Home Depot and Walmart to report – No change to macro theme

Notes/observations

- Relatively flat US dollar and mixed EU indices as risk sentiment remains undecided after little overnight and weekend macro news with US returning for trade today from Presidents Day. Home Depot and Walmart to report ahead of the open.

- ECB released quarterly negotiated wage rate for Q4 with a slight tick lower to 4.5% from 4.7% in Q3, suggesting wages may have peaked across Euro Area.

- Focus is on upcoming comments from Bank of England (BoE) members at a Treasury Committee beginning from 05:15 ET (10:15 GMT).

- EU Earnings Recap: UK bank Barclays FY results most inline, but plan to return >£10B to shareholders lifts stock; Air Liquide FY results missed estimates, but improved outlook seen as positive.

- Upcoming US Premarket Earnings: CNP, EXPD, FLR, HD, MDT, OMI, VC, WMT.

- Asia closed mixed with Kospi under-performing at -0.8%. EU indices are -0.2% +0.3%. US futures are -0.1% to -0.4%. Gold +0.3%, DXY -0.1%; Commodity: Brent -0.8%, WTI -0.9%, TTF +1.1%; Crypto: BTC -0.9%, ETH -0.1%.

Asia

- RBA Jan Minutes noted that the Board considered two options either to hike by 25bps or keep policy steady. Decided to hold steady given progress had been made on inflation and the labour market was loosening faster than expected.

- China PBOC Monthly Loan Prime Rate (LPR) Setting left the 1-year unchanged at 3.45% (not expected) while cutting the 5-year rate by 25bps to 3.95% (more-than-expected).

- Japan Fin Min Suzuki reiterated stance that FX markets were set by various factors.

- Japan MOF Official Mimura noted that office was always communicating and coordinating with other countries in case for currency intervention.

Global conflict/tensions

- US draft resolution to UN Security Council to say that a major ground offensive into Rafah should not proceed under current circumstances.

Energy

IAEA chief Grossi Iran continues to enrich uranium just below weapons-grade level.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.15% at 491.68, FTSE -0.06% at 7,723.57, DAX -0.30% at 17,041.69, CAC-40 +0.31% at 7,792.96, IBEX-35 +0.21% at 9,965.66, FTSE MIB -0.03% at 31,665.00, SMI +0.27% at 11,429.20, S&P 500 Futures -0.34%].

Market focal points/key themes: European indices open mixed with a downward bias which became more pronounced through the early part of the session; among sectors trending higher are financials and utilities; while sectors leading to the downside include real estate and materials; banking sector supported following Barclay’s earnings; mining subsector weighed down following results from Antofagasta; earnings expected in the upcoming US session include Home Depot, Walmart, Medtronic and Visteon.

Equities

- Consumer discretionary: Intercontinental Hotels Group [IHG.UK] -0.5% (results).

- Financials: Barclays [BARC.UK] +4.5% (results; buyback; rebalances its structure).

- Healthcare: Bayer [BAYN.DE] -1.0% (dividend policy change, analyst upgrade), Grifols [GRF.ES] -6.5% (new short seller report).

- Industrials: Oerlikon [OERL.CH] +4.5% (earnings).

- Technology: Ensurge Micropower [ENSU.NO] +28.0% (first commercial delivery of its world´s first functional commercial-scale solid-state lithium microbattery is expected in Q2 2024), Temenos [TEMN.CH] -1.0% (results).

- Materials: Air Liquide [AI.FR] +5.5% (results), Antofagasta [ANTO.UK] -1.5% (earnings; China rate cut).

Speakers

- ECB noted that Q4 Euro-Area Negotiated Wage Rate: 4.5% v 4.7% prior.

- Sweden Central Bank (Riksbank) Dep Gov Floden stated that inflation was going in the right direction but not at target yet.

- Hungary confirmed to approve Sweden NATO accession bid on Monday, Feb 26th.

- BOJ Exec Dir Shimizu reiterated stance that financial conditions would probably stay accommodative even after the BOJ ended the negative interest rate policy given the bank’s current economic outlook.

- Malaysia Central Bank Gov noted that the current level of MYR currency (Ringgit did not reflect prospects of economy going forward.

Currencies/fixed income

- USD was again steady in quiet trading on Tuesday. as noted yesterday the greenback has advanced over the past month after various data released forced market participant to dial down the number of interest rate cuts they expect from the Fed this year from approx. 145bps to under 100bps currently. Market focus now on Wed’s release of FOMC minutes.

- EUR/USD at 1.0790 area with focus on the upcoming EU PMI readings on Thursday. ECB wage growth slowed in Q4 and might ease inflation fears. Markets continued assessing when the ECB could start cutting rates.

- USD/JPY hovering around the 150 area as market participant debate the potential exit of BOJ from negative rates. BOJ Exec Dir Shimizu reiterated stance that financial conditions would probably stay accommodative even after the BOJ ended the negative interest rate policy given the bank’s current economic outlook.

- China’s state-owned banks said to have aggressively sold USD as the yuan inched lower after the PBoC delivered a larger-than-expected reduction in the five-year loan prime rates.

Economic data

- (NL) Netherlands Feb Consumer Confidence: -27 v -28 prior.

- (FI) Finland Jan Unemployment Rate: 8.3% v 7.1% prior.

- (EU) EU27 Jan New Car Registrations: +12.1% v -3.3% prior.

- (CH) Swiss Jan Trade Balance (CHF): 4.7B v 1.3B prior; Real Exports M/M: -0.4 v +1.1% prior; Real Imports M/M: -4.3% v +2.2% prior; Watch Exports Y/Y: 3.1% v 5.9% prior.

- (SE) Sweden Q4 Industry Capacity: 88.4% v 89.7% prior.

- (DK) Denmark Q4 Preliminary GDP Q/Q: 2.0% v 0.4% prior; Y/Y: 3.1% v 0.7% prior.

- (ZA) South Africa Dec Leading Indicator: 111.0 v 111.9 prior.

- (ES) Spain Dec Trade Balance: -€3.4B v -€2.4B prior.

- (HK) Hong Kong Jan Unemployment Rate: 2.9% v 3.0%e.

- (EU) Euro Zone Dec Current Account: €31.9B v €22.5B prior.

- (PL) Poland Jan Sold Industrial Output M/M: 2.3% v 3.8%e; Y/Y: 1.6% v 3.1%e.

- (PL) Poland Jan Employment M/M: 0.3% v 0.4%e; Y/Y: -0.2% v -0.2%e.

- (PL) Poland Jan Average Gross Wages M/M: -3.3% v -4.9%e; Y/Y: 12.8% v 11.2%e.

- (PL) Poland Jan PPI M/M: -0.2% v 0.2%e; Y/Y: -9.0% v -8.3%e.

- (ZA) South Africa Q4 Unemployment Rate: 32.1% v 31.6%e.

- (IT) Italy Dec Current Account Balance: +€1.1B v -€0.4B prior.

- (GR) Greece Dec Current Account Balance: -€2.3B v -€3.3B prior.

- (PT) Portugal Dec Current Account Balance: -€1.0B v +€0.5B prior.

- (EU) Euro Zone Dec Construction Output M/M: +0.8% v -0.4% prior; Y/Y: +1.9% v -1.9% prior.

Fixed income issuance

- (ID) Indonesia sold total IDR12.0T vs. IDR12.0T target in Islamic bills and bonds (sukuks).

- (EU) European Union opened its book to sell €7.0B in 10-year note via syndicate, guidance seen at +31bps to mid-swaps.

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B in 2031, 2040 and 2048 bonds.

- (UK) DMO sold £1.75B in 4.0% Oct 2063 Gilts; Avg Yield: 4.518%; bid-to-cover: 2.92x; Tail: 0.6bps (**Note: No prior auction history for this issue).

Looking ahead

- (IL) Israel Feb 12-month CPI Forecast: No est v 2.6% prior.

- (AR) Argentina Jan Budget Balance (ARS): No est v -199.1B prior.

- (MX) Mexico CitiBanamex Survey of Economists.

- (CO) Colombia Jan Retail Confidence: No est v 16.6 prior; Industrial Confidence: No est v -4.3 prior.

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

- 05:30 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €5.0B in 2.50% Mar 2026 Schatz.

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

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

- 05:30 (TR) Turkey to sell I/L Bonds.

- 06:00 (SE) Sweden Central Bank (Riksbank) Breman.

- 06:00 (FI) Finland to sell combined €1.0B in 2029 and 2033 RFGB Bonds.

- 06:30 (EU) ESM to sell €1.1B in 6-month Bills.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

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

- 08:30 (US) Feb Philadelphia Fed Non-Manufacturing Regional Index: No est v -3.7 prior.

- 08:30 (CA) Canada Jan CPI M/M: +0.4%e v -0.3% prior; Y/Y: 3.2%e v 3.4% prior; CPI Core-Trim Y/Y: 3.6%e v 3.7% prior; CPI Core-Median Y/Y: 3.6%e v 3.6% prior; Consumer Price Index: 159.0e v 158.3 prior.

- 10:00 (US) Jan Leading Index: -0.3%e v -0.1% prior.

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

- 11:30 (US) Treasury to sell 52-Week Bills.

- 11:55 (SE) Sweden Central Bank (Riksbank) Gov Thedeen.

- 14:00 (AR) Argentina Jan Trade Balance: $0.8Be v $1.0B prior.

- 16:00 (KR) South Korea Mar Business Manufacturing Survey: No est v 71 prior; Non-Manufacturing Survey: No est v 68 prior.

- 16:00 (KR) South Korea Jan PPI Y/Y: No est v 1.2% prior.

- 16:45 (NZ) New Zealand Q4 PPI Input Q/Q: No est v 1.2% prior; Output Q/Q: No est v 0.8% prior.

- 18:30 (AU) Australia Jan Westpac Leading Index M/M: No est v -0.04% prior.

- 18:50 (JP) Japan Jan Trade Balance: -¥1.855Te v ¥68.9B prior (revised from ¥62.1B); Adj Trade Balance: -¥230.7Be v -¥412.7B prior; Exports Y/Y: 9.5%e v 9.7% prior (revised from 9.8%); Imports Y/Y: -8.7%e v -6.9% prior (revised from -6.8%).

- 19:00 (KR) South Korea Feb Trade Balance (Feb 1st thru20th): No est v $0.3B prior; Exports Y/Y: No est v -1.0% prior; Imports Y/Y: No est v -18.2% prior.

- 19:30 (AU) Australia Q4 Wage Price Index Q/Q: 0.9%e v 1.3% prior; Y/Y: 4.1%e v 4.0% prior.

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years and 5~10 Years maturities.

- 20:30 (KR) Bank of Korea to sell KRW1.2T in 3-Year Bonds.

- 21:35 (CN) China to sell 2025 and 2029 bonds.

- 22:00 (TH) Thailand to sell THB25B in 3.39% Jun 2037 bonds.