• APAC stocks traded mixed albeit with a positive bias as several markets reopened from the extended weekend.
• European equity futures indicate a lower open with Euro Stoxx 50 future -0.3% after the cash market closed up 0.7% on Monday.
• DXY is steady above the 104 mark, USD/JPY lingers around 149.50, NZD lags post-inflation expectation survey.
• US President Biden said the US is working on a hostage deal that would lead to a period of calm for at least six weeks
• Looking ahead, highlights include French Unemployment Rate, Swiss CPI, UK Employment, EZ & German ZEW, US CPI, OPEC MOMR, Supply from UK, Italy & Germany.

US TRADE

EQUITIES

• US stocks finished mixed in choppy and thinned post-Super Bowl trade ahead of the January CPI report and with an initial rally in the major indices seen during the NY morning as Bitcoin surged towards USD 50k which it eventually breached for the first time in 2 years and NYCB extended its Friday recovery. However, NYCB shares then faded their gains, while the SPX and NDX saw a big tech-led pullback in the absence of an obvious catalyst, although there was some attention on a Goldman note warning about extended positioning in the tech sector which may have made a mark in otherwise quiet trade.
• SPX -0.1% at 5,022, NDX -0.44% at 17,883, DJI +0.32% at 38,797, RUT +1.75% at 2,045
• Click here for a detailed summary.**

NOTABLE HEADLINES

• US Senate voted 66-33 to advance the aid bill for Ukraine, Israel and Taiwan for a possible Wednesday vote on passage. However, it was separately reported that House Speaker Johnson rejected the Senate's Ukraine and Israel aid bill as written and indicated his Republican-led chamber would not take up the bill to provide billions in additional aid to Ukraine and Israel, according to AFP.

APAC TRADE

EQUITIES

• APAC stocks traded mixed albeit with a positive bias as several markets reopened from the extended weekend.
• ASX 200 was choppy as gains in mining, utilities and financials were offset by weakness in healthcare, telecoms and tech, while data showed an improvement in Westpac Consumer Sentiment but NAB Business Confidence and Conditions were mixed.
• Nikkei 225 outperformed and extended on its highest levels since February 1990 as the earnings deluge resumed.
• US equity futures were subdued after yesterday's mixed performance and as participants await US CPI data.
• European equity futures indicate a lower open with Euro Stoxx 50 future -0.3% after the cash market closed up 0.7% on Monday.

FX

• DXY traded rangebound above the 104.00 level as markets brace for the incoming US inflation data.
• EUR/USD was lacklustre with a sub-1.0800 status, while recent ECB comments provided little to shift the dial.
• GBP/USD struggled for direction ahead of key data later this week including UK GDP and CPI, while BoE Governor Bailey said he wouldn't put too much weight on whether the UK enters a technical recession and that any UK recession will be shallow.
• USD/JPY eked slight gains amid outperformance in Japanese stocks to test resistance around 149.50.
• Antipodeans weakened with underperformance in NZD/USD following lower inflation expectation forecasts.

FIXED INCOME

• 10-year UST futures lacked direction after their recent choppy performance as participants await US CPI data.
• Bund futures were rangebound ahead of German ZEW data and with a Bobl auction also scheduled later.
• 10-year JGBs recouped some losses on reopening from the long weekend and after mixed PPI data.

COMMODITIES

• Crude futures sat around the prior day's best levels amid geopolitical concerns and recent Saudi jawboning.
• EIA said US oil output from top shale-producing regions in March is due to climb to its highest since December 2023.
• American Petroleum Institute sues the Biden administration over offshore drilling curbs, according to FT
• Spot gold traded sideways with a non-committal tone heading into the US inflation data.
• Copper futures extended on their rebound after several regional markets reopened from the long weekend.

CRYPTO

• Bitcoin took a breather after having recently climbed above USD 50,000 for the first time since late 2021.

NOTABLE ASIA-PAC HEADLINES

• RBA's Head of Economic Analysis Kohler said inflation is coming down but is still too high and it will take some time for inflation to get back within the 2%-3% target range and based on their central forecast, inflation is expected to return to the target range in 2025 and to the midpoint in 2026. Furthermore, Kohler said services price inflation remains high and broadly based, while she also noted that high inflation, higher tax payments and higher interest rates have significantly reduced household incomes.

DATA RECAP

• Japanese Corp Goods Price MM (Jan) 0.0% vs. Exp. 0.1% (Prev. 0.3%)
• Japanese Corp Goods Price YY (Jan) 0.2% vs. Exp. 0.1% (Prev. 0.0%, Rev. 0.2%)
• Australian Westpac Consumer Confidence Index (Feb) 86.0 (Prev. 81.0)
• Australian Westpac Consumer Sentiment MM (Feb) 6.2% (Prev. -1.3%)
• Australian NAB Business Confidence (Jan) 1.0 (Prev. -1.0)
• Australian NAB Business Conditions (Jan) 6.0 (Prev. 7.0)
• New Zealand 1-Year Inflation Forecast (Q1) 3.22% (Prev. 3.60%)
• New Zealand 2-Year Inflation Forecast (Q1) 2.50% (Prev. 2.76%)

GEOPOLITICS

MIDDLE EAST

• Israeli warplanes reportedly bombed areas in northern Rafah, according to Al Arabiya via social media platform X.
• The heads of the CIA and Israel’s Mossad spy agency are expected to hold talks with senior Egyptian and Qatari officials on Tuesday in a bid to revive negotiations on a deal to stop the war and release hostages, according to FT sources.
• US President Biden said military operations in Rafah should not proceed without a credible plan for civilians and the US is working on a hostage deal that would lead to a period of calm for at least six weeks. It was also reported that the US State Department said it is not the US' assessment that the Israeli air strikes in Rafah are the beginning of a full-scale offensive there.
• Jordan's King Abdullah said they need a lasting ceasefire now and must not ignore the situation in the West Bank and at Jerusalem holy sites, while he also commented that they cannot tolerate an Israeli attack on Rafah.
• White House said President Biden and Jordan's King Abdullah discussed the importance of stability in the West Bank and the region more broadly, while Biden underscored the importance of upholding the status quo at the Haram Al-Sharif/Temple Mount, according to Reuters.
• France's proposal for a truce on the Lebanon-Israeli border was delivered to Lebanon by France which called for fighters including Hezbollah elite forces to withdraw 10km away from the Israel border and aims to enforce a potential ceasefire when the conditions are right, while the proposal also called for the resumption of talks to demarcate the border. Hezbollah official Fadlallah said the group won't discuss the matter relating to south Lebanon before the Israeli offensive in Gaza stops and that Israel is not in a position to impose conditions.
• Russia's Kremlin said they invited Palestinian President Abbas and hope that he will visit Russia, according to RIA.
• US military said Houthi militants fired two missiles from Yemen towards the ship Star Iris in the Bab Al-Mandeb, while the ship reported being seaworthy with minor damage and no injuries to the crew, according to Reuters.
• Rocket shells fell in the town of Al-Shaafah in the eastern Syrian city of Deir ez-Zur where American forces are stationed, according to Al Arabiya citing Syrian media.

OTHER

• German Chancellor Scholz said Germany will continue to spend 2% of output on defence going forward and expects that all NATO members in Europe will fulfil commitments.
• Polish PM Tusk said Poland and Germany must take joint responsibility for mobilising Europe to increase defence capabilities and wants increasing defence production an absolute priority.
• US seized a Venezuelan-owned cargo jet with ties to Iran’s IRGC that had been grounded in Argentina after its arrival two years ago prompted an investigation into possible terrorism ties, according to WSJ citing Biden administration officials.
• White House said the US sees no indication there are about to be hostilities at the Venezuela-Guyana border.
• Japanese PM Kishida is seeking a summit with North Korean leader Kim, according to FT.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said he expects banks to hold larger reserves at the BoE than was the case before the financial crisis. Bailey said he wouldn't put too much weight on whether the UK enters a technical recession and is starting to see signs of an upturn, while he added that any UK recession will be shallow and is putting more emphasis on the forward-looking data.
• BoE reportedly plans to stress test insurers on exposure to reinsurance firms, according to FT.
• ECB's Wunsch, speaking to Econostream on Thursday, said while an argument could be made for deferring monetary policy easing until more data becomes available, the risks of deciding not to continue to wait were also not great. Wunsch also said there is some value to waiting, but added it is not if by waiting so many days or weeks or months that the ECB will know everything precisely.