• European bourses are firmer, with outperformance in the FTSE 100 after softer-than-expected UK CPI; US futures are entirely in the green, with the RTY leading
• Dollar is around flat and just beneath 105.00, GBP underperforming post-CPI and Yen still holds above 150.00
• Bonds boosted in tandem with Gilt price action, which gapped up post-inflation data
• Crude is incrementally firmer, spot gold trades sideways and base metals mixed awaiting impetus from geopols and central banks speak
• Looking ahead, US PPI Seasonal Factor Revisions, Japanese GDP, Comments from ECB’s Cipollone, BoE's Bailey hearing, Fed’s Goolsbee, Barr & BoC’s Mendes, Earnings from Cisco & Occidental Petroleum Corp.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.3%) began the session on a mixed footing and trade was generally tentative, before eventually moving into the green.
• And love is in the air for the FTSE 100 (+0.8%), as weakness in the Pound (post-CPI) lifts the index off its feet.
• European sectors hold a mostly positive bias, with Media taking the spotlight, helped by significant post-earning strength in ProsibenSat (+9.2%). Basic Resources is hampered by broader losses in underlying base metal prices.
• US equity futures (ES +0.4%, NQ +0.6%, RTY +0.9%) are firmer across the board and attempting to pare back some of the prior day’s hefty losses, sparked by the hotter-than-expected CPI. The RTY outperforms after significant losses yesterday and as Bitcoin continues to advance past USD 50k.
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FX

• DXY is overall steady but the USD is showing varying performance vs. peers. DXY has eclipsed yesterday's peak of 104.96 but is yet to print on a 105.00 handle. Above which, there is clean air until 105.73 which was the November 14th peak.
• EUR printed a fresh YTD trough as the post-US CPI pressure on the pair continued. 1.0696 is the low print thus far with downside targets including the 14th November low at 1.0692.
• GBP is bottom of the pile across the major following softer-than-expected UK inflation metrics which have put an August cut back on the table. Cable fell to a trough of 1.2544 after taking out yesterday's low of 1.2573 and the 200DMA at 1.2563.
• JPY is attempting to claw back some lost ground vs. the USD after printing a 2024 high at 150.88 yesterday; remarks from MOF & others in focus, but USD/JPY remains well above 150.00.
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FIXED INCOME

• Gilts are boosted on the cooler-than-expected January CPI, though the uptick in All Services (albeit, shy of BoE estimates) means the Table Mountain approach is unlikely to be swayed just yet; Gilts gapped higher before printing a peak at 97.83, where it then traded within a tight range ahead of supply.
• USTs are in-fitting with the above and within Tuesday's 101-29 to 102-11 extremes going into Fed speak & US PPI Seasonal Revisions. Any remarks from Fed's Barr or Goolsbee around the CPI print will be sought given we are yet to hear from a FOMC member on it.
• Bunds are lifted as the region reacted to cooler than expected UK CPI, lifting Bunds from 133.00 to around 133.25. Thereafter, EGBs have continued to tick up gradually with a 133.54 peak printing alongside an escalation in geopols & remarks from ECB officials (who overall added little).
• Germany sells EUR 0.81bln vs exp. EUR 1.0bln 1.80% 2053 Bund and EUR 0.85bln vs exp. EUR 1.0bln 2.50% 2054.
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COMMODITIES

• Crude is incrementally firmer and little changed following the US CPI, but still underpinned by geopolitics. On that note, reports this morning suggested escalating tensions between Israel and Lebanon, with one report stating "This morning's attack on Safed by Hezbollah marked the most significant attack since the war's onset."
• Spot gold trade sideways and continues to hold beneath USD 2,000/oz, with the yellow metal awaiting impetus from geopolitics or Fed speak.
• Base metals are mixed but copper prices remain softer following the downbeat APAC mood, although newsflow remains quiet thus far and price volatility minimal.
• US Energy Inventory Data (bbls): Crude +8.5mln (exp. +2.6mln), Gasoline -7.2mln (exp. -1.2mln), Distillate -4.0mln (exp. -1.6mln), Cushing +0.5mln.
• EU Commission's Sefcovic said after meeting White House officials that he understands the US pause in LNG export approvals will not affect US LNG shipments to Europe in the next two to three years.
• Citi says gold market seems biased to tactically correct to USD 1,925-50/oz at some point in the next 1-3 months
• Global LNG trade reached 404mln metric tons in 2023, according to Shell's LNG outlook; China is likely to dominate LNG demand growth this decade; gas market remains structurally tight
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NOTABLE EUROPEAN HEADLINES

• ECB's de Guindos says incoming data continues to signal weakness in the near term; some forward-looking survey indicators point to a pick-up in growth further ahead; deflationary process is continuing.
• ECB's Vujcic says ECB seems to be getting the inflation fight right.
• German Economy Minister says German economic recovery may be delayed further by strikes, geopolitics, and weak foreign demand; inflation-dampening factors in Germany likely to persist over the rest of the year.
• German Direct Investments in China rose 4.3% Y/Y to a record high of EUR 11.9bln in 2023; investments in China as a share of overall German investments abroad rose to 10.3% - the highest level since 2014, according to IW Institute.
• UK ONS says UK House Prices -1.4% Y/Y in Dec (vs -2.1% in Nov)

DATA RECAP

• UK CPI YY (Jan) 4.0% vs. Exp. 4.2% (Prev. 4.0%); All Services 6.5% (prev. 6.4%, BoE guided 6.6%).Weakness in GBP following the release. Click here for more details.
• UK Core CPI MM (Jan) -0.9% vs. Exp. -0.8% (Prev. 0.6%); Core CPI YY (Jan) 5.1% vs. Exp. 5.2% (Prev. 5.1%); CPI MM (Jan) -0.6% vs. Exp. -0.3% (Prev. 0.4%).
• UK PPI Output Prices MM NSA (Jan) -0.2% vs. Exp. -0.1% (Prev. -0.6%, Rev. -0.5%); PPI Output Prices YY NSA (Jan) -0.6% vs. Exp. -0.5% (Prev. 0.1%); PPI Input Prices MM NSA (Jan) -0.8% vs. Exp. 0.2% (Prev. -1.2%, Rev. -0.4%); PPI Input Prices YY NSA (Jan) -3.3% vs. Exp. -3.0% (Prev. -2.8%, Rev. -2.1%)
• UK RPI MM (Jan) -0.3% vs. Exp. -0.1% (Prev. 0.5%); RPI YY (Jan) 4.9% vs. Exp. 5.1% (Prev. 5.2%); RPIX YY (Jan) 3.8% (Prev. 4.0%); RPI-X (Retail Prices) MM(Jan) -0.4% (Prev. 0.4%)
• EU Employment Flash QQ (Q4) 0.3% vs. Exp. 0.2% (Prev. 0.2%); Employment Flash YY (Q4) 1.3% vs. Exp. 1.1% (Prev. 1.3%)
• EU GDP Flash Estimate QQ (Q4) 0.0% vs. Exp. 0.0% (Prev. 0.0%); GDP Flash Estimate YY (Q4) 0.1% vs. Exp. 0.1% (Prev. 0.1%)
• EU Industrial Production MM (Dec) 2.6% vs. Exp. -0.2% (Prev. -0.3%, Rev. 0.4%); Industrial Production YY (Dec) 1.2% vs. Exp. -4.1% (Prev. -6.8%, Rev. -5.4%)
• Norwegian GDP Month (Dec) 0.5% (Prev. 1.2%, Rev. 1.0%); GDP Month Mainland (Dec) -0.1% vs. Exp. -0.1% (Prev. -0.2%, Rev. -0.1%); GDP Growth Mainland (Q4) 0.2% vs. Exp. 0.1% (Prev. 0.1%); GDP Growth (Q4) 1.5% (Prev. -0.5%). Modest NOK strength following the firmer than expected Q4 growth figures.

EARNINGS

• Airbnb Inc (ABNB) - Q4 2023 (USD): Revenue 2.22bln (exp. 2.16bln), Gross booking value 15.5bln (exp. 15.2bln), Adj. EBITDA 738mln (exp. 643.5mln), Adj. EBITDA margin 33% (exp. 29.9%); to buy back up to 6bln of Class A common stock. Q1 revenue view 2.03-2.07bln (exp. 2.02bln). Shares -5.5% in the pre-market
• Thyssenkrupp (TKA GY) - Q1 (EUR): Revenue 8.18bln (exp. 8.8bln); cuts FY net profit guidance and now expects to break even (exp. +472mln; prev. "slight increase" ); Co. says the steel industry is currently facing a very challenging environment. COMMENTARY: Lower volumes of materials and raw materials had a negative impact. With lower volumes and prices overall, Materials Services posted a figure of EUR 2.9bln for both order intake and sales (prev. EUR 3.3bln and EUR 3.2bln, respectively) in a weak economic environment. Shipment volumes were stable compared with the prior year, order volumes decreased, mainly driven by lower demand from automotive customers. OUTLOOK: In a difficult market environment characterized by geopolitical and trade conflicts, ThyssenKrupp anticipates that macroeconomic development in the current fiscal year will be challenging overall. Shares -8.7% in European trade
• Capgemini (CAP FP) - FY23 (EUR): Net 1.66bln (exp. 2.15bln, prev. 1.55bln Y/Y), Revenue 22.5bln (exp. 22.6bln). To propose a renewal of Aiman Ezzat as CEO. Guides initial FY24 Revenue flat to +3%, Op margin 13.3-13.6%, Organic FCF 1.9bln. BoD has decided to recommend the payment of a dividend of EUR 3.4/shr. Shares +4.3% in European trade
• ProsiebenSat.1 (PSM GY) - Q4 (EUR): Adj. EBITDA 335mln (exp. 311.8mln), Revenue 1.28bln (exp. 1.3bln). Prelim FY23 Adj. EBITDA 578mln (exp. 554.2mln), Guides initial FY24 Adj. EBITDA 575mln (exp. 558.6mln). Shares +7.5% in European trade

NOTABLE US HEADLINES

• US Defense Secretary Austin was released from the hospital and resumed his duties, according to the Pentagon.
• Tesla (TSLA) CEO Musk is inviting Chinese suppliers to Mexico to replicate the local supply chain at his Shanghai gigafactory, Bloomberg sources say, concerning US officials

GEOPOLITICS

MIDDLE EAST

• "Israeli media: Sirens sound for the third time in Safed", according to Al Arabiya.
• Al Jazeera reporter notes "This morning's attack on Safed by Hezbollah marked the most significant attack since the war's onset."
• "Israeli media: War Council discusses how to respond to heavy Hezbollah bombardment of Israel", according to Al Jazeera.
• Israeli Minister of National Security Gvir calls on PM Netanyahu to hold an urgent meeting, says that "the shelling from Lebanon is not sporadic strikes but an actual war", according to Al Jazeera

OTHER

• North Korea fired multiple cruise missiles off its east coast, according to Yonhap.

CRYPTO

• Bitcoin (+3.5%) soars past USD 51k in what has been a strong session in the Crypto markets, with Ethereum (+4.7%) also surpassing USD 2.7k.

APAC TRADE

• APAC stocks declined amid headwinds from the US where hot inflation unwound Fed rate cut expectations.
• ASX 200 declined with underperformance in the top-weighted financial sector after Australia's largest lender CBA reported a drop in H1 profit and warned of financial strain from higher rates in 2024.
• Nikkei 225 retreated with the biggest stock movers influenced by earnings results, although further losses in the index were somewhat cushioned by the recent currency weakness.
• Hang Seng conformed to the risk-off mood on return from the holiday and with mainland Chinese markets shut.

NOTABLE HEADLINES

• Japan's top currency diplomat Kanda said recent yen moves are rapid and is watching FX moves with a high sense of urgency, while he said they will take appropriate actions if needed on forex and are ready to take action on FX anytime 24 hours all year round. Furthermore, Kanda said rapid FX moves could have an adverse impact on the economy and he suggested appropriate responses to the weak yen could include intervention.
• Japanese Finance Minister Suzuki said he is watching the FX market with even stronger urgency and that rapid FX moves are undesirable, while he won't comment on the FX level and intervention.
• Japanese Chief Cabinet Secretary Hayashi says will not comment on FX levels; important for currencies to move in stable manner reflecting fundamentals

DATA RECAP

• New Zealand Elec Card Retail Sale MM (Jan) 1.7% (Prev. -2.0%, Rev. -1.7%); Elec Card Retail Sale YY (Jan) 1.6% (Prev. -0.6%)
• New Zealand Food Price Index (Jan) 0.9% (Prev. -0.1%)
• Indian WPI Inflation YY (Jan) 0.27% vs. Exp. 0.53% (Prev. 0.73%)