• European bourses are modestly firmer, whilst US equity futures are mixed; the NQ narrowly outperforms led by tech optimism post Oracle results
• Dollar is flat, JPY underperforms post-Ueda and the Pound lags after softer-than-expected jobs data
• Bonds are modestly firmer, taking the lead from Gilt outperformance following the region's jobs data
• Crude is firmer as geopolitical themes remain; XAU is lower
• Looking ahead, US CPI, EIA STEO, OPEC OMR, Supply from the US, Comments from BoE's Bailey

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.3%) began the session on a firm footing, though edged lower throughout the European morning as sentiment waned. The FTSE100 (+0.8%) outperforms, lifted by the weaker Pound and its exposure to Mining/Energy names.
• European sectors hold a strong positive tilt; Banks continue to advance ahead of an ECB meeting regarding European banking policies, whilst Utilities is found at the foot of the pile.
• US equity futures (ES +0.1%, NQ +0.4%, RTY +0.2%) are mixed, with slight outperformance in the NQ, with the Tech sector benefitting from strong Oracle (+13.3% pre-market) earnings.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• DXY is marginally firmer thanks to a softer JPY and GBP. DXY marginally eclipsed yesterday's peak of 102.93 to print a high of 102.94.
• Uneventful trade for the EUR with EZ-wide updates lacking. EUR/USD sits in a tight 1.0922-39 range and is respecting yesterday's 1.0914-48 parameters.
• GBP is on the backfoot vs. peers with Cable losing 1.28 status following jobs data which showed soft wages and an unexpected uptick in the unemployment rate. GBP/USD as low as 1.2777 with not much in the way of support until the 10DMA at 1.2732 and 7th March low at 1.2722.
• JPY the laggard across the majors as the Yen's advances vs. the USD grind to a halt. "Non-hawkish" remarks from Ueda can be cited as the catalyst but it is fair to say the decline in USD/JPY had to wane at some point.
• Antipodeans are both steady vs. the USD with NZD faring marginally worse in quiet newsflow. AUD/USD holding above 0.66 and contained within yesterday's 0.6596-0.6627 range.
• PBoC set USD/CNY mid-point at 7.0963 vs exp. 7.1885 (prev. 7.0969).
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• Click here for NY FX expiry details

FIXED INCOME

• Gilts are bid after the morning's labour market data. Action that took Gilts to a 99.98 high just a tick shy of Monday's best and by extension a handful below last week's 100.03 contract high. Thereafter, Gilts extended to a fresh contract peak of 100.17 following the strong auction.
• Bunds are a touch firmer given the above but much more contained as the pre-CPI lull and heavy supply docket holds greater sway than UK data; holding around the 133.56 peak which is 50 ticks below Monday's best.
• USTs are holding marginally in the green ahead of US CPI, at the upper-end of narrow 111-18 to 111-22 bounds. Resistance at 111-31 & 112-04+ from the last two sessions, low point from those days also provides support at 111-16+ and 111-08.
• UK sells GBP 3.75bln 4.625% 2034 Gilt: b/c 3.61x (prev. 3.09x), average yield 3.927% (prev. 4.132%) & tail 0.2bps (prev. 1bps)
• Japan to issue JPY 350bln of climate transition bonds later in the month, via Reuters citing sources; targeting four issuances of this type a year.
• Netherlands sells EUR 2.05bln vs exp. EUR 2-2.5bln 2.50% 2030 DSL: average yield 2.481% (prev. 2.334%)
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COMMODITIES

• Crude is firmer but off best levels as the Dollar strengthened with newsflow light thus far ahead of US CPI, but geopolitical concerns linger; Brent holds around USD 82.75/bbl.
• Precious metals are mixed with spot gold hampered by the initial Dollar strength, while spot silver is slightly more resilient; XAU briefly dipped under yesterday's low (2,174.86/oz).
• Base metals are mixed and lack firm direction ahead of the US CPI later today; 3M LME copper trades within a USD 8,628.00-8,675.50/t range.
• UBS says we continue to retain negative outlook for Palladium, expecting it to remain the laggard in precious metal sector this year.
• Commerzbank raises its gold price forecast for end of this year and end of next year to USD 2.2k/toz (prev. 2.1k)
• Russia's Lukoil refinery work in Nizhny Novgorod region was temporarily stopped due to an "incident", while it was later reported that the oil processing unit in Nizhny Novgorod was on fire after a drone attack, according to Russian agencies.
• Main crude distillation unit (AVT -6) at Russia's Norsi refinery is damaged, via Reuters citing industry sources; the damage at Russia's Norsi refinery means that at least half of Norsi production is halted.
• Morgan Stanley lowers TTF gas price forecast to USD 8/MMBtu (prev. USD 8.5/MMBtu) for Q2'24 and Q3'24; forecast to USD 10.00/MMBtu (prev. 10.5/MMBtu) for Q4'24.
• Iraq Basrah April OSPs: Asia -0.60/bbl vs Oman/Dubai (prev. -0.80/bbl); Europe -5.85/bbl vs Brent (prev. -5.45/bbl), Americas -0.95/bbl vs ASCI (prev. -1.00/bbl), according to SOMO.
• Kuwait sets April KEC Crude OSP for Asia at Oman/Dubai plus USD 0.55/bbl, USD +0.30/bbl M/M, according to Reuters citing traders
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NOTABLE EUROPEAN HEADLINES

• Morgan Stanley says chances of a UK rate cut in Q2 looks "severely under-priced"; the base case is for a cut in May
• European Parliament is reportedly to take the European Commission to court regarding the EUR 10.2bln payoff for Hungary, via Politico citing sources.
• Spanish Economy Minister is "optimistic" about agreement with other parties over approval of the 2024 budget. Sees latest economic data backing govt's 2% GDP forecast.
• Irish Central Bank sees HICP in 2024 at +2.0 (prev. +2.3% in December), 2025 at +1.8% (prev. +2.1%) and 2026 at 1.4% (prev. +1.4%), while it sees GDP in 2024 at +2.8% (prev. +2.5%), 2025 at +3.5% (prev. +4.5%) and 2026 at +3.3%. Furthermore, it stated that risks to the economic growth outlook are tilted to the downside and risks to the inflation outlook are broadly balanced.
• Riksbank's Jansson says the risk of high inflation becoming entrenched has diminished, demand-side activity suggests limited upside risk to inflation.
• Riksbank's Thedeen says if inflation prospects remain favourable, we cannot rule out the possibility of a H1 cut. Inflation has fallen recently and is on firmer ground.

DATA RECAP

• Overall, the UK data has a dovish skew with the earnings metrics (with and without bonuses) printing softer than expected and below the prior alongside an unexpected uptick in the unemployment rate and a contraction in the employment change.
• UK ILO Unemployment Rate (Jan) 3.9% vs. Exp. 3.8% (Prev. 3.8%)
• UK Avg Earnings (Ex-Bonus) (Jan) 6.1% vs. Exp. 6.2% (Prev. 6.2%); Avg Wk Earnings 3M YY (Jan) 5.6% vs. Exp. 5.7% (Prev. 5.8%)
• UK HMRC Payrolls Change (Feb) 20k (Prev. 48k); Claimant Count Unem Chng (Feb) 16.8k (Prev. 14.1k, Rev. 3.1k); Employment Change (Jan) -21k (Prev. 72k)
• German CPI Final MM (Feb) 0.4% vs. Exp. 0.4% (Prev. 0.4%)
• German HICP Final YY (Feb) 2.7% vs. Exp. 2.7% (Prev. 2.7%); HICP Final MM (Feb) 0.6% vs. Exp. 0.6% (Prev. 0.6%); CPI Final YY (Feb) 2.5% vs. Exp. 2.5% (Prev. 2.5%)

NOTABLE US HEADLINES

• Oracle Corp (ORCL) - Q3 adj. EPS 1.41 (exp. 1.38), Q3 revenue USD 13.28bln (exp. 13.31bln). Q3 cloud revenue USD 5.1bln (exp. 5.06bln); cloud revenue in constant currency +24% (exp. +24.7%); Q3 cloud services and license support revenue USD 9.96bln (exp. 9.85bln); cloud license and on-premise license revenue USD 1.26bln (exp. 1.2bln); Q3 hardware revenue 0.754bln (exp. 0.769bln); Gen2 Cloud Infrastructure business Remaining Performance Obligations (RPOs) +29% to USD 80bln in Q3. Q3 service revenue 1.31bln (exp. 1.37bln). Exec said demand for Gen2 AI infrastructure substantially exceeds supply, and expects Gen2 cloud infrastructure business will remain in a hypergrowth phase up 53% in Q3 for the foreseeable future. Sees Q4 EPS between 1.62-1.66 (exp. 1.64), and sees Q4 revenue growth of +4-6% Y/Y (exp. 14.75bln); Q4 cloud revenue seen rising +22-24%. FY24 revenue seen accelerating Y/Y, and will likely be significantly higher in FY25. FY24 capex seen between USD 7-7.5bln, expects capex to be considerably higher in Q4. Sees FY25 capex above USD 10bln; is building an AI data centre in Salt Lake City; building 20 data centres for Microsoft (MSFT), with three new orders this year. Oracle said it is set to make a joint announcement with Nvidia (NVDA) in the coming week (at NVDA's GTC event), and Reuters noted that execs mentioned Nvidia at least three times during their conference call. (Oracle IR/Newswires) Shares +13.3% pre-market
• Alaska Air (ALK) says Q1 performance is now on track to exceed expectations held by the Co. coming into the year; FY capacity to expectations still in flux amid uncertainty around timing of aircraft deliveries.
• Intel (INTC) survived bid to halt millions in sales to China's Huawei, giving it more time to sell to the heavily sanctioned Chinese telecoms company, Reuters reports.

GEOPOLITICS

MIDDLE EAST

• Islamic Resistance said it targeted Ben Gurion Airport with drones on Monday evening, according to Al Jazeera.
• Four Israeli strikes targeted eastern Lebanon's Baalbek, according to two security sources cited by Reuters
• Yemen's Houthis said they targeted 'American ship Pinocchio' in the Red Sea and their operations are to escalate during Ramadan. However, US Central Command said Houthi forces targeted the merchant vessel Pinocchio on Monday which is a Singaporean-owned, Liberian-flagged ship although the missiles did not impact the vessel and there were no injuries or damage reported.
• EU leaders to urge Israel to refrain from ground operations in Rafah, via Reuters citing draft summit text; calls for "immediate humanitarian pause leading to sustainable ceasefire" in Gaza

OTHER

• Ukrainian military intelligence said they are preparing to launch serious offensive operations in Crimea, according to Al Arabiya.
• Russian air defence systems destroyed Ukraine-launched drones near Moscow, according to Moscow's Mayor.
• US President Biden responded there was no need for that when asked if he would support US troops at the Polish border.
• China Maritime Safety Administration announced live firing drills in some areas in the East China Sea from March 12th-14th.
• Russian Defence Ministry says Russia, China and Iran are to begin joint navy drills in the Gulf of Oman.
• European Commission Chief von der Leyen says considering new sanctions on Iran if reports of supplying Russia with missiles is true

CRYPTO

• Bitcoin takes a breather and holds just shy of USD 72k, with Ethereum also lower but remains above USD 4k.

APAC TRADE

• APAC stocks traded mixed following the tentative mood stateside and as participants await US CPI data.
• ASX 200 notched slight gains but with upside capped by a lack of macro drivers and mixed business surveys.
• Nikkei 225 slipped at the open after firmer-than-expected PPI data and the ongoing hawkish BoJ-related speculation, but then clawed back the majority of the losses after BoJ Governor Ueda refrained from any major hawkish commentary.
• Hang Seng and Shanghai Comp. diverged with the former boosted by continued tech strength and as property developers showed resilience including Vanke despite being cut to junk by Moody's, while the mainland was pressured by lingering headwinds including US-China frictions and economic concerns.

NOTABLE ASIA-PAC HEADLINES

• BoJ Governor Ueda said Japan's economy is recovering moderately but with some weak data seen, while they see weakness in consumption of non-durable goods and need to see if a virtuous cycle is underway. Ueda also stated they have seen various data since January and more will come out this week which they will look at comprehensively in reaching an appropriate monetary policy decision, while they are focusing on whether a positive wage-inflation cycle is kicking off in judging whether a sustained and stable achievement of the price target is coming into sight. Furthermore, Ueda later commented that it is possible to control short-term rates at an appropriate level by paying interest on reserves parked with the BoJ and if inflation accelerates and warrants monetary tightening, it is possible to do so by raising rates without scaling back BoJ's bond holdings.
• BoJ is reportedly mulling a March hike with the outcome too close to call, according to Bloomberg sources.
• BoJ will likely offer numerical guidance on how much government bonds it will buy upon ending NIRP and YCC to avoid causing market disruptions, according to Reuters sources. BoJ is likely to roughly maintain the current pace of bond buying after ditching YCC, and forgot shar cuts in the amount for the time being. BoJ is likely to forgo offering explicit guidance on how soon it will hike rates again amid uncertainties in the economic outlook. Any guidance on future policy path is likely to be in line with Ueda comments on maintaining accommodative monetary conditions even after ending negative interest rates. Note: The guidance on government bonds buying is in-fitting with recent sources.
• Former BoJ Official Kiuchi says the BoJ could potentially cancel YCC in March, via Bloomberg TV
• US State Department said the US must employ all the tools at its disposal to outcompete China wherever possible and it announced USD 2bln to create a new international infrastructure fund which will help compete with China by providing an alternative.
• US House is to vote on Wednesday on the bill which will give ByteDance six months to divest TikTok or face a ban, according to the majority leader’s spokesperson.
• US steel unions urge US President Biden to open a probe into Chinese shipbuilding, according to FT.
• South Korean chipmakers halt old equipment sales over fears of a US backlash, according to FT.
• Nissan (7201 JT) is reportedly mulling cutting China production by as much as 30%, according to Nikkei; Honda Motors (7267 JT) reportedly mulling cutting China production by some 20%.
• China Vanke in debt swap talks with banks to stave off default, via Bloomberg

DATA RECAP

• Japanese Corporate Goods Prices MM (Feb) 0.2% vs. Exp. 0.1% (Prev. 0.0%); Corporate Goods Prices YY (Feb) 0.6% vs. Exp. 0.5% (Prev. 0.2%)
• Australian NAB Business Conditions (Feb) 10.0 (Prev. 6.0, Rev. 7.0); NAB Business Confidence (Feb) 0.0 (Prev. 1.0)