• APAC stocks were mostly rangebound after the lack of significant incremental catalysts over the weekend.
• Taiwan ruling DPP’s William Lai won the presidential election with around 40% of votes, although the party did not win a parliamentary majority.
• Fed’s Bostic (voter) warned that US progress on inflation is likely to slow and believes rates need to stay on hold until at least summer, via FT.
• US congressional leaders have reached an agreement on a stopgap spending bill through March 1st and March 8th.
• European equity futures are indicative of a higher open with Euro Stoxx 50 future +0.4% after the cash market closed lower up 0.9% on Friday.
• DXY caged in tight 102.30-55 parameters, JPY lags G10 FX, EUR/USD oscillated around 1.0950.
• Looking ahead, highlights include German Wholesale Price Index, Full Year GDP, EZ Total Trade Balance, Industrial Production, BoC’s Business Outlook Survey. US Cash Markets are Closed for Martin Luther King Jr Day.

US TRADE

EQUITIES

• US stocks were choppy and ultimately finished little changed on Friday after gyrating between the Middle East conflict and soft US PPI data, while attention was also on the big bank earnings which were mixed and Treasuries sustained their bull-steepening.
• SPX +0.08% at 4,784, NDX +0.07% at 16,832, DJIA -0.31% at 37,593, RUT -0.23% at 1,951.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed’s Bostic (voter) warned that US progress on inflation is likely to slow and believes rates need to stay on hold until at least summer to prevent prices from rising again, according to FT.
• Fed’s Goolsbee (non-voter) said on Friday that investors got ahead on Fed rate cut bets and that PPI data is the most noisy and least productive, while he added not to take too much heart from it and that the Fed targets PCE which continues to show good progress on getting inflation down, according to Fox News.
• US congressional leaders have reached an agreement on a stopgap spending bill through March 1st and March 8th in a laddered continuing resolution, while the procedural vote for the spending bill is set for Tuesday, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks were mostly rangebound after the lack of significant catalysts over the weekend and with global markets set for a quietened session on Monday owing to the extended weekend stateside.
• ASX 200 lacked direction as strength in energy and telecoms offset the weakness in miners and defensives.
• Nikkei 225 continued on its upward trend and briefly reclaimed the 36,000 level for the first time since 1990.
• Hang Seng and Shanghai Comp were choppy after the PBoC refrained from cutting its 1-year MLF rate.
• US equity futures traded sideways and were uneventful as US cash markets are to remain closed on Monday.
• European equity futures are indicative of a higher open with Euro Stoxx 50 future +0.4% after the cash market closed lower up 0.9% on Friday.

FX

• DXY remained within a tight range of between 102.30-102.55 amid the US holiday closure.
• EUR/USD traded indecisively around 1.0950 after last week's whipsawing and lack of pertinent drivers.
• GBP/USD price action was limited following a very quiet weekend of newsflow from the UK.
• USD/JPY was marginally higher and reclaimed the 145.00 status amid outperformance in Japanese stocks.
• Antipodeans were mixed on cross-related flows and after the PBoC disappointed calls for a MLF rate cut.
• PBoC set USD/CNY mid-point at 7.1084 vs exp. 7.1684 (prev. 7.1050)

FIXED INCOME

• 10yr UST futures were lacklustre and traded rangebound with US cash markets to remain closed on Monday.
• Bund futures traded uneventfully in the absence of any major pertinent catalysts for Europe over the weekend.
• 10yr JGB futures extend on recent gains amid the presence of the BoJ in the market for almost JPY 1.2tln of JGBs, while 2-year JGB bond yields briefly returned to negative territory and printed its lowest since July 2023.

COMMODITIES

• Crude futures were rangebound as demand-related woes offset the geopolitical risk premium.
• Iraq set February Basrah medium crude OSP to Asia at minus USD 0.80/bbl to Oman/Dubai average and to Europe at minus USD 5.15/bbl vs dated Brent, while it set the price to North and South America at minus USD 1.00/bbl vs ASCI, according to SOMO.
• Iraq’s Oil Minister said the oil market suffers from many challenges that affect its stability and that OPEC+ is working to limit these factors by taking the measures necessary, according to Reuters.
• Qatar appears to have halted sending LNG tankers through the Bab el-Mandeb Strait after US-led airstrikes on Houthi targets raised risks in the key waterway, according to Bloomberg.
• Spot gold edged marginal gains amid an uneventful dollar and with US participants on an extended weekend.
• Copper futures nursed some of last week's losses but with the rebound capped by PBoC-related disappointment.

CRYPTO

• Bitcoin traded higher in which prices steadily advanced after having reclaimed the USD 42,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 995bln (exp. 900bln) in 1-year MLF loans with the rate kept at 2.50% (exp. 10bps cut).
• China's military, AI institutes and universities have over the past year bought small batches of Nvidia (NVDA) chips banned by the US from export to China, according to a Reuters review of tender documents.
• US Secretary of State Blinken had constructive discussions on a range of issues with a Chinese minister on Friday which included areas of potential cooperation and areas of differences, while Blinken emphasised the importance of resolving cases of American citizens wrongfully detained or subject to exit bans in China and raised US concerns about human rights abuses, according to Reuters.
• Taiwan ruling DPP’s William Lai won the presidential election with around 40% of votes which represents an unprecedented third consecutive presidential term for the DPP, although the party did not win a parliamentary majority. Furthermore, President-elect Lai said he can resume healthy and orderly exchanges with China and will use dialogue to replace confrontation, according to Reuters.
• US Secretary of State Blinken said the US is committed to maintaining cross-strait peace and stability, and peaceful resolution of differences, while he added the US will work with Taiwan to further a longstanding unofficial relationship, consistent with the US one-China policy, according to Reuters.
• China’s Foreign Ministry said US Secretary of State Blinken’s statement on the Taiwan election sent a seriously incorrect signal to Taiwan's independence separatist forces and seriously violated US promises that it would only maintain cultural, economic and other non-official ties with Taiwan, according to Reuters.

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu reiterated that no one will stop Israel from fighting in Gaza until victory and they will not end the war without closing the hole on the border with Egypt, while he added they must close Gaza’s border with Egypt and are considering several ways to do this, according to Reuters.
• Israeli military chief said it will consider letting Palestinians displaced from north Gaza to return when there is no danger to them, according to Reuters.
• Hamas armed wing spokesman Abu Ubaida said any talks before stopping Israeli aggression are worthless and the fate of many hostages has become unknown, while the spokesman added many have been killed and blamed their fate on Israel. Furthermore, the spokesman said they have been told by several parties on resistance fronts that they will expand their strikes in the coming days, while it was also reported that Hamas aired a video showing three Israeli hostages appealing to be freed and Hamas said the fate of hostages will be disclosed on Monday, according to Reuters.
• US President Biden and other senior US officials are reportedly becoming increasingly frustrated with Israeli PM Netanyahu and his rejection of most of the administration’s recent requests related to Gaza, according to four US officials with direct knowledge of the matter cited by Axios.
• White House’s Kirby said a lower intensity phase of operations in the Israel-Hamas war is approaching soon.
• US military announced US forces conducted a strike against a Houthi radar site in Yemen and said strikes are designed to degrade the Houthi’s ability to attack maritime vessels, while a Houthi spokesman said US strikes on Yemen including the latest one on a military base in Sanaa are ineffective, according to Reuters.
• US President Biden said the US delivered a private message to Iran about Houthi attacks and the US is confident that it is well prepared. It was separately reported that Iranian President Raisi condemned US air strikes on Yemen and said that Washington’s move revealed its true nature which is aggressive and against human rights, according to Reuters and IRNA.
• Egypt and China are closely following up on developments in the Red Sea and expressed concern over the expansion of the conflict in the region, while they emphasised the importance of uniting international and regional efforts to stop the attack on Gaza, according to a joint statement.
• Lebanon’s Hezbollah head said it is wrong and ignorant if US President Biden thinks the Yemenis will stop confronting the Israelis in the Red Sea, while he added that what the Americans did in the Red Sea will harm all maritime navigation, according to Reuters.
• US Central Command said an anti-ship cruise missile was fired on Sunday from the Iranian-backed Houthi military area of Yemen towards USS Laboon operating in the Red Sea, while the missile was shot by a US fighter aircraft and there were no injuries or damage.
• Iraqi armed factions said they attacked three American bases in Iraq and Syria, according to Al Arabiya.
• Turkey’s military said it launched air strikes against Kurdish militant positions in Northern Syria and Iraq which destroyed 24 militant targets, according to Reuters.

OTHER

• Ukraine promoted a peace plan at Davos on Sunday ahead of the World Economic Forum although China decided not to attend and Russia was not invited to the meeting, according to FT.
• North Korea fired an intermediate-range ballistic missile which landed outside of Japan’s exclusive economic zone, while North Korea said that it successfully launched a mid- to long-range solid fuel ballistic missile which was equipped with a hypersonic manoeuvring unit and that the launch did not pose a threat to countries around it, according to Yonhap.
• North Korea’s Foreign Minister travelled to Russia and led a delegation which left Pyongyang on Sunday, according to KCNA.

UK/EU

NOTABLE HEADLINES

• ECB’s Lane said they will have key data by June to decide on rates and that changing rates too fast can be harmful, while he added that once the ECB begins lowering rates, this would not be by a single decision of a rate cut and there would likely be a sequence of rate cuts, according to an interview with Corriere Della Serra.

DATA RECAP

• UK Rightmove House Price Index MM (Jan) 1.3% (Prev. -1.9%)
• UK Rightmove House Price Index YY (Jan) -0.7% (Prev. -1.1%)