• European bourses are modestly firmer, whilst US equity futures are mixed with slight underperformance in the NQ
• Dollar is incrementally higher and the JPY continues to underperform
• Bonds are mixed with Gilts paring back Tuesday’s gains
• Crude is firmer and near session highs, base metals are mixed but with outperformance in Copper
• Looking ahead, ECB Operational Framework Review, Speech from ECB’s Cipollone & RBNZ’s Conway, Supply from the US

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.2%), are modestly firmer, though with overall trade rangebound in what has been an uneventful session. The IBEX 35 (+1.3%) outperforms, led higher by post-earning strength in Inditex (+4.2%).
• European sectors are mixed; Retail outperforms, propped up by gains in Zalando (+13.5%) and Inditex. Autos is found at the foot of the pile, hampered by a poor Volkswagen (-0.8%) update.
• US equity futures (ES U/C, NQ -0.2%, RTY +0.1%) are trading around the unchanged mark, with slight underperformance in the NQ, paring back some of the strength seen in the prior session.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• Marginal upside for the USD which has seen DXY kiss the 103 mark in quiet trade. If the level is cleared, yesterday's 103.17 will come into view.
• Uneventful price action for EUR with ECB comments unable to shift the dial. As such, the pair is sticking to a 1.09 handle and within yesterday's 1.0902-43 range.
• GBP is steady vs. the USD and stuck on a 1.27 handle as in-line GDP metrics failed to inspire price action. For now, yesterday's 1.2746-1.2823 range holds.
• JPY is marginally softer vs. the USD but with losses tempered by reports that the BoJ could end ETF purchases. Today's 147.24-89 range sits within yesterday's 146.62-148.18 parameters. More broadly, focus is on in
• AUD is holding up vs. the USD despite falling iron ore prices, with AUD/USD maintaining 0.66 status and within yesterday's 0.6596-0.6627 range. Likewise, NZD/USD is unable to break out of yesterday's 0.6133-6184 range. RBNZ's Conway later today could help to decide direction.
• PBoC set USD/CNY mid-point at 7.0930 vs exp. 7.1775 (prev. 7.0963).
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FIXED INCOME

• Gilts are the relative laggards, at lows of 99.68, with the paper unreactive to the UK's GDP data (which was broadly in-line). The downside can be attributed to Gilts paring some of Tuesday's outperformance following the labour data and a strong DMO sale.
• USTs are essentially unchanged in a quieter session for the US (on paper) after Tuesday's marked CPI moves and a soft 10yr auction, despite the marked concession built in by the post-CPI reaction. Currently holds near session lows at 111-04.
• Bunds are slightly firmer after Tuesday's marked US CPI-induced pressure. Specifics are relatively light thus far, but focus will be on the ECB Operational Framework Review (tentatively due today). Currently, Bunds hold around 133.24, with the peak for today at 133.27.
• Italy sells EUR 7.25bln vs exp. EUR 6-7.25bln 2.95% 2027, 3.50% 2031, 3.25% 2038 BTP Auction and EUR 1.25bln vs exp. EUR 1-1.25bln 4.0% 2031 BTP Green.
• Germany sells EUR 3.738bln vs exp. EUR 4.5bln 2.20% 2034 Bund: b/c 2.29x (prev. 2.10x), average yield 2.31% (prev. 2.38%) & retention 16.9% (prev. 17.5%)
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COMMODITIES

• Crude is firmer, taking impetus from Tuesday's bullish private inventory data, with specifics light in the session thus far; Brent holds near session highs at +1.1%.
• Flat trade in gold and a mild upward bias in silver with the Dollar steady, calendar light, and with the ongoing geopolitical landscape potentially providing a modest underlying bid; XAU trades in a tight USD 2,155.86-2,161.66/oz range.
• Base metals are mixed with copper prices outperforming following reports that top Chinese copper smelters have reportedly reached an agreement to take action to curb falling fees.
• Azerbaijan oil production stood at 476k BPD in Feb (prev. 474k BPD in Jan), according to the Energy Ministry.
• Top Chinese copper smelters have reportedly reached an agreement to take action to curb falling fees, according to Reuters sources; smelters to cut output at loss-making plants.
• BP (BP/ LN) and ADNOC suspend USD 2bln talks to take Israel-based Newmed private, via Bloomberg.
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NOTABLE EUROPEAN HEADLINES

• ECB's Villeroy noted broad agreement in the ECB to start cutting rates in spring as the battle against inflation is being won, while he noted the risk of waiting too long before loosening monetary policy and unduly hurting the economy is now “at least equal” to acting too soon and letting inflation rebound, according to an interview with Le Figaro; In another batch of comments: Says the ECB is winning the battle against inflation; will remain vigilant on inflation but victory is within sight; Spring rate cut remains probably; more likely to cut rates in June than April.
• ECB's Kazaks says ECB rate cut decision will come in the next few meetings; uncertainty remains high, and tensions in the labour market is still high.
• Citi expects BoE to start cutting rates in June (vs prev forecast of August).

DATA RECAP

• UK GDP Estimate YY (Jan) -0.30% vs. Exp. -0.30% (Prev. 0.00%); GDP Estimate MM (Jan) 0.20% vs. Exp. 0.20% (Prev. -0.10%); GDP Est 3M/3M (Jan) -0.10% vs. Exp. -0.10% (Prev. -0.30%)
• UK Services YY (Jan) -0.50% vs. Exp. -0.50% (Prev. 0.10%); Services MM (Jan) 0.20% vs. Exp. 0.20% (Prev. -0.10%)
• UK Construction O/P Vol YY (Jan) 0.7% vs. Exp. -0.5% (Prev. -3.2%); Construction O/P Vol MM (Jan) 1.1% vs. Exp. -0.1% (Prev. -0.5%)
• UK Manufacturing Output YY (Jan) 2.0% vs. Exp. 2.0% (Prev. 2.3%); Manufacturing Output MM (Jan) 0.0% vs. Exp. 0.0% (Prev. 0.8%)
• UK Goods Trade Balance GBP (Jan) -14.515B GB vs. Exp. -15.0B GB (Prev. -13.989B GB, Rev. -13.989B GB)
• UK Goods Trade Bal. Non-EU (Jan) -3.421B GB (Prev. -3.319B GB, Rev. -3.319B GB)
• UK Industrial Output MM (Jan) -0.2% vs Exp. 0.0% (Prev. 0.6%); Industrial Output YY (Jan) 0.5% vs. Exp. 0.7% (Prev. 0.6%)
• German Wholesale Price Index YY (Feb) -3.0% (Prev. -2.7%); Wholesale Price Index MM (Feb) -0.1% (Prev. 0.1%)
• EU Industrial Production MM (Jan) -3.2% vs. Exp. -1.5% (Prev. 2.6%, Rev. 1.6%); Industrial Production YY (Jan) -6.7% vs. Exp. -2.9% (Prev. 1.2%, Rev. 0.2%)

NOTABLE US HEADLINES

• US President Biden secured enough votes to clinch the Democratic presidential nomination and Donald Trump secured enough delegates to win the Republican nomination, according to Reuters.
• Eli Lilly (LLY) is partnering with Amazon Pharmacy (AMZN) to deliver prescriptions sold through direct-to-consumer website.
• Dollar Tree Inc (DLTR) Q4 2023 (USD): adj. EPS 2.55 (exp. 2.65), Revenue 8.632bln (exp. 8.67bln). Shares -7.1% in pre-market trade.

GEOPOLITICS

MIDDLE EAST

• CIA Director Burns said there is "still a possibility" of a Gaza ceasefire deal but added that many complicated issues are still to be worked through.
• US may urge partners and allies to fund a privately run operation to send aid by sea to Gaza that could begin before a much larger US military effort, according to sources cited by Reuters.
• US Central Command announced that Houthis fired a close-range ballistic missile from Yemen toward USS Laboon in the Red Sea on March 12th but it did not impact the vessel, while CENTCOM forces and a coalition vessel successfully engaged and destroyed two unmanned aerial systems launched from Yemen.

OTHER

• Ukrainian Army Chief Syrskyi and Ukraine's Defence Minister Umerov held a phone call with US Defense Secretary Austin on weapons delivery to Ukraine, according to Reuters.
• A fire at oil refinery in Ryazan region extinguished, according to the governor cited by Reuters.

CRYPTO

• Bitcoin is back on a firmer footing and soaring past USD 73k, with Ethereum (+2.7%) also catching wind.

APAC TRADE

• APAC stocks traded mixed as early momentum from the tech-led gains on Wall St was offset by Chinese developer default concerns and as participants digested Japanese wage hike announcements.
• ASX 200 was led higher by consumer stocks after China's MOFCOM released an interim proposal to remove tariffs on Australian wine although the advances in the index were limited by losses in the mining sector as iron ore prices continued to tumble.
• Nikkei 225 swung between gains and losses with initial strength reversed amid firm wage hike announcements.
• Hang Seng and Shanghai Comp. were varied and price action was contained within relatively narrow ranges with the Hong Kong benchmark kept afloat by strength in auto names and tech, while the mainland was pressured amid developer default fears and with the US House set to vote later on the TikTok crackdown bill.

NOTABLE ASIA-PAC HEADLINES

• Country Garden Holdings (2007 HK) onshore bondholders said they have not received a coupon payment due on Tuesday, while the developer said funds for a CNY 96mln coupon payment due on Tuesday were not fully in place and it plans to do its best to raise money for payment within a 30-day grace period, according to Reuters.
• TikTok US executives told headquarters recently that a ban wasn't an imminent risk, according to WSJ citing sources. However, it was separately reported that the US House plans to vote on the TikTok crackdown bill today at around 10:00EDT (14:00GMT).

Japan

• Japan Chief Cabinet Secretary Hayashi said it is important for wage hikes to spread to mid-sized and small companies, while he added they are seeing strong momentum for wage hikes. It was also reported that Toyota, Nissan, Panasonic, Hitachi & Nippon Steel were among the companies that have responded to unions' wage hike demands in full.
• Japanese PM Kishida says will call for pay hikes exceeding last year at small and mid-sized firms during the meeting with labour union and management; Japan not yet emerging out of deflation.
• BoJ Governor Ueda says BoJ will consider tweaking negative rates, YCC, and other monetary easing tools if the sustained achievement of price target comes into sight. We must scrutinize whether positive wage-inflation cycle merges in deciding whether conditions for phasing out stimulus are falling into place. This year's wage talks is critical in deciding timing on exit from stimulus. Unions have demanded higher pay, seeing many corporate management making offers that will stream in today and beyond. Will scrutinize the wage talk outcomes, as well as other data and information from hearings when making policy decisions.
• Japanese PM Adviser Yata says wage hikes this year likely to exceed last year's; Must continue pay rises next year and thereafter to defeat deflation; must broaden pay hikes to workers nationwide and in every prefecture. When asked if solid wage offers could trigger end to NIRP in march, Yata says government will not meddle with the BoJ's independent policy-making.
• BoJ is reportedly to mull ending all ETF purchases if price goal is in sight; likely to keep buying bonds to keep market stable and to intervene in the event of sharp yield upside, according to Bloomberg sources.
• Japan's Business Lobby Keidanren Head Tokura says wage increases indicated in the preliminary survey of big firms' wage talks are likely to exceed last years levels.
• Early signs of a strong outcome in this year's annual wage talks have heightened changes the BoJ will end its negative interest rate policy next week, according to Reuters sources; "There seems to be enough factors that justify a March policy shift".