• European equities are generally firmer, whilst US equity futures meander around the unchanged mark ahead of key earnings
• Dollar is around flat whilst the Pound lags with specifics light
• Bonds are firmer, though Bunds have been edging lower following hawkish EZ data
• Crude benchmarks are marginally firmer alongside Gold, awaiting geopolitical updates
• Looking ahead, US JOLTs, Consumer Confidence, Japanese Retail Sales, BoJ SOO, Comments from ECB’s Nagel, Earnings from Pfizer, Marathon Petroleum, Microsoft, Alphabet, Starbucks & AMD.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.3%), are on a modestly firmer footing, albeit contained within recent ranges as markets await impetus from this week’s key events.
• European sectors hold a positive tilt; Media takes the spotlight, largely helped by gains in WPP (+4.2%) after its trading update whilst Food Beverage & Tobacco is hampered by losses in Diageo (-3.6%), post-earnings.
• US equity futures trade incrementally in the red and within a tight range which resides towards the prior day’s peak; focus for today will be on US JOLTs and key earnings from Microsoft, Alphabet, Starbucks & AMD.
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FX

• Once again, DXY continues to pivot around the 103.50 mark with the index awaiting fresh catalysts. Yesterday's best of 103.82 was the highest since Dec 13th (FOMC day).
• EUR is supported by hotter Spanish GDP and CPI metrics as attention then turned to the EZ-wide data which showed that the EZ just about avoided a recession; EUR/USD is contained within yesterday's 1.0796-1.0851 range.
• Cable has slipped back from the 1.27 handle with UK-specific drivers light ahead of BoE on Thursday; currently trades in a 1.2672-1.2721 range with yesterday's low at 1.2662.
• AUD the weaker of the Antipodes post-soft Retail Sales data overnight. AUD/USD remains in close proximity to 0.66 level whilst NZD/USD remains supported above the 0.61 mark.
• PBoC set USD/CNY mid-point at 7.1055 vs exp. 7.1763 (prev. 7.1097).
• SNB's Chair Jordan said his expectation is inflation will again rise a little but noted the situation regarding inflation has improved and looks relatively good. Jordan also said that inflation should be below 2% in 2024 and that it probably accelerated in January.
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FIXED INCOME

• USTs are firmer after Monday's Treasury Financing Estimates implied a lower net issuance amount than forecast for Wednesday's Quarterly Refunding; the accompanying yield is yet to approach 4.0% to the downside.
• Bunds initial bullish bias from Treasury estimates faded quickly as supply-side pressure emerged via Greece (10yr) and German (30yr) syndications. Further pressure occurred on the firmer Spanish GDP & HICP figures and upward revision to Germany's Q3 figure; currently holds just below the 135.00 mark.
• Gilt price action is in-fitting with EGBs directionally but remain in the green alongside USTs and were unreactive to their own data points via the BoE.
• UK sells GBP 900mln 0.125% 2051 I/L: b/c 3.10x (prev. 3.18x), real yield 1.333% (prev. 1.314%)
• Italy sells EUR 7bln vs exp. EUR 5.5-7bln 4.10% 2029, 4.35% 2033, 3.35% 2035 BTP & sells EUR 2bln vs exp. EUR 1.5-2bln 2031 CCTeu.
• New German 30yr EUR-denominated benchmark guided +5.5bps, set to price today, via IFR
• Germany sees over EUR 51bln of demand for syndicated 30-year bond sale, via Reuters citing lead managers
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COMMODITIES

• Crude benchmarks are modestly firmer given the Aramco update, but overall remain towards the low-end of Monday's parameters as newsflow has been somewhat light; Brent futures holds just below the USD 82/bbl mark.
• Spot gold is a touch firmer, holding above the technical levels eclipsed on Monday but yet to advance towards a test of USD 2050/oz, current peak of USD 2040/oz.
• Base metals are mixed in-fitting with the risk tone seen in APAC trade overnight; LME copper was unreactive to EZ and regional data.
• Brazilian miner Vale reported Q4 iron ore production of 89.4mln tons (prev. 80.85mln tons Y/Y) and nickel production of 44.9k tons (prev. 47.4k tons Y/Y).
• Saudi Aramco received a directive to maintain maximum sustainable capacity at 12mln BPD and not to continue increasing it to 13mln BPD, according to Reuters.
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NOTABLE EUROPEAN HEADLINES

• Ifo says the German economy is expected to contract by 0.2% in Q1.
• UK Kantar supermarket data: Grocery price inflation fell slightly to 6.8% in January, down from 6.9% in December 2023.
• Government advisers says German debt brake is "too rigid" and "restrict the fiscal space for future oriented expenditure", according to the FT.
• Northern Ireland DUP leader Donaldson said the party executive endorsed proposals from negotiations with the UK government and the package of measures provides a basis to return to a devolved government, while the measures including new legislation will be published by the UK government in due course. Donaldson said he believes the package safeguards Northern Ireland's place in the UK and it will remove checks for goods moving with the UK and remaining in Northern Ireland, according to Reuters.

DATA RECAP

• Spanish CPI YY Flash NSA (Jan) 3.4% (Prev. 3.10%); Core 3.6% (prev. 3.8%); CPI MM Flash NSA (Jan) 0.1% (Prev. 0.00%)
• Spanish HICP Flash MM (Jan) -0.2% vs. Exp. -0.40% (Prev. 0.00%); HICP Flash YY (Jan) 3.5% vs. Exp. 3.1% (Prev. 3.3%)
• Spanish Estimated GDP YY (Q4) 2.0% vs. Exp. 1.50% (Prev. 1.80%, Rev. 1.0%); QQ 0.6% vs Exp. 0.2% (Prev. 0.3%, Rev. 0.4%); QQ (Q4) 0.6% vs. Exp. 0.2% (Prev. 0.3%, Rev. 0.4%)
• German GDP Flash YY SA (Q4) -0.2% vs Exp. -0.2% (prev. -0.4%); YY NSA(Q4) -0.4% vs. Exp. -0.4% (Prev. -0.8%); Flash QQ SA (Q4) -0.3% vs. Exp. -0.3% (Prev. -0.1%, Rev. 0.0%)
• Italian GDP Prelim QQ (Q4) 0.2% (Prev. 0.1%); YY (Q4) 0.5% vs. Exp. 0.3% (Prev. 0.1%)
• French GDP Preliminary QQ (Q4) 0.0% vs Exp. 0.0% (Prev. -0.1%)
• EU GDP Flash Prelim QQ (Q4) 0.0% vs. Exp. -0.1% (Prev. -0.1%); Prelim YY (Q4) 0.1% vs. Exp. 0.0% (Prev. 0.0%)
• EU Cons Infl Expec (Jan) 11.9 (Prev. 10.5); EU Selling Price Expec (Jan) 4.6 (Prev. 3.2); EU Business Climate (Jan) -0.4 vs. Exp. -0.27 (Prev. -0.45, Rev. -0.50)
• EU Economic Sentiment (Jan) 96.2 vs. Exp. 96.2 (Prev. 96.4); Industrial Sentiment (Jan) -9.4 vs. Exp. -9.0 (Prev. -9.2); Services Sentiment (Jan) 8.8 vs. Exp. 8.0 (Prev. 8.4); Consumer Confid. Final (Jan) -16.1 vs. Exp. -16.1(Prev. -16.1)
• UK Mortgage Approvals (Dec) 50.459k vs. Exp. 52.5k (Prev. 50.067k, Rev. 49.313k); Mortgage Lending (Dec) -0.83B GB vs. Exp. 0.25B GB (Prev. -0.039B GB, Rev. 0.006B GB); BOE Consumer Credit (Dec) 1.197B GB vs. Exp. 1.35B GB (Prev. 2.005B GB, Rev. 2.058B GB)
• UK BRC Retail Shop Price Index YY (Jan) 2.9% (Prev. 4.3%)
• Swiss KOF Indicator (Jan) 101.5 vs. Exp. 98.2 (Prev. 97.8, Rev. 98.0)
• Swiss Trade (Dec) 1248.0M CH (Prev. 3707.0M CH, Rev. 3833M CH); Watch Exports +5.5% Y/Y (prev. +3.1%)
• Swedish Overall Sentiment (Jan) 90.5 (Prev. 84.3); Manufacturing Confidence (Jan) 99.3 (Prev. 95.1); Consumer Confidence SA (Jan) 82.3 (Prev. 74.5); Total Industry Sentiment (Jan) 91.7 (Prev. 86.6)

NOTABLE US HEADLINES

• US Treasury expects to borrow USD 760bln in net marketable debt for the January-March period which is down USD 55bln from the October 2023 estimate and it expects to borrow USD 202bln in the April-June period, assuming an end-June cash balance of USD 750bln. Furthermore, in the October-December 2023 period it borrowed USD 776bln and ended the quarter with a cash balance of USD 769bln.
• Bipartisan US Congress negotiators have agreed on funding allocations for all 12 government spending bills, according to Republican lawmakers cited by Reuters.

EARNINGS

• BBVA (BBVA SM) - Q4 (EUR): Net 2.06bln (exp. 1.95bln), NII 5.25bln (exp. 5.89bln). FY Net 8.02bln (exp. 7.90bln). Co. announces execution of a EUR 781mln share buyback. (Newswires)
• Hapag Lloyd (HLAG GY) - FY23 (EUR): EBITDA 4.5bln (exp. 4.47bln, prev. 19.4bln Y/Y), Revenue 17.9bln (exp. 17.7bln, prev. 34.5bln Y/Y), EBIT 2.7bln (exp. 2.53bln). Says the Red Sea conflict negatively impacted transport volumes at the end of 2023 as the rerouting of ships around Cape of Good Hope extended voyage times. Average FY freight rates USD 1500 (prev. 2863 Y/Y, -43% Y/Y), Transport Volume 11.9mln (prev. 11.8mln Y/Y). (Newswires)
• Super Micro Computer Inc (SMCI) - Q2 2024 (USD): Adj. EPS 5.59 (exp. 4.93), Net Sales 3.66bln (exp. 3.42bln), Gross margin 15.5% (exp. 16.5%). Raises FY24 revenue outlook to 14.3-14.7bln (prev. 10-11bln). Q3 adj. EPS view 5.20-6.01 (exp. 4.65). Q3 net sales view 3.7-4.1bln (exp. 3.07bln). Shares +10.2% pre-market

GEOPOLITICS

MIDDLE EAST

• US President Biden asked advisers for options to respond that would deter any further attacks against US forces, while the Pentagon's response options include striking Iranian personnel in Iraq and Syria or Iranian naval assets in Gulf waters. Furthermore, a response is likely to come in waves against a range of targets and will likely be initiated in a couple of days after President Biden gives the green light, according to sources cited by Politico.
• US Secretary of State Blinken said response against Iran could be multi-levered, come in stages and be sustained over time, while he added that work on Gaza hostage talks has been important and hopeful with the proposal on the table is strong and compelling.
• Hamas Chief says has received the Paris ceasefire proposal and will study it

OTHER

• North Korea fired cruise missiles towards the sea off its west coast, according to South Korea's military.
• Chinese Vice Foreign Minister Sun met with Ukraine's Ambassador to China and said that China and Ukraine should promote stability and long-term development of bilateral ties, while they exchanged views on issues of common concern including the Ukraine crisis, according to Reuters.
• Russian Former President Medvedev says Russia plans to deploy new weapons on Kuril Islands, via Tass

CRYPTO

• Bitcoin (+0.6%) and Ethereum (+0.3%) continues to edge higher, with the former trending back towards USD 43.5k.

APAC TRADE

• APAC stocks traded mixed as weakness in China offset the momentum from Wall St's record highs.
• ASX 200 finished positive albeit with upside capped after disappointing retail sales data and as financials lagged.
• Nikkei 225 was initially lifted after a surprise decline in Japan's unemployment but gradually pared most of its gains.
• Hang Seng and Shanghai Comp were pressured as the focus turned to earnings releases with underperformance in Hong Kong amid losses in property and tech, while the Hong Kong government also began the process of passing new national security laws.

NOTABLE HEADLINES

• Hong Kong government started the process to pass new national security laws this year with consultations on Article 23 to last until February 28th and some chapters of the new law will include actions that would endanger national security. Furthermore, one chapter is related to treason and actions with seditious intentions and another chapter relates to state secrets and espionage behaviour, while the law will also relate to using computers or electronic systems to conduct actions to endanger national security, according to Reuters.
• Two US lawmakers asked the Biden administration to impose export restrictions on four Chinese companies involved in the planned Ford (F) Michigan battery plant, according to a letter seen by Reuters.
• RBNZ Chief Economist Conway said recent economic data suggests that monetary policy is working with the economy slowing and inflation easing, but they still have a way to go to get inflation back to the target midpoint of 2%.

DATA RECAP

• Japanese Unemployment Rate (Dec) 2.4% vs. Exp. 2.5% (Prev. 2.5%); Jobs/Applicants Ratio (Dec) 1.27 vs. Exp. 1.28 (Prev. 1.28)
• Australian Retail Sales MM (Dec F) -2.7% vs. Exp. -1.0% (Prev. 2.0%, Rev. 1.6%)