• Asia stocks continued the global equity sell-off and saw hefty losses across the board, as panic selling rolled over to the region
• In FX markets, safe-haven currencies were firmer with JPY boosted across the board and USD/JPY now below 109.00
• Looking ahead, highlights include Canadian trade, APIs, NZ jobs and a slew of speakers

ASIA

Asia stocks continued the global equity sell-off and saw hefty losses across the board, as panic selling rolled over to the region following a slaughtering on Wall St. in which the DJIA (-4.6%) tumbled nearly 1200 points and briefly slipped into correction territory with sell programmes pushing the space lower but closed well off session lows amid a recovered on low volume. ASX 200 (-3.2%) andNikkei 225 (-5.2%) slumped at the open in which losses in crude weighed on Australia’s energy stocks, while the Japanese benchmark was the worst performer amid JPY strength and with the index in a technical correction. Hang Seng (-4.1%) and Shanghai Comp. (-2.7%)were also heavily weighed amid the ongoing market turmoil and after the PBoC refrained again from liquidity operations. Finally. 10yr JGBs traded higher and tracked the gains in T-notes which were up over a point, as the ongoing stock market sell-off spurred a flight-to-quality and lifted bond across the curve which saw the Japanese 40yr yield drop to its lowest since April last year. Furthermore, today’s 10yr inflation-indexed auction from Japan also attracted stronger demand and higher accepted prices.

PBoC skipped open market operations again today for a daily net drain of CNY 80bln. (Newswires)

PBoC set CNY mid-point at 6.3072 (Prev. 6.3019)

UK

UK BRC Retail Sales YY (Jan) 0.60% vs. Exp. 0.70% (Prev. 0.60%). (Newswires)

UK PM May is seeking development of trade relations with Australia post-Brexit. (Newswires)

UK may be forced to accept nearly 40 EU directives during the transition period post-Brexit, according to leaked analysis. (Telegraph)

EU

Germany’s prospective government coalition partners are to continue and wrap up negotiations today according to party sources, while German SPD party member Klingbeil said that today will be a decisive day for coalition talks. (Newswires)

FX

FX markets were relatively quiet overnight as focus centred on the collapse in the stock market. As such, safe-haven currencies were firmer with JPY boosted across the board and USD/JPY now below 109.00, while the greenback held on to the prior day’s gains against most counterparts as EUR/USD and GBP/USD languished after they surrendered the 1.2400 and 1.4000 handles respectively. Elsewhere, AUD was subdued following disappointing Trade Balance and Retail Sales, with further pressure seen after the RBA kept rates on hold as expected and was downbeat on near-term wage growth and inflation.

RBA kept the Cash Rate unchanged at 1.50% as expected and reiterated that it judged policy was consistent with growth and inflation targets. RBA also repeated that a rising AUD would slow economy and inflation, while it also commented that wage growth and inflation to remain low for some time. (Newswires)

Australian Trade Balance (AUD)(Dec) -1358M vs. Exp. 200M (Prev. -628M, Rev. 36M). (Newswires)

Australian Retail Sales (Dec) M/M -0.5% vs. Exp. -0.2% (Prev. 1.2%, Rev. 1.3%)

Australian Retail Sales (Q4) Q/Q 0.9% vs. Exp. 1.0% (Prev. 0.1%)

COMMODITIES

Commodities were mixed with the complex dictated by the market panic seen across global stock markets. This saw WTI crude futures slip firmly below USD 64/bbl, while copper also extended on losses amid the turmoil. Conversely, gold outperformed its peers with prices marginally supported on safe-haven flows.

Venezuela President Maduro said that oil prices have entered into period of stabilization and improvement, while he added that OPEC+ monitoring committee should remain for another 5 years. (Newswires)

US

Treasuries moved higher tspanough the US session as the risk off tone filtered tspanough, with the space pushing on to fresh session highs in late US dealing on the back of block buyers entering the 2-year note futures and sell side flow in equities, although we pulled back from best levels as equities moved away from session lows. This week, the US Treasury will sell $68bln of new 3s ($28bln, Tuesday), new 10s ($24bln, Wednesday), and new 30s ($16bln, Thursday), while analysts have said that this week’s auctions will likely give some indication whether the bond rout has further to run, or whether we will find some short-term stabilisation. Furthermore, with $46.6bln maturing at the mid-month settlement, net supply is seen at $21.4bln. US T-Note Futures settled up 17 ticks at 121.08+.

Fed's Kashkari (Non-Voter) reiterated his slightly more upbeat comments following Friday's NFP release, in which he stressed that he needs to see more data on inflation and also noted that he is of the view that the Fed doesn’t have far to go until it reaches neutral policy (cites 50-75bps). He further suggested that stock valuations are on the high end, but it is far too early to say a bubble has formed and also noted that the USD could create inflationary pressures. (Newswires)

US House is to vote Tuesday on short-term stop gap measure to fund government tspanough to March 23^rd.

US Ambassador to Canada Craft noted that the US wants NAFTA to keep duty free trade of energy goods. (Newswires)

Axios reporting that the White House says US President Trump’s attorneys have already approved the idea of appointing a second special counsel to investigate the FBI and Justice Department. (Axios)