RECAP

• UK GfK Consumer Confidence (Mar) -36 vs. Exp. -36.0 (Prev. -38.0)
• UK Retail Sales MM (Feb) 1.2% vs. Exp. 0.2% (Prev. 0.5%); Ex-Fuel MM (Feb) 1.5% vs. Exp. 0.1% (Prev. 0.4%, Rev. 0.9%)
• UK Retail Sales YY (Feb) 3.5% vs. Exp. -4.7% (Prev. -5.1%); Ex-Fuel YY (Feb) -3.3% vs. Exp. -4.7% (Prev. -5.3%, Rev. -5.4%)
• UK Flash Services PMI (Mar) 52.8 vs. Exp. 53.0 (Prev. 53.5); Manufacturing PMI (Mar) 48.0 vs. Exp. 49.8 (Prev. 49.3)
• UK Flash Composite PMI (Mar) 52.2 vs. Exp. 52.8 (Prev. 53.1)
• EU S&P Global Composite Flash PMI (Mar) 54.1 vs. Exp. 51.9 (Prev. 52.0)
• EU S&P Global Manufacturing Flash PMI (Mar) 47.1 vs. Exp. 49.0 (Prev. 48.5); Services Flash PMI (Mar) 55.6 vs. Exp. 52.5 (Prev. 52.7)
• German S&P Global Composite Flash PMI (Mar) 52.6 vs. Exp. 51.0 (Prev. 50.7)
• German S&P Global Manufacturing Flash PMI (Mar) 44.4 vs. Exp. 47.0 (Prev. 46.3); Services Flash PMI (Mar) 53.9 vs. Exp. 51.0 (Prev. 50.9)
• French S&P Global Composite Flash PMI (Mar) 54.0 vs. Exp. 51.8 (Prev. 51.7)
• French S&P Global Manufacturing Flash PMI (Mar) 47.7 vs. Exp. 48.0 (Prev. 47.4); Services Flash PMI (Mar) 55.5 vs. Exp. 52.5 (Prev. 53.1)

GEOPOLITICS

• Ukraine's top ground forces commander said Ukrainian troops are to launch a counterassault soon as Russia's large winter offensive weakens without capturing the eastern city of Bakhmut, according to Reuters.
• Russian Security Council Deputy Chairman Medvedev says cannot rule out that Russian forces will need to reach Kyiv or Lviv to 'destroy the infection', according to RIA.
• US Pentagon said the US conducted air strikes in Syria which targeted an Iranian-backed group in response to a deadly UAV attack, according to Reuters and Wall Street Journal.
• US Treasury Secretary Yellen said sanctions on Iran have created a real economic crisis in that country and the US is constantly looking at ways to strengthen Iran sanctions but added that sanctions may not be sufficient to change a country's behaviour, according to Reuters.
• China's Defence Ministry said it monitored and drove away a US destroyer which entered the South China Sea Paracel Islands on Friday again and sternly demands the US to immediately stop such provocations, according to Reuters.
• North Korea said it conducted an important weapon test and firing drill from March 21st-23rd, while it added that it conducted a new underwater attack system in which it tested a new nuclear underwater attack drone and launched strategic cruise missiles. Furthermore, North Korea said its leader Kim guided the military activities and that Kim seriously warned enemies to stop reckless anti-North Korea war drills, according to KCNA.
• South Korean President Yoon said they will step up security cooperation with the US and Japan against North Korea's nuclear and missile provocations, while he said they will make sure North Korea pays the price for its reckless provocations, according to Reuters.

CRYPTO

• Bitcoin is softer on the session but within very confined sub USD 500 parameters as it remains somewhat detached from the broader risk-off action currently being seen.

APAC TRADE

• APAC stocks were mostly subdued after the recent bout of central bank rate hikes and choppy performance stateside where Wall Street just about closed higher amid a dovish market repricing of Fed rate expectations.
• ASX 200 was lower with risk appetite sapped by weak PMI data which returned to contraction territory.
• Nikkei 225 lacked conviction after the latest inflation data printed mostly in line with estimates.
• Hang Seng and Shanghai Comp. retreated after the central bank drained liquidity and as participants digest earnings releases, while it was also reported that the US added 14 Chinese entities to the red flag list.

NOTABLE ASIA-PAC HEADLINES

• HKMA said Hong Kong has very little exposure to the European and US banking situation, while it needs to monitor the situation carefully for any further volatility but is not concerned about risks to the Hong Kong banking sector.
• China is to extend some tax relief measures, according to local media.

DATA RECAP

• Japanese National CPI YY (Feb) 3.3% vs. Exp. 3.3% (Prev. 4.3%); Ex. Fresh Food YY (Feb) 3.1% vs. Exp. 3.1% (Prev. 4.2%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Feb) 3.5% vs. Exp. 3.4% (Prev. 3.2%)
• Japanese Manufacturing PMI (Mar P) 48.6 (Prev. 47.7); Services PMI (Mar P) 54.2 (Prev. 54.0)
• Japanese Composite PMI (Mar P) 51.9 (Prev. 51.1)
• Australian Manufacturing PMI (Mar P) 48.7 (Prev. 50.5); Services PMI (Mar P) 48.2 (Prev. 50.7)
• Australian Composite PMI (Mar P) 48.1 (Prev. 50.6)