All eyes on Fed Chair Powell two-day testimony in Senate

 EU mid-market update: All eyes on Fed Chair Powell two-day testimony in Senate; Europe trades sideways with Kering reported better-than-feared sales

Notes/observations

- European equities traded flat as basic resources and travel sectors lagged. France’s unemployment rate edged down to 7.3%, led by youth job gains. However, political risks lingered as France defied tariff retaliation threats by maintaining its digital tax. Bond markets steadied, with Bund yields up 2bps to 2.38% and U.S. 10-year yields at 4.51%.

- BoE’s dovish dissenter at last meeting, Catherine Mann, said that, despite her vote, she favors continued restrictiveness in future. Contrasting signals emerged as the British Retail Consortium reported the fastest consumer spending growth in two years. Gilts held steady ahead of a new 2035 gilt issuance, while FTSE100 futures pointed lower pre-Powell testimony.

- President Trump’s 25% tariffs on all steel and aluminum imports took effect, sparking global retaliation concerns. The EU vowed to protect its interests, while the UK signaled it would not join retaliatory measures, seeking bilateral talks. Steel rebar futures in China sank to a one-month low (CNY 3,200/tonne), with South Korea holding emergency talks to mitigate quota risks. Trump warned of additional tariffs on autos, chips, and pharmaceuticals in coming weeks, amplifying fears of a broader trade war.

- Notable EU Earnings: Kering shares rose despite a 12% Q4 revenue drop as CEO flagged “stabilization” in luxury demand. BP little changed after Q4 earnings with weak refining margins; investor focus shifts to strategic reset plans due Feb 26. UniCredit drops as FY25 net interest margin guidance disappointed despite Q4 beat. TUI Group falls heavily after winter booking slowdown overshadowed solid Q1 results.

- Asia closed mixed with Nifty50 underperforming -1.3% and Japanese markets closed. EU indices -0.1% to +0.1%. US futures -0.2% to -0.5%. Gold -0.1%, DXY -0.1%; Commodity: Brent +1.2%, WTI +1.2%; Crypto: BTC +0.4%, ETH +1.8%.

Asia

- Australia Feb Westpac Consumer Confidence: 92.2 v 92.1 prior.

- Australia Jan NAB Business Confidence: +4 v -2 prior.

Global conflict/tensions

- President Trump warned that if all the Israeli hostages held in Gaza were not returned by Saturday, Feb 18th at noon he would propose canceling the Israel-Hamas ceasefire.

Europe

- UK Jan BRC Sales Like-For-Like Y/Y: 2.5% v 1.0%e.

- BOE's Mann (dovish dissenter) noted that inflation was less of a threat as corporate pricing power weakened and could see pricing coming very close to 2% target in the year ahead.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.07% at 545.56, FTSE -0.04% at 8,763.99, DAX -0.04% at 21,924.12, CAC-40 -0.02% at 8,004.24, IBEX-35 +0.01% at 12,712.79, FTSE MIB -0.01% at 37,239.00, SMI +0.17% at 12,651.80, S&P 500 Futures -0.41%].

Market focal points/key themes: European indices open mixed and failed to gain direction in the early part of the session; among better performing sectors are financials and consumer discretionary; underperforming sectors include materials and real estate; dsm-firmenich sells its stake in FEA to Novonesis; Novartis acquires Anthos Therapeutics; focus on Fed Chair Powell’s semi-Annual testimony in Congress; earnings expected in the upcoming US session include Humana, Coca-Cola, Deutsche Boerse and Gilead.

Equities

- Consumer discretionary: Kering [KER.FR] +3.5% (Q4 results; hints new Gucci designer), Entain [ENT.UK] -11.5% (CEO steps down; trading update), TUI [TUI.DE] -7.5% (Q1 results), PZ Cussons [PZC.UK] +8.5% (H1 results).

- Energy: BP [BP.UK] -0.5% (Q4 results; to review strategy and buyback) - Financials: Unicredit [UCG.IT] -3.5% (Q4 results, beats estimates; shareholder exploring the possibility of selling 2.7% stake), MedioBanca [MB.IT] +0.5% (earnings).

- Technology: ams OSRAM [AMS.CH] +18.5% (Q4 results), Barco [BAR.BE] +14.5% (FY results), Landis & Gyr [LAND.CH] -13.5% (Cuts guidance and prepares implementation of strategic initiatives).

Speakers

- ECB's Kazaks (Latvia) commented that US-EU Talks could soften tariff situation.

- BOE's Mann (dovish dissenter) noted that she opted for 50bps cut to 'cut through the noise'; Favors continued restrictiveness in future; Prefereed to err at higher end of 3.0-3.5% range of estimates for 'neutral rate'.

- EU Trade Commissioner Sefcovic stated that the EU to impose countermeasures against US tariffs, but remained open to negotiations with the US.

- EU Commission President Von der Leyen noted that unjustified tariffs would not go unanswered.

- Germany Chancellor Scholz stated that would use debt brake and carefully modernist it. Hoped 'misguided path' of tariffs could still be avoided. EU would respond together against Trump's trade tariffs.

- Canada PM Trudeau stated that govt would highlight to Trump Admin the negative impacts of tariffs. Country’s response would be firm and clear and to stand up for Canadian workers.

- IMF Managing Dir Georgieva noted that tariffs impact on global economy was too early to say.

Currencies/fixed income

- FX market saw little price volatility as limited data releases provided no fresh impetus for positions. Focus on upcoming Fed Chair Powell testimony in Congress over the next two days.

- EUR/USD holding above the 1.03 level while GBP/USD hovered around 1.2370.

- Gold continued it march towards the $3,000/oz level as trade wars take its toll on markets and prompted safe-haven flows. Dealers noted geopolitical environment could get tenser and uglier very quickly.
Bund yields mover higher by approx 2bps. US 10-year at 4.52% during the EU trading session. German 10-year Bunds at 2.40% and the 10-year Gilt at 4.48%.

Economic data

- (FR) France Q4 ILO Unemployment Rate: 7.3% v 7.5%e; Mainland Unemployment Rate: 7.1% v 7.3%e.

- (NO) Norway Q4 Overall GDP Q/Q: -0.6% v -1.8% prior; GDP Mainland Q/Q: -0.4% v +0.3%e.

- (TR) Turkey Dec Retail Sales Y/Y: 13.5% v 16.6% prior.

- (HU) Hungary Jan CPI M/M: 1.5% v 0.9%e; Y/Y: 5.5% v 4.8%e (2nd month above target range).

Fixed income issuance

- (ID) Indonesia sold total IDR10.0T in Islamic bills and bonds (sukuk).

- (EU) European Union opened its book to sell EUR-denominated 2031 and 2050 NGEU bonds via syndicate.

- (UK) DMO opened its book to sell new 4.5% Mar 2035 Gilts via syndicate; guidance seen 5.5-6.0bps to 2034 gilts.

- (IT) Italy Debt Agency (Tesoro) opened book to sell new 15-year BTP bond via syndicate; guidance seen +9bps to 4.15% Oct 2039 BTP bond.

- (IL) Israel opened its book to sell USD-denominated 5-year and 10-year notes via syndicate.

- (NL) Netherlands Debt Agency (DSTA) sold €1.995B vs. €1.5-2.0B indicated range in 2.75% Jan 2047 DSL Bonds; Avg Yield: 2.773% v 0.357% prior.

- (ZA) South Africa sold total ZAR3.75B vs. ZAR3.75B indicated in 2032, 2035 and 2053 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €2.55B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

Looking ahead

- (SI) Slovenia Debt Agency to sell 3-month, 6-month and 12-month bills.

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

- 05:25 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €5.0B in 2.4% Apr 2030 BOBL.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.4B in 3-month and 12-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (ZA) South Africa Dec Manufacturing Production M/M: -0.3%e v -1.1% prior; Y/Y: -1.7%e v -2.6% prior.

- 06:00 (US) Jan NFIB Small Business Optimism Index: 104.7e v 105.1 prior.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

- 06:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 06:30 (CL) Chile Central Bank Economist Survey.

- 07:00 (BR) Brazil Jan IBGE Inflation IPCA M/M: 0.2%e v 0.5% prior; Y/Y: 4.6%e v 4.8% prior.

- 07:00 (MX) Mexico Dec Industrial Production M/M: -0.5%e v +0.1% prior; Y/Y: -1.2%e v -1.4% prior Manufacturing Production Y/Y: +0.7%e v -0.2% prior.

- 07:15 (UK) BOE Gov Bailey.

- 08:00 (RU) Russia Dec Trade Balance: No est v $6.0B prior; Exports: No est v $32.0B prior; Imports: No est v $25.9B prior.

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

- 08:30 (CA) Canada Dec Building Permits M/M: +1.4%e v -5.9% prior.

- 08:50 (US) Fed's Hammack on economic outlook.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 10:00 (US) Fed Chair Powell testifies in Senate.

- 10:30 (CA) Canada to Sell 1-month, 3-month, 6-month and 12-month bills.

- 12:00 (DE) ECB’s Schnabel (Germany).

- 12:00 (SE) Sweden Central Bank (Riksbank) Seim.

- 13:00 (US) Treasury to sell $58B in 3-year Notes.

- 15:30 (US) Fed's Williams Keynote Remarks.

- 16:30 (US) Weekly API Oil Inventories.

- 18:50 (JP) Japan Jan M2 Money Stock Y/Y: No est v 1.3% prior; M3 Money Stock Y/Y: No est v 0.8% prior.

- 19:30 (AU) Australia Q4 Home Loans Value.

- 20:10 (KR) Bank of Korea to sell KRW500B in 1-year Bonds.

- 22:00 (KR) South Korea Jan Total Bank Lending To Household (KRW) No est v 1141.0T prior.

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