• Equities are mixed, with the Dax 40 continuing to trade near/at ATHs, and as attention remains on US PCE
• Dollar is modestly weaker, largely a factor of the strong JPY after hawkish leaning BoJ speak
• Bonds are pressured following the hotter-than-expected European CPI data
• Crude is pressured with a lack of fresh catalysts; XAU initially benefitted from the weaker Dollar, though now off best levels
• Looking ahead, US PCE Price Index, IJC, Chicago PMI, Canadian GDP, Australian PMI, Japanese Unemployment Rate, Comments from Fed’s Bostic, Goolsbee & Mester, Earnings from Bath & Body Works, Best Buy & Hewlett Packard Enterprises

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.1%) are mixed and trade has remained rangebound throughout the session; the DAX 40 (+0.4%) outperforms, and continues to trade towards/at ATHs.
• European sectors are mixed; Construction & Materials takes the top spot, lifted by gains in CRH (+7.3%) post-earnings. Tech is found at the bottom of the pile, with many of the chip names continuing to underperform.
• US Equity Futures (ES -0.3%, NQ -0.3%, RTY +0.1%) are mostly lower, with trade continuing the downbeat price action seen in the prior session. In terms of individual movers, Salesforce (-1.9%) slipped on its results, which although reported strong metrics, its FY25 guidance missed analyst expectations.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from IAG, Covestro, MTU Aero & more.
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FX

• DXY is a touch softer as a by-product of JPY strength. DXY has ventured to a low of 103.75, stopping shy of the 200DMA at 103.69 and yesterday's low at 103.60. The fate for the index today will almost certainly be determined by US PCE metrics.
• EUR marginally gains vs. the USD amid a slew of EZ data with (on balance) firmer regional CPIs taking focus ahead of tomorrow's EZ-wide metrics. EUR/USD mounted yesterday's best at 1.0840.
• JPY is the standout outperformer across the majors following "hawkish" BoJ comments overnight. This has given JPY some reprieve with USD/JPY pulling back to a low of 149.62 (matches 21DMA) from a high of 150.69. A hot core PCE release could reverse the pair's fortunes and bring attention back to the YTD peak at 150.88.
• Differing fortunes for the antipodes with AUD/USD back on a 0.65 handle after bottoming out yesterday at 0.6488 post-USD strength. NZD/USD remains above yesterday's 0.6082 trough but is unable to reclaim 0.61 status.
• PBoC set USD/CNY mid-point at 7.1036 vs exp. 7.1938 (prev. 7.1075).
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FIXED INCOME

• The bearish narrative continues for Bunds; French CPI sparked some initial downside, though further hotter-than-expected releases from Spain and Germany (state), firmly guided the hawkish direction. Bunds have been drifting lower and are now at a fresh YTD low at 131.62, with the 10yr yield above 2.5%.
• USTs are driven by EGBs so far but also potentially positioning into the US January PCE data, which will be gauged to see if it conforms to the hotter narrative of other January pricing metrics; currently holds just above 110-00.
• Gilt price action conformed with EGBs into the latest BoE mortgage data with no reaction to the numbers despite lending and approvals printing below/above their respective forecast ranges. EGB-driven action has similarly pushed Gilts to a fresh YTD low at 96.83.
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COMMODITIES

• Crude benchmarks are under modest pressure but are comparably contained when judged against Wednesday's whipsaw price action; currently holds around the USD 82/bbl mark.
• Spot gold is incrementally softer initially benefitting from a weaker Dollar, though now off best levels; USD 2032/oz 50-DMA remains untested with the current low at USD 2034/oz.
• Base metals are bid and deriving support from USD downside, the overall European risk tone and strength in China.
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NOTABLE EUROPEAN HEADLINES

• ECB's Vasle said the ECB is looking at a rate-cutting phase if there are no big surprises and the timing of cuts depends on inflation.
• ECB will continue to put a 'floor' underneath market interest rates in the years ahead, though banks will have a greater role in determining how much liquidity they want, via Reuters citing sources.
• UK appoints Clare Lombardelli as the the next BoE Deputy Governor for monetary policy; replaces Broadbent who leaves at the end of June.
• ECB's Holzmann says a serious discussion at the ECB on rate reductions is unlikely before June, via Politico [published Feb. 28th]

DATA RECAP

• Inflation data out of Europe has significantly cooled from the prior, but still printed hotter than expectations. Attention will remain on German CPI at 13:00 GMT / 08:00 ET and the EZ-wide figure tomorrow.
• French CPI Prelim MM NSA (Feb) 0.8% vs. Exp. 0.7% (Prev. -0.2%); CPI Prelim YY NSA (Feb) 2.9% vs. Exp. 2.7% (Prev. 3.1%); Consumer Spending MM (Jan) -0.3% vs. Exp. -0.2% (Prev. 0.3%); CPI (EU Norm) Prelim YY (Feb) 3.1% vs. Exp. 3.0% (Prev. 3.4%)
• French Producer Prices MM (Jan) -1.3% (Prev. 0.1%, Rev. -0.1%); GDP QQ Final (Q4) 0.1%
• Spanish HICP Flash YY (Feb) 2.9% vs. Exp. 2.9% (Prev. 3.5%); CPI YY Flash NSA (Feb) 2.8% vs. Exp. 2.7% (Prev. 3.4%); Core 3.4% (prev. 3.6%)
• German Unemployment Chg SA (Feb) 11.0k vs. Exp. 7.0k (Prev. -2.0k); Unemployment Rate SA (Feb) 5.9% vs. Exp. 5.8% (Prev. 5.8%); Unemployment Total SA (Feb) 2.713M (Prev. 2.694M); Unemployment Total NSA (Feb) 2.814M (Prev. 2.805M)
• German Bavaria State CPI MM (Feb) 0.5% (Prev. 0.2%); Bavaria State CPI YY (Feb) 2.6% (Prev. 2.9%)
• German Retail Sales YY Real (Jan) -1.4% vs. Exp. -1.5% (Prev. -1.7%); Retail Sales MM Real (Jan) -0.4% vs. Exp. 0.5% (Prev. -1.6%)
• Swiss KOF Indicator (Feb) 101.6 vs. Exp. 102.0 (Prev. 101.5, Rev. 102.5); GDP YY (Q4) 0.6% vs. Exp. 0.7% (Prev. 0.3%, Rev. 0.4%); GDP QQ (Q4) 0.3% vs. Exp. 0.1% (Prev. 0.3%)
• Italian Industrial Sales MM SA (Dec) 2.1% (Prev. -1.0%, Rev. -0.9%)
• UK Mortgage Approvals (Jan) 55.227k vs. Exp. 52.0k (Prev. 50.459k, Rev. 51.506k); Mortgage Lending (Jan) -1.086B GB vs. Exp. 0.2B GB (Prev. -0.83B GB, Rev. -0.854B GB); BOE Consumer Credit (Jan) 1.877B GB vs. Exp. 1.6B GB (Prev. 1.197B GB, Rev. 1.257B GB); M4 Money Supply (Jan) -0.1% (Prev. 0.5%)
• UK Lloyds Business Barometer (Feb) 42 (Prev. 44)
• Swedish Retail Sales YY (Jan) -1.2% (Prev. -2.2%); Retail Sales MM (Jan) 0.4% (Prev. -0.2%); GDP Final QQ (Q4) -0.1% vs. Exp. 0.1% (Prev. 0.1%); GDP Final YY (Q4) -0.2% vs. Exp. -0.3%

EARNINGS

• Covestro (1COV GY) - Q4 (EUR): adj. EBITDA 132mln (exp. 99mln), Revenue 3.35bln (exp. 3.44bln). Decides not to pay a dividend. Expects economic conditions to remain challenging in 2024. Guides Q1 EBITDA 180-280mln (exp. 204mln). Guides initial FY24 EBITDA 1-1.6bln (exp. 1.36bln), Revenue 14-15bln (exp. 14.7bln). Shares +1.8% in European trade
• IAG (IAG LN) – FY (EUR): Revenue 29.5bln (exp. 29.4bln), adj. Net 2.66bln (exp. 2.29bln), adj. Operating 3.5bln (exp. 3.5bln). 92% booked for Q1 and 62% for H1. Positive outlook for 2024, expect to generate significant cashflow throughout the year. Shares +1.2% in European trade
• MTU Aero (MTX GY) – FY23 (EUR): Adj. Revenue 6.3bln (prev. forecast 6.1-6.3bln), Adj. EBIT 818mln (prev. forecast 800mln), Adj. Net Income 594mln (exp. 600mln). Outlook: FY Revenue 7.3-7.5bln, Adj. EBIT margin 12%. Shares -0.5% in European trade
• Snowflake (SNOW) - Q4 2024 (USD): Adj. EPS 0.35 (exp. 0.18), Revenue 774.7mln (exp. 760.4mln); Q1 product revenue view 745-750mln (exp. 769.5mln), FY25 product revenue view 3.25bln (exp. 3.46bln). (Newswires) Shares -22.8% in pre-market trade
• Salesforce (CRM) - Shares slipped by 1.6% in afterhours trade as it provided light guidance for the FY. Q4 adj. EPS 2.29 (exp. 2.26), Q4 revenue USD 9.29bln (exp. 9.22bln). Increases share repurchase authorisation by USD 10bln. Initiated a common stock dividend of USD 0.40/shr. Sees Q1 adj. EPS between USD 2.37-2.39 (exp. 2.20), and Q1 revenue between USD 9.12bln-9.19bln (exp. 9.19bln); sees FY25 revenue between USD 37.7bln-38.0bln (exp. 38.6bln). Shares -1.8% in pre-market trade

NOTABLE US HEADLINES

• US Congressional leaders have reached a deal to avoid a March 2nd partial shutdown by providing a week of temporary funding, whilst providing funding for parts of the government through September 30th, according to Bloomberg. However, the rest of the US government still faces a potential shutdown on March 23rd. It was also reported that GOP. Rep. Hern said the House will vote on a continuing resolution this Thursday.
• BofA Institute week to Feb 24th: Total Card Spending +0.4%% Y/Y (vs. -0.2% January average); Overall spending growth remained relatively soft but stable in February
• WSJ writes Apple (AAPL) investors grow impatient on AI, via WSJ; article adds Co. is expected to release generative AI features at a June developer conference

GEOPOLITICS

• Japan's top currency diplomat Kanda said using frozen Russian assets for Ukraine must be based on international law and he thinks EU's proposal is along those lines, while he added that Japan strongly condemned Russia's invasion of Ukraine at the G20 and that the G7 discussed ways to make use of frozen Russian assets for Ukraine reconstruction.
• Russian President Putin says "don't they understand there is danger of nuclear conflict?"; on talk of NATO troops in Ukraine, says consequences for the intruders will be more tragic and we have weapon which is able to hit targets on their territory.
• Ukraine sees a risk of Russia breaking through its defences by the summer unless allies increase supplies of ammunition, according to Bloomberg sources

CRYPTO

• Bitcoin continues to march higher and back above the USD 62k level. Ethereum continues to outperform, printing a peak incrementally above USD 3.5k.
• Coinbase (COIN) says all services on Coinbase.com have been restored; after some users reported a zero balance on their accounts.

APAC TRADE

• APAC stocks were choppy at month-end after the lacklustre handover from the US ahead of PCE price data.
• ASX 200 eventually shrugged off the initial indecision and briefly climbed above 7,700 to eke a fresh record high.
• Nikkei 225 briefly dipped below the 39,000 level amid a firmer currency and hawkish comments from BoJ's Takata, although the index gradually recovered all of its losses in late trade.
• Hang Seng and Shanghai Comp. were positive with outperformance in the latter which momentarily reclaimed the 3,000 level amid lower yields and after the PBoC voiced support for Shanghai's high-level opening up financially, while it was also reported that China is to crack down on illegal activity to maintain market order. Conversely, the gains in Hong Kong were limited with earnings on the radar.

NOTABLE HEADLINES

• US limits the sales of Americans' data to China and other rivals with President Biden signing an executive order restricting the ability of data brokers to sell sensitive information abroad, according to WSJ.
• BoJ Board Member Takata said Japan's economy is at an inflexion point of changing the 'norm' that people think wages and prices are not rising, while he added achievement of the price target is coming into sight despite the uncertainty of the economic outlook. Takata also said need to consider taking a flexible response including exit from monetary stimulus and that momentum is rising in this spring's wage talks with many companies offering higher-than-2023 wage hikes. BoJ Board Member Takata later stated that he would call for a gear shift in policy and not go backwards but added he has not made up his mind yet on a monetary policy decision when asked about whether to end negative interest rates in March or April, while he is not thinking of raising interest rates one after another and said gradual steps will be needed amid mixed circumstances surrounding small firms.
• RBNZ Governor Orr said as aggregate demand has slowed, it has been harder to pass on cost increases and he is confident the current level of the OCR is restricting demand, while the inflation outlook is very balanced. Orr said the economy has developed as they expected and the latest data confirmed inflation is slowing, while he added the easing of interest rates won't happen anytime soon.

DATA RECAP

• Japanese Industrial Production MM (Jan P) -7.5% vs. Exp. -7.3% (Prev. 1.4%); Retail Sales YY (Jan) 2.3% vs. Exp. 2.3% (Prev. 2.1%, Rev. 2.4%)
• Australian Capital Expenditure (Q4) 0.8% vs. Exp. 0.5% (Prev. 0.6%); Retail Sales MM Final (Jan) 1.1% vs. Exp. 1.5% (Prev. -2.7%)
• New Zealand ANZ Business Confidence (Feb) 34.7% (Prev. 36.6%); ANZ Activity Outlook (Jan) 29.5 (Prev. 25.6)