• Both European and US equity futures are firmer, in a continuation of the data-inspired APAC handover; US ISM & Fed speak ahead
• Specifically, the data released included the fastest pace of expansion for Chinese Manufacturing PMI in more than a decade.
• DXY has been pressured by marked Yuan action, while GBP lags post-Bailey and EUR outperforms ahead of German mainland CPI.
• EGBs are softer on the session, give state CPIs & Nagel, though the complex is off lows after Bailey sparked marked Gilt upside.
• Crude has given up initial gains while metals glean support from the softer USD and APAC data.
• Looking ahead, highlights include German mainland CPI (Prelim.), US ISM Manufacturing PMI, New Zealand Export/Import Prices, Speeches from Fed's Kashkari, Earnings from Salesforce & Hilton.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.6%, in a continuation of the APAC handover following strong Chinese PMIs; though, the region awaits mainland German prelim. CPI.
• Sectors are mixed with Basic Resources outperforming given benchmark pricing while Real Estate names lag following earnings and as yields continue to rise.
• Stateside, futures are similarly in the green though magnitudes are incrementally more modest given key data points loom.
• Tesla (TSLA) is reportedly preparing a revamp of its Model Y, via Reuters citing sources; named "project Juniper" with a production start target of October 2024; revamp reportedly includes the exterior and interior of the Model Y. Reminder, Tesla is holding an investor day on March 1st at its Texas facility.
• Lowe's Companies Inc (LOW) Q4 2022 (USD): Adj. EPS 2.28 (exp. 2.21), Revenue 22.445bln (exp. 22.69bln); FY EPS view 13.60-14.00 (exp. 13.73), FY Revenue view 88-90bln (exp. 97.34bln).
• Turkish President Erdogan "indicates" that Presidential and Parliamentary elections will be held on May 14th.
• Click here for more detail.

FX

• Dollar knocked back as punchy Chinese PMIs give the Yuan enough impetus to scale chart resistance, DXY down to 104.270 from just over 105.000, USD/CNY and USD/CNH both under 6.9000 and 200 DMAs.
• Sterling lags as BoE Governor Bailey sounds a word of caution about further hikes or calling time on the tightening cycle.
• Cable sub-1.2050 and EUR/GBP 0.8850+ as EUR/USD extends beyond 1.0665 vs Buck.
• Aussie underpinned by Yuan revival, but gains capped by soft GDP and CPI data.
• PBoC set USD/CNY mid-point at 6.9400 vs exp. 6.9409 (prev. 6.0519)
• Click here for more detail.

FIXED INCOME

• EGBs are softer on the session given initially hot German State CPIs and commentary from ECB's Nagel; however, Gilts have seen a marked bounce in the wake of BoE's Bailey.
• Specifically for EGBs, Bunds dropped to a 131.86 trough with the 10yr yield at a fresh 2.72% YTD peak, though they are off-worst given the readacross from Gilts and as the State CPIs overall are more in-line with the prior.
• For the UK, Bailey's remarks prompted marked two-way action with Gilts/STIRs eventually focusing on the dovish-elements, lifting Gilts to a 100.30+ peak vs a 99.37 initial low.
• Stateside, USTs remain soft within 111.08+ to 111.18 parameters ahead of Final PMIs, ISM Manufacturing and Fed's 2023 voter Kashkari; yield curve elevated with action much more pronounced at the short-end.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have given up initial gains after Tuesday's firmer settlement, with the initial more tentative European tone vs Asia and the Private Inventory build capping upside.
• Specifically, WTI Apr and Brent May are at the lower-end of USD 76.21-77.74/bbl and USD 82.68-84.20/bbl parameters respectively.
• US Energy Inventory Data (bbls): Crude +6.2mln (exp. +0.5mln), Cushing +0.5mln, Gasoline -1.8mln (exp. +0.5mln), Distillates -0.3mln (exp. -0.5mln).
• Nat Gas futures are firmer in Europe and the US, with technicians focusing on Henry Hub's 21-DMA while TTF reclaims some last ground after recently dipping below EUR 50/MWh.
• Spot gold and metals more broadly are modestly firmer, benefitting from the softer USD while base metals outperform their precious counterparts following China's strong PMI releases.
• Click here for more detail.

NOTABLE HEADLINES

• BoE Governor Bailey says he would caution against suggesting either that the BoE is done with hiking rates or that BoE will inevitably need to do more; have to monitor carefully how the tightening already done is working its way through the economy. Further increase in Bank Rate may turn out to be appropriate, but nothing is decided. The incoming data will add to the overall picture of the economy and the outlook for inflation, and that will inform our policy decisions. If BoE does too little with rates now, BoE will only have to do more later on. Must ensure that the situation does not get worse through homemade inflation taking hold.. Click here for more detail alongside analysis & reaction.
• ECB's Villeroy expects growth in France to be slightly positive this year, desirable to reach terminal by the Summer i.e. September at the latest. France's public debt ratio is not decreasing, unlike that of other major countries within the EZ.
• ECB's Nagel says further significant rate hikes beyond March may be needed, favours a stepper reduction of the APP portfolio from July. Energy price decline has no essential bearing on the ECB's medium-term inflation projections.

DATA RECAP

• German North Rhine-Westphalia State CPI YY (Feb) 8.5% (Prev. 8.3%); MM (Feb) 1.0% (Prev. 0.9%). The mainland German CPI is expected at 8.5% (prev. 8.7%) YY and 0.6% (prev. 1.0%) MM; HICP expected at 9.0% (prev. 9.2%) YY and 0.7% (prev. 0.5%) MM. Due for release at 13:00GMT/08:00ET. Overall, the skew of state CPIs have been firmer/in-line with their priors.
• EU S&P Global Manufacturing Final PMI (Feb) 48.5 vs. Exp. 48.5 (Prev. 48.5)
• UK S&P GLBL/CIPS Manufacturing PMI FNL (Feb) 49.3 vs. Exp. 49.2 (Prev. 49.2)
• UK BRC Shop Price Index YY (Feb) 8.4% (Prev. 8.0%)
• UK Nationwide house price YY (Feb) -1.1% vs. Exp. -0.9% (Prev. 1.1%); MM (Feb) -0.5% vs. Exp. -0.4% (Prev. -0.6%)
• UK Mortgage Lending (Jan) 2.541B GB vs. Exp. 2.95B GB (Prev. 3.238B GB, Rev. 3.082B GB); Approvals (Jan) 39.637k vs. Exp. 38.0k (Prev. 35.612k, Rev. 40.54k)

NOTABLE US HEADLINES

• US President Biden plans a relentless focus on the economy during his re-election race, even as much of the public doubts the country's direction, according to Axios.
• A senior US Treasury Official reportedly travelled to Beijing, China recently, via WSJ citing sources; meeting was not aimed at setting up a trip for Treasury Secretary Yellen, meeting described as "constructive and friendly".
• Click here for the US Early Morning note.

GEOPOLITICS

• Turkish President Erdogan "indicates" that Presidential and Parliamentary elections will be held on May 14th.
• "Russia is concerned about information that a Kiev provocation using radioactive materials could take place near Transnistria", according to Russian Foreign Ministry Spokeswoman cited by Tass.

CRYPTO

• Bitcoin has experienced marked upside to a test of the USD 24k mark from a circa. USD 23k base, though it is yet to surpass the figure and remains someway shy of recent USD 25k+ parameters.

APAC TRADE

• APAC stocks were mostly positive as the region digested a slew of data releases including the fastest pace of expansion for Chinese Manufacturing PMI in more than a decade.
• ASX 200 was initially pressured by weakness in telecoms and financials, but later pared the losses as the miss on quarterly GDP and softer monthly CPI data effectively eased some of the hawkish pressure on the RBA.
• Nikkei 225 lacked firm direction with price action confined to a narrow range around the 27,500 level.
• Hang Seng and Shanghai Comp. were supported by the blockbuster official Chinese PMI data which printed its highest since April 2012 and Caixin Manufacturing PMI also returned to expansion territory. Furthermore, a surge in tech spearheaded the outperformance in Hong Kong, while advances in the mainland were somewhat moderated by US-China frictions as the Biden administration considers revoking export licenses issued to US suppliers for sales to Huawei and with the US also barring chipmakers from expanding capacity in China for 10 years if they are to receive some of the federal funding from the CHIPS Act.
• US equity futures (ES Unch.) were uneventful but moved off lows as sentiment in Asia gradually improved

NOTABLE ASIA-PAC HEADLINES

• Chinese Finance Minister Liu Kun said proactive fiscal policy will be more forceful, while he added that China's economy will continue its rebound and local governments will see better fiscal conditions.
• BoJ JGB market survey shows the index measuring market functioning deteriorating to -64 for February (prev. -51, Nov.), the lowest on record.
• China's economy is recovering faster than expected by top officials, suggesting that the government might be restrained in rolling out new stimulus measures this year, according to Bloomberg sources.

DATA RECAP

• Chinese NBS Manufacturing PMI (Feb) 52.6 vs. Exp. 50.5 (Prev. 50.1); Non-Manufacturing PMI (Feb) 56.3 vs. Exp. 55.0 (Prev. 54.4)
• Chinese Composite PMI (Feb) 56.4 (Prev. 52.9); Caixin Manufacturing PMI (Feb) 51.6 vs. Exp. 50.2 (Prev. 49.2)
• Australian Real GDP QQ SA (Q4) 0.5% vs. Exp. 0.8% (Prev. 0.6%); YY SA (Q4) 2.7% vs. Exp. 2.7% (Prev. 5.9%)
• Australian CPI YY (Jan) 7.4% vs Exp. 8.0% (Prev. 8.4%)