• APAC stocks lacked firm direction with price action mostly rangebound amid the mixed US close and with Japanese markets closed.
• FOMC minutes noted a few participants favoured a 50bps hike and all agreed more rate hikes are needed.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed down 0.2% yesterday.
• DXY is a touch softer but maintaining 104 status, support in EUR/USD at 1.06 held, AUD and NZD outperform, USD/JPY capped by 135.
• Looking ahead, highlights include EZ CPI (Final), US GDP/PCE Q4 (2nd Estimate), IJC Japanese CPI, CBRT Policy Announcement, Speeches from Fed's Bostic & Daly, BoE's Cunliffe & Mann, Supply from US.

US TRADE

EQUITIES

• US stocks closed mixed and unwound earlier strength after the hawkish tidbits from the stale FOMC minutes were seized upon by market participants in which there was plenty of attention on the comment that a few participants favoured a 50bps hike which also spurred bull flattening in Treasuries.
• SPX -0.16% at 3,991, NDX +0.05% at 12,066, DJI -0.26% at 33,045, RUT +0.34% at 1,895.
• Click here for a detailed summary.

FOMC MINUTES

• FOMC Minutes stated that a few participants favoured raising rates by 50bps and all agreed more rate hikes were needed, while almost all participants observed that slowing the pace of rate increases at the current juncture would allow for appropriate risk management. Furthermore, a number of participants observed that a policy stance that proved to be insufficiently restrictive could halt recent progress in moderating inflationary pressures and a number of participants also observed that financial conditions had eased in recent months which some noted could necessitate a tighter stance of monetary policy.

NOTABLE HEADLINES

• Fed's Williams (voter) said 2% inflation is a foundational target and price stability is an absolute imperative, while he noted an absolute commitment to getting back to 2% over the next few years. Williams stated that although goods prices have come down in the last several months, there are signs this may not go as quickly as hoped and said they don't want inflation expectations anchor to slip. Furthermore, he noted that demand exceeds supply and the labour market is exceptionally strong, while monetary policy must bring demand and supply back into balance.
• WSJ's Timiraos noted "Two economists who both served in a top post in the Obama Treasury, Karen Dynan of Harvard and Janice Eberly of Northwestern, are under consideration to be the Fed's vice chair".

APAC TRADE

EQUITIES

• APAC stocks lacked firm direction with price action mostly rangebound amid thinned conditions due to the holiday closure in Japan and following the mixed performance stateside where the major indices faded mild gains in the aftermath of the FOMC minutes.
• ASX 200 was the laggard with the index weakened by underperformance in the mining industry after recent declines in commodity prices and a slump in Rio Tinto’s profits, although losses were limited as participants also digested better-than-expected capex data.
• KOSPI was the biggest gainer amid recent currency weakness and after the BoK kept its rate unchanged for the first time in a year, as unanimously expected.
• Hang Seng and Shanghai Comp. were indecisive with stocks initially led higher by strength in tech and after China vowed to improve measures to cut taxes and fees, although the gains were briefly pared amid ongoing global frictions and the PBoC’s liquidity drain.
• US equity futures recovered (ES +0.4%) overnight led by Nasdaq 100 futures (+0.8%) after NVIDIA's earnings topped forecasts which boosted its shares by nearly 9% after-hours.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed down 0.2% yesterday.

FX

• DXY reversed some of the gains seen from the hawkish-leaning FOMC minutes which noted a few participants favoured a 50bps hike and all agreed more rate hikes were needed, while some also observed that financial conditions had eased in recent months which could necessitate a tighter policy stance.
• EUR/USD clawed back some of its recent losses after support held at the 1.0600 level.
• GBP/USD was off the lows seen in the aftermath of the FOMC minutes but with the rebound limited after yesterday's underperformance and reports the N.I. protocol deal will unlikely be reached this week.
• USD/JPY marginally pulled back from resistance at 135.00 amid the Japanese holiday closure.
• Antipodeans were firmer which provided AUD/USD with some respite from this week’s selling pressure, while NZD/USD reapproached yesterday’s post-RBNZ highs.
• PBoC set USD/CNY mid-point at 6.9028 vs exp. 6.9028 (prev. 6.8759)

FIXED INCOME

• 10yr UST futures lacked direction after the choppy performance during the prior US session where treasuries initially bull-flattened heading into the FOMC minutes and amid a decent 5yr auction, but then pared the moves upon the release of the Fed minutes which markets assimilated to be hawkish-leaning.
• Bund futures were uneventful although remained above the 134.00 level after yesterday’s mild rebound.

COMMODITIES

• Crude futures partially nursed some of their recent losses but with the rebound limited by the mixed risk tone and following another substantial headline crude build in the private sector inventory data.
• US Energy Inventory Data (bbls): Crude +9.9mln (exp. +2.1mln), Cushing +0.5mln, Gasoline +0.9mln (exp. +0.1mln), Distillates +1.4mln (exp. -1.1mln)
• CPC said it has resumed oil loadings from the Black Sea terminal as the weather has improved.
• Exxon posted USD 2.5bln after-tax earnings in Kazakhstan and produced 246k bpd there for 2022, while it alerted against potential risks of disruptions of Kazakhstan oil through the CPC pipeline.
• Spot gold edged off lows as the greenback pared some of the gains from the FOMC minutes.
• Copper futures were lacklustre alongside the somewhat improved but flimsy risk appetite.

CRYPTO

• Bitcoin strengthened overnight and briefly climbed back above the 24,500 level.

NOTABLE ASIA-PAC HEADLINES

• BoK maintained its base rate at 3.5%, as expected, while it noted uncertainties surrounding the policy decision are high and it deemed it warranted to keep a restrictive policy stance for a considerable time. BoK Governor Rhee said board member Cho Yoon-Je dissented and that the decision should not be taken as indicating the tightening cycle is over. Furthermore, Rhee stated that five members wanted to keep the chance open for the terminal rate to reach 3.75% and that the decision was based on the expectation that inflation will head down from March, while he added that it is time to stop and watch if the inflation trend goes along the expected path.

DATA RECAP

• Australian Capital Expenditure (Q4) 2.2% vs. Exp. 1.3% (Prev. -0.6%)
• Australian Private Capital Expenditure 2023-2024 (AUD)(Est. 1) 129.7B
• Australian Private Capital Expenditure 2022-2023 (AUD)(Est. 5) 158.7B (Prev. 155.7B)

GEOPOLITICS

• Russian Defence Ministry accused Ukraine of planning to stage an 'armed provocation' in the near future against Transnistria, Moldova and noted that it is ready to respond to any changes in the situation, according to a Telegram and RIA news agency.
• Russian President Putin said Moscow will pay increased attention to bolstering the country's nuclear forces and will start mass deliveries of Zirkon sea-launched hypersonic missiles, according to Reuters.
• US President Biden said Russian President Putin's suspension of the New START treaty is a big mistake and is not very responsible, while Biden added that he does not read into Russian President Putin's comments that he's thinking of using nuclear weapons and sees no change in Russia's nuclear posture, according to an interview with ABC News.
• US mulls releasing intelligence on China's potential arms transfer to Russia, according to WSJ.
• UK Defence Minister Wallace said the UK is stepping up weapons production to help Ukraine push back Russian forces and said challenger tanks could go to Ukraine in the spring, according to Reuters.
• Polish PM Duda said he told US President Biden he would like soldiers to move equipment to bases in Poland and that a decision to send equipment to Poland is easier than a decision to send soldiers, while he added that they would give MiG planes first if there is a decision to provide fighter jets to Ukraine.

EU/UK

• Northern Ireland protocol deal is unlikely to be reached until next week, according to The Guardian citing senior sources.