• APAC stocks traded mixed following the tentative mood stateside and as participants await US CPI data.
• BoJ Governor Ueda refrained from any overly hawkish rhetoric and noted weakness in consumption of non-durable goods.
• European equity futures indicate a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down 0.6% on Monday.
• DXY remains sub-103, JPY lags post-Ueda, other majors are broadly contained.
• Looking ahead, highlights include German CPI (F), UK Employment Data, US CPI, Comments from Japan's Top Currency Diplomat Kanda, EIA STEO, OPEC OMR, Supply from Netherlands, UK, Germany & US. 

US TRADE

EQUITIES

• US stocks finished mostly lower on what was a relatively indecisive session ahead of the incoming US CPI data with the Russell 2000 the laggard and the Nasdaq was also pressured amid a slide in semiconductors, while Donald Trump's dig at Meta (META) saw the stock tumble although gains in Apple (AAPL) helped cushion the downside. Elsewhere, Bitcoin printed a fresh record high just shy of USD 73k on further financial product euphoria after the LSE confirmed they are to accept Bitcoin and Ethereum ETNs.
• SPX -0.11% at 5,117, NDX -0.37% at 17,951, DJIA +0.12% at 38,769, RUT -0.81% at 2,065.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury revenue green book said Biden's FY25 budget plan would raise tax receipts by USD 4.951tln over 10 years and the Treasury estimates raising the domestic corporate minimum tax rate to 21% would raise USD 137.4bln over 10 years, while limiting the deductibility of employee income to USD 1mln is to raise USD 271.9bln.

APAC TRADE

EQUITIES

• APAC stocks traded mixed following the tentative mood stateside and as participants await US CPI data.
• ASX 200 notched slight gains but with upside capped by a lack of macro drivers and mixed business surveys.
• Nikkei 225 slipped at the open after firmer-than-expected PPI data and the ongoing hawkish BoJ-related speculation, but then clawed back the majority of the losses after BoJ Governor Ueda refrained from any major hawkish commentary.
• Hang Seng and Shanghai Comp. diverged with the former boosted by continued tech strength and as property developers showed resilience including Vanke despite being cut to junk by Moody's, while the mainland was pressured by lingering headwinds including US-China frictions and economic concerns.
• US equity futures (ES +0.4%) steadily edged higher in a continuation of the rebound from yesterday's trough.
• European equity futures indicate a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed down 0.6% on Monday.

FX

• DXY traded flat and remained beneath the 103.00 level as markets brace for the incoming inflation data.
• EUR/USD eked marginal gains in quiet trade and with recent ECB comments doing little to shift the dial.
• GBP/USD somewhat continued the gradual rebound from support at 1.2800 ahead of UK jobs and wage data.
• USD/JPY was underpinned following comments from BoJ Governor Ueda who refrained from any overly hawkish rhetoric, stressed data dependency, as well as noted weakness in consumption of non-durable goods and that they need to see if a virtuous cycle is underway. In recent trade, Bloomberg sources noted that the BoJ is reportedly mulling a March hike with the outcome too close to call.
• Antipodeans were kept afloat but with trade contained amid mixed sentiment and Australian business surveys.
• PBoC set USD/CNY mid-point at 7.0963 vs exp. 7.1885 (prev. 7.0969).

FIXED INCOME

• 10-year UST futures traded quietly as CPI data loomed and after yesterday's mild bear flattening despite a strong 3yr auction.
• Bund futures languished firmly beneath the 134.00 level after yesterday's retreat and ahead of German supply.
• 10-year JGB futures clawed back some of its earlier losses and was also briefly supported by firmer demand at the 5yr JGB auction.

COMMODITIES

• Crude futures lacked firm direction after yesterday's choppy performance amid geopolitical risks.
• Russia's Lukoil refinery work in Nizhny Novgorod region was temporarily stopped due to an "incident", while it was later reported that the oil processing unit in Nizhny Novgorod was on fire after a drone attack, according to Russian agencies.
• Spot gold traded sideways beneath its record highs as participants await the key US inflation data.
• Copper futures were lacklustre owing to the mixed risk tone and after a recent plunge in iron ore.

CRYPTO

• Bitcoin was indecisive and slightly eased back below the USD 72,000 level after recently hitting fresh all-time highs.

NOTABLE ASIA-PAC HEADLINES

• BoJ Governor Ueda said Japan's economy is recovering moderately but with some weak data seen, while they see weakness in consumption of non-durable goods and need to see if a virtuous cycle is underway. Ueda also stated they have seen various data since January and more will come out this week which they will look at comprehensively in reaching an appropriate monetary policy decision, while they are focusing on whether a positive wage-inflation cycle is kicking off in judging whether a sustained and stable achievement of the price target is coming into sight. Furthermore, Ueda later commented that it is possible to control short-term rates at an appropriate level by paying interest on reserves parked with the BoJ and if inflation accelerates and warrants monetary tightening, it is possible to do so by raising rates without scaling back BoJ's bond holdings.
• BoJ is reportedly mulling a March hike with the outcome too close to call, according to Bloomberg sources
• US State Department said the US must employ all the tools at its disposal to outcompete China wherever possible and it announced USD 2bln to create a new international infrastructure fund which will help compete with China by providing an alternative.
• US House is to vote on Wednesday on the bill which will give ByteDance six months to divest TikTok or face a ban, according to the majority leader’s spokesperson.
• US steel unions urge US President Biden to open a probe into Chinese shipbuilding, according to FT.
• South Korean chipmakers halt old equipment sales over fears of a US backlash, according to FT.

DATA RECAP

• Japanese Corporate Goods Prices MM (Feb) 0.2% vs. Exp. 0.1% (Prev. 0.0%)
• Japanese Corporate Goods Prices YY (Feb) 0.6% vs. Exp. 0.5% (Prev. 0.2%)
• Australian NAB Business Conditions (Feb) 10.0 (Prev. 6.0, Rev. 7.0)
• Australian NAB Business Confidence (Feb) 0.0 (Prev. 1.0)

GEOPOLITICS

MIDDLE EAST

• US President Biden will reportedly consider conditioning military aid to Israel if the country moves forward with a large-scale invasion of Rafah, according to four officials cited by POLITICO.
• Islamic Resistance said it targeted Ben Gurion Airport with drones on Monday evening, according to Al Jazeera.
• Four Israeli strikes targeted eastern Lebanon's Baalbek, according to two security sources cited by Reuters
• Yemen's Houthis said they targeted 'American ship Pinocchio' in the Red Sea and their operations are to escalate during Ramadan. However, US Central Command said Houthi forces targeted the merchant vessel Pinocchio on Monday which is a Singaporean-owned, Liberian-flagged ship although the missiles did not impact the vessel and there were no injuries or damage reported.
• US and UK coalition forces launched at least 17 airstrikes on western Yemen in a single day, according to Al Masirah TV.

OTHER

• Ukrainian military intelligence said they are preparing to launch serious offensive operations in Crimea, according to Al Arabiya.
• Brussels aims to fast-track EUR 2bln-3bln for Ukraine from frozen Russian assets, according to FT.
• Russian air defence systems destroyed Ukraine-launched drones near Moscow, according to Moscow's Mayor.
• US President Biden responded there was no need for that when asked if he would support US troops at the Polish border.
• US intelligence agencies said trade between China and Russia has been increasing since the start of the Ukraine war and China's exports of goods with potential military use rose more than threefold since 2022.
• US intelligence agencies said North Korea will expand its weapons of mass destruction capabilities.
• China Maritime Safety Administration announced live firing drills in some areas in the East China Sea from March 12th-14th.

EU/UK

NOTABLE HEADLINES

• BoE's Mann said BoE has a long way to go for inflation pressures to be consistent with the 2% target.
• Irish Central Bank sees HICP in 2024 at +2.0 (prev. +2.3% in December), 2025 at +1.8% (prev. +2.1%) and 2026 at 1.4% (prev. +1.4%), while it sees GDP in 2024 at +2.8% (prev. +2.5%), 2025 at +3.5% (prev. +4.5%) and 2026 at +3.3%. Furthermore, it stated that risks to the economic growth outlook are tilted to the downside and risks to the inflation outlook are broadly balanced.