Hope continues for progress in talks between Russia and Ukraine

- Hope continued for progress in talks between Russia and Ukraine.

- Fed repositioned itself as an inflation fighter; other central banks hiked afterwards (Brazil, Taiwan).

Asia

- New Zealand Q4 GDP missed expectations (Q/Q: 3.0% v 3.3%e; Y/Y: 3.1% v 3.3%e).

- Australia Feb Employment Change: +77.4K v +37.0Ke; Unemployment Rate: 4.0% 4.1%e (lowest level since Aug 2008).

Russia/Ukraine

- Ukraine President Zelenskiy stated that talks with Russian remained fairly difficult but were still in progress.

- Ukraine Presidential advisor Podolyak noted that draft document on a 15 point peace plan was only showing the request of the Russian side and nothing more.

- Payment on interest of Russian government dollar bonds was not received by the close of business in London on Wednesday.

- US Congress Nears Agreement to Revoke Russia’s Trade Status. House could act on the bill as soon as Thursday (Mar 17th).

- President Biden described Russia President Putin as a war criminal.

Americas

- FOMC raised the Target range by 25bps (as expected) for its 1st rate hike since Dec 2018; Vote was 8-1 with Bullard the lone dissenter (sought 50bps hike). To begin cutting holdings of treasury securities and agent debt/mortgage-backed securities at an upcoming meeting . Fed dots saw 7 rates hikes in 2022.

- US Senate Banking Committee voting favorably to approve Fed’s Powell for a 2nd term, approved Brainard and Fed nominee Jefferson. Committee tied on nominating Lisa Cook to Federal Reserve.

- Brazil Central Bank (BCB) raised the Selic Target Rate by 100bps to 11.75% for its 9th straight hike in the current tightening cycle, Decision to hike was unanimous and saw another rate hike of the same size as appropriate at the next meeting.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.12% at 7,295.90, FTSE +0.06% at 7,295.90, DAX -0.52% at 14,365.87, CAC-40 -0.19% at 6,576.15, IBEX-35 -0.02% at 6,576.15, FTSE MIB -0.56% at 24,149.00, SMI +0.28% at 11,934.75, S&P 500 Futures -0.16%].

Market Focal Points/Key Themes: European indices open higher across the board but moderated gains as the session wore on; sectors among those trending higher are materials and consumer discretionary; while sectors trending negative include materials and financials; oil and gas subsector supported as Brent moves back above $100/bbl; Adecco to complete acquisition of all remaining Akka debt following acquisition; National Express board comments in support of Stagecoach offer; Glencore divests CSA copper mine in Australia; Hiberniasells Forum to Spear Street; focus on upcoming monetary policy decision by the BOE later in the day; earnings expected during the upcoming US session include FedEx, Pirelli and Enel.

Equities

- Consumer discretionary: Deliveroo [ROO.UK] +6.5% (earnings), Ocado Group [OCDO.UK] -8% (trading update).

- Materials: FLSmidth [FLS.DK] -1% (investigation).

- Industrials: ThyssenKrupp [TKA.DE] -8.5% (suspends outlook), SAF-Holland [SFQ.CH] -14% (earnings).

- Technology: Atos [ATO.FR] +6% (Airbus interest in unit).

- Utilities: Veolia Environnement [VIE.FR] +2% (earnings).

Speakers

- ECB chief Lagarde speech at the Watcher Conference noted that Ukraine invasion had cast a shadow over Europe; central bank was doing its part in the situation. Reiterated inflation to stabilize at 2% target over the medium term. Ukraine war could set in motion new inflationary trends. Would react gradually and flexibly to deliver on goal, ECB mindful of risks, ready to revise plan if needed.

- ECB's Villeroy (France) stated that he did not see a risk of recession; Ukraine war to lead to higher inflation and smaller growth. Ukraine conflict subtracting around 1.0% from French GDP growth. Russia debt default would have limited consequences for global finance.

- German VCI (Chemical Industry Association) scrapped its growth forecasts for 2022 noting that industry's hopes for a recovery had come to an end with Russia's invasion of Ukraine (**Note: Had previously saw 2022 production rising by 2% and sale +5%).

- Russia Finance Ministry stated that an Eurobond coupon payment was made to correspondent bank. Would separately update market on whether payment was accepted on payment agent's accounts.

- Russia Foreign Ministry noted that talks with Ukraine continued via video link.

- US Defense Dept spokesperson Kirby stated that Ukraine had essentially stalled Russian advance.

- Philippines Central Bank (BSP) Gov Diokno stated that was monitoring for any 2nd round effects of inflation; any change in monetary policy to be data dependent.

- Indonesia Central Bank Policy Statement reiterated stance that current rate was in-line to support growth and need to maintain FX stability.

- Indonesia (BI) Gov Warjiyo Pre-Rate Decision Comments noted that the global economic recovery was continuing but at a slower pace than previously see. Commodity prices were rising and it would continue to monitor inflation risks. Domestic growth remained resilient as covid cases declined; growth supported by trade and reopening of economy. Reiterated stance to stabilize IDR currency (Rupiah) to be in-line with fundamental.

- Indonesia Central Bank updated its Staff Projections which maintained 2022 GDP growth between 4.7-.5.5% range and also maintained the 2022 CPI between 2.0-4.0% range.

- Taiwan Central Bank (CBC) Policy Statement noted that the decision to hike was unanimous and would timely adjust its monetary policy. Imported inflation pressure was strong and the rate hike to be helpful to contain and stabilize inflation. Saw mild economic growth in 2022 with export momentum remaining string.

- Taiwan Central Bank updated its Staff Projections which raised 2022 GDP growth from 4.0% to 4.1% and raised the 2022 CPI forecast from 1.6% to 2.4%.

- China Commerce Minister (MOFCOM) stated that the domestic COVID-19 outbreaks have been a brake on consumption but expected consumption to recover.

- China Foreign Min spokesperson Zhao Lijian stated that China was making efforts to de-escalate situation in Ukraine. To maintain normal economic ties both with Russia and Ukraine.

Currencies/Fixed Income

- USD was slightly softer in the session on profit taking despite the Fed’s rate hike since 2018 on Wed. Dealers noted that FOMC’s signal of further rate rises throughout 2022 was in-line with market expectations.

- Some mild risk-on appetite bubbling as continued peace talks between Russia and Ukraine helped to improve market sentiment.

- EUR/USD at 1-week highs at 1.1050 area aided by hopes for progress in talks between Russia and Ukraine.

- GBP/USD at 1.3180 area ahead of the BOE rate decision. Analysts pricing in an about 90% chance of a 25 bps rate hike.

Economic data

- (NL) Netherlands Feb Unemployment Rate: 3.4% v 3.6% prior.

- (EU) EU27 Feb New Car Registrations: -6.7% v -6.0% prior.

- (CH) Swiss Feb Trade Balance (CHF): 6.0B v 3.1B prior; Real Exports M/M: 8.1% v 2.0% prior; Real Imports M/M: -0.9% v 0.4% prior; Watch Exports Y/Y: 24.4% v 7.1% prior.

- (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo unchanged at 3.50% (as expected).

- (AT) Austria Feb Final CPI M/M: 1.3% v 1.3% prelim; Y/Y: 5.9% v 5.9% prelim.

- (ZA) South Africa Q1 BER Consumer Confidence: -13 v -9 prior.

- (ES) Spain Q4 Labour Costs Y/Y: 4.4% v 4.9% prior.

- (HK) Hong Kong Feb Unemployment Rate: 4.5% v 4.2%e.

- (TW) Taiwan Central Bank (CBC) raised the Benchmark Interest Rate by 25bps to 1.37% (not expected).

- (ES) Spain Jan Trade Balance: -€6.1B v -€5.3B prior.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €B vs. €5.0-6.0B indicated range in 2025, 2028 and 2032 bonds.

- Sold €2.08B in 0.00% May 2025 SPGB bonds; Avg Yield: 0.342% v 0.065% prior; Bid-to-cover: 1.69x v 1.31x prior.

- Sold €1.029B in 1.40% July 2028 SPGB bonds; Avg Yield: 0.764% v 0.036% prior, Bid-to-cover: 2.33x v 1.80x prior.

- Sold €2.49B in 0.70% Apr 2032 SPGB bond; Avg Yield: 1.307% v 1.232% prior; Bid-to-cover: 1.51x v 1.52x prior.

Looking ahead

- 05:50 (FR) France Debt Agency (AFT) to sell €9.0-1.0B in 2026, 2027 and 2029 Bonds.

- 06:00 (EU) Euro Zone Feb Final CPI Y/Y: 5.8%e v 5.8% advance; CPI Core Y/Y: 2.7%e v 2.7% advance; CPI M/M: 0.9%e v 0.9% advance.

- 06:00 (GR) Greece Q4 Unemployment Rate: No est v 13.0% prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (SE) Sweden to sell I/L Bonds.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 06:50 (FR) France Debt Agency (AFT) to sell €1.0-1.5B in inflation-linked 2031, 2036 and 2053 bonds (Oatei).

- 07:00 (RO) Romania to sell RON400M 2.5% Oct 2027 bonds.

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 14.00%.

- 07:45 (DE) ECB's Schnabel (Germany).

- 08:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to raise Bank Rate by 25bps to 0.75%.

- 08:00 (UK) BOE Mar Minutes.

- 08:00 (BR) Brazil Jan Economic Activity Index (Monthly GDP) M/M: -0.2%e v +0.3% prior; Y/Y: 0.7%e v 1.3% prior.

- 08:30 (US) Feb Housing Starts: 1.700Me v 1.638M prior; Building Permits: 1.850Me v 1.895M prior (revised from 1.899M).

- 08:30 (US) Mar Philadelphia Fed Business Outlook: 15.0e v 16.0 prior.

- 08:30 (US) Initial Jobless Claims: 220Ke v 227K prior; Continuing Claims: 1.48Me v 1.494M prior.

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

- 08:30 (CA) Canada Feb Teranet House Price Index (HPI) M/M: No est v 1.7% prior; Y/Y: No est v 16.6% prior; HPI Index: No est v # prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 11th: No est v $643.2B prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:15 (US) Feb Industrial Production M/M: 0.5%e v 1.4% prior; Capacity Utilization: 77.9%e v 77.6% prior; Manufacturing Production: 1.0%e v 0.2% prior.

- 09:30 (IT) ECB’s Visco (Italy).

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

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

- 12:00 (CA) Canada to sell 3 Year Bonds.

- 19:30 (JP) Japan Feb National CPI Y/Y: 0.9%e v 0.5% prior; CPI (ex-fresh food) Y/Y: 0.5%e v 0.2% prior; CPI (ex-fresh food/energy) Y/Y: -1.0%e v -1.1% prior.

- 21:00 (PH) Philippines Jan Unemployment Rate: No est v 6.6% prior.

- 22:30 (KR) South Korea to sell KRW500B in 50-year Bonds.

- 23:00 (CN) China to sell 3-month bills.

- (JP) BOJ Interest Rate Decision: Expected to leave Interest on Overnight Rate (IOER) unchanged at -0.10% and maintain Yield Control target around 0.00%.