• European bourses are firmer but within contained ranges, in the absence of any pertinent catalysts; US equity futures are modestly firmer, NQ outperforms as Tech continues to gain
• Dollar trades around flat, G10’s generally rangebound in light of a quiet start to a busy week
• Bonds lift, albeit incrementally, as attention turns to key central bank events starting from tomorrow
• Crude is marginally firmer as geopolitical themes remain in focus; Base metals are lower following downbeat Chinese price action
• Looking ahead, US Leading Index Change, BoJ SLOOS, Comments from ECB's President Lagarde, Earnings from United Airlines

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.5%), started the session on a firmer footing though have been edging lower since, despite the absence of any pertinent catalysts.
• European sectors have a strong positive tilt; Tech continues to build on the prior week's strength whilst Basic Resources and Energy are both hampered by broader losses in the commodities complex.
• US equity futures are modestly firmer across the board, with slight outperformance in the NQ (+0.7%), as the Tech-heavy index continues to build on the prior week’s strength.
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FX

• Contained action for the Dollar in catalyst-light trade; DXY sits in a tight 103.11-33 range as markets await Q4 GDP and monthly PCE later this week.
• EUR is steady vs. the USD as the pair oscillates around the 1.09 mark and in a 1.0888-1.0909 range.
• JPY is flat against the Dollar, USD/JPY pivots the 148 mark with traders mindful of the BoJ tomorrow and noteworthy OpEx; trough at 147.74.
• AUD is softer on account of Chinese equity selling overnight. Support in NZD/USD holding at 0.6100 for now.
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FIXED INCOME

• USTs are incrementally firmer but still towards the lower-end of last week's bounds, Fed blackout is underway but the week does have US GDP & PCE.
• A slightly firmer start for the Bund with a 134.17 open vs Friday's 134.00 close, lifting further from the 133.71-73 double-bottom from Thurs/Fri; EZ syndication to be announced today, expected to price later in the week.
• Gilts are a touch firmer, in-fitting with peers; there is a potential for headline volatility as the pre-meeting blackout is yet to begin though nothing scheduled ahead of the Feb meeting.
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COMMODITIES

• WTI and Brent are modestly firmer, though spent the majority of the morning subdued given the recommencement of production at Libya's El Sharara oilfield (300k BPD), support seemingly stemming from the overall tone and bouts of modest USD pressure.
• Gold is under modest pressure as the tone overall remains constructive, despite a China-hindered APAC handover, alongside a firmer USD and retreat in yields.
• Base metals are entirely in the red amid downbeat trade in China overnight, with particular underperformance in property names.
• Libya’s El Sharara oilfield output restarted after protestors ended the sit-down which had shut down production, while the NOC declared lifting of a force majeure and resuming full production from the El Sharara field.
• Russian energy company Novatek was forced to suspend some operations at a huge Baltic Sea fuel export terminal due to a fire following a suspected Ukrainian drone attack, according to Reuters.
• UBS says in 2024 Platinum will again become moderately more expensive than Palladium; Sees Platinum at USD 1025/oz by end 2024; Sees Gold at USD 2250/oz by end-Q4'2024. Sees Silver at USD 28/oz by end-Q4'24.
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NOTABLE EUROPEAN HEADLINES

• EU’s Dombrovskis said the EU must find ways to prevent the bloc’s most sensitive technologies, companies and assets from “ending up in the wrong hands”, as the EU prepares to unveil economic security proposals, according to FT.
• UK's defined pensions market is likely to see GBP 80bln in pension de-risking transactions in 2024, via WTW.

NOTABLE US HEADLINES

• Florida Governor DeSantis ended his presidential bid and endorsed Donald Trump.

GEOPOLITICS

MIDDLE EAST

• Israel conducted a strike on southern Lebanon which killed a Hezbollah member and one other Lebanese person, according to security sources cited by Reuters.
• Israel conducted an air strike on Damascus which killed 4 Iranian Revolutionary Guards, while Iranian President Raisi said the Israeli strike that killed Revolutionary Guards will not go unanswered, according to state media.
• US, Egypt and Qatar are pushing Israel and Hamas to join a phased diplomatic process that would begin with the release of hostages and eventually lead to the withdrawal of Israeli forces and an end to the war in Gaza. However, the report also noted that a media adviser to Hamas said there was no real progress, while Israeli PM Netanyahu rejected Hamas’s demands which included an end to the war and said they would not be able to ensure the security of their citizens if they would have agreed to this.
• Saudi’s Foreign Minister said they are very focused on de-escalation in Gaza and need to focus on a solution for the Palestinian issue, according to CNN.
• US Central Command forces conducted air strikes against a Houthi anti-ship missile that was aimed at the Gulf of Aden on January 20th, according to Reuters.
• US personnel suffered minor injuries and an Iraqi security forces member was wounded following an attack on the Ain al-Asad air base on Saturday which involved multiple ballistic missiles and rockets that were launched by Iranian-backed militants in western Iraq, although most of the missiles were intercepted, according to Reuters.
• UK Defence Minister Shapps said the UK military scientists shot down drones for the first time by using DragonFire laser to cut through incoming targets at the speed of light. It was also reported that the UK Defence Ministry said it will spend GBP 405mln to upgrade its warship defence missile system currently being used in the Red Sea.

OTHER

• Russian President Putin reportedly showed his intention to visit North Korea soon, while it was also reported that North Korea and Russia expressed concern over provocation acts by the US and its allies, Furthermore, North Korea and Russia agreed on cooperation in regional affairs and agreed that cooperation and joint assistance would be in accordance with the UN Charter and international laws.
• Eight people were killed following an attack on Russian-controlled Donetsk, according to TASS. It was also separately reported that Russia took control of the village of Krokhmalne in the Karkiv region, according to IFX.

CRYPTO

• Bitcoin nears the USD 40k level, whilst the Ethereum dips below the USD 2.5k mark.
• Terraform Labs announced the strategic filing for Chapter 11 bankruptcy protection, while the filing is to allow it to execute its business plan as it navigates ongoing legal proceedings, according to Reuters.

APAC TRADE

• APAC stocks were mixed following a catalyst-light weekend and as weakness in Chinese stocks clouded over the early momentum from last week's record levels on Wall Street.
• ASX 200 was led higher by consumer and real estate sectors which benefitted from slightly lower yields, while miners were pressured after weaker quarterly output by South32 and Lynas.
• Nikkei 225 rallied and broke above 36,500 ahead of tomorrow's BoJ announcement.
• Hang Seng and Shanghai Comp underperformed amid notable weakness in tech and property which saw the Hang Seng Mainland Properties Index hit a record low, while sentiment remained pressured in the mainland amid ongoing economic concerns and the benchmark LPRs were kept unchanged, as expected.

NOTABLE HEADLINES

• Chinese major state-owned banks are curtailing lending to tighten CNY liquidity in the offshore market, according to Reuters sources; banks are seen selling USD in the onshore FX market.
• Shipments of smartphones within China are nearly flat Y/Y in December at 26.84mln handsets, according to CAICT.
• Japanese PM Kishida says wage growth outpacing prices is a requirement for a virtuous cycle, requests firms provide larger pay rises this year. Wage hikes at small/medium firms are seen as essential.
• Chinese Loan Prime Rate 1-Year (Jan) 3.45% vs. Exp. 3.45% (Prev. 3.45%)
• Chinese Loan Prime Rate 5-Year (Jan) 4.20% vs. Exp. 4.20% (Prev. 4.20%)

DATA RECAP

• South Korean January 1st-20th Exports fell 1.0% Y/Y and Imports fell 18.2% Y/Y, while Trade Balance is at a provisional deficit of USD 2.61bln, according to the customs agency.
• Hong Kong Consumer Price Index (Dec) 2.4% vs. Exp. 2.5% (Prev. 2.6%)