• European bourses & US futures are contained in relatively narrow ranges pre-Powell, following firmer but ultimately capped APAC action on China trade data
• DXY continues to inch higher but has stalled at 104.50 before Monday's 104.69 best; AUD lags post-RBA
• EGBs/Gilts initially tested/breached Monday's best, but have pulled back slightly following relatively lacklustre auctions
• USTs are firmer and at the top-end of their range ahead of Fed speak and 3yr supply
• Crude benchmarks are pivoting the unchanged mark given the above, focus also on numerous geopolitical updates
• Looking ahead, highlights include US Manheim index, Speeches from Fed's Powell, BoE's Dhingra, SNB's Jordan, Supply from the US

EUROPEAN TRADE

EQUITIES

• European bourses are contained, Euro Stoxx 50 +0.1%, and reside in contained ranges ahead of Fed Chair Powell.
• Sectors are mostly in the green, though the breadth of performance is narrow given the above.
• Stateside, futures are also in close proximity to the unchanged mark though they do have a slight upward-bias pre-Powell as yields ease; NQ +0.3%.
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FX

• The DXY continues to inch higher, but has seemingly hit a ceiling at 104.50 before Monday's 104.69 best, with peers mostly contained/slightly softer vs USD pre-Powell.
• Though, AUD bucks-the-trend and is markedly softer after the RBA hiked by 25bp and tweaked its accompanying statement, which has been taken as a dovish-adjustment by markets; AUD/USD at the lower-end of 0.6669-0.6747 parameters.
• GBP and JPY are little changed despite familiar hawkish remarks from BoE's Mann and a further easing of UST yields respectively; Cable holding at 1.20, where the 100-DMA resides, while USD/JPY has pulled back from a brief breach of 136.00.
• CAD is rangebound on the eve of the BoC while the SEK has shrugged off more familiar remarks from Riksbank's Thedeen on inflation and the SEK.
• PBoC set USD/CNY mid-point at 6.9156 vs exp. 6.9159 (prev. 6.8951)
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FIXED INCOME

• Bunds have moved within a handful of ticks of Monday's best while Gilts eclipsed their peak following the latest ECB Consumer survey.
• However, the benchmarks have since faded slightly from 131.78 and 100.62 respective peaks following lacklustre UK and German issuance.
• Stateside, USTs are firmer and at the top-end of 111.00-111.12 ranges with yields softer and the curve slightly flatter pre-Powell and 3yr supply.
• Retail orders for the new March 2028 BTP Italia reached EUR 5bln since the start of the offer, according to bourse data.
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COMMODITIES

• Crude benchmarks are in close proximity to the unchanged mark in-fitting with the broader tentative risk tone, WTI & Brent front-month futures reside within sub-USD 1/bbl parameters.
• US energy envoy Hochstein said Russian oil price caps are working well and that Russian oil continues to flow which is selling at a discount, according to Reuters.
• China's average daily crude oil imports in January-February were at the highest since May last year, according to Reuters calculations based on customs records.
• MMG's Las Bambas mine is set to resume copper transportation, according to a minister.
• Ukraine has begun bilateral online discussions with partners on extending the Black Sea grain export deal but not with Russia, according to a source in the Ukraine government cited by Reuters.
• Gas futures are similarly contained with focus on Bloomberg reports that the EU will be making a move as a buyer's group on international markets in April.
• Spot gold is incrementally softer as the USD retains a positive-bias; yellow metal holding just above the 21-DMA at USD 1842.6/oz while base metals are softer given broader priced action and APAC price action following China's trade data.
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NOTABLE HEADLINES

• Barclays said UK February consumer spending rose 5.9% Y/Y which was hit by a reduction in non-essential spending and higher food prices, while the sales growth was also affected by comparison to the base as there was a spike in spending in February 2022 after COVID restrictions were lifted.
• ECB Consumer Expectations Survey: Inflation Expectations: 4.9% 12-months ahead (Dec 5.0%); Nominal Income: 1.3% over the next 12-months (Dec +1.0%); Nominal Spending: 3.8% over the next 12-months (Dec +4.2%)
• ECB’s Stournaras says he is confident that credit rating agencies will upgrade Greece’s bonds within months. Elsewhere, Stournaras would not pre-commit to specific further rate increases amid a backdrop of headline inflation declining; saying, it could increase rather than limit market confusion. (FT)
• ECB's de Cos says core inflation is to remain elevated in the short term, and thereafter ease gradually.
• BoE's Mann says more needs to be done with rates. Weak GBP is significant for inflation; could be more to go in terms of how much is priced into GBP.
• Riksbank's Thedeen says wants to see a stronger SEK; there is not a strong argument that the SEK should be weak or weaker because of the housing market. Underlying inflation has not turned, and is still too high.
• TotalEnergies' (TTE FP) Gonfreville refinery (240k BPD) is completely blocked; Exxon's (XOM) Port Jerome (270k BPD) and Fos Sur Mer (140k BPD) refineries are on strike, via the union. Subsequently, TotalEnergies says there is no shortage of fuel within its gas stations, reserves at a high level.

DATA RECAP

• UK BRC Retail Sales YY (Feb) 4.9% (Prev. 3.9%); Total Sales YY (Feb) 5.2% (Prev. 4.2%)
• German Industrial Orders MM (Jan) 1.0% vs. Exp. -0.9% (Prev. 3.2%, Rev. 3.4%)
• Swiss Unemployment Rate Adj. (Feb) 1.9% vs. Exp. 1.9% (Prev. 1.9%)

NOTABLE US HEADLINES

• The White House will propose raising taxes on Americans earning more than USD 400k and reducing what Medicare pays for prescription drugs "in an attempt to ensure that the health-care program for seniors is funded for the next two decades", WaPo reports.
• Subsequently, US President Biden in the New York Times: "My Plan to Extend Medicare for Another Generation". Click here for more detail.

GEOPOLITICS

• Chinese Foreign Minister Qin Gang said China-Russia relations are not subjected to interference by third parties and the more turbulent the world is, the more China-Russia relations must advance. Qin stated that China did not create the crisis in Ukraine and has not provided weapons to either side of the conflict, while he added that conflict, sanctions and pressures won't solve the crisis. Furthermore, he said dialogue should begin as soon as possible and what is needed now is calmness and rationality.
• North Korea said US and South Korean military actions have gone too far and leader Kim's sister said North Korea will see it as a declaration of war if the US takes military action against strategic weapon tests, according to KCNA.
• North Korea says South Korea launched 30 rounds of artillery on Tuesday near its border, KCNA reports. Subsequently, North Korea's Foreign Ministry says "The danger of a nuclear war on the Korean peninsula turns from fantasy into reality because of Washington and Seoul", via Al Jazeera.
• Syrian state media reported Israeli aggression targeting Syria's Aleppo International Airport and a Syrian military source said Israeli aggression put Aleppo International Airport out of service.
• South Korea spy agency says North Korea could test a new ICBM in March or April, according to Newsis.
• Russia Defense Minister Shoigu says seizure of Bahkmut will allow further offensives in Ukraine, Interfax reports. Reminder, western officials have pushed back on the strategic importance of Bahkmut in recent sessions.
• Belarus President Lukashenko says Ukraine, by order of the US, seeks to drag Belarus into the war.

CRYPTO

• Bitcoin is slightly softer on the session, but remains steady overall within very narrow ranges given the broader risk tone.

APAC TRADE

• APAC stocks traded mostly higher although gains were capped as participants digested the latest Chinese trade data and with cautiousness ahead of Fed Chair Powell's testimony in Congress.
• ASX 200 pared losses after the RBA rate decision where it hiked rates as expected but provided a slightly less hawkish tone in which it noted the Board expects further tightening of monetary policy will be needed which was a subtle tweak from its prior guidance that the Board expects further increases in interest rates will be needed, while it also noted that monthly CPI suggests inflation seems to have peaked.
• Nikkei 225 shrugged off the early weakness to trade marginally higher in the aftermath of the softer-than-expected labour earnings data including the largest decline in real wages since May 2014 which reduces the likelihood of a sooner exit from the BoJ’s ultra-easy policy.
• Hang Seng and Shanghai Comp. were choppy amid mixed Chinese trade data which showed a continued contraction in both dollar-denominated exports and imports, while it was also reported that the White House is considering pushing Congress on dealing with TikTok and that US Senators will announce a bill to comprehensively address the ongoing threat posed by technology from foreign adversaries.

NOTABLE ASIA-PAC HEADLINES

• China's State Councillor says they are to establish a national financial regulatory administration, to advance the reform of PBoC branches; to downsize staff of central-level state institutions by 5%. Deepen reform of local financial regulatory system. To abolish the China Banking and Insurance Regulatory Commission, regulator to become an agency directly under state council.
• China's Housing Minister says full of confidence in the stabilisation and rebound in China's property market; says confidence among market players is recovering. The resumption rate of many housing project has been greatly improved.
• Chinese President Xi condemned US-led suppression of China, according to state media cited by AFP.
• Chinese Foreign Minister Qin Gang said US perception of China has seriously deviated and that the US thinks China is its main rival. Qin also stated that US so-called competition means containing and suppressing China, while he warned there will be conflict and confrontation if the US does not change its path but also stated that China is committed to promoting healthy and stable development of China-US relations, according to Reuters.
• Taiwan's Defence Minister Chiu said he is not aware of President Tsai meeting with US House Speaker McCarthy but added that if China makes a move, the military's role is to fight. Chiu added that they don't expect it to happen, but will not allow repeated provocations from China.
• US Senators Warner and Thune are to announce a bill on Tuesday that will comprehensively address the ongoing threat posed by technology from foreign adversaries such as TikTok. In relevant news, the German government plans to ban telecom operators from using certain components of Huawei and ZTE in 5G networks.
• RBA hiked rates by 25bps to 3.60%, as expected, while the Board remains resolute in its determination to return inflation to the target and expects further tightening of monetary policy will be needed which was a slight tweak from its previous guidance that the Board expects that further increases in interest rates will be needed, while it also noted that monthly CPI suggests inflation seems to have peaked. Furthermore, the RBA said growth in the Australian economy has slowed and the labour market remains very tight, although conditions have eased a little and that uncertainties mean that there is a range of potential scenarios for the Australian economy.

DATA RECAP

• Chinese Trade Balance (USD)(Feb) 116.88B vs. Exp. 81.8B (Prev. 78.0B)
• Chinese Exports YY (USD)(Feb) -6.8% vs. Exp. -9.4% (Prev. -9.9%); Imports YY (USD)(Feb) -10.2% vs. Exp. -5.5% (Prev. -7.5%)
• Chinese Trade Balance (CNY)(Feb) 810.3B (Prev. 550.1B)
• Chinese Exports YY (CNY)(Feb) 0.9% (Prev. -0.5%); Imports YY (CNY)(Feb) -2.9% (Prev. 2.2%)
• Japanese Labour Cash Earnings YY (Jan) 0.8% vs Exp. 1.9% (Prev. 4.8%, Rev. 4.1%)
• Australian Trade Balance (AUD)(Jan) 11.7B vs. Exp. 12.5B (Prev. 12.2B)
• Australian Exports (Jan) 1% (Prev. -1%); Imports (Jan) 5% (Prev. 1%)