Accusations of cease fire violations circulated from both side of Ukraine crisis

Notes/Observations

- Headline roulette on Ukraine tensions prompts winding/unwinding of safe havens flows.

Asia

- Singapore Q4 Final GDP Q/Q: 2.3% v 2.6% prelim; Y/Y: 6.1% v 5.9% prelim.

- Australia Jan Net Employment Change: +12.9K v 0.0Ke; Unemployment Rate: 4.2% v 4.2% prior.

- Japan Jan Trade Balance: -¥2.19T v -¥1.60TBe (largest monthly deficit since Jan 2014).

Russia/Ukraine

- US Senior Administration official stated that Russia claims about withdrawing troops were false, they had increased troops near Ukraine border by up to 7,000.

- Ukraine President Zelenskiy stated that had seen a large accumulation of Russian troops and this had not changed in recent week.

- EU Commission President Von Der Leyen stated that NATO had not seen any sign of Russian troop reduction.

Americas

- FOMC Jan Minutes noted that most participants suggested that a faster pace of increases in target range compared to the post 2015 period would be warranted.

- Fed's Kashkari (dove, non-voter) noted that would do what was needed to bring things back into balance. Message to his colleagues was to not overdo it; If rates raised really aggressively, then run the risk of putting the economy into recession.

- Fed’s Harker (voter) stated that sought a 25bps hike in March hike not 50bps.

- Treasury Sec Yellen warned that there could be a global fallout of Russia Sanctions; soaring inflation was unacceptable, but economy was sound.

- Bank of Canada (BOC) Dep Gov Lane noted that BoC was alert to risk of inflation could be persistent.

Energy

- Iran nuclear negotiator Kani: We are closer than ever to an agreement after weeks of intensive talks.

- France Foreign Min Le Drian stated that Iran nuclear deal was within reach and would be a matter of days; Deal required political decision to be made by Iran.

Speakers/Fixed income/FX/Commodities/Erratum

Indices [Stoxx600 -0.15% at 467.06, FTSE -0.62% at 7,556.90, DAX -0.03% at 15,365.81, CAC-40 +0.23% at #, IBEX-35 -0.26% at 8,714.25, FTSE MIB -0.42% at 26,856.00, SMI -0.42% at 12,140.20, S&P 500 Futures -0.56%].

Market Focal Points/Key Themes: European indices open mixed but later turned to trade mostly lower; geopolitical situation seeing as driver of fluctuating risk sentiment; better performing sectors include industrials and consumer; while worse performing sectors include financials and technology; M&G acquires TCF Invesment; reportedly Fresenius looking to buy mAbxience; earnings expected in the upcoming US session include Reliance Steel, AutoNation, Genuine Parts and Sealed Air.

Equities

- Consumer discretionary: Kering [KER.FR] +7% (earnings), Continental [CON.DE] +3% (split speculation).

- Consumer staples: Carrefour [CA.FR] +4% (earnings; buyback; dividend), Nestle [NESN.CH] -0.5% (earnings; buyback).

- Financials: Commerzbank [CBK.DE] +6% (earnings).

- Industrials: Airbus [AIR.FR] -1% (earnings; dividend), Schneider Electric [SU.FR] +2% (earnings), Air France-KLM [AIR.FR] -4.5% (earnings; capital raise).

- Telecom: Orange [ORAN.FR] +0.5% (earnings).

Speakers

- ECB’s de Cos (Spain) noted that policy direction was cleat but process to be gradual; reiterated that premature tightening of policy would only add to negative consequences. Inflation had surprised on the upside but needed to assess the medium-term inflationary expectations.

- Italy Econ Min Giorgetti noted that Govt was considering €1B annual support to auto industry.

- Sweden Central Bank (Riksbank) Breman reiterated that inflationary expectations were well anchored and not seeing any wage pressures at this time.

- Russia Foreign Ministry refuted US claim related to 7,000 additional Russian troops at Ukraine border.

- Russia govt spokesperson Peskov stated that the situation in Donbas region was getting more tense; NATO waging information aggression. Foreign Min Lavrov to send response to US on security on Thur, Feb 17th.

- Ukrainian military official stated that Russian occupying forces fired on village in Luhansk region; kindergarten hit by separatist shelling but no injuries were caused.

- EU official noted that the Bloc carefully looking at Donbas shelling. May be used as a test or an excuse. EU leaders will not discuss Russian sanctions at upcoming meeting later today as issue is divisive..

- Turkey President Erdogan reiterated that goal was to lower inflation to single digits. Domestic economy to enter its strongest period; should not listen to doomsayers.

- Philippines Central Bank Policy Statement noted that preserving appropriate degree of policy support remained a priority but would continue developing plans for an exit of monetary support. Inflation was seen within the 2.0-4.0% target range for both 2022 and 2023 period. Risks to inflation outlook was tilted to the upside in 2022 and seen balanced in 2023. Inflation expectations had risen marginally.

- Japan Cabinet Office (Govt) Feb Economic Report cut its overall economic assessment (1st downgrade in 5 months) citing renewed restrictions to counter the spread of the omicron variant.

- Iran Supreme Leader Khamenei stated that the country needed peaceful nuclear energy to preserve its independence. Some points needed to be respected in the revival of the 2015 nuclear agreement to avoid problems down the road.

Currencies/Fixed income

- FX process action focus on the Ukraine situation as headline roulette prompted several bouts of winding/unwinding of safe havens flows.

- EUR/USD hovered within a 30 pips range between 1.1355-85 in the session. Dealers noted that speculation about the Fed front-loading policy tightening should support the greenback if the pair re-approached the 1.15 area.

- GBP/USD probing the 1.36 area after Wed inflation data prompted that BOE would continue to raise interest rates further.

- USD/JPY tested the 115.00 arae several time as safe-heaven flows regarding Ukraine percolated.

- TRY currency holding around the 13.62 area ahead of the CBRT rate decision. Turkey is expected to keep policy steady for the 2nd straight time to assess its prior easing in a high inflationary environment.

Economic data

- (NL) Netherlands Jan Unemployment Rate: % v 3.8% prior.

- (EU) EU27 Jan New Car Registrations: -6.0% v -22.8% prior.

- (CH) Swiss Jan Trade Balance (CHF): 3.2B v 3.5B prior; Real Exports M/M: +2.3% v -2.8% prior; Real Imports M/M: -0.7% v +0.3% prior; Watch Exports Y/Y: 6.8% v 11.3% prior.

- (PH) Philippines Central Bank (BSP) left the Overnight Borrowing Rate unchanged at 2.00% (as expected).

- (ES) Spain Dec Trade Balance: -€5.3B v -€4.2B prior.

- (IT) Italy Dec Total Trade Balance: €1.1B v €4.2B prior; Trade Balance EU: -€3.7B v €0.0B prior.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €4.53B vs. €4.0-5.0B indicated range in 2027 and 2032 SGPB bonds.

- Sold €2.39B in 0.00% Jan 2027 SPGB bonds; Avg Yield: 0.581% v 0.088% prior; bid-to-cover: 1.51x v 1.63x prior (Jan 20th 2022).

- Sold €2.14B in 0.70% Apr 2032 SPGB bond; Avg Yield: 1.232% v 0.852% prior; Bid-to-cover: 1.52x v 1.56x prior.

- (FR) France Debt Agency (AFT) sold total €10.996B vs. €10.0-11.0B indicated range in 2025, 2027 and 2028 Bonds.

- Sold €4.005B in 0.00% Feb 2025 Oat; Avg Yield: -0.08% v -0.35% prior; Bid-to-cover: 2.52x v 3.25x prior (Jan 20th 2022).

- Sold €4.498B in 0.00% Feb 2027 Oat; Avg Yield: +0.23% v -0.15% prior; bid-to-cover: 2.00x v 2.32x prior (Jan 20th 2022).

- Sold €2.493B in 0.75% Nov 2028 Oat; Avg Yield: +0.33% v -0.01% prior; Bid-to-cover: 2.01x v 2.92x prior.

- (SE) Sweden sold total SEK750M vs. SEK750M indicated in I/L 2030 and 2039 Bonds.

- (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: % v -0.700% prior; Bid-to-cover: x v 2.4x prior.

Looking ahead

- (UR) EU leaders discuss Ukraine conflict.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:50 (FR) France Debt Agency (AFT) to sell €1.0-1.5B in inflation-linked 2031, 2032 and 2036 bonds (Oatei).

- To sell % Oatei.

- 06:00 (IE) Ireland Jan CPI M/M: No est v 0.5% prior; Y/Y: No est v 5.5% prior.

- 06:00 (IE) Ireland Jan CPI EU Harmonized M/M: No est v 0.5% prior; Y/Y: No est v 5.7% prior.

- 06:00 (PT) Portugal Jan PPI M/M: No est v 1.1% prior; Y/Y: No est v 19.9% prior.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 14.00%.

- 06:00 (RO) Romania to sell RON200M in 6-month bills.

- 06:00 (RO) Romania to sell RON500M in 3.25% 2026 Bonds.

- 06:45 (US) Daily Libor Fixing.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 11th: No est v $634.9B prior.

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

- 08:30 (US) Feb Philadelphia Fed Business Outlook: 20.0e v 23.2 prior.

- 08:30 (US) Jan Housing Starts: 1.695Me bv 1.702M prior; Building Permits: 1.750Me v 1.885M prior (revised from 1.873M).

- 08:30 (US) Initial Jobless Claims: 218Ke v 223K prior; Continuing Claims: 1.60Me v 1.621M prior.

- 08:30 (CA) Canada Jan Teranet House Price Index M/M: No est v 0.8% prior; Y/Y: No est v 15.5% prior; House Price Index: No est v 288.47 prior.

- 08:30 (CA) Canada Dec Int'l Securities Transactions (CAD): No est v 30.2B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (IE) ECB’s Lane (Ireland, chief economist).

- 10:00 (BR) Brazilian President Bolsonaro visits Hungary PMOrban.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Fed’s Bullard.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 12:00 (NO) Norway Central Bank (Norges) Gov Olsen annual address.

- 13:00 (US) Treasury to sell 30-Year Notes.

- 16:45 (NZ) New Zealand Q4 PPI Input Q/Q: No est v 1.6% prior; Output Q/Q: No est v 1.8% prior.

- 17:00 (US) Fed’s Mester on Economic and Policy Outlook.

- 18:30 (JP) Japan Jan National CPI Y/Y: 0.6%e v 0.8% prior; CPI Ex-fresh food (Core) Y/Y: 0.3%e v 0.5% prior; CPI Ex-fresh food/energy (Core-core) Y/Y: -1.0%e v -0.7% prior.

- 19:00 (EU) ECB’s Lagarde at G20 Finance Minister meeting (via video conference).

- 21:30 (KR) South Korea to sell KRW500B in 50-year Bonds.

- 22:00 (ID) Indonesia Q4 Current Account Balance: $1.7Be v $4.5B prior.

- 22:00 (CN) China to sell C30-year Upsize Bond.

- 22:00 (CN) China to sell 3-month Bills.

- 22:30 (JP) Japan to sell 3-Month Bills.