Quiet session ahead of a event-packed week

Notes/observations

- Japan’s Nikkei225 held above 40K as govt initially said to be considering announcing an official end to deflation, however, Chief Cabinet Sec Hayashi refuted this later by saying Japan has not escaped deflation at this point.

- For economic data, stronger Swiss Franc (CHF) on back of hotter than expected Feb CPI, but as it is still the lowest since Oct 2021, the move faded as the session wore on.

- In geopolitics, tensions elevated after German military intelligence officials were caught in lengthy leaked recording, mentioning long-range missiles to Ukraine and potential plans in Crimea, including reference to UK forces participation.

- Looking ahead, today the US Supreme Court will rule on at least 1 decision on whether Colorado can exclude Trump from their ballot. On Wed, UK Spring Budget, with details mostly telegraphed already about tax cuts, potentially for National Insurance or income tax related.

- Asia closed mixed with KOSPI outperforming at +1.2%. EU indices are -0.3% to +0.1%. US futures are -0.2% to 0.0%. Gold +0.1%, DXY -0.1%; Commodity: Brent -0.1%, WTI -0.3%, TTF -2.0%; Crypto: BTC +5.6%, ETH +3.6%.

Asia

- South Korea Jan Industrial Production M/M: -1.3% v +0.9%e; Y/Y: 12.9% v 10.0%e.

- Japan Q4 Capital Spending (Capex) Y/Y: 16.4% v 2.8%e (might help revise Q4 GDP data upwards).

-Japan govt said to be putting more pressure on the BOJ to normalize rates, Govt said to be considering announcing an official end to deflation.

- China annual National People’s Congress (NPC) began its annual session (runs thru Monday, Mar 11th). NPR historically releases key economic targets and policy priorities to be released in the Government Work Report (GWR). **Note: Premier Li would not hold the usual Premier's press conference this year.

Global conflict/tensions

- Qatari, Egyptian mediators and Hamas envoys have reportedly made "significant progress" towards a Gaza truce with Israel.

Europe

- S&P raised Portugal sovereign rating to A- from BBB+; Outlook positive.

- UK Chancellor Hunt stated that he wanted to move towards lower taxes but will only do so in a responsible way (speculation he was consider cutting public spending to give room for tax cuts in Spring Budget).

Americas

- Fitch affirmed the United States Sovereign Rating at 'AA+'; Outlook Stable.

- Fed's Kugler (voter) stated that the Fed has faced less of a tradeoff between inflation and jobs; Inflation pressures had cooled significantly.

- Fed’s Bostic (dove, voter) was grateful for inflation progress but the job was not done.

- Fed's Logan (non-voter): noted that slowing balance sheet runoff did not mean stopping.

- Fed's Waller (voter, hawk) noted that the timing of balance sheet redemptions pace would be independent of any changes to policy rate.

- Fed's Goolsbee (non-voter for 2024): Housing inflation is the thing that's really been weird; Wouldn't be surprised if Jan inflation was noise.

Energy

- OPEC+ confirmed to extend voluntary oil production cuts until end of Q2, 2024.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.13% at 498.24, FTSE -0.22% at 7,665.88, DAX +0.10% at 17,752.55, CAC-40 +0.02% at 7,936.07, IBEX-35 +0.14% at 10,078.60, FTSE MIB +0.01% at 32,937.00, SMI -0.05% at 11,488.10, S&P 500 Futures -0.09%].

Market focal points/key themes: European indices open mixed with an upward bias; among better performing sectors are technology and utilities; sectors inclined to the downside include industrials and consumer; discretionary; SoftwareOne to dissolve; Aviva to acquire Probitas; reportedly Mondi to raise offer from DS Smith; earnings expected in the upcoming US session include Sea Limited, Piaggio and GitLab.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] +4.5% (debt restructure; affirms outlook).

- Healthcare: DiaSorin [DIA.IT] +5.0% (FDA clearance), Novartis [NOVN.CH] +0.5% (new trial data).

- Industrials: Volkswagen [VOW3.DE] +2.0% (prelim results), Henkel [HEN3.DE] -1.0% (FY23 results), DS Smith plc [SMDS.UK] +0.5% (reports of higher bid from Mondi), Evonik Industries [EVK.DE] +1.5% (earnings), Senior [SNR.UK] -2.5% (earnings).

- Technology: SoftwareONE [SWON.CH] -2.5% (shareholders scrap agreement to sell company to Bain).

Speakers

- Turkey Fin Min Simsek stated that the country was still far away from attaining price stability. Govt adopted gradual program on economy withfocus on inflation, budget and current account.

- German VDMA Engineering Association: Jan Orders -10% y/y.

Currencies/fixed income

- The week ahead is another macro-laden data and event-fest. Tuesday will see UK Budget speech; Thurs with an ECB rate decision and Fri has the US non-farm payroll report. Politically, China holds its National People’s Congress (NPC) while the US Presidential race sees the super Tuesday primaries. Lastly Fed Chair Powell testifies before Congress on Wednesday and Thursday,

- EUR/USD hovered around the 1.0850 level in a quiet session with focus on Thursday’s ECB rate decision. Currently market fully pricing a 25bps rate cut by Jun.

- GBP/USD at 1.2680 with focus on Wed UK budget speech. One analyst noted that the GBP currency could fall as the UK government's reported lack of fiscal headroom might result in an earlier interest rate cut.

- USD/JPY stayed above the 150 level with focus on the upcoming Tokyo CPI data (**seen as a precursor the the National reading). Recent dovish BOJ speak offset reports that Japan govt was putting more pressure on the BOJ to normalize rates, Govt said to be considering announcing an official end to deflation.

Economic data

- (TR) Turkey Feb CPI M/M: 4.5% v 3.9%e; Y/Y: 67.1% v 66.0%e; Core CPI Y/Y: 72.9% v 71.9%e.

- (TR) Turkey Feb PPI M/M: 3.7% v 4.1% prior; Y/Y: 47.3% v 44.2% prior.

- (CH) Swiss Feb CPI M/M: 0.6% v 0.5%e; Y/Y: 1.2% v 1.1%e.

- (CH) Swiss Feb CPI EU Harmonized M/M: 0.2% v 0.1% prior; Y/Y:1.2 % v 1.2%e; CPI Core Y/Y:1.1 % v 1.0%e.

- (FR) France Jan YTD Budget Balance: -€25.7B v -€173.3B prior.

- (ES) Spain Feb Unemployment Change: -7.5K v +60.4K prior.

- (TW) Taiwan Jan Monitoring Indicator: 27 v 20 prior.

- (BR) Brazil Feb FIPE CPI (Sao Paulo): 0.5% v 0.4%e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 478.5B v 480.5B prior; Domestic Sight Deposits: 467.9B v 471.4B prior.

- (EU) Euro Zone Mar Sentix Investor Confidence: -10.5 v -10.6e.

Fixed income issuance

- None seen.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 ((DE) Germany to sell €2.0B in 6-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills.

- 05:30 (EU) European Union to sell combined €5.0B in 2028 and 2038 Bonds.

- 06:00 (IL) Israel to sell combined ILS2.55B in 2027, 2029, 2035, 2037 and 2052 bonds.

- 06:00 (RO) Romania to sell combined RON800M in 2026 and 2034 bonds.

- 06:00 (NO) Norway announcement on upcoming bond issuance; to sell NOK in bonds on Wed, Mar 6th.

- 06:30 (AT) ECB's Holzmann (Austria) at Bretton Wood Event.

- 07:00 (MX) Mexico Dec Gross Fixed Investment M/M: -0.3%e v -1.3% prior; Y/Y: 14.9%e v 19.2% prior; Private Consumption Y/Y: 4.4%e v 5.6% prior.

- 07:00 (MX) Mexico Jan Leading Indicators M/M: No est v 0.04 prior.

- 07:00 (MX) Mexico Feb Vehicle Domestic Sales: No est v 112.1K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.9-7.5B in 3-month, 6-month and 12-month bills (4 tranches).

- 09:45 (UK) BOE Gilt sale operation.

- 10:00 (CO) Colombia Jan Exports: $4.0Be v $4.4B prior.

- 11:00 (DK) Denmark Feb Foreign Reserves (DKK): No est v 630.2B prior.

- 11:00 (US) Fed’s Harker.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 17:00 (AU) Australia Feb Final PMI Services: No est v 52.8 prelim; PMI Composite: No est v 51.8 prelim.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 83.2 prior.

- 18:00 (KR) South Korea Q4 Preliminary GDP (2nd of 3 readings) Q/Q: 0.6%e v 0.6% advance; Y/Y: 2.2%e v 2.2% advance; Overall 2023 GDP: 1.4%e v 1.4% advance.

- 18:30 (JP) Japan Feb Tokyo CPI Y/Y: 2.5%e v 1.8% prior (revised from 1.6%);; CPI (Ex-Fresh Food) Y/Y: 2.5%e v 1.8% prior (revised from 1.6%); CPI (Ex-Fresh Food, Energy) Y/Y: 3.1%e v 3.3% prior (revised from 3.1%).

- 19:00 (NZ) New Zealand Feb ANZ Commodity Price M/M: No est v 2.2% prior.

- 19:01 (UK) Feb BRC Sales LFL Y/Y: 1.6%e v 1.4% prior.

- 19:30 (AU) Australia Q4 Current Account (A$): 5.0Be v -0.2B prior; Net Exports of GDP: +0.2%e v -0.6% prior.

- 19:30 (JP) Japan Feb Final PMI Services: No est v 52.5 prelim; PMI Composite: No est v 50.3 prelim.

- 19:30 (HK) Hong Kong Feb PMI (Whole Economy): No est v 49.9 prior.

- 19:30 (SG) Singapore Feb PMI (Whole Economy): No est v 54.7 prior.

- 20:00 (PH) Philippines Feb CPI M/M: 0.3%e v 0.6% prior; Y/Y: 3.0%e v 2.8% prior.

- 20:01 (IE) Ireland Feb PMI Services: No est v 50.5 prior; PMI Composite: No est v 50.7 prior.

- 20:45 (CN) China Feb Caixin PMI Services: 52.9e v 52.7 prior; PMI Composite: No est v 52.5 prior.

- 22:30 (TH) Thailand Feb CPI M/M: 0.2%e v 0.0% prior; Y/Y: -0.8%e v -1.1% prior; CPI Core Y/Y: 0.5%e v 0.5% prior.

- 22:35 (JP) Japan to sell 10-Year JGB Bonds.

- 23:00 (JP) BOJ Gov Ueda.