• European equities are mixed whilst US futures meander around the unchanged mark; the Russell underperforms as Moody’s downgrades NYCB’s rating
• Dollar is flat and holds just above 104.00, GBP the G10 outperformer
• Bonds are divergent, though the overall trend is bearish ahead of US supply
• Crude benchmarks are firmer and XAU holds around flat alongside base metals as we await updates on the ceasefire proposal
• Looking ahead, US Trade Data, NBP Policy Announcement, US Budget and Economic Outlook 2024 to 2034, Comments from, Fed’s Kugler, Barkin, Collins & Bowman, Supply from the US, Earnings from Uber & PayPal.

EUROPEAN TRADE

EQUITIES

• European equities are generally lower and have been edging lower since the open; the FTSE MIB remains firmer with banks assisted by gains in BMPS (+5.6%).
• European sectors are mixed; Autos hold the top spot, with several names benefitting from strong Ford (+6%) earnings after-hours. Meanwhile, China’s MOFCOM has issued guidelines to support the EV industry. Optimised Personal Care is hampered by Sainsbury’s (-3.6%) after its trading update.
• US equity futures (ES U/C, NQ +0.1%, RTY -0.5%) meander the unchanged mark, with underperformance in the Russell and investors jittery after Moody’s downgraded New York Community Bancorp (-9.3% pre-market) to junk status of Ba2.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from TotalEnergies, Sainsbury's (update) & more.
• Click here for more details.

FX

• Dollar trades within tight parameters of 104.01-16 after yesterday's pullback from Monday's 104.60 YTD peak. Sits below its 100DMA at 104.20 with support seen at 104 and Monday's 103.96 trough.
• EUR is steady against the USD after printing a YTD low of 1.0722 yesterday. Comments from Schnabel suggest that imminent rate cuts are not forthcoming; Upside sees 100DMA at 1.0784.
• GBP managing to eke out modest gains vs. the USD after printing a YTD low on Monday at 1.2519. Interim catalysts for the UK are light ahead of a raft of data next week.
• NZD once again the better performer of the two, this time thanks to stronger-than-expected job metrics overnight. NZD/USD back on a 0.61 handle but needs a more sustained pick-up to reverse the 2024 downtrend.
• PBoC set USD/CNY mid-point at 7.1049 vs exp. 7.1858 (prev. 7.1082).
• Click here for more details.

FIXED INCOME

• USTs are pivoting the unchanged mark with newsflow slow thus far though banking fears remain in view after NYCB was cut at Moody's. In a similar fashion to peers, within 110-22+ to 111-21+ WTD bounds; US 10yr due, 3yr was well received.
• Gilts were unreactive to commentary from BoE's Breeden who said her focus is now on how long to keep rates at current levels, but added little on the timing of easing aside from emphasising the need for more data around pay growth and demand; within WTD levels of 97.71-98.79 with the accompanying 10yr yield yet to reclaim 4.0%.
• Bunds are at the unchanged mark with initial upside stalling a handful of ticks above Tuesday's 134.55 best and someway shy of the WTD 134.98 peak; EGBs unreactive to soft German Industrial Output; a strong German 2030 outing led to marginal upticks in the complex, but this ultimately proved fleeting.
• UK sells GBP 4bln 3.75% 2027 Gilt: b/c 3.04x (prev. 3.44x), average yield 4.131% (prev. 3.887%) & tail 0.5bps (prev. 0.2bps)
• Germany sells EUR 2.476bln vs exp. EUR 3.0bln 2.40% 2030 Bund: b/c 2.15x (prev. 1.92x), average yield 2.22% (prev. 2.7%) & retention 17.47% (prev. 19.0%)
• Guidance for the Belgium 30yr EUR-denominated syndication at the June 2054 benchmark +7bps.
• Click here for more details.

COMMODITIES

• Crude is firmer but upside remains somewhat limited amid a lack of fresh fundamentals in the mid-week European morning; Brent Apr sits between a USD 78.49-79.04/bbl parameter. Complex ultimately unreactive to reports that Hamas has proposed a 135-day truce which will be in three phases, via Al Arabiya.
• XAU is flat and within a particular narrow USD 5/oz range thus far, largely moving in tandem with the Dollar with traders on standby for a slew of Fed speakers in the European afternoon.
• Base metals are contained in the run-up to the Chinese New Year, but prices have been edging into slightly negative territory in recent trade in tandem with the performance across European equities.
• IEA Executive says seeing delays of oil product deliveries impacting European markets in particular due to Red Sea attacks; global oil markets comfortable with supply with growth from Non-Opec producers and demand not robust due to macroeconomic concerns
• OPEC executive sees global oil demand to grow by 2.2mln bpd this year and to taper to 1.8mln bpd next year, while the executive added to expect 2022-2045 to see incremental additional demand of at least 60mln bpd, according to Reuters.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK may have narrowly slipped into a technical recession at the end of 2023, according to NIESR estimates cited by FT.
• UK will wave through animal products from the EU without checks under a contingency plan if there are capacity issues as ports, according to documents cited by FT.
• ECB's Schnabel said lower borrowing costs risk flare-up of inflation and that the last mile in bringing down inflation could be the most difficult one. Schnabel also noted that commercial lenders are reducing borrowing rates on mortgages in expectation the ECB will start cutting interest rates soon and that if demand is held back by restrictive monetary policy, it will be much harder for firms to pass through higher costs to consumers, according to FT.
• BoE's Breeden says she has become less concerned that rates might need to be tightened further; focus shifted to how long rates need to remain at their current level
• Riksbank Minutes of the monetary policy meeting on 31 January. Click here for full details.

DATA RECAP

• UK Halifax House Prices MM (Jan) 1.3% (Prev. 1.1%)
• German Industrial Output MM (Dec) -1.6% vs. Exp. -0.4% (Prev. -0.7%)
• French Non-Farm Payrolls QQ (Q4) 0.0% (Prev. 0.10%)
• French Trade Balance, EUR, SA (Dec) -6.829B (Prev. -5.943B, Rev. -5.939B); Imports, EUR (Dec) 57.021B (Prev. 55.395B); Exports, EUR (Dec) 50.192B (Prev. 49.451B); Current Account (Dec) -0.7B (Prev. -2.8B)
• Spanish Ind Output Cal Adj YY (Dec) -0.2% vs. Exp. -0.2% (Prev. 0.8%, Rev. 0.9%)
• Italian Retail Sales NSA YY (Dec) 0.3% (Prev. 1.5%); Retail Sales SA MM (Dec) -0.1% (Prev. 0.4%)

NOTABLE US HEADLINES

• Fed's Harker (non-voter) said the Fed's decision to hold rates was the correct move and noted that data shows inflation is falling and the labour market is in better balance. Harker also said consumer spending has been resilient and sees real progress on getting inflation back to 2%, while he added that the economy is on track for a soft landing.
• US House rejected the Republican-led effort to pass a standalone Israel aid bill without funds for Ukraine with the final vote at 250 to 180, which is short of the two-thirds majority required for the expedited procedure.
• Moody's downgraded New York Community Bancorp's (NYCB) long-term issuer rating to junk status of Ba2 and said most ratings remain on review for a further downgrade. Moody's added that NYCB's elevated use of market funding may limit the bank's financial flexibility in the current environment and that pressure on profitability could challenge NYCB's internal capital generation plans.
• New York Community Bancorp (NYCB) issued current liquidity and deposit information in which it noted that it maintains over USD 10bln of reciprocal deposit capacity to offer expanded deposit insurance to its clients and that total uninsured deposits excluding collateralised and internal deposits are USD 22.9bln. NYCB said it took decisive actions to fortify the balance sheet and strengthen risk management processes during Q4, while it added that total deposits are around USD 83bln and total liquidity of USD 37.3bln exceeds uninsured deposits with a coverage ratio of 163. Furthermore, it stated that Moody's downgrade is not expected to have a material impact on contractual arrangements.

EARNINGS

• Ford Motor Co (F) Q4 2023 (USD): Adj. EPS 0.29 (exp. 0.14), Revenue 46bln (exp. 40.12bln); declares Q1 regular dividend of 0.15/shr and supplemental dividend of 0.18/shr. KEY METRICS: Ford Blue revenue 26.2bln (exp. 24.52bln). Ford Model E revenue 1.6bln (exp. 1.91bln). Ford Pro revenue 15.4bln (exp. 13.86bln). Adj. EBIT 1.1bln (exp. 997.4mln). FY24 GUIDANCE: Adj. EBIT 10-12bln (exp. 9.24bln). Ford Pro EBIT at least 8-9bln (exp. 7.05bln). Ford Blue Ebit 7-7.5bln (exp. 6.34bln). (Newswires) Shares +6.1% in pre-market trade
• Gilead Sciences Inc (GILD) - Q4 2023 (USD): Adj. EPS 1.72 (exp. 1.76), Revenue 7.12bln (exp. 7.10bln). Sees FY adj. EPS USD 6.85-7.25 (exp. 7.21). Sees FY total product sales 27.10bln-27.50bln (exp. 27.66bln). (Newswires) Shares -1.7% in pre-market trade
• Snap Inc (SNAP) - Q4 2023 (USD): Adj. EPS 0.08 (exp. 0.06), Revenue 1.36bln (exp. 1.38bln). KEY METRICS: Adj. EBITDA 159.1mln (exp. 111.8mln). DAUs 414mln (exp. 411.59mln). ARPU 3.29 (exp. 3.33). GUIDANCE: Q1 revenue 1.10-1.14bln (exp. 1.11bln). Q1 adj. EBITDA loss 55-95mln (exp. loss 32.7mln). Q1 DAUs 420mln (exp. 418.55mln). COMMENTARY: “While we are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners, we estimate that the onset of the conflict in the Middle East was a headwind to year-over-year growth of approximately 2 percentage points in Q4.” (Newswires) Shares -30.7% in pre-market trade
• Siemens Energy (ENR GY) - Q1 (EUR): Net 1.88bln (exp. 813mln, prev. -384mln Y/Y), Revenue 7.65bln (exp. 7.42bln, prev. 7.06bln Y/Y), Orders 15.4bln +23.9%. Affirms outlook. (Newswires) Shares +0.8% in European trade
• TotalEnergies (TTE FP) - Q4 (USD) adj. net 5.23bln (exp. 5.66bln), adj. EBITDA 11.69bln (exp. 11.66bln). Final dividend of 0.79/shr. Plans a USD 2bln share buyback in Q1, which will remain the base level for quarterly buybacks in the current environment. Shares -2.2% in European trade
• BMPS (BMPS IM) – Q4 (EUR): Net 1.12bln (exp. 340mln), Revenue 993mln (exp. 953mln), Resumes dividend first time in 13 years. CET1 Ratio 18.1% (prev. 15.6% Y/Y). (Newswires) Shares +5.5% in European trade

GEOPOLITICS

• Hamas proposes 45 day phase where remains and bodies will be exchanged; proposes indirect talks with Israel in the first stage to end military operations and restore total calm, in document seen by Reuters.
• Hamas has proposed a 135-day truce which will be in three phases, via Al Arabiya.
• Saudi's Foreign Ministry said there will be no diplomatic relations with Israel without recognising an independent Palestinian state and ending Israeli aggression in Gaza, according to Reuters.
• Iraq's Foreign Minister stressed in a call with US Secretary of State Blinken a need to return to the negotiation table over the future of the US-led coalition in Iraq and asked Blinken for the US to reconsider sanctions imposed on Iraqi banks, according to Reuters.

CRYPTO

• Bitcoin modestly lower, though still holds above the USD 43k mark.

APAC TRADE

• APAC stocks were mostly positive after a decline in global yields and further Chinese support efforts.
• ASX 200 gained with the index led by outperformance in mining and property sectors amid lower yields.
• Nikkei 225 was indecisive amid a slew of earnings and with the BoJ reportedly on track for a policy shift by April.
• Hang Seng and Shanghai Comp were mixed despite early momentum following the latest support efforts from China which were targeted at real estate financing and new energy vehicles. Nonetheless, Chinese stocks gradually faded some of their initial gains and the Hong Kong benchmark ultimately turned negative.

NOTABLE HEADLINES

• China's MOFCOM issued guidelines to support the new energy vehicle industry and will optimise credit support for the NEV sector, as well as improve management for exports. MOFCOM encourages NEV firms to set up R&D centres overseas and will optimise export procedures for NEVs and batteries, while it will guide banks to provide domestic and overseas financial services for the NEV supply chain.

DATA RECAP

• New Zealand HLFS Job Growth QQ (Q4) 0.4% vs. Exp. 0.3% (Prev. -0.2%); HLFS Unemployment Rate (Q4) 4.0% vs. Exp. 4.2% (Prev. 3.9%); Labour Cost Index QQ(Q4) 1.0% vs. Exp. 0.8% (Prev. 0.8%); Labour Cost Index YY (Q4) 3.9% vs. Exp. 3.8% (Prev. 4.1%)
• Chinese FX Reserves (Monthly) (Jan) 3.219Trl vs. Exp. 3.217Trl (Prev. 3.238Trl)