• APAC stocks traded mixed amid a tentative mood ahead of an event-packed week.
• European equity futures indicate a slightly higher open with Euro Stoxx 50 future +0.2% after the cash market closed up 0.4% on Friday.
• DXY is sub-104, JPY marginally lags across the majors with price action otherwise contained in the FX space.
• OPEC+ members agreed to extend voluntary cuts to Q2 whereby Saudi Arabia is to extend its voluntary oil cut of 1mln bpd.
• UK Chancellor Hunt said he wants to move towards lower taxes but will only do so in a responsible way.
• Looking ahead, highlights include German Import Prices, Swiss CPI, EZ Sentix Index, Australian PMI, Tokyo CPI, Comments from Fed’s Harker.

US TRADE

EQUITIES

• US stocks advanced to new highs on Friday as AI-affiliated names led the charge with particular strength in Dell (DELL) after its earnings report, although regional banks were in a weak spot after NYCB's (NYCB) (-26%) latest woes, while Fed rate cut pricing across 2024 ramped up by 10bps to 92bps after the ISM Manufacturing survey saw a surprise fall including in the prices paid component.
• SPX +0.80% at 5,137, NDX +1.44% at 18,302, DJIA +0.23% at 39,087, RUT +1.05% at 2,076.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Chair Powell is expected to double down on his message that there’s no rush for the Fed to cut rates when he delivers in semi-annual testimony to the House committee and a Senate panel on Wednesday and Thursday, respectively, according to Bloomberg.
• Fed's Bostic (2024) said on Friday that he is "grateful" for inflation progress but the "job is not done" and Fed staff are having a debate about the efficacy of policies. Bostic also said they need to hold rates higher for longer than you'd think and can't afford to ease up and assume services inflation will cool.
• Fed's Kugler (voter) said on Friday that signs firms are adjusting prices slower bolsters disinflation confidence and she is 'cautiously optimistic’ inflation will fall without job market damage, while she added the Fed are laser-focused on bringing inflation down to 2%.
• US congressional leaders released the text of a bill to fund the government through September 30th and avert a government shutdown, while Senate Majority leader Schumer said the bill sets discretionary spending of USD 1.66tln for fiscal 2024, according to Reuters.
• Former US President Donald Trump won the Michigan Republican caucuses, while Nikki Haley was projected to win the District of Columbia Republican Presidential primary.
• Fitch affirmed the US at AA+; Outlook Stable.
• Fitch downgraded New York Community Bancorp’s (NYCB) rating; Outlook Negative, while Moody’s downgraded NYCB’s long-term issuer rating to B3; Outlook remains on review for a further downgrade.

APAC TRADE

EQUITIES

• APAC stocks traded mixed amid a tentative mood ahead of an event-packed week.
• ASX 200 lacked conviction amid varied data releases and despite initially printing a fresh record high.
• Nikkei 225 resumed its uptrend and climbed above the 40,000 level for the first time.
• KOSPI outperformed as it played catch up on its return from a 3-day weekend.
• Hang Seng and Shanghai Comp. were choppy with an early lacklustre mood after the PBoC's liquidity drain, while China begins its Two Sessions meeting with the focus on the NPC tomorrow including Premier Li's first government work report and the official GDP target.
• US equity futures traded sideways after Friday's data-induced rally and as participants await key events.
• European equity futures indicate a slightly higher open with Euro Stoxx 50 future +0.2% after the cash market closed up 0.4% on Friday.

FX

• DXY languished below the 104.00 level after last week's dovish data releases and ramp-up in Fed rate cut pricing, while participants await an event-packed week for the US including Super Tuesday, Fed Chair Powell's Congressional testimony from Wednesday, President Biden's State of the Union Address on Thursday and the latest NFP report on Friday.
• EUR/USD remained afloat amid the lacklustre dollar and ahead of the ECB meeting later in the week.
• GBP/USD marginally extended on Friday's highs albeit with gains contained amid a lack of catalysts, while the focus for the UK will be on the Budget announcement on Wednesday with Chancellor Hunt reportedly considering a further cut in public spending to fund tax cuts.
• USD/JPY was rangebound and shrugged off early weakness after finding support around the 150.00 level.
• Antipodeans were indecisive amid the mixed sentiment in the region and mixed bag of Australian data.
• PBoC set USD/CNY mid-point at 7.1020 vs exp. 7.1906 (prev. 7.1059).

FIXED INCOME

• 10-year UST futures marginally pulled back from resistance at the 111.00 level but retained most of last week's late gains which were spurred by dovish economic releases including disappointing ISM Manufacturing data and a softer Prices Paid component.
• Bund futures traded sideways after recent whipsawing and with near-term resistance around 132.50.
• 10-year JGB futures faded Friday's advances but with the downside cushioned amid the BoJ's presence in the market.

COMMODITIES

• Crude futures failed to sustain early upside despite OPEC+ extending output cuts through to Q2 and after the Red Sea crisis claimed its first ship casualty in which UK-owned MV Rubymar finally sunk after being hit by a Houthi missile attack in February.
• OPEC+ members agreed to extend voluntary cuts to Q2 whereby Saudi Arabia is to extend its voluntary oil cut of 1mln bpd for Q2 with its output to be around 9mln bpd through June and Russia is to cut oil output and exports by an additional 471k bpd, while the UAE is to voluntary cut oil output by 163k bpd and Iraq will voluntary cut output by 220k bpd. Furthermore, Kazakhstan is to extend voluntary oil output cuts of 82k bpd through to Q2 2024 and Kuwait is to cut oil output by 135k bpd for June.
• Russian Deputy PM Novak said Russia will implement an additional voluntary oil and export output cut of 471k bpd for Q2 in which it will cut output by 350k bpd in April with exports cut by 121k bpd, while it will cut output by 400k bpd in May with exports cut by 71k bpd and will cut 471k bpd in June which will all be from output, according to Reuters and The Moscow Times.
• GCC ministerial meeting communiqué stated that the entire Durra gas field and its natural resources are jointly and only owned by Saudi Arabia and Kuwait.
• Iran’s Oil Minister said Iran aims to reach 1.3bln cubic metres per day of gas output in 5 years.
• Spot gold took a breather after Friday's gains which were facilitated by dollar pressure and dovish Fed pricing.
• Copper futures were subdued amid the flimsy risk appetite in the metal's largest purchaser, China.

CRYPTO

• Bitcoin extended on gains but is off intraday highs after failing to sustain a brief incursion above USD 64,000.
• Chinese state media warned against cryptocurrency trading as domestic interest surges amid the bitcoin rally, according to SCMP.

NOTABLE ASIA-PAC HEADLINES

• China NPC spokesperson said the 2024 annual parliamentary meeting will close on March 11th and they will make new laws to deepen economic reform including financial institutional reform to promote private companies, while the spokesperson said Premier Li will not give a press conference at the close of the NPC this year and will not hold a press conference in following years, according to Reuters. It was separately reported that Beijing is expected to resist market pressure for a much stronger stimulus to spur China’s economic recovery at the annual political event this week, according to FT.

DATA RECAP

• Japanese Business Capex YY (Q4) 16.4% vs. Exp. 2.9% (Prev. 3.4%)
• Japanese Company Profits YY (Q4) 13.0% vs Exp. 21.3% (Prev. 20.1%)
• Japanese Company Sales YY (Q4) 4.2% vs Exp. 4.5% (Prev. 5.0%)
• Australian Building Approvals (Jan) -1.0% vs. Exp. 4.0% (Prev. -9.5%, Rev. -10.1%)
• Australian Gross Company Profits (Q4) 7.4% vs. Exp. 1.8% (Prev. -1.3%)
• Australian Business Inventories (Q4) -1.7% vs Exp. 0.0% (Prev. 1.2%)

GEOPOLITICS

MIDDLE EAST

• Israeli military spokesman said the IDF concluded the initial review of civilian deaths at the Gaza aid convoy in which it was concluded that the IDF did not carry out a strike towards the aid convoy and the majority of Palestinians that died were the result of a stampede, while forces fired warning shots and responded towards several individuals that approached forces posing an ‘immediate threat’.
• Hamas delegation arrived in Cairo on Sunday for ceasefire talks, while it was also reported that a Palestinian official familiar with Gaza truce talks said they were not there yet when asked whether a deal was imminent. Furthermore, Egyptian security sources had previously stated that parties agreed on the duration of a truce, as well as hostage and prisoner releases although the completion of a deal still requires an agreement on the withdrawal of Israeli forces from northern Gaza and a return of residents.
• US VP Harris said what we are seeing every day in Gaza is devastating and too many innocent Palestinians have been killed and Gazans are suffering from a humanitarian catastrophe. Harris added that Israel’s government must do more to increase the flow of aid, "no excuses", as well as work to restore basic services and restore order in Gaza. Furthermore, she said there must be an immediate ceasefire and the threat posed by Hamas must be eliminated, while she added there is a deal on the table and Hamas needs to agree to that deal, according to Reuters.
• US VP Harris is to meet with Israeli war cabinet member Gantz on Monday and US Secretary of State Blinken is also to meet with Gantz in Washington on Tuesday.
• US official said on Saturday that the outlines of a Gaza peace deal are in place and it depends on Hamas agreeing to release hostages, according to Reuters.
• US military confirmed that UK-owned vessel MV Rubymar sunk on Saturday after being struck by a Houthi missile attack on February 18th to become the first ship casualty of the Red Sea crisis, while Houthis said they will continue sinking more British ships.
• Houthi transport ministry said hostile actions by British and US naval vessels against Yemen caused a malfunction in submarine cables in the Red Sea.
• Hezbollah claimed it detonated a large IED and fired artillery at an Israeli force that attempted to infiltrate Lebanon, according to a source via social media platform X.

OTHER

• Road traffic near Crimea’s port of Feodosia was temporarily restricted following reports of an explosion.
• China’s Embassy in the Philippines commented on remarks from the Philippines Ambassador to the US in which it stated the China-related remarks disregard basic facts, ‘wantonly hype up’ the South China Sea issue and maliciously smear China which they strongly condemn, according to Reuters.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Hunt said he hoped to be able to lower taxes further in his annual budget on Wednesday but noted it would be “deeply unconservative” for him to do so in a way that required higher borrowing and his budget will be prudent and responsible, according to Reuters. Furthermore, Hunt said during an interview with the BBC that he wants to move towards lower taxes but will only do so in a responsible way and that the most unconservative thing he could do would be to cut taxes by increasing borrowing.
• UK Chancellor Hunt is putting together plans for up to GBP 9bln worth of tax increases and spending cuts in order to fund a 2p reduction in national insurance, according to The Times.
• UK Chancellor Hunt is reportedly expected to set out plans for private companies to trade shares on exchanges, according to FT.
• UK PM Sunak’s close allies reportedly worry that his chances of winning the next UK election have been made even more difficult as one of his Cabinet ministers, Business Secretary Badenock is said to be positioning to succeed him as Conservative Party leader, according to Bloomberg.
• EU’s Dombrovskis said it is positive that the e-commerce moratorium has been extended, while he noted there were disappointments related to agriculture and fisheries talks.
• S&P upgraded Portugal from BBB+ to A-; Outlook Positive amid ongoing steep external and government deleveraging.