• European bourses are firmer across the board, Euro Stoxx 50 +1.4%, as the region's strong start to 2023 continues despite soft Chinese NBS PMIs
• Stateside, futures are supported with the ES back above 3900 ahead of the week's risk events from Wednesday onwards.
• Dollar erases and reverses losses on positional, fundamental and technical grounds with EUR deflated by sub-consensus German state CPIs
• Fixed income boosted by the German inflation metrics, with Gilts outperforming in catch-up trade
• Crude benchmarks have come under modest pressure as the European morning progresses, having more than retracted a concerted bid that occurred around the European cash equity open.
• Looking ahead, highlights include National German CPI, US Final MFG PMI & Construction Spending.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +1.4%, as the region's strong start to 2023 continues.
• Post-APAC individual developments have been somewhat limited and primarily focused on Chinese PMIs and USD action.
• Stateside, futures are firmer across the board with the ES back above 3900 ahead of the week's risk events from Wednesday onwards.
• TikTok owner ByteDance has cut hundreds of jobs at multiple departments in China, according to SCMP sources; the job reductions came after the CEO told employees in December that the company needs to ‘get fit and beef up the muscle’ to streamline operations.
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FX

• Dollar erases and reverses losses on positional, fundamental and technical grounds
• DXY picks off late December peaks within 103.460-104.820 range, Yen retreats after testing multi-month peaks vs Buck in holiday-thinned trade overnight, USD/JPY back on 130.00 handle from circa 129.51 low
• Kiwi and Aussie unable to evade Greenback revival with NZD/USD eyeing 0.6200 and AUD/USD probing 0.6700 vs 0.6360+ and 0.6830+ highs
• Euro deflated by sub-consensus German state CPIs ahead of prelim. national data
• EUR/USD towards bottom of 1.06830-1.0526 band and Pound unable to benefit from upward revision to final UK manufacturing PMI, Cable closer to 1.1900 than 1.2100
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Bunds boosted by softer than forecast German regional inflation reports as stops are triggered between 133.79-135.55 parameters
• Gilts catch up and carry on after the extended UK New Year break as 10 year bond hits 101.66 from 99.97 low and 99.90 prior close
• T-note climbs without cash-backing to 113-02 from 112-12+ ahead of final US manufacturing PMI and construction spending data
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COMMODITIES

• Crude benchmarks have come under modest pressure as the European morning progresses, with the benchmarks currently lower by circa. USD -0.70/bbl having more than retracted a concerted bid that occurred around the European cash equity open.
• Spot gold and silver are firmer despite the mentioned USD strength with Chinese data points perhaps proving favourable for the traditional haven. Albeit, the yellow metal has retreated from a USD 1850/oz peak.
• Base metals are supported despite the China metrics as the overall tone remains constructive amid a relatively thin docket to start a particularly busy week.
• Indian gov't is reportedly considering selling 2.1mln/T of wheat, with a decision due in the next 10-days, via Reuters citing sources.
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NOTABLE HEADLINES

• Chinese Foreign Ministry says some nations restrictions on Chinese travellers lack scientific basis and are unreasonable; will take corresponding measures accordingly.
• Click here for the US Early Morning note.

NOTABLE DATA

• German North Rhine-Westphalia State CPI YY (Dec) 8.7% (Prev. 10.4%); MM (Dec) -1.0% (Prev. -0.8%).
• The subsequent State CPIs from Germany followed the trend of NRW, ahead of the mainland reading which is expected at 10.7% (prev. 11.3%) for the YY HICP figure.
• UK S&P Global/CIPS Manufacturing PMI Final (Dec) 45.3 vs. Exp. 44.7 (Prev. 44.7).
• Turkish CPI YY (Dec) 64.27% vs. Exp. 66.53% (Prev. 84.39%); MM (Dec) 1.18% vs. Exp. 2.58% (Prev. 2.88%)

CRYPTO

• Sam Bankman-Fried is expected on Tuesday to enter a plea of not guilty to criminal charges that he cheated investors and looted billions of dollars at his now-bankrupt FTX cryptocurrency exchange, according to a source cited by Reuters.

MACRO RECAP

• Stocks in Asia were a mixed bag (Japan and New Zealand are away from market). ASX (-1.3%) is the laggard whilst Chinese bourses are on a firmer footing (Shanghai Comp +0.8%, Hang Seng +2.1%).
• Weekend developments focused around China's NBS PMIs, with the official NBS manufacturing PMI dropping to 47.0 (exp. 48.0) in December from 48.0 in November, the largest monthly decline since the start of the pandemic in February 2020, and remaining below the neutral 50-mark for the third consecutive month. Reuters notes that the data gives the first glimpse of the manufacturing sector after China removed its COVID restrictions in early December. Meanwhile, the Caixin version of the manufacturing PMI declined to 49.0 in December (exp. 48.8, prev. 49.4).
• EU Health Commissioner Kyriakides has reportedly contacted China offering variant-adapted EU vaccine donations alongside public health expertise, via FT citing sources which add China has not responded yet. (FT)
• IMF chief Georgieva said one-third of the global economy will be hit by recession this year, and 2023 will likely be tougher for the world economy than the previous 12 months.