• European equities began the session on a firm footing, though have succumbed to selling pressure after the hotter-than-expected EZ CPI print; US futures lower, with RTY hampered by NYCB losses
• The EZ metric sparked a fleeting hawkish reaction in the bond complex; soon-after EGBs moved to session highs, as the cooling narrative remains in-play & a June cut is still priced
• Dollar holds around flat and the Yen underperforms after dovishly-perceived comments from Ueda overnight
• Crude is bid, though with catalysts light; XAU continues to build on the prior day’s gains
• Looking ahead, US and Canadian Manufacturing PMI, US UoM Inflation Expectations, Comments from BoE’s Pill, Fed's Barkin, Waller, Logan, Kugler, Bostic & Daly.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.1%) began the session firmly in the green, though did succumb to some early morning pressure ahead of EZ inflation. Thereafter, European equities took another leg lower, with sentiment subdued following the hotter-than-expected print.
• However, the move came alongside marked uptick in EGBs, with the move seen across assets and has a risk-feel to it; though, it does appear to have been driven by the 'relief' in EGBs post-HICP which while hotter-than-expected continues the cooling narrative.
• European sectors hold a positive tilt; Autos is firmer, being propped up by post-earning gains in Daimler Truck (+12.8%). Energy has been lifted by recent strength in the crude complex; BP (+1.2%)/Shell (+1%). To the downside, Saint-Gobain weighs on Construction & Materials, after poor results.
• US Equity Futures (ES -0.2%, NQ -0.2%, RTY -0.4%) are entirely in the red. The RTY underperforms, largely hampered by regional banking fears after NYCB (-24% pre-market) announced it had identified weaknesses in internal controls.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from Daimler Truck, Saint Gobain & more.
• Click here for more details.

FX

• Contained trade for the DXY and within a 104.04-21 range, respecting yesterday's 103.65-104.20 parameters. Upcoming data/speaker slate could provide impetus and bring the weekly high of 104.24 into view.
• EUR/USD is ultimately around flat after the hotter-than-expected inflation metrics but respecting yesterday's 1.0795-1.0856 range. Interim resistance provided by the 100DMA at 1.0824.
• JPY is the underperformer across the majors following dovishly-perceived comments from Ueda. USD/JPY is up to 150.68 at best with all eyes on the YTD peak at 150.88.
• Antipodeans are marginally firmer vs. the USD in uneventful trade with AUD continuing to pivot around the 0.65 mark after making a base for the week yesterday at 0.6486. NZD/USD unable to crack 0.61 after printing a YTD trough yesterday at 0.6077.
• PBoC set USD/CNY mid-point at 7.1059 vs exp. 7.2011 (prev. 7.1036).
• Click here for more details.

FIXED INCOME

• USTs began the session with a bearish bias, attempting to pare back some of the PCE-induced gains. However, after the EZ CPI (which sparked a fleeting hawkish reaction), the bond complex caught a bid, taking treasuries to fresh session highs; currently around 6 ticks firmer with the curve steeper into US ISM & Fed speak.
• Bunds also began the session on a softer footing. Following the hotter-than-expected CPI there was a fleeting downward move to a test of 132.00 however this was shortlived with Bunds now bouncing and briefly surpassing the 132.54 overnight high. Perhaps driven by the view that while HICP was hotter than expected, it is still cooling overall and does not change the pre-existing narrative of a June move.
• Gilt price action is in-fitting with EGBs, and unreactive to its own PMI (the HCOB commentary brought attention to ongoing inflationary pressures); Gilts following suit, briefly moved into the green as EGBs bounced but have settled near unchanged.
• Click here for more details.

COMMODITIES

• Crude is firmer after a relatively contained start to the session. The complex caught a bid in the European morning, just after the release of EZ Manufacturing PMIs which were revised up but remain bleak overall; Brent holds just shy of USD 83/bbl.
• XAU is firmer, continuing to build on the prior day's PCE-induced gains. Has climbed above USD 2050/oz, but with still some way to go thereafter before the USD 2078/oz YTD peak.
• Base metals in the red, hit by PMIs remaining in contraction (despite upward revisions) and soft Chinese performance given the region's Manufacturing number printed below 50.0 for the fifth consecutive month. Initial USD upside is also a hindrance, though this narrative has diminished somewhat.
• Click here for more details.

NOTABLE EUROPEAN 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.
• SNB Chairman Thomas Jordan to step down at end of September 2024.
• UK Chancellor Hunt has ruled out stamp duty cuts in the March budget, according to i news; due to a belief this would fuel inflation

DATA RECAP

• EU Unemployment Rate (Jan) 6.4% vs. Exp. 6.4% (Prev. 6.4%, Rev. 6.5%)
• EU HICP Flash YY (Feb) 2.6% vs. Exp. 2.5% (Prev. 2.8%); HICP-X F&E Flash YY (Feb) 3.3% (Prev. 3.6%); HICP-X F,E,A&T Flash YY (Feb) 3.1% vs. Exp. 2.9% (Prev. 3.3%)
• UK Nationwide house price mm (Feb) 0.7% vs. Exp. 0.3% (Prev. 0.7%); Nationwide house price Y/Y (Feb) 1.2% vs. Exp. 0.7% (Prev. -0.2%)
• Spanish HCOB Manufacturing PMI (Feb) 51.5 vs. Exp. 50.0 (Prev. 49.2)
• UK S&P Global Manufacturing PMI (Feb) 47.5 vs. Exp. 47.1 (Prev. 47.1)
• EU HCOB Manufacturing Final PMI (Feb) 46.5 vs. Exp. 46.1 (Prev. 46.1)
• German HCOB Manufacturing PMI (Feb) 42.5 vs. Exp. 42.3 (Prev. 42.3)
• Italian HCOB Manufacturing PMI (Feb) 48.7 vs. Exp. 49.1 (Prev. 48.5)
• Italian CPI (EU Norm) Prelim YY (Feb) 0.9% vs. Exp. 1.0% (Prev. 0.9%); Consumer Price Prelim YY (Feb) 0.8% vs. Exp. 0.9% (Prev. 0.8%); Consumer Price Prelim MM (Feb) 0.1% (Prev. 0.3%)

EARNINGS

• Dell Technologies Inc (DELL) - Q4 2023 (USD): Adj. EPS 2.20 (exp. 1.73), Revenue 22.32bln (exp. 22.16bln). Shares +22.4% in pre-market trade.
• Saint Gobain (SGO FP) - FY23 (EUR): Recurring 6.39bln (prev. 6.48bln Y/Y), EBITDA 7bln (exp. 6.9bln, prev. 7.12bln Y/Y), Revenue 47.9bln (exp. 47.8bln, prev. 51.2bln Y/Y). Expects to complete previously announced 5yr 2bln buyback in 2024. Guides initial FY24 Op. margin "double digit". Shares -4.2% in European trade
• Daimler Truck (DTG GY) – Q4 (EUR): Adj. EBIT 1.56bln (exp. 1.36bln), Revenue 15bln (exp. 14.85bln). Raises dividend to 1.9/shr (prev 1.30/shr). Guides initial FY24 Revenue 55-75bln. (Newswires) Shares +12.8% in European trade

NOTABLE US HEADLINES

• 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. Shares -24% pre-market
• Tesla (TSLA) raises price of Model Y rear wheel drive to USD 43,990 (prev. USD 42,990) in the US.
• White House says US commerce department opening an investigation into Chinese made vehicles over connected vehicle technology and data collection concerns; Biden administration may bar or restrict Chinese vehicle imports, citing national security
• Goldman Sachs has removed Apple (AAPL) from its Conviction List

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.
• 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.
• Japan's government will freeze the assets of 12 individuals and 8 organisations due to their involvement in the Ukraine conflict.

CRYPTO

• Bitcoin continues recent bullish price action, and holds right above USD 62k.

APAC TRADE

• 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.

NOTABLE 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.
• Fitch cuts China new home sales forecast, sees wider effects from a slower recovery. Cuts forecast for the Chinese hosing market to a 5-10% decline in 2024 new home sales

DATA RECAP

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