• European bourses are in the green across the board, Euro Stoxx 50 +0.9%, with banking names outperforming initially after the concerns at the tail-end of last week.
• Stateside, futures are more tentative though the ES +0.4% is firmer and back above 4k after incrementally losing the figure in the European morning.
• FRC is bolstered in the pre-market amid reports the US is considering given the name more time & providing further support to banks.
• DXY remains solid around 103.00 with peers mixed as CHF outperforms while JPY lags on risk and as UST/JGB spreads widen.
• Core fixed income is pressured given the above tone with Gilts and USTs seemingly leading the latest leg ahead of Central Bank speakers.
• Commodities are diverging modestly with overall action fairly tentative as crude lifts while the USD/risk dents metals.
• Looking ahead, highlights include speeches from Fed’s Jefferson, BoE’s Bailey, ECB’s Schnabel & Elderson, Supply from US.

BANKS

• US is considering further support for banks while giving First Republic Bank (FRC) more time. It was also reported that First Citizens Bancshares (FCNCA) has made a deal for Silicon Valley Bank (SIVB), according to Bloomberg.
• FSOC heard a presentation from New York Fed staff last week on market developments and discussed current conditions in the banking sector, while it noted the banking system remains sound and resilient despite recent stress.
• Credit Suisse (CSGN SW) is facing the threat of a potential probe and disciplinary action over how top managers ran the bank in the lead-up to its collapse, according to Bloomberg.

EUROPEAN TRADE

EQUITIES

• European bourses are in the green across the board, Euro Stoxx 50 +0.9%, with banking names outperforming initially after the concerns at the tail-end of last week.
• Specifically, SX7P +1.0% with Deutsche Bank among the best performers as the weekend was devoid of any significantly negative developments with updates generally limited.
• Stateside, futures are more tentative with the ES +0.4% firmer and back above 4k after it incrementally lost the figure in the European morning.
• FRC +24% is bolstered in the pre-market amid reports that the US is considering giving them more time, with banks generally under consideration for additional support from the US.
• China Commerce Ministries Wentao met with Apple (AAPL) CEO Cook; exchanged views on Cos progress in the region, stabilisation of industry and supply chains.
• Salesforce (CRM) and Elliott Investment Management issue joint statement; Elliott will not proceed with director nominations.
• Click here for more detail.

FX

• DXY solid around 103.000 axis as firm rebound in US Treasury yields offset loss of safety premium.
• Franc outperforms amidst further relief rally from CS collapse as USD/CHF eyes 0.9150 and EUR/CHF trades mainly under 0.9900.
• Sterling firm on the 1.2200 handle vs Dollar ahead of latest comments from BoE Governor Bailey.
• Yen reverses through 131.00 from circa 130.50 at best as risk appetite improves and UST/JGB spreads widen.
• PBoC set USD/CNY mid-point at 6.8714 vs exp. 6.8703 (prev. 6.8374)
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FIXED INCOME

• Core benchmarks are pressured given the modestly constructive risk tone in European trade, Bund dipping further below 137.00
• Specifics have been slim with ECB speak and Ifo not markedly moving the dial with the risk tone dictating action instead; as such, EGBs are at the lower-end of circa. 150 tick parameters.
• Gilts are in-fitting and incrementally softer as they seemingly lead the latest move lower ahead of BoE's Bailey at the LSE.
• Stateside, USTs are in-fitting with focus still on the banking sector and officials response to it ahead of US 2yr supply and Fed's Jefferson.
• Japan's 10yr bond has not traded all day, for the first time in one month, via Bloomberg.
• Click here for more detail.

COMMODITIES

• Commodities are diverging modestly with overall action fairly tentative as the complex and markets more broadly await fresh catalysts, particularly on the banking front.
• WTI and Brent are firmer by circa. USD 0.30/bbl but reside towards the lower end of USD 1/bbl range parameters which are well within Friday’s and by extension recent ranges.
• Spot gold is softer given the constructive European tone and as the USD retains an underlying bid with the DXY above 103.00, action which has pressured the yellow metal to a USD 1965/oz intraday low.
• Saudi Aramco CEO affirmed the Co.’s support for China’s long-term energy security and it was separately reported that Aramco JV Hapco is to commence construction of a major refinery and petrochemical complex in China with construction to begin in Q2 and the complex is expected to be fully operational by 2026, according to Reuters.
• Iraq won an arbitration case against Turkey regarding Kurdish oil exports, while Turkey informed Iraq it will respect the arbitration ruling and halted Kurdish crude exports, according to officials cited by Reuters.
• TotalEnergies (TTE FP) said 33% of operational staff at its French refineries and depots were on strike on Sunday, according to a Co. spokesperson cited by Reuters.
• A major incident was declared due to an oil leak from the Wytch Farm Oil Field in Dorset.
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NOTABLE HEADLINES

• ECB’s de Guindos said the question now is how the events in the US banking system and Credit Suisse (CSGN SW) will impact the eurozone economy and need to assess whether they will give rise to an additional tightening of financing conditions which could perhaps feed through to the economy in terms of lower growth and lower inflation, according to Business Post.
• ECB's de Cos says that decisions must be prudent amid bank uncertainty; tensions in financial markets have generated a further tightening of financial conditions, affecting the outlook for economic activity and inflation.
• ECB's Simkus says that financial stability is an important factor, bank liquidity and capitalisation are high in the Euro Area.
• ECB's Nagel says QT should be accelerated from the summer and inflation is still too high. Adds, recent financial developments make it even more important that decisions are taken meeting-by-meeting.
• S&P affirmed Germany at AAA; Outlook Stable, while Fitch affirmed Malta at A+; Outlook Stable.

DATA RECAP

• German Ifo Business Climate New (Mar) 93.3 vs. Exp. 91.0 (Prev. 91.1), Expectations New (Mar) 91.2 vs. Exp. 88.3 (Prev. 88.5, Rev. 88.4)
• German Ifo Current Conditions New (Mar) 95.4 vs. Exp. 94.1 (Prev. 93.9)
• Ifo says: Winter recession in Germany is now more unlikely, Expectations in industry have fallen, Proportion of businesses which wish to increase prices has fallen.
• EU Money-M3 Annual Growth (Feb) 2.9% vs. Exp. 3.2% (Prev. 3.5%)

NOTABLE US HEADLINES

• Fed’s Kashkari (voter) said the US banking system is resilient and sound, while he expects the process of reducing stress altogether will take some time. Kashkari added there are other banks with exposure to long-dated treasury bonds, as well as commercial real estate losses and the situation does bring the US closer to a recession. Furthermore, he noted it is too soon to forecast the rate decision for the next Fed meeting and that the interest rate risk that brought down SVB is something the Fed had been communicating to banks, according to CBS.
• Click here for the US Early Morning Note.

GEOPOLITICS

• Israeli PM Netanyahu fired the defence minister for not supporting the judicial reform plan which prompted protests in Tel Aviv, while it was later reported that all universities across Israel will declare a strike from Monday and that Israeli police used a water cannon to push back protestors who broke barricades near PM Netanyahu’s house in Jerusalem. Furthermore, the IDF raised the alert level amid the unrest.
• Israeli broadcaster says that PM Netanyahu has told coalition heads that he will pause the judicial overhaul. *Following protest from coalition members on this and the announcement/commencement of widespread of
• Russian President Putin said Moscow will station tactical nuclear weapons in Belarus and has moved 10 aircraft to Belarus capable of carrying tactical nuclear weapons, while he noted that this does not violate nuclear non-proliferation agreements and that they are not transferring nuclear weapons to Belarus but will station them there as the US does in Europe, according to TASS.
• White House said it has seen the reports of Russia’s nuclear announcement but has not seen a reason to adjust the nuclear posture nor indications that Russia is preparing to use a nuclear weapon, while a US official said Russia and Belarus have talked about nuclear stationing for some time and the move could be political signalling on Belarus Independence Day, according to Reuters.
• NATO said Russia’s nuclear rhetoric is dangerous and irresponsible, while it is closely monitoring the situation but has not seen any changes in Russia’s nuclear posture that would lead to NATO adjusting its own, according to Reuters.
• EU’s Foreign Policy Chief Borrell said Belarus hosting Russian nuclear weapons would mean an irresponsible escalation and threat to European security, while he added that Belarus can still stop it and the EU stands ready to respond with further sanctions.
• Ukraine’s Foreign Ministry slammed Russian President Putin’s provocative nuclear plans and called for a UN Security Council session, while Lithuania’s Foreign Ministry said it will call for new sanctions in response to Russia’s plan to place tactical nuclear weapons in Belarus, according to Reuters.
• Ukraine’s Central Bank Governor said Ukraine will no longer resort to dangerous money printing to fund the war against Russia, according to FT.
• An explosion occurred that injured two people in a town in Russia’s Tula region and was caused by a Ukrainian drone packed with explosives, according to TASS.
• Russia’s Parliament Speaker Volodin proposed to ban the activities of the International Criminal Court in Russia, after the ICC issued an arrest warrant for Russian President Putin and accused him of war crimes, according to Reuters.
• Russian Kremlin denies reports in Turkish media that President Putin intends to visit Turkey.
• North Korea fired two suspected ballistic missiles towards the East Sea which landed outside of Japan’s exclusive economic zone, according to Reuters. Furthermore, South Korea's military said it strongly condemns North Korean missile launches as a grave act of provocation, while it will continue field exercises with the US as planned and maintain readiness to respond to any provocations.
• Japanese Chief Cabinet Secretary Matsuno says North Korea is likely to step up provocative activities including nuclear tests, according to Reuters.

CRYPTO

• Cryptocurrency companies are reportedly rushing to Hong Kong in the hope of benefitting from the city's push to become a digital asset hub, according to FT.

APAC TRADE

• APAC stocks were mixed in mostly rangebound trade as markets took a breather from recent banking sector jitters and with risk appetite also restricted amid lingering geopolitical tensions and heading into quarter-end.
• ASX 200 eked slight gains with the index supported by strength in utilities and real estate although the upside was capped by weakness in the commodity-related sectors.
• Nikkei 225 reclaimed the 27,500 level but with further upside limited after firmer than expected Services PPI data from Japan and a fresh round of missile launches by North Korea.
• Hang Seng and Shanghai Comp. were pressured despite the PBoC's RRR cut taking effect today, as the attention turned to earnings releases with energy leading the downturn in Hong Kong following a decline in Sinopec’s profits and certain tech stocks also weakened after Xiaomi’s quarterly smartphone shipments fell 18.6% Q/Q, while the latest data showed that February YTD Industrial Profits declined by 22.9% Y/Y.

NOTABLE ASIA-PAC HEADLINES

• Chinese Foreign Minister Qin Gang said China’s attitude towards developing a healthy, stable and constructive Sino-US relationship remains unchanged, while he hopes US and China can work together to promote bilateral relations to overcome difficulties and return to healthy and stable developments. Furthermore, he welcomes US companies to continue expanding investments in China and said China is willing to provide a better business environment for companies across the world including the US, according to Reuters.
• Chinese Vice Premier Ding Xuexiang said Premier Li will meet with key foreign guests attending the China Development Forum and that major economic indicators have improved following the smooth transition away from epidemic control. Ding said opening up to the outside world is an indispensable major national policy and China will actively expand imports of high-quality goods and services, while he added China will further reduce tariffs, continue to expand market access and attract foreign investment, according to Reuters.
• Chinese Finance Minister Liu Kun said will intensify the implementation of proactive fiscal policy and fiscal expenditure, while China will introduce increased tax reduction measures to support market entities and will improve residents’ income through multiple channels. Furthermore, China is to continue to give priority to scientific and technological innovation, as well as increase investment, according to Reuters.
• Chinese Commerce Minister said China’s import and export volumes are expected to continue on a growth trajectory and that they will focus on government procurement, intellectual property rights and serving foreign investors, according to Reuters.
• China NDRC head Zheng Shanjie said China’s economic development faces challenges and they are implementing effective solutions. Zheng said China’s economy is resilient and dynamic with long-term fundamentals unchanged, while they will strengthen coordination of fiscal, monetary, employment, industrial, consumption and other policies, according to Reuters.
• China Communist Party senior official Han Wenxiu said China is confident of reaching the annual economic growth target of around 5% and there is currently no apparent inflation nor deflation in China, while he added there is a relatively large room to manoeuvre monetary policy and China will respond strongly to negative population growth and population ageing, according to Reuters.
• IMF's Georgieva said risks to financial stability have increased and vigilance is still needed, while the IMF is paying close attention to vulnerable countries, especially low-income nations with high-debt growth. Georgieva also stated that China’s economy is seeing a strong rebound fuelled by private consumption and that reforms to boost productivity could lift China’s GDP by up to 2.5% by 2027 and by 18% by 2037.
• Honduras said it is breaking diplomatic relations with Taiwan and it established diplomatic ties with China, while China and Honduras agreed to develop relations on the basis of principles of mutual respect for sovereignty and territorial integrity, according to state media.
• Taiwan’s Foreign Minister confirmed the cutting of ties with Honduras and is withdrawing its embassy, while Taiwan’s Foreign Minister noted that Honduras demanded a larger amount of money and reiterated that China does not follow through on its promises, according to Reuters.
• US State Department said that while Honduras’s action to sever ties with Taiwan is a sovereign decision, it is important to note that China often makes promises that remain unfulfilled and the US strongly encourages all countries to expand engagement with Taiwan, according to Reuters.

DATA RECAP

• Chinese Industrial Profits YTD YY (Feb) -22.9% (Prev. -4.0%)
• Japanese Services PPI YY (Feb) 1.8% vs Exp. 1.7% (Prev. 1.6%)