EU Core CPI hits fresh record high; BOE's Mann calls for more rate hikes

Notes/Observations

- Euro Zone Jan Final CPI revised 0.1% higher to set a record high for Core CPI.

- Wake of US FOMC Minutes on markets is relatively subdued after its slightly hawkish tilt, although no notable surprises. US economic focus on PCE reading on Fri.

- Geopolitical tensions between US, Russia and China continue to hog macro focus on eve of Russia/Ukraine war anniversary (today is Defender of the Fatherland Day). NATO Sec Gen Stoltenberg stated concern over Russia's nuclear plans, vowing to monitor closely. Follows two days after Russia officially suspended participating in START nuclear arms treaty..

- EU earnings season dictating equity moves and as such, EU indices performance is mixed; FTSE100 lags, Italy MIB40 outperforms.

- Asia closed mixed with Nikkei225 -1.3%. EU indices are -0.4% to +0.7%. US futures are +0.2% to +0.7%. Gold -0.4%, DXY 0.0%; Commodity: Brent +0.5%, WTI +0.6%, TTF -1.6%; Crypto: BTC +0.4%, ETH +1.4%.

Asia

- Bank of Korea (BOK) left the 7-day Repo Rate unchanged at 3.50% (as expected) for its 1st pause in 11 decisions in the current tightening cycle. To judge whether base rate needed to rise further but saw its restrictive stance as warranted for a considerable time.

- BOK Gov Rhee post rate decision press conference noted that decision to keep policy steady was not unanimous. Member Cho Yoon-Je sought a 25bps rate hike. Decision was based on the expectation that inflation would head down from March. Pause should not be taken as a signal indicating the tightening cycle is over.

- Australia Q4 Private Capital Expenditure Q/Q: 2.2% v 1.1%e.

Americas

- FOMC Feb Minutes saw all participants agree that more rate hikes were needed to achieve job and employment targets. Few members did call for a 50bps hike..

- NY Fed’s Williams (voter): 2% inflation is a foundational target; Price stability is an absolute imperative.

Energy

- Weekly API Crude Oil Inventories: +9.9M v +10.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.13% at 462.80, FTSE -0.42% at 7,897.30, DAX +0.36% at 15,455.95, CAC-40 +0.39% at 7,327.76, IBEX-35 +0.33% at 9,203.04, FTSE MIB +0.78% at 27,313.00, SMI -0.34% at 11,262.30, S&P 500 Futures +0.44%].

Market Focal Points/Key Themes: European indices open mixed but took on a positive biase later in the session; better performing sectors include technology and materials; underperforming sectors include health care and financials; Redx to merge with Jounce; Rolls Royce CEO hints at divestments in post-earnings call; earnings expected during the upcoming US session include Moderna, Alibaba, Valeo and Accor.

Equities

- Consumer discretionary: Fnac Darty [FNAC.FR] +10.0% (potential stake sale), Bureau Veritas [BVI.FR] +2.0% (reports FY22- beats estimates, guides FY23), Sopra Steria [SOP.FR] +8.0% (reports FY22), ISS [ISS.DK] +3.0% (reports FY22 - guides FY23), Accor [AC.FR] +1.5% (reports FY22 - guides FY23), Takkt [TTK.DE] +1.0% (reports Q4).

- Energy: Eni S.P.A [ENI.IT] -1.5% (reports Q4).

- Financials: Credit Suisse [CSGN.CH] +1.5% (Apollo said to consider $750M First Boston leveraged finance bet), Axa [AXA.DE] +3.5% (reports FY22 - launches €1.1B share buyback).

- Healthcare: EssilorLuxottica [EL.FR] -2.5% (reports FY22 - affirms FY22-26), Genmab [GE9.DE] -3.5% (reports FY22 - announces 220K share buyback - post close).

- Industrials: Rolls-Royce [RR.UK] +16.0% (reports FY22), GetLink [GET.FR] -4.0% (reports FY22).

- Technology: Auto1 Group [AG1.DE] -1.0% (reports FY22 - guides FY23), Fugro [FUR.NL] -5.0% (earnings; acquisition).

- Telecom: WPP [WPP.UK] +4.5% (reports FY22 - guides FY23), Bouygues [EN.FR] +2.5% (reports FY22 - guides FY23), Freenet [FNTN.DE] +2.0% (reports Q4 - post close).

Speakers

- BOE's Mann speech noted that more tightening was needed and any pivot was not imminent; Monetary policy had been insufficiently aggressive. Failure to do enough on rates now risks the worst of both worlds.

- Treasury Sec Yellen commented from G20 that US was prepared for an additional $10B in economic assistance for Ukraine in coming weeks; Global economy was in a better place than seen from months ago.

- NATO Sec Gen Stoltenberg stated that saw signs that China was considering giving arms to Russia; Closely monitoring Russia on their nuclear weapons.

- China Commerce Ministry (MOFCOM) spokesperson Shu Jueting reiterated stance and urged US to create good conditions for trade with China.

Currencies/fixed income

- USD drifted higher in the session aided by the notion that the Fed will continue to tighten for longer to combat inflation expectations. Recent FOMC Feb Minutes showed that members expected more interest rate hikes to fight stubborn inflation.

- EUR/USD dipping below the 1.06 level for 7-week lows despite EU Jan CPI being revised slightly higher with core staying stubborn..

- USD/JPY staying below the 135 level ahead of the Parliamentary hearing of the BOJ Gov nominee Ueda.

Economic data

- (NO) Norway Jan Trend Unemployment Rate: 3.4% v 3.4% prior.

- (NO) Norway Jan Credit Indicator Growth Y/Y: 5.3% v 5.5% prior.

- (HU) Hungary Dec Average Gross Wages Y/Y: 18.1% v 17.0%e.

- (ES) Spain Dec Total Mortgage Lending Y/Y: -9.8% v +11.9% prior; Mortgage Approvals Y/Y: -8.8% v +9.3% prior.

- (AT) Austria Jan Final CPI M/M: 0.9% v 0.8% prelim; Y/Y: 11.2% v 11.1% prelim.

- (TW) Taiwan Jan Industrial Production Y/Y: -20.5% v -11.3%e.

- (HK) Hong Kong Jan CPI Composite Y/Y: 2.4% v 2.1%e.

- (PL) Poland Jan Unemployment Rate: 5.5% v 5.5%e; Q4 Unemployment Rate: 2.9% v 3.0%e.

- (ZA) South Jan Africa PPI M/M: -0.6% v -0.4%e; Y/Y: 12.7% v 12.8%e.

- (EU) Euro Zone Jan Final CPI Y/Y: 8.6% v 8.5% advance; CPI Core Y/Y: 5.3% v 5.2% advance (Core at record high).

- (CY) Cyprus Jan CPI Harmonized M/M: -1.4% v -0.8% prior; Y/Y: 6.8% v 7.6% prior.

Fixed income issuance

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in to sell 2026 and 2039 I/L Bonds.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €2.0B indicated in 6-month Bills; Avg Yield: % v 2.822% prior; Bid-to-cover: x v 1.50x prior.

- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €3.0B indicated in 12-month Bills; Avg Yield: % v 3.179% prior; Bid-to-cover: x v 1.38x prior.

Looking ahead

- (RO) Romania Jan M3 Money Supply Y/Y: No est v 6.9% prior.

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

- 05:30 (PL) Poland to sell 2025, 2027 and 2033 bonds (5 tranches).

- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds (3 tranches).

- 05:45 (UK) BOE’s Cunliffe.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 100bps to 8.00%.

- 06:00 (UK) Feb CBI Retailing Reported Sales: -10e v -23 prior; Total Distribution Reported Sales: No est v -22 prior.

- 06:00 (CZ) Czech Republic to sell Bills.

- 06:00 (RO) Romania to sell combined RON1.0B in 2026 and 2032 bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (CA) Canada Feb CFIB Business Barometer: No est v 51.4 prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 17th: No est v $589.0B prior.

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

- 08:30 (US) Q4 Preliminary GDP Annualized Q/Q: 2.9%e v 2.9% advance; Personal Consumption: 1.9%e v 2.1% advance.

- 08:30 (US) Q4 Preliminary GDP Price Index: 3.5%e v 3.5% advance; Core PCE Q/Q: 3.9%e v 3.9% advance.

- 08:30 (US) Initial Jobless Claims: 200Ke v 194K prior; Continuing Claims: 1.70Me v 1.696M prior.

- 08:30 (US) Jan Chicago Fed National Activity Index: -0.25e v -0.49 prior.

- 09:00 (BR) Brazil Jan Tax Collections (BRL): 250.4Be v 210.2B prior.

- 10:00 (MX) Mexico Central Bank (Banxico) Feb Minutes.

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

- 10:50 (US) Fed’s Bostic on Fed’s role in the banking system.

- 11:00 (US) Feb Kansas City Fed Manufacturing Activity Index: -2e v -1 prior.

- 11:00 (US) Weekly DOE Oil Inventories.

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

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v -0.7% prior; Y/Y: 0.9%e v 2.6% prior.

- (AR) Argentina Feb Consumer Confidence: 40.1e v 38.5 prior.

- 14:00 (US) Fed’s Daly.

- 18:30 (JP) Japan Jan National CPI Y/Y: 4.3%e v 4.0% prior; CPI Ex-Fresh Food (Core) Y/Y: 4.3%e v 4.0% prior; CPI Ex-Fresh Food/Energy (Core-Core) Y/Y: 3.3%e v 3.0% prior.

- 19:01 (UK) Feb GfK Consumer Confidence: -43e v -45 prior.

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

- 23:00 (MY) Malaysia Jan CPI Y/Y: 3.7%e v 3.8% prior.

- 23:30 (TW)) Taiwan to sell NT$25B in 20-Year Bonds; Avg Yield: % v 1.880% prior, bid-to-cover: x v 1.22x prior (Sept 27th 2022).

- (JP) BOJ’s Ueda in Parliament.