• APAC stocks traded mixed after the lacklustre handover from the US as markets braced for looming risk events.
• Fed's Schmid (non-voter) said there is no need to pre-emptively adjust the stance of policy.
• Hamas officials are "disappointed" with the framework of the hostage deal that was presented in Paris last Friday.
• Japanese CPI data printed firmer-than-expected but showed a slowdown with Core CPI at the central bank's 2% target.
• European equity futures indicate a slightly lower open with Euro Stoxx 50 future -0.2% after the cash market closed down 0.2% on Monday.
• DXY remains sub-104.00, JPY marginally outperforms post-Japanese CPI, NZD continues to lag.
• Looking ahead, highlights include German GfK, EZ M3, US Durable Goods, Richmond Fed, NBH, Fed Discount Rate Minutes, Comments from Fed's Barr, BoE's Ramsden, ECB's Elderson, Supply from Netherlands, UK, Germany & US, Earnings from Smith & Nephew, Abrdn, Puma, Campari, Banco BPM & Lowe's

US TRADE

EQUITIES

• US stocks were mostly subdued and the major indices finished with marginal losses in what was a quiet session amid a lack of any major catalysts and with headwinds amid weakness in big tech, while sentiment was also constrained heading into month-end risk events.
• SPX -0.38% at 5,070, NDX -0.02% at 17,933, DJI -0.16% at 39,069, RUT +0.61% at 2,029.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Schmid (non-voter) said there is no need to pre-emptively adjust the stance of policy and that the Fed should be patient and wait for convincing evidence that the inflation fight has been won, while they are not out of the woods yet on 'too high' inflation. Schmid said there is no hurry to halt the ongoing reduction in the size of the Fed's balance sheet and how much further the Fed can shrink its balance sheet is 'an open question'. Furthermore, he doesn't favour an 'overly cautious' approach to balance sheet runoff and some interest-rate volatility should be tolerated.
• US Treasury Secretary Yellen said she is carefully monitoring economic challenges in certain countries but noted the global economy remains resilient and global growth has been stronger than expected, while she added inflation is to fall in 80% of economies this year. Yellen said the US economy's strength has been a key driver of positive global economic performance and although there are risks to the US outlook, America's growth has consistently exceeded projections, according to Reuters.
• US Commerce Secretary Raimondo said the US is to make 20% of 'leading edge' chips by the end of the decade and some chip companies may get half of what they sought or less in government subsidies.

APAC TRADE

EQUITIES

• APAC stocks traded mixed after the lacklustre handover from the US as markets braced for looming risk events.
• ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners.
• Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data.
• Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption.
• US equity futures remained subdued after the uninspired performance on Wall St ahead of a slew of data.
• European equity futures indicate a slightly lower open with Euro Stoxx 50 future -0.2% after the cash market closed down 0.2% on Monday.

FX

• DXY was lacklustre following the prior day's weakness and failure to sustain the 104.00 status ahead of Fed speak and economic data, while Citi and Credit Agricole month-end rebalancing models point to dollar selling.
• EUR/USD stalled around the 1.0850 level after recently surpassing the nearby 100- and 200-DMAs.
• GBP/USD lacked direction following a pullback from resistance around the 1.2700 level, while the latest UK BRC Shop Price Index showed the slowest pace of increase since March 2022.
• USD/JPY was marginally lower as US-Japan yield differentials slightly narrowed overnight and following the Japanese CPI data which printed firmer-than-expected but showed a slowdown with Core CPI at the central bank's 2% target.
• Antipodeans were indecisive amid the mixed risk tone and as participants await tomorrow's RBNZ decision.
• PBoC set USD/CNY mid-point at 7.1057 vs exp. 7.1945 (prev. 7.1080).
• Chinese regulators are reportedly taking measures to keep the renminbi exchange rate stable as Beijing aims to bolster confidence in China's economy and currency ahead of the "Two Sessions" gathering set to begin March 4th, while measures include refraining from short-term interest rate cuts and keeping the CNY currency band against the dollar firm, according to FT.

FIXED INCOME

• 10-year UST futures gained some composure after sliding beneath the 110.00 level but with the recovery restricted and demand not helped by underwhelming 2yr and 5r auctions ahead of the upcoming 7yr auction.
• Bund futures languished firmly beneath the 133.00 level after yesterday's selling pressure.
• 10-year JGB futures mildly gapped lower to track the recent declines in global peers and after Japanese CPI data printed firmer-than-expected, while Japan's first-ever auction of 5-year Climate Transition Bonds had little effect on prices.

COMMODITIES

• Crude futures took a breather after rallying yesterday amid geopolitical risks and recent dollar weakness.
• Libyan output and exports resumed after guards' protest at an oil field and gas pipeline was called off, according to S&P Global.
• US announced a solicitation for up to 3mln bbls of sour crude oil for August 2024 delivery.
• Russia is to ban gasoline exports for six months with the ban to be introduced from March 1st, according to Tass.
• Spot gold struggled for firm direction with participants awaiting upcoming risk events.
• Copper futures nursed some of their recent losses but with the rebound limited amid the cautious mood.

CRYPTO

• Bitcoin extended on its advances and climbed above the USD 56,000 level.

NOTABLE ASIA-PAC HEADLINES

• US intends to increase defence industrial cooperation with Japan, India, and other partners in the Indo-Pacific to build supply chain resilience in the face of threats like China, according to a Pentagon official cited by Nikkei.
• China's Commerce Minister Wang met with USTR Tai at the WTO conference in Abu Dhabi and expressed Beijing’s “solemn concerns” over US tariffs and Taiwan-related issues, according to SCMP.
• China's Commerce Minister Wang said China is highly concerned about the trade remedy investigation initiated by the European side on China's EVs and other products, while he expressed strong dissatisfaction with this investigation that lacks factual basis.
• China's Commerce Minister Wang said China hopes Australia will pay attention to and actively promote the resolution of specific problems encountered by Chinese enterprises in Australia, as well as actively support China's accession to CPTPP.
• ABC News reported that it understands China is on track to lift tariffs on Australian wine at the end of next month when a review into the wine duties concludes.
• Standard Chartered (2888 HK) suspended new subscriptions by clients in China under the QDII outbound investment programme citing "commercial reasons", according to Reuters.

DATA RECAP

• Japanese National CPI YY (Jan) 2.2% vs. Exp. 1.9% (Prev. 2.6%)
• Japanese National CPI Ex. Fresh Food YY (Jan) 2.0% vs. Exp. 1.8% (Prev. 2.3%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Jan) 3.5% vs. Exp. 3.3% (Prev. 3.7%)

GEOPOLITICS

MIDDLE EAST

• Qatari mediators stated that Hamas officials are "disappointed" with the framework of the hostage deal that was presented in Paris last Friday and emphasized that there is a significant gap between the proposal and their demands, according to Axios's Ravid.
• Hamas received a draft Paris proposal which allows for a 40-day initial halt in all military operations and for the gradual return of displaced civilians to North Gaza, except men of military age, while it proposes all Israeli women, children under 19, elderly, and sick hostages would be released in exchange for a number of Palestinian prisoners. Furthermore, Palestinian prisoners would be exchanged for the release of Israeli hostages at a ratio of 10 to 1, according to a senior source cited by Reuters.
• US President Biden said he hopes a ceasefire agreement between Israel and Hamas can take effect by next Monday and national security advisers told him negotiators are "close", according to AP.
• US President Biden said Israel has agreed not to engage in "activities" during Ramadan and has committed to enable an evacuation of significant portions of Rafah "before they go and take out remainder of Hamas", according to NBC interview
• US State Department said Hamas must accept the existing deal to reach a temporary truce in Gaza, while it has not yet seen the plan for Israel’s operation in Rafah, according to Al Arabiya. US State Department also noted progress was by the end of last week in negotiations regarding the hostages and still believes reaching an agreement is possible, according to Sky News Arabia.
• US Central Command said it destroyed three unmanned surface vessels, two mobile anti-ship cruise missiles, and a one-way attack unmanned aerial vehicle in self-defence, according to Reuters.
• Hezbollah Deputy Secretary General said when the Israeli aggression expands, Hezbollah will expand its response to prevent it from going further and achieving its goals, according to Al Jazeera.

OTHER

• Czech PM Fiala said about 15 countries have shown interest in the Ukraine ammunition initiative and Dutch PM Rutte noted that several other countries will also contribute to the Czech-proposed ammunition initiative, according to Reuters.
• French President Macron said they think a Russian defeat is indispensable for Europe's security and they will be exploring ways to mobilise third countries to buy ammunition, while he added they will join the ammunition initiative. Macron also said European countries will increase sanctions on countries helping Russia to bypass European sanctions and noted that he didn't say France was not in favour of sending troops to Ukraine, while he stands by strategic ambiguity on the issue of sending troops to Ukraine and cannot rule it out.
• US Treasury Deputy Secretary Adeyemo said the US has seen a "significant difference" in financial flows to Russia after US sanctions threat to financial institutions.
• Russian Security Council Secretary Patrushev met with Cuba's Raul Castro to discuss security cooperation, according to Ifax.

EU/UK

NEWS

• UK Chancellor Hunt is considering plans to lower national insurance instead of income tax and could also announce a duty on vapes, according to reporting by The Telegraph.

DATA RECAP

• UK BRC Shop Price Index YY (Jan) 2.5% (Prev. 2.9%)