• APAC stocks took impetus from the fresh record levels on Wall Street amid dovish tailwinds, Nikkei gained despite the recent JPY strength.
• DXY languished beneath 103.00, EUR/USD lingered around 1.0950, USD/JPY tested yesterday's lows, and Antipodeans remained afloat.
• Fed Chair Powell suggested they are not far from being confident to cut rates and he could see the case for shortening the maturity of Fed holdings, while he would prefer not to hold MBS.
• Fed’s Mester (voter) said a couple more inflation reports could give confidence on inflation with the Fed likely in a position later this year to cut rates.
• ECB's Nagel sees a rising chance of a rate cut before policymakers' break for summer, although this will be data-dependent, but the prospects have brightened. 
• Looking ahead, highlights include German Industrial Output, Producer Prices, Swiss GDP, French Trade, Italian Producer Prices, EZ Employment, US NFP, Canadian Employment, and comments from Fed’s Williams.

US TRADE

EQUITIES

• US stocks extended their gains in which the S&P 500 and Nasdaq posted fresh record highs with outperformance in tech amid some dovish tailwinds after the ECB slashed its inflation forecasts and US data showed a surprise downward revision to Unit Labor Costs, as well as an increase in Challenger Layoffs, while the focus turns to the looming NFP report.
• SPX +1.03% at 5,157, NDX +1.56% at 18,297, DJIA +0.34% at 38,791, RUT +0.81% at 2,084.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Chair Powell suggested they are not far from being confident to cut rates and he could see the case for shortening the maturity of Fed holdings, while he would prefer not to hold MBS.
• Fed’s Mester (voter) said if the economy meets forecasts, rate cuts are likely later this year and she expects the Fed will be able to cut rates gradually. Mester said monetary policy is currently in a "good place" given the outlook and the Fed has the luxury of holding steady while taking in more data, while she added that January inflation reports were a wake-up call and she is considering raising her long-term Fed Funds Rate forecast. Furthermore, Mester said that a couple more inflation reports could give confidence on inflation with the Fed likely in a position later this year to cut rates and policy is in a good position to deliberate on the next step.
• Federal Reserve said US household net worth climbed to USD 156.2tln in Q4 2023, while stock market values climbed by USD 4.7tln in Q4 and real estate values fell by USD 0.6tln in Q4.
• Fed Small Business Report noted most small businesses faced financial challenges last year but added that small business performance was steady over 2023, while their biggest challenges were higher costs and wages in 2023 and small businesses also flagged higher interest rates as a financial challenge.
• US President Biden delivered the State of the Union Address in which he stated they will work to rebuild the economy and that unemployment is at a 50-year low, Biden said he is seeking to make healthcare tax credit permanent, while he added that Americans pay more than anywhere else in the world on prescription drugs and he is ending this.

APAC TRADE

EQUITIES

• APAC stocks took impetus from the fresh record levels on Wall Street amid dovish tailwinds.
• ASX 200 printed a fresh record high as the top-weighted financial industry led the gains seen in most sectors.
• Nikkei 225 initially approached just shy of 40,000 but with gains capped after disappointing Household Spending.
• Hang Seng and Shanghai Comp. were somewhat varied as the Hong Kong benchmark conformed to the upbeat mood, while the mainland was less decisive amid lingering tech-related frictions between the US and China.
• US equity futures traded sideways ahead of the NFP report and with a muted reaction to the SOTU.
• European equity futures indicate a marginally higher open with the Euro Stoxx 50 future +0.2% after the cash market closed up 1.2% on Thursday.

FX

• DXY languished beneath 103.00 after recent soft data and Fed Chair Powell's suggestion they were nearing the confidence needed to cut rates, while there was little reaction to the State of the Union Address.
• EUR/USD lingered around the 1.0950 level after recently benefitting from the weaker dollar.
• GBP/USD lacked direction and just about held on to the recently reclaimed 1.2800 status.
• USD/JPY tested yesterday's lows after this week's increasingly hawkish BoJ rhetoric and perceptions.
• Antipodeans remained afloat with price action uneventful amid the lack of macro drivers of pertinent data.
• PBoC set USD/CNY mid-point at 7.0978 vs exp. 7.1863 (prev. 7.1002).

FIXED INCOME

• 10-year UST futures traded little changed following yesterday's bull steepening and comments from Fed Chair Powell that the Fed is nearing the confidence to cut rates and that he could see the case for shortening the maturity of Fed holdings.
• Bund futures lacked direction after the prior day's whipsawing and post-ECB indecision.
• 10-year JGB futures clawed back opening losses and continued their rebound from support at the 146.00 level with the BoJ present in the market for nearly JPY 1.3tln of JGBs in 1yr-10yr maturities.

COMMODITIES

• Crude futures gradually higher amid the positive risk tone and ongoing geopolitical climate.
• White House energy adviser Hochstein said hasn't seen costs rise amid Red Sea Houthi attacks.
• Spot gold sat near record highs amid a lacklustre dollar and with the NFP report on the horizon.
• Copper futures were rangebound and held on to most of the prior day's risk-fuelled gains.

CRYPTO

• Bitcoin eked mild gains with price action choppy on both sides of the USD 67,000 level.

NOTABLE ASIA-PAC HEADLINES

• China NPC Standing Committee said it will formulate a financial stability law, a law on rural collective economic organizations, a value-added tax law and a private sector promotion law, while it will revise the mineral resources law, enterprise bankruptcy law, unfair competition law, accounting law, public bidding law, the statistics law, and civil aviation law. Elsewhere, Hong Kong's government issued a draft of a new national security law which includes state secrets, espionage, and foreign interference, according to Reuters.
• US lawmakers advanced a bill on Thursday that would ban TikTok in the US unless it cuts ties with its Chinese parent ByteDance within six months, while House Majority Leader Scalise said the House will vote next week on the TikTok crackdown.
• Three US Senators urge President Biden to hike tariffs on Chinese imported autos saying they could endanger American automotive manufacturing, according to a letter.

DATA RECAP

• Japanese All Household Spending MM (Jan) -2.1% vs. Exp. 0.4% (Prev. -0.9%)
• Japanese All Household Spending YY (Jan) -6.3% vs. Exp. -4.3% (Prev. -2.5%)

GEOPOLITICS

MIDDLE EAST

• Hamas official said Israel aimed to secure the release of its hostages without agreeing to conditions set by the movement, while Israel prioritised its captives' issue and refused conditions set by Palestinian factions.
• US President Biden announced that the US military will construct a port in Gaza to allow more humanitarian aid to arrive and confirmed there will be no troops on the ground while a senior official earlier stated that the port is to allow Gaza humanitarian aid deliveries and will take weeks to complete, while troops to remain on vessels offshore.
• CIA Director is scheduled to arrive in Israel soon in a final attempt to reach an agreement before Ramadan, according to Al Jazeera citing Israeli Channel 12.

OTHER

• US President Biden stated during the State of the Union Address that they are facing an unprecedented moment and he assures that Russian President Putin will not stop at Ukraine, while he added they can stop Putin by helping Ukraine with weapons and his message to Putin is that they will not walk away and will not bow down.
• Ukrainian President Zelensky is to visit Turkey on Friday and will meet with Turkish President Erdogan to discuss the Black Sea grain deal, according to the Turkish government.
• North Korean leader Kim Jong-Un guided an artillery firing drill on Thursday, according to KCNA.

EU/UK

NOTABLE HEADLINES

• ECB's Nagel sees a rising chance of a rate cut before policymakers' break for summer, although this will be data-dependent, but the prospects have brightened, according to Bloomberg. ECB meetings are scheduled for April 11th, June 6th, July 18th, then September 12th.