Dialogue remain open on between US-Russia on Ukraine

Notes/Observations

- Risk appetite improved amid hopes of US/Russia talks.

- UK Jan Retail Sales data rebounds as the impact of the omicron variant waned.

Asia

- Japan Jan National CPI Y/Y: 0.5% v 0.6%e; CPI Ex-fresh food (Core) Y/Y: 0.2% v 0.3%e.

- Japan Fin Min Suzuki noted that the recent price rise was driven mostly by increases in energy cost. Needed to continue necessary fiscal support. Reiterated Japan's fiscal situation was becoming severer.

- RBA Board member Harper stated that RBA won't follow pace of US Fed rate hikes; Should be no mystery as to why RBA was being patient.

Russia/Ukraine

- US Sec of State Blinken accepted an invitation to meet with Russia Foreign Minister Lavrov late next week provided Russia did not invade Ukraine.

- President Biden to host meeting on Ukraine on Fri. [Feb 18th] with the leaders of Canada, France, Germany, Italy, Poland, Romania, UK, EU and NATO. To discuss Russian troop build-up on Ukraine border.

Americas

- Fed's Mester (FOMC voter, hawk) supported a March hike with further increases in coming months.

- Fed's Bullard (2022 voter, hawk) reiterated good target was to have fund rates up 100bps by July 1st. Front loading rate increase would send the right signal that FED is serious about inflation control.

- Senator Manchin (D-WV) met with White House chief of staff Klain. President’s top advisers now acknowledge inflation is a major concern that needs to be addressed (Note: o talk of Biden’s BBB package).

- Senate had votes to pass stopgap funding bill, funding the Govt through Mar 11th (as expected).

Energy

- White House stated that US officials discussed with Saudi Arabia an approach to managing energy market pressures from potential Russian invasion of Ukraine.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.13% at 465.14, FTSE +0.18% at 7,551.15, DAX -0.06% at 15,258.69, CAC-40 +0.42% at 6,975.74, IBEX-35 -0.09% at 8,663.60, FTSE MIB +0.09% at 26,693.00, SMI +0.59% at 12,145.04, S&P 500 Futures +0.46%].

Market Focal Points/Key Themes: European indices open mixed and have traded around flat through most of the session so far; improved risk sentiment attributed to easing of tensions around Ukraine; better performing sectors include financials and industrials; laggard sectors include materials and consumer discretionary; reportedly Macquarie looking to take controlling stake of National Grid; earnings expected during the upcoming US session include Deere, PPL and Air Canada.

Equities

- Consumer discretionary: Hermes [RMS.FR] -4% (earnings).

- Energy: Eni [ENI.IT] +0.5% (earnings), Electricite de France [EDF.FR] -5% (earnings; French govt to acquire stake).

- Financials: NatWest [NWG.UK] -3% (earnings).

- Industrials: Renault [RNO.FR] +1.5% (earnings).

- Communication Services: Ubisoft Entertainment [UBI.FR] +5% (sales).

Speakers

- ECB's Kazimir (Slovakia) express support to end of QE program in Aug 2022 an dmaintain flexibility on the timetable for rate hikes. Urged gradual steps in tightening monetary policy.

- ECB Vasle (Slovenia) stated that he favored a quicker adjustment of monetary policy.

- Russia to conduct strategic deterrence drills on Sat, Feb 19th; President Putin to monitor.

- Russia govt spokesperson Peskov stated that breaches of cease-fire arrangement in Donbas was potentially very dangerous.

- Ukraine Defense Min stated that the probability of a large scale escalation was low.

- Organization for Security and Co-operation in Europe (OSCE): Have record 80 ceasefire violations in Ukraine as of Friday, Feb 18th.

- Singapore Fin Min Wong budget speech noted that expected to see a steady recovery in 2022; but risks remained.

Currencies/Fixed income

- FX market was steady as the prospect of a Russia-U.S. meeting reduced any demand for safe haven flows. Focus on the upcoming Blinken-Lavrov talks schedule for next week. The.USD. JPY and CHF currencies to remain highly sensitive to broad investor sentiment.

- EUR/USD steady at 1.1370 area. Dealers noted that ECB would likely prove more cautious than the markets were currently priced on the rate front.

Economic data

- (NL) Netherlands Feb Consumer Confidence Index: -30 v -28 prior.

- (FI) Finland Jan CPI M/M: N +1.2% v -0.1% prior; Y/Y: 4.4% v 3.5% prior.

- (FR) France Q4 ILO Unemployment Rate: 7.4% v 7.8%e (lowest since 2008); Mainland Unemployment Rate: 7.2% v 7.6%e.

- (UK) Jan Retail Sales (ex-auto/fuel) M/M: 1.7% v 1.0%e; Y/Y: 7.2% v 7.9%e.

- (UK) Jan Retail Sales (including auto/fuel) M/M: 1.9% v 1.2%e; Y/Y: 9.1% v 9.4%e.

- (SE) Sweden Jan CPI M/M: -0.5% v -0.8%e; Y/Y: 3.7% v 3.6%e; CPI Level: 350.56 v 349.35e.

- (SE) Sweden Jan CPIF M/M: -0.5% v -0.7%e; Y/Y: 3.9% v 3.9%e.

- (SE) Sweden Jan CPIF (ex-energy) M/M: +0.1% v -0.5%e; Y/Y: 2.5% v 1.9%e.

- (SE) Sweden Q4 Total Number of Employees Y/Y: 4.0% v 2.7% prior.

- (DK) Denmark Feb Consumer Confidence Indicator: -3.2 v -1.5 prior.

- (TR) Turkey Feb Consumer Confidence: 71.2 v 73.2 prior.

- (CH) Swiss Q4 Industrial Output Y/Y: 7.3% v 8.5% prior; Industry & Construction Output Y/Y: 6.2% v 7.2% prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 136.3K v 106.6K tons prior.

- (FR) France Jan Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 2.9% v 2.9% prelim; CPI Ex-Tobacco Index: 107.30 v 107.30e.

- (FR) France Jan Final CPI EU Harmonized M/M: 0.1% v 0.1% prelim; Y/Y: 3.3% v 3.3% prelim.

- (RU) Russia Narrow Money Supply w/e Feb 11th (RUB): 14.42T v 14.35T prior.

- (EU) Euro Zone Dec Current Account Balance: €22.6B v €23.6B prior.

- (PL) Poland Jan Sold Industrial Output M/M: -3.0% v -7.3%e; Y/Y: 19.2% v 14.7%e.

- (PL) Poland Jan Employment M/M: 1.5% v 0.8%e; Y/Y: 2.3% v 1.7%e.

- (PL) Poland Jan Average Gross Wages M/M: -8.7% v -8.6%e; Y/Y:9.5% v 10.1%e.

- (PL) Poland Jan PPI M/M: 1.3% v 1.0%e; Y/Y: 14.8% v 14.4%e.

- (PT) Portugal Dec Current Account Balance: -€0.7B v -€0.7B prior.

- (IT) Italy Dec Current Account Balance: €4.4B v €4.7B prior.

- (GR) Greece Dec Current Account Balance: -€1.7B v -€2.5B prior.

- (EU) Euro Zone Dec Construction Output M/M: -4.0% v -0.2% prior; Y/Y: -3.9% v +0.4% prior.

- (BE) Belgium Feb Consumer Confidence: +1 v -2 prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR1.2B vs. ZAR1.2B indicated in I/L 2029, 2046 and 2050 Bonds.

Looking ahead

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

- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).

- 06:30 (IN) India Weekly Forex Reserve w/e Feb 11th: No est v $632.0B prior.

- 06:30 (IS) Iceland to sell 2024 and 2026 RIKB Bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

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

- 08:00 (NL) ECB’s Elderson (Netherlands, SSM member).

- 08:30 (CA) Canada Dec Retail Sales M/M: -2.1%e v +0.7% prior; Retail Sales (ex-auto) M/M: -1.5%e v +1.1% prior.

- 10:00 (US) Jan Existing Home Sales: 6.10Me v 6.18M prior.

- 10:00 (US) Jan Leading Index: 0.2%e v 0.8% prior.

- 10:00 (EU) Euro Zone Feb Advance Consumer Confidence: -8.0e v -8.5 prior.

- 10:45 (US) Fed’s Evans and Waller on panel.

- 11:00 (EU) Potential sovereign ratings after European close (Fitch on France, Denmark, Poland sovereign rating; S&P on France, Estonia sovereign ratings; Moody’s on Cyprus, Iceland sovereign ratings).

- 11:00 (RU) Russia 2021 Annual GDP Y/Y: +4.5%e v -3.0% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 13:00 (IT) ECB’s Panetti (Italy) on digital currencies.