Russia opens up space for humanitarian corridors

EU Mid-Market Update: Russia opens up space for humanitarian corridors; talk of massive EU joint bond issuance to aid energy and defense sectors.

Notes/Observations

- Focus continues on Ukraine conflict; Russia Defense Ministry declared a 'silence regime' to open up humanitarian corridors in 5 Ukraine cities.

- Speculation of EU joint bond issuance eases risk aversion sentiment for the time being.

Asia

- BOJ Gov Kuroda stated that economy had yet to fully recover from pandemic impact, reiterated need to continue with monetary easing.

- Japan Fin Min Suzuki stated that would eep watching commodity price rise impact.

- Japan Jan Current Account Balance registered its largest deficit since Jan 2014 (-¥1.19T v -¥870.5Be).

- Taiwan Air Force said to be in close contact with US regarding F-16 deliveries.

Russia/Ukraine

- Ukraine spokesperson Podolyak stated that the 3rd round of talks with Russia made small positive developments in improving the logistics of humanitarian corridors.

- Ukraine Foreign Min Kuleba stated that it sought direct Zelenskiy-Putin talks because they know Putin made the final decisions.

- Russia President Putin noted that would only use professional soldiers in Ukraine operations (Reminder: reports circulated that Russia was recruiting Syrians skilled in urban combat to fight in Ukrainian cities).

- US sent 500 additional troops to Poland, Romania, and Germany (Note: US military now has about 100K personnel stationed in Europe).

Americas

- House and Senate members said to be putting together a bill that would ban the import of energy products from Russia and to suspend normal trade relations with Russia and Belarus.

- White House to issue cryptocurrency executive order this week,. To task Federal agencies to study the market, study concept of a US digital currency.

Energy

- Russia Dep PM Novak stated that Europe was pushing the country towards an embargo on gas deliveries through Nord Stream 1 but not taking this decision yet; No one would benefit from that embargo.

- EU Leaders to agree this week to phase out dependency on Russian gas, oil, and coal imports. Draft called for 80% of gas storage capacity to be filled by September 30th (currently around 30%).

- White House Spokesperson Psaki stated that President Biden had not made a decision about banning Russian oil imports into the US.

- Libya's biggest oil field Sharara and El Feel said to restart production.

- Various US oil executives met with the OPEC Sec Gen Barkindo.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.79% at 420.42, FTSE +0.07% at 6,964.43, DAX +1.35% at 13,008.00, CAC-40 +1.69% at 6,083.49, IBEX-35 +3.11% at 7,882.13, FTSE MIB +3.14% at 22,856.00, SMI -0.17% at 11,185.51, S&P 500 Futures +0.28%].

Market Focal Points/Key Themes: European indices open moderately lower but later turned around to trade higher; sectors among those starting the day in the green are health care and telecom; sectors among those leading to the downside are industrials and consumer discretionary; oil and gas subsector supported after Brent opens higher; IWG merges digital assets with Instant; earnings expected in the upcoming US session include Dick’s Sporting Goods.

Equities

- Consumer discretionary: International Workplace Group [IWG.UK] +12% (unit merger; earnings), Adidas [ADS.DE] +2.5% (exits Russia), Ashtead [AHT.UK] +2% (earnings), Greggs {GRG.UK] -8.5% (earnings), Domino's Pizza [DOM.UK] -1.5% (earnings; buyback).

- Consumer staples: Danone [BN.FR] +1% (outlook).

- Industrials: Schaeffler [SHA.DE] +8.5% (earnings; suspends outlook citing Ukraine-Russia conflict).

- Materials: Fresnillo [FRES.UK] +3.5% (earnings).

Speakers

- EU said to consider joint bond issuance to help fund energy and defense to cope with the fallout from Russia’s invasion of Ukraine. Proposal may be presented after the bloc’s leaders hold an emergency summit in Versailles, France.

- Germany Econ Min Habeck stated that he did not see Russia halting the Nord Stream 1 flows. Germany could cope this winter if the gas was stopped.

- Sweden Central Bank (Riksbank) Jansson stated that underlying inflation of 2.5% was high for the country but not one to run away from and hide.

- EU ambassadors said to discuss new sanctions against Russia and Belaru.

- Russia Defense Ministry announced 'silence regime' in Ukraine which stopped shelling and opened up humanitarian corridors in 5 Ukraine cities.

- Iran Revolutionary Guards Corp said to successfully launch the Noor2 satellite.

- IEA chief Birol stated that oil prices could still go higher than current levels; would recommend more oil inventory release if necessary.

Currencies/Fixed income

- The session began with some risk off sentiment but reports that EU was considering joint bond issuance to help fund energy and defense to cope with the fallout from Russia’s invasion of Ukraine prompted up confidence. Dealers did note that each time Russia and Ukraine came to the negotiating table and leave without a resolution prompted more doubt on whether one was achievable at all.

- EUR/USD moved above the 1.09 session as some risk appetite percolated on the report of EU joint bond issuance. Focus on the upcoming ECB meeting with dealers noting the war in Ukraine to push near-term inflation higher in Europe.

Economic data

- (SE) Sweden Jan Maklarstatistik Housing Prices Y/Y: 11% v 13% prior; Apartment Prices Y/Y: 7% v 6% prior.

- (DE) Germany Jan Industrial Production M/M: 2.7% v 0.5%e; Y/Y: +1.8% v -1.7%e.

- (FI) Finland Jan Preliminary Trade Balance: -€0.9B v -€0.2B prior.

- (NO) Norway Jan GDP M/M: -1.6% v +0.2% prior; GDP Mainland M/M: -0.9% v -0.1%e.

- (RO) Romania Q4 Preliminary GDP (2nd reading) Q/Q: -0.1% v -0.5% advance; Y/Y: 2.4% v 2.2% advance.

- (TW) Taiwan Feb Trade Balance: $5.8B v $4.0Be; Exports Y/Y: 34.8% v 15.7%e; Imports Y/Y: 35.3% v 21.4%e.

- (TW) Taiwan Feb CPI Y/Y: 2.4% v 2.7%e; CPI Core Y/Y: 1.7% v 1.8%e; WPI Y/Y: 11.5% v 10.6%e.

- (ES) Spain Jan Industrial Production M/M: -0.1% v +1.0%e; Y/Y: 1.7% v 2.7%e; Industrial Output NSA (unadj) Y/Y: 4.0% v 3.0% prior.

- (IT) Italy Jan Retail Sales M/M: -0.5% v +0.8% prior; Y/Y: 8.4% v 9.8% prior.

- (CZ) Czech Feb International Reserves: $176.3B v $174.3B prior.

- (CZ) Czech Feb Unemployment Rate: 3.5% v 3.6% prior.

- (ZA) South Africa Q4 GDP Q/Q: 1.2% v 1.2%e; Y/Y: 1.7% v 1.8%e.

- (EU) Euro Zone Q4 Final GDP Q/Q: 0.3% v 0.3% prelim; Y/Y: 4.6% v 4.6% prelim.

- (EU) Euro Zone Q4 Household Consumption Q/Q: -0.6% v -0.4%e; Govt Expenditures Q/Q: 0.5% v 0.1%e; Gross Fix Capital Q/Q: 3.5% v 0.5%e.

- (EU) Euro Zone Q4 Final Employment Q/Q: 0.5% v 0.5% prelim; Y/Y: 2.2% v 2.1% prelim.

- (HU) Hungary Feb YTD Budget Balance (HUF): -1.434T v 151.3B prior.

Fixed income issuance

- (ID) Indonesia sold total IDR6.2T vs. IDR9.0T target in Islamic bills and bonds (sukuk).

- (NL) Netherlands Debt Agency (DSTA) sold €2.095B vs. €1.5-2.5B indicated in 0% Jan 2029 DSL Bonds; Avg Yield: +0.085% v -0.280% prior.

- (ZA) South Africa sold total ZAR vs. ZAR3.9B indicated in 2026, 2037 and 2048 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €1.949B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £1.5B indicated in 1.25% July 2051 Gilts; Avg Yield: 1.580% v 0.871% prior; bid-to-cover: 2.31x v 2.42x prior; Tail: 0.4bps v 1.0bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €1.38B vs. €1.38B indicated range in 2025 and 2031 RAGB bond.

- Sold €805M in 0% Apr 2025 RAGB Bonds; Avg Yield: -0.231% v -0.640% prior; bid-to-cover: 1.91x v 2.87x prior.

- Sold €575M in 0.0% Feb 2031 RAGB bonds; Avg Yield: 0.426% v 0.143% prior, bid-to-cover: 2.08x v 2.08x prior.

Looking ahead

- (PT) Bank of Portugal ECB financing to Portuguese Banks: No est v €41.8B prior.

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to raise Base Rate by 50bps to 3.25%.

- (CO) Colombia Feb Consumer Confidence Index: -15.6e v -13.5 prior.

- (SK) Slovenia Debt Agency (Ardal) to sell 3-month. 6-month and 12-month Bills.

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

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

- 05:30 (DE) Germany to sell combined €750M in inflation-linked 2030 and 2033 Bonds (Bundei).

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills.

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

- 06:00 (IE) Ireland Jan Industrial Production M/M: No est v 10.2% prior; Y/Y: No est v -4.3% prior.

- 06:00 (US) Feb NFIB Small Business Optimism Index: 97.4e v 97.1 prior.

- 06:00 (BR) Brazil Feb FGV Inflation IGP-DI M/M: 1.5%e v 2.0% prior; Y/Y: 15.4%e v 16.7% prior.

- 06:00 (CL) Chile Feb CPI M/M: 0.7%e v 1.2% prior; Y/Y: 8.3%e v 7.7% prior.

- 06:00 (FI) Finland to sell combined ?1.5B in 6-month and 9-month Bills.

- 06:30 (EU) ESM to sell €1.1B in 12-month Bills.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (TR) Turkey to sell Bonds.

- 08:00 (BR) Brazil Feb Vehicle Production: No est v 145.4K prior; Vehicle Sales: No est v 126.5K prior; Vehicle Exports: No est v 27.6K prior.

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

- 08:30 (US) Jan Trade Balance: -$87.3Be v -$80.7B prior.

- 08:30 (CA) Canada Jan Int'l Merchandise Trade (CAD): +1.1Be v -0.1B prior.

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

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (EU) ECB weekly QE bond buying update.

- 10:00 (US) Jan Final Wholesale Inventories M/M: 0.8%e v 0.8% prelim; Wholesale Trade Sales M/M: No est v 0.2% prior.

- 13:00 (US) Treasury to sell $48B in 3-Year Notes.

- 16:00 (NZ) New Zealand Feb Heavy Truckometer M/M: No est v -0.5% prior.

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

- 16:45 (NZ) New Zealand Q4Manufacturing Activity Q/Q: No est v -2.2% prior.

- 18:30 (AU) Australia Mar Consumer Confidence Index: No est v 100.8 prior.

- 18:50 (JP) Japan M2 Money Supply Y/Y: 3.5%e v 3.6% prior; M3 Money Supply Y/Y: 3.1%e v 3.3% prior.

- 18:50 (JP) Japan Q4 Final GDP Q/Q: 1.4%e v 1.3% prelim; GDP Annualized Q/Q: 5.6%e v 5.4% prelim; GDP Nominal Q/Q: 0.6%e v 0.5% prelim.

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

- 20:30 (CN) China Feb CPI Y/Y: 0.9%e v 0.9% prior; PPI Y/Y: 8.6%e v 9.1% prior.

- 21:00 (AU) RBA's Lowe-Speech.

- 22:00 (TH) Thailand Feb Consumer Confidence: No est v 44.8 prior; Economic Confidence: No est v 38.7 prior.

- 22:00 (CN) China to sell 1-year and 10-year Upsize Bonds.

- 23:30 (TW) Taiwan to sell 3-month bills.

- (KR) South Korea Presidential Election.

- 23:30 (JP) Japan Feb Bankruptcies.