Ukraine conflict continues to push energy prices higher thus delaying any expected peak in price trends

Notes/Observations

- Ukraine conflict continues to push energy prices higher thus delaying any expected peak in price trends.

- Oil soars on embargo risk; Brent oil hit $139 a barrel, and WTI crude $130 a barrel.

- EU benchmark gas contract tested above €310/megawatt hour (record high).

- Spot Gold rises above $2,000/oz amid safe-haven demand.

Asia

- China set its GDP growth target for 2022 at “around 5.5% (lowest annual GDP target since 1991).

- China Feb YTD Trade Balance $115.9B v $95.0Be; Exports YTD Y/Y: 16.3% v 14.0%e; Import YTD Y/Y: 15.5% v 17.0%e.

- China NDRC Vice Chairman Hu stated that commodity price stability was important to the economy, used many measures to stabilize prices in 2021; oil prices were very high right now; 2022 GDP target of 5.5% would require strenuous effort- Biden administration to start reviewing first group of tariffs on Chinese imports as they expire in July.

Russia/Ukraine

- US said to consider acting without allies on ban of oil imports from Russia, no decision has been made as of yet.

- Russia's foreign ministry called on European Union and NATO countries to stop pumping weapons to Ukraine. Putin likens Western sanctions to war and warned against creating no-fly zone over Ukraine.

- US Sec of State Blinken stated that US was looking at ways to provide Ukraine with jet fighters without provoking Russian retaliation and potentially dragging Poland and NATO into the war.

- 3rd round of talks between Ukraine and Russia said to be held on Monday but Russian side was less definitive.

- Russia President Putin issued decree to allow companies to use Rubles (RUB) to pay foreign creditors [relates to debt payments to creditors in countries that engage in hostile activities against Russia]; Russia Central Bank to also ease reporting requirements for domestic lenders, commercial banks will no longer have to publish their monthly accounts on their websites.

- IMF: Ongoing war in Ukraine will have severe impact on the global economy.

Europe

- SNB's Maechler reiterated stance that ready to intervene and address the rapidly strengthening CHF currency (Franc); Negative interest rates remained necessary.

Americas

- US Speaker Pelosi stated that House was considering Russia oil and energy imports ban bill, would also allow to increase tariffs on goods from Russia.

Energy

- US National average for a gallon of gas tops $4, the highest price at the pump since 2008.

- President Biden said to be considering a trip to Saudi Arabia to help repair relations and convince the Kingdom to pump more oil.

- US officials said to be meeting with Venezuela’s Maduro’s government possibly in discussion to ease sanctions on its oil.

Speakers/Fixed income/FX/Ccommodities/Erratum

Equities

Indices [Stoxx600 -2.69% at 410.42, FTSE -1.63% at 6,873.00, DAX -3.40% at 12,649.79, CAC-40 -3.22% at 5,866.77, IBEX-35 -3.07% at 7,484.10, FTSE MIB -3.05% at 21,780.00, SMI % at #, S&P 500 Futures -1.52%].

Market Focal Points/Key Themes: European indices open lower across the board and continued lower as the session wore on; least negative sectors include energy and real estate; sectors among those leading to the downside are financials and consumer discretionary; oil and gas subsector among the few in the green, including defense subsector; Greece and Cyprus closed for holiday; multiple firms announce updates on Russia operations; Spectris desists in its unsolicited bid for Oxford Instruments; earnings expected during the upcoming US session include Schlumberger, Ciena and Kohl’s.

Equities

- Consumer discretionary: Inditex [ITX.ES] -6.5% (closes shops in Russia).

- Energy: Engie [ENGI.FR] -7.5% (notes gas market consequences).

- Financials: Credit Agricole [ACA.FR] -6% (Russia/Ukraine impact), Amigo Holdings [AMGO.UK] +64% (update on Schemes of Arrangement).

- Industrials: Clarkson [CKN.UK] +7% (earnings), Oxford Instruments [OXIG.UK] -27% (offer termination.

Speakers

- SNB reiterated its stance that CHF currency (Franc)wais highly valued; recent strength due to its safe-haven status. Reiterated stance that was prepared to intervene in FX markets if necessary. Look at overall currency situation and that individual pairs did not play a special role.

- France Fin Min Le Maire reiterated stance to back consumers and industry on energy prices.

- France Official noted that Fin Min Le Maire was considering risk evaluation of scenario of total cut-off of gas from Russia.

- Spain Econ Min Calvino stated that the gov't was looking at ways to cap energy prices. Prepared for more persistent inflation.

- Ukraine President Zelenskiy called for the boycott of Russian oil and trade.

- EU Commission President Von der Leyen stated that she would discuss enforcement package with Italy's PM Draghi; Working on further sanctions on Russia.

- US Sec of State Blinken stated that was continuously reviewing defense posture for NATO. Looking at question of more permanent deployments.

- BOJ said to possible cut its overall economic assessment at its upcoming Mar policy meeting citing covid restrictions.

- China Foreign Min Wang Yi stated that Russia-China cooperation was good for world peace and stability. Russia-Ukraine need dialogue.

- Iran govt spokesperson Khatibzadeh: Nuclear negotiations could be concluded even before Tehran's negotiation with IAEA are completed.

- Iran Top Security official Shamkhani stated that the outlook for Vienna nuclear talks remained unclear due to US delay.

Currencies/Fixed income

- Safe-haven flows dominated once again due to Russia's continued invasion of Ukraine and the possibility that sanctions could include a potential ban on imports of Russian oil. Overall price action hinting of no immediate easing of the conflict.

- EUR/USD tested 1.0820 area during Asia as markets also noted that higher energy process might have the Concern mounting Fed act more aggressively amid talks of a possible ban on Russian oil exports. Market participants bringing forward bets for ECB tightening from Feb 2023 to Dec 2022 as energy prices surged but having little impact to help the pair back above the 1.09. Key resistance seen at 1.110 with 1.05 deemed as a measured move objective.

- EUR/CHF cross moved below parity during the Asian session to register fresh seven-year lows. Dealers noted that there was a risk of potential intervention by SNB. Spot Gold rose above $2,000/oz amid the safe-haven demand.

Economic data

- (ZA) South Africa Feb Gross Reserves: $57.7B v $58.0Be; Net Reserves Feb $55.5B v $55.6Be.

- (CH) Swiss Feb Unemployment Rate: 2.5% v 2.5%e; Unemployment Rate (seasonally adj: 2.2% v 2.3%e.

- (DE) Germany Jan Retail Sales M/M: 2.0% v 1.9%e; Y/Y: 10.3% v 9.5%e.

- (DE) Germany Jan Factory Orders M/M: 1.8% v 1.0%e; Y/Y: 7.3% v 5.8%e.

- (UK) Feb Halifax House Price Index M/M: 0.5% v 0.3% prior; Y/Y: 10.8% v 9.7% prior (Strongest annual pace since 2007).

- (NO) Norway Jan Industrial Production M/M: 0.9% v 2.8% prior; Y/Y: 0.2% v 2.0% prior (revised from 1.8%).

- (NO) Norway Jan Manufacturing Production M/M: +3.3% v -1.6% prior; Y/Y-0.2% v -1.0% prior.

- (DK) Denmark Jan Industrial Production M/M: +2.2% v -1.1% prior.

- (SE) Sweden Feb Budget Balance (SEK): 85.6B v 0.8B prior.

- (MY) Malaysia end-Feb Foreign Reserves: $115.8B v $115.8B prior.

- (CZ) Czech Q4 Average Real Monthly Wage Y/Y: -2.0% v -0.6%e.

- (AT) Austria Feb Wholesale Price Index M/M: 2.2% v 2.6% prior; Y/Y: 16.3% v 15.5% prior.

- (CH) Swiss Feb Foreign Currency Reserves (CHF): 938.3B v 946.8B prior.

- (CN) China Feb Foreign Reserves: $3.214T v $3.225Te.

- (SG) Singapore Feb Foreign Reserves: $426.6B v $418.4B prior.

- (CH) Swiss weekly Total Sight Deposits (CHF): 725.7B v 725.2B prior; Domestic Sight Deposits: 657.6B v 660.9B prior.

- (IS) Iceland Feb Preliminary Trade Balance (ISK): -15.1B v -5.3B prior.

- (EU) Euro Zone Mar Sentix Investor Confidence Index: -7.0 v +5.3e.

- (IT) Bank of Italy (BOI) Feb Balance-Sheet Aggregates: Target2 Liabilities at €568.1B vs. €564.8B prior.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel Feb Foreign Currency Balance: No est v $208.8B prior.

- (UR) Ukraine Feb Official Reserve Assets: No est v $29.1B prior (revised from $29.3B).

- (MX) CitiBanamex Survey of Economists.

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

- 05:30 ((DE) Germany to sell combined €6.0B in 3-month and 6-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €3.0-5.0B in 1-month, 3-month, 5-month and 6-month bills.

- 06:00 (IL) Israel to sell 2024, 2026, 2032 and 2051 Bonds (5 tranches).

- 06:00 (RO) Romania to sell RON400M in 3.5% 2025 Bonds.

- 06:00 (RO) Romania to sell RON200M in 4.25% 2036 Bonds.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 06:30 (CL) Chile Feb Trade Balance: -$0.4Be v +$0.8B prior; Total Exports: No est v $8.4B prior; Total Imports: No est v $7.6B prior; Copper Exports: No est v $3.9B prior.

- 06:30 (CL) Chile Feb International Reserves: No est v $50.7B prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 (MX) Mexico Feb Consumer Confidence: No est v 43.4 prior.

- 07:00 (CL) Chile Jan Nominal Wage Y/Y: No est v 6.8% prior.

- 08:00 (PL) Poland Feb Official Reserves: No est v $161.3B prior (revised from $161.1B).

- 08:00 (BR) Brazil Feb PMI Services: No est v 52.8 prior; PMI Composite: No est v 50.9 prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.5-5.7B in 3-month, 6-month, 9-month and 12-month bills.

- 09:30 (TR) Turkey Feb Cash Budget Balance (TRY): No est v -37.8B prior.

- 10:00 (UK) BOE's Cunliffe speaks.

- 15:00 (US) Jan Consumer Credit: $24.5Be v $19.0B prior.

- 16:45 (NZ) New Zealand Q4 Volume of All Buildings Q/Q: +10.0%e v -8.6% prior.

- 17:00 (AU) Australia Feb Household Spending M/M: No est v -10.0% prior; Y/Y: No est v 1.4% prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 99.2 prior.

- 17:30 (AU) RBA's Bullock speech.

- 18:30 (JP) Japan Jan Labor Cash Earnings Y/Y: +0.1%e v -0.4% prior (revised from -0.2%) Real Cash Earnings Y/Y: -1.0%e v -2.3% prior (revised from -2.2%).

- 18:50 (JP) Japan Jan Current Account Balance: -¥870.5Be v -¥370.8B prior; Adjusted Current Account: ¥332.5Be v ¥787.5B prior; Trade Balance (BoP Basis): -¥1.873Te v -¥318.7B prior.

- 18:50 (JP) Japan Feb Bank Lending Y/Y: No est v 0.6% prior; Bank Lending (ex-trusts) Y/Y: No est v 0.6% prior.

- 19:01 (UK) Feb BRC Sales Like-For-Like Y/Y: No est v 8.1% prior.

- 19:30 (AU) Australia Feb Business Confidence: No est v 3 prior; Business Conditions: No est v 3 prior.

- 22:00 (ID) Indonesia Feb Foreign Reserves: No est v $141.3B prior.

- 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.

- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills.

- 23:30 (JP) Japan Feb Bankruptcies Y/Y.