• APAC stocks traded cautiously and followed suit to the rangebound performance seen on Wall St.
• RBNZ kept the OCR unchanged and lowered its OCR projections to suggest a reduced chance of a hike.
• NZD is the standout laggard across the majors, USD/JPY remains in close proximity to the YTD peak.
• European equity futures indicate a slightly lower open with Euro Stoxx 50 future -0.1% after the cash market closed up 0.4% on Tuesday.
• Looking ahead, highlights include EZ Consumer Confidence (Final), US GDP (2nd), PCE Prices Prelim. (Q4), Japanese Retail Sales, Comments from Fed's Bostic, Collins, Williams & BoE's Mann, Supply from UK, Italy & Germany.

US TRADE

EQUITIES

• US stocks were choppy and finished relatively rangebound albeit with most major indices in the green after the latest US data releases were largely ignored, while the initial downside in the indices during the NY morning was unwound later in the session with the help of a rebound in Apple (AAPL) shares after reports that it had abandoned its EV venture and is shifting its attention to AI ventures.
• SPX +0.17% at 5,078, NDX +0.21% at 17,971, DJIA -0.25% at 38,792, RUT +1.34% at 2,056.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bowman (voter) reiterated that she will remain "cautious" on monetary policy and if inflation moves sustainably to the 2% goal, it will eventually be appropriate to cut interest rates but they are not yet there. Bowman said reducing the policy rate too soon could result in the need for future rate hikes and she remains willing to raise the policy rate if inflation progress stalls or reverses, while she added the latest inflation data suggests slower progress on inflation.
• US President Biden said they need to find a solution to funding the government and he thinks they can do that, while the White House said the meeting between President Biden and Congressional leaders on the shutdown was 'productive'.
• US Senate Majority Leader Schumer said they had a productive and intense meeting, while they are making good progress and he hopes they can get it done quickly. Furthermore, he is cautiously optimistic they can do what they need to do in the next few days to avoid a US government shutdown.
• Apple (AAPL) is cancelling its effort to build an electric car and will shift many car project workers to the generative AI effort and some car employees will be cut but it is unclear how many, according to Bloomberg sources.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously and followed suit to the rangebound performance seen on Wall St where stocks largely ignored weak US data ahead of key events, while the region also digested a couple of data releases and the RBNZ policy announcement.
• ASX 200 was indecisive with tech strength offset by weakness in telecoms, consumer stocks and financials, while data showed softer-than-expected monthly CPI in January and a miss on Construction Work Done for Q4.
• Nikkei 225 lacked conviction but remained above the 39,000 level in the absence of any pertinent catalysts.
• Hang Seng and Shanghai Comp. were pressured amid initial developer-related concerns after a wind-up petition was filed against Country Garden, although the property sector in Hong Kong then recovered after the government announced the cancellation of all demand-side property tightening measures for residential.
• US equity futures traded sideways as markets remained tentative ahead of Fed speak and key data.
• European equity futures indicate a slightly lower open with Euro Stoxx 50 future -0.1% after the cash market closed up 0.4% on Tuesday.

FX

• DXY was contained for most of the session after the dollar was ultimately unfazed by recent weak US data, while the latest Fed rhetoric had little impact in which Fed's Bowman reiterated that she will remain "cautious" on monetary policy. However, the greenback later edged higher to around the 104.00 level.
• EUR/USD eventually softened after its recent choppy performance and oscillation back and forth of 1.0850.
• GBP/USD weakened beneath its 50-DMA of 1.2675. after yesterday's failed attempt at the 1.2700 handle.
• USD/JPY was choppy and traded on both sides of 150.50 amid a lack of fresh catalysts and mixed risk tone.
• Antipodeans were pressured with NZD/USD the underperformer following the dovish RBNZ meeting where the central bank kept the OCR unchanged and lowered its OCR projections to suggest a reduced chance of a hike.
• PBoC set USD/CNY mid-point at 7.1075 vs exp. 7.2023 (prev. 7.1057).

FIXED INCOME

• 10-year UST futures shrugged off the prior day's bear steepening and traded marginally positive, while the mild rebound also followed a decent 7-year auction.
• Bund futures languished near the prior day's lows firmly beneath the 133.00 level ahead of supply.
• 10-year JGB futures were subdued after recent weakness in peers and a relatively reserved BoJ purchase operation.

COMMODITIES

• Crude futures mildly pulled back overnight after bearish private sector crude inventory data and with WTI crude futures retreating from resistance at the USD 79/bbl level, while downside was limited amid reports of potential OPEC+ output cut extensions.
• US Private Energy Inventory (bbls): Crude +8.4mln (exp. +2.7mln), Cushing +1.8mln, Gasoline -3.3mln (exp. -1.5mln), Distillate -0.5mln (exp. -2.1mln)
• OPEC+ is to consider extending voluntary oil output cuts into Q2 and may extend them until year-end, according to Reuters sources. One of the OPEC sources said extending the output cuts into Q2 is 'likely', while two others said a longer extension until the end of the year was possible.
• Spot gold was rangebound alongside an uneventful dollar as markets await the Fed's preferred inflation gauge.
• Copper futures lacked demand amid the cautious risk tone and uneventful mood across the commodities complex.

CRYPTO

• Bitcoin was rangebound and took a breather after its recent climb above the USD 57,000 level.

NOTABLE ASIA-PAC HEADLINES

• Hong Kong Financial Secretary Chan said in the budget address that momentum for economic recovery needs to be improved amid global challenges. Chan announced the government is to cancel all demand-side property tightening measures for residential and noted there is room to further adjust measures for the property market, while it will waive stamp duties payable on transfer of REIT units.
• HKMA said the maximum loan-to-value ratios will be adjusted to 70% for self-occupation residential properties valued at HKD 30mln or less, while the maximum LTV ratio will be adjusted from 50% to 60% for non-self-use residential properties.
• RBNZ kept the OCR unchanged at 5.50% as expected, while it slightly lowered its OCR projections and said the OCR needs to remain at a restrictive level for a sustained period. The committee remains confident that the current level of the OCR is restricting demand but also noted that headline inflation remains above the 1%-3% target band, limiting the committee's ability to tolerate upside inflation surprises. Furthermore, the RBNZ reduced its OCR forecast with the June 2024 view lowered to 5.59% from 5.67% and the March 2025 view lowered to 5.47% from 5.56%.
• RBNZ Governor Orr said during the press conference Q&A that they did discuss a hike in rates and there was strong consensus that the current level of rates was sufficient, while he added that many variables have given them confidence that policy is working and noted that underlying inflation is still a concern, but headline inflation is easing.

DATA RECAP

• Australian Weighted CPI YY (Jan) 3.40% vs. Exp. 3.60% (Prev. 3.40%)
• Australian Construction Work Done (Q4) 0.7% vs. Exp. 0.8% (Prev. 1.3%)

GEOPOLITICS

MIDDLE EAST

• Lebanon's Hezbollah will cease fire if Hamas approves the Gaza truce, according to Reuters sources.
• US Central Command said a US aircraft and a coalition warship shot down five Houthi one-way attack unmanned aerial vehicles in the Red Sea on Tuesday, according to Reuters.

OTHER

• The Pentagon said the US has no plans to send troops to fight in Ukraine.
• China's Vice Foreign Minister Sun Weidong conducted consultations in Moscow where he met with his counterpart and the Russian Foreign Minister, while he stated that China supports Russia's BRICS presidency and stands ready to continuously strengthen strategic coordination between both sides in international multilateral platforms. Furthermore, Sun said both sides should strengthen communication and coordination in Asia-Pacific affairs, as well as jointly safeguard regional security and stability.
• China Foreign Ministry Department of Arms Control Director General said countries with the strongest military power have repeatedly 'broken treaties' in order 'to seek their own absolute superiority' and the UN Conference on Disarmament should define a roadmap or timetable for an international legal instrument on exemption of non-nuclear-weapon states from threat of nuclear weapons. Furthermore, the official said countries with the largest nuclear arsenals 'should continue to fulfil their special and priority responsibilities', while nuclear-weapon states should negotiate and conclude a treaty on no-first-use of nuclear weapons against each other or make a political statement in this regard, according to Reuters.
• South Korea and the US are to conduct annual military drills from March 4th-14th.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Hunt reportedly struggles to find ‘Budget goodies’ as he faces fiscal ‘headlock’, while deteriorating forecasts pose a challenge for Hunt as Tory MPs seek tax cuts to improve election prospects. Hunt is said to prioritise personal tax cuts on March 6th, but his allies noted room for manoeuvre is limited because of increasingly tight fiscal forecasts produced by the spending watchdog. Furthermore, Tory MPs still hope Hunt can spring a surprise by cutting national insurance rates by 2bps at a cost of about GBP 10bln although the Chancellor's aides have insisted this was 'impossible at the moment, let alone difficult', according to FT.