• APAC stocks traded with positive bias amid tailwinds from the US, while participants also reflected on the latest Chinese PMI figures.
• Fed's Williams doesn't see a sense of urgency to cut rates, Mester says three cuts in 2024 still 'feels about right'.
• European equity futures indicate a higher open with Euro Stoxx 50 future +0.5% after the cash market closed down 0.1% on Thursday.
• DXY is back above 104, JPY lags post-Ueda comments, AUD marginally outperforms.
• Looking ahead, highlights include EZ, US and Canadian Manufacturing PMI, Italian and EZ CPI, US UoM Inflation Expectations, Comments from BoE’s Pill, Fed's Barkin, Waller, Logan, Kugler, Bostic & Daly.

US TRADE

EQUITIES

• US stocks gained and were led by the Nasdaq 100 amid semiconductor strength and as yields softened after the lack of hawkish surprises from Core PCE data which printed in line with expectations, while other releases also conformed to the dovish data theme.
• SPX +0.52% at 5,096, NDX +0.95% at 18,043, DJIA +0.12% at 38,996, RUT +0.71% at 2,054.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Daly (voter) said the Fed has policy in a good place and can cut if needed, while she wants to avoid holding rates all the way to 2% inflation and said there is no imminent risk of the economy faltering. Furthermore, Daly warned inflation could get stuck if the Fed cuts too quickly and noted that risks of persistent inflation and economic downturn are even.
• Fed's Mester (voter) said PCE data came in as expected and doesn't change her view that inflation is moving down, while she noted there is little more work for the Fed to do on inflation and that monetary policy is restrictive and demand should cool. Furthermore, Mester said she doesn't want to focus on time regarding the first rate cut and will focus on the economy, as well as noted that baseline forecasts for three cuts in 2024 still 'feels about right', according to a Yahoo Finance interview.
• Fed's Williams (voter) said the Fed can take time to deliberate on the next policy move and he expects the Fed to cut interest rates later this year but doesn't see a sense of urgency to cut rates. Williams also said a rate hike is not part of the base case and that the current outlook doesn't suggest another hike is needed.
• US House and Senate passed the stopgap funding bill to avert a government shutdown and sent it to President Biden for signing, while President Biden commented that Congress must do its job and pass full-year funding bills in the days ahead.
• New York Community Bancorp (NYCB) identified material weaknesses in internal controls and discussed matters disclosed with KPMG, while it expects to file its 10k late and it completed goodwill impairment assessment on Feb. 23rd in which it determined a goodwill impairment charge was required, resulting in a USD 2.4bln decrease to Q4 and annual net (loss) income.

APAC TRADE

EQUITIES

• APAC stocks traded with positive bias amid tailwinds from the US following an absence of any hawkish surprises in the PCE data, while participants also reflected on the latest Chinese PMI figures.
• ASX 200 printed fresh record highs and entered bull market territory after gaining over 20% from its 2022 low.
• Nikkei 225 extended on its best levels and advanced closer to the 40,000 level amid a weaker currency and after BoJ Governor Ueda said Japan's economy is not yet in a situation where sustained achievement of 2% inflation can be foreseen, which is in contrast with the prior day's hawkish rhetoric from board member Takata.
• Hang Seng and Shanghai Comp. lagged behind their regional peers although the Hong Kong benchmark clawed back initial losses with the help of tech strength, while the mainland was indecisive after the PBoC drained liquidity and as participants digested Chinese PMI data which was mostly encouraging although Official Manufacturing PMI remained in contraction territory for the 5th consecutive month.
• US equity futures (ES +0.2%) marginally extended on their recent gains after the dovish data releases stateside.
• European equity futures indicate a higher open with Euro Stoxx 50 future +0.5% after the cash market closed down 0.1% on Thursday.

FX

• DXY traded rangebound just above the 104.00 level after yesterday's bounceback from dovish-perceived data and with the latest Fed commentary providing very little to shift the dial.
• EUR/USD nursed some of its recent losses after finding support around the 1.0800 level, while attention turns to incoming data from the bloc including EZ CPI and Manufacturing PMI figures.
• GBP/USD was uneventful after recent weakness and amid light UK-specific catalysts.
• USD/JPY extended above the 150.00 level after BoJ Governor Ueda stuck to the dovish script.
• Antipodeans were marginally supported following the mostly encouraging Chinese PMI data.
• PBoC set USD/CNY mid-point at 7.1059 vs exp. 7.2011 (prev. 7.1036).

FIXED INCOME

• 10-year UST futures were indecisive after gradually fading some of the post-data uplift.
• Bund futures marginally eased back after the prior day's firm rebound and as EZ data looms.
• 10-year JGB futures struggled for direction amid the lack of additional BoJ purchases and despite BoJ Governor Ueda's dovish reaffirmation.

COMMODITIES

• Crude futures were contained with upside limited after yesterday's choppy performance as heightened geopolitical worries were counterbalanced by fluctuations in the dollar.
• OPEC February oil output rose by 900k BPD from January to 26.42mln BPD as Libyan output recovered from the outage, while OPEC's nine members making voluntary cuts or subject to quotas reduced output by 20k BPD vs. January to 21.43mln BPD, according to a Reuters survey.
• US crude oil production fell 4k BPD in December to 1.315mln BPD (prev. 13.319mln BPD in Nov), according to the EIA.
• Spot gold held on to its post-PCE gains but was off highs after hitting resistance at USD 2050/oz.
• Copper futures were little changed amid the initial indecisiveness in China after its latest PMI data.

CRYPTO

• Bitcoin was choppy and traded on both sides of the USD 61,000 level after this week's near 20% surge.

NOTABLE ASIA-PAC HEADLINES

• China's Commerce Ministry said China's trade faces a complex, severe, and uncertain external environment, while it will help companies explore the market and expand imports to ensure domestic demand, according to Reuters.
• BoJ Governor Ueda said inflation is easing at a quick pace and wage negotiations will offer a tailwind, while he added that Japan's economy will continue a gradual recovery and the economy is not yet in a situation where sustained achievement of 2% inflation can be foreseen. Ueda also commented that in judging whether a sustained achievement of the 2% inflation target can be foreseen, this year's annual wage negotiation outcome is key.
• RBNZ Governor Orr said the economy is evolving as anticipated and inflation expectations have declined, while inflation is still too high but is declining and policy needs to stay restrictive for some time. Orr also said he expects to begin normalising policy next year and economic growth to begin picking up this year.
• RBNZ Deputy Governor Hawkesby said restrictive policy is needed to ensure inflation expectations anchor at 2% and policy is going to stay restrictive for some time yet, while they don't have a lot of room to manoeuvre when it comes to future inflation shocks. Hawkesby said they are on the right path with inflation and have to hold their course, as well as noted they are not in a mindset to cut rates now and will be cutting sometime down the track.

DATA RECAP

• Chinese NBS Manufacturing PMI (Feb) 49.1 vs. Exp. 49.1 (Prev. 49.2)
• Chinese NBS Non-Manufacturing PMI (Feb) 51.4 vs. Exp. 50.9 (Prev. 50.7)
• Chinese Composite PMI (Feb) 50.9 (Prev. 50.9)
• Chinese Caixin Manufacturing PMI Final (Feb) 50.9 vs. Exp. 50.6 (Prev. 50.8)

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu said Israel won't fold to the delusional demand of Hamas but will provide freedom of worship to Muslims during the month of Ramadan while maintaining security at the same time, according to Al Jazeera.
• Israel’s Defence Minister said they are planning operations in Rafah and the central camps, while they will not stop until Hamas is eliminated but noted that concessions can be made on the issue of detainees, according to Al Jazeera.
• US President Biden spoke with Qatar's Emir in which they agreed Hamas should release the hostages it is holding without delay and underscored that the release of hostages would result in an immediate and sustained ceasefire in Gaza over a period of at least six weeks, according to the White House.
• French President Macron said the situation in Gaza is terrible and a ceasefire must be implemented immediately to allow humanitarian aid to be distributed, while France's Foreign Ministry said the shooting by Israeli soldiers against civilians trying to access food is unjustifiable and they are waiting for all light to be shed on the shooting. The ministry also said it is Israel's responsibility to comply with the rules of international law and protect the distribution of humanitarian aid to civilian populations.
• UN Secretary-General Guterres said the killing of over 100 humanitarian aid seekers in Gaza would require an effective independent investigation.
• US military said it conducted strikes against six anti-ship cruise missiles and an aerial drone that posed a threat to ships in the Red Sea, according to Reuters.

OTHER

• US Defense Secretary Austin told the House Armed Services Committee that the Russian leadership "won't stop there" if Ukraine is defeated and that Russia and NATO could come into conflict if Ukraine falls, according to TASS.
• US State Department said they do not have any sign Russia is preparing to use a nuclear weapon.
• Japan's government will freeze the assets of 12 individuals and 8 organisations due to their involvement in the Ukraine conflict.

EU/UK

NOTABLE HEADLINES

• Portuguese Finance Minister Medina called for the ECB to start lowering borrowing costs and warned that maintaining them at their current level is a “high risk”, while he noted various European countries are experiencing a strong slowdown with some already in stagnation and recession, according to Bloomberg.
• ECB's Panetta said inflation is falling faster than expected.