MNI US OPEN - Russian Forces Press Toward Kyiv

NEWS:

UKRAINE (BBC/MNI): Russian forces have entered the Ukrainian capital of Kyiv
The Russian forces who have reportedly entered the Ukrainian capital are seemingly centred around the northern district of Obolon. The heavily residential area is just 9km north of Kyiv’s parliament and the city centre.

• Just before 10am local time, Ukraine’s Defence Ministry tweeted that enemy Russian operatives were in the area
• The defence ministry called on locals to rally and make Molotov cocktails to fight back
• Meanwhile, several videos online appear to show armoured vehicles rolling down mostly-empty roads in Obolon
• There are also videos appearing to show fighting between civilians and people in military uniform
• Kyiv has also been attacked from the air, with residents taking shelter in underground railway stations

UKRAINE/RUSSIA (MNI): Russia rebuffs statement that Ukraine ready to negotiate neutral status
Ukraine is ready to negotiate a neutral status with Russia, but it must also receive security guarantees, adviser to the President of Ukraine Mikhail Podolyak said in a statement, adding that "This war must be stopped. These hostilities must be stopped." Russia's Foreign Minister Lavrov rebuffed this statement, saying that Zelenskiy is lying when he says the country is ready to discuss neutral status.

NATO/EUROPE/UKRAINE (BBG/MNI) European Union leaders backed a broad sanctions package late Thursday that they said will limit Russia’s access to Europe’s financial sector and restrict key technologies. Leaders from the North Atlantic Treaty Organization will hold virtual talks on the alliance’s next steps starting at 3 p.m. in Brussels. Doorstep comments from Secretary-General Jens Stoltenberg expected at around 1430CET (0830ET, 1330GMT) before the public opening remarks half an hour later. The post-talks press conference by Stoltenberg, originally due at 1800CET, has been brought forward to 1700CET (1100ET, 1600GMT). Confirmed by NATO spox Oana Lungescu.

• Presser will be streamed live at: https://www.nato.int/

UKRAINE (BBG): President Volodymyr Zelenskiy said Ukraine’s military had so far prevented Russia from achieving its objectives. “Russia will have to talk to us sooner or later, talk about how to end the fighting and stop this invasion,” Zelenskiy said in a morning address. “The sooner this conversation begins, the smaller the losses to Russia itself.”

US/RUSSIA/CHINA (NYT): U.S. Officials Repeatedly Urged China to Help Avert War in Ukraine
Americans presented Chinese officials with intelligence on Russia’s troop buildup in hopes that President Xi Jinping would step in, but were repeatedly rebuffed. Over three months, senior Biden administration officials held half a dozen urgent meetings with top Chinese officials in which the Americans presented intelligence showing Russia’s troop buildup around Ukraine and beseeched the Chinese to tell Russia not to invade, according to U.S. officials.

CHINA/RUSSIA (BBC): China still declining to condemn Russia
Long-time Russian ally China is still declining to condemn Russia, with its foreign ministry refusing to call Russia's action against Ukraine an "invasion". At a daily news briefing in Beijing, spokesman Wang Wenbin reiterated China's position that while it respected the territorial integrity of all countries, it also understood "Russia's legitimate concerns on security issues".

CHINA (MNI): China's Total Social Financing To Grow Faster In 2022
Chinese total social financing, a broad measure of credit, is set to grow more quickly this year as the People's Bank of China looks past previous concerns over excessive leverage and boosts loans to real estate and infrastructure spending in line with the government's upcoming economic growth target, policy advisors and analysts told MNI.

DATA:

MNI: EZ FEB ECONOMIC SENTIMENT INDICATOR 114.0; JAN 112.7
EZ FEB INDUSTRIAL CONFIDENCE 14.0; JAN 13.9
EZ EMPLOYMENT EXPECTATIONS 116.2; JAN 113.6R
EZ FEB CONSUMER CONFIDENCE -8.8; JAN -8.5R

MNI: FRANCE FINAL Q4 2021 GDP -0.3%R Q/Q, +1.8% Y/Y
FLASH FEB CPI +0.7% M/M, +3.6% Y/Y; JAN +2.9% Y/Y
FRANCE JAN PPI +4.6% M/M, +22.2% Y/Y; DEC +1.3r% M/M

MNI: ITALY ISTAT FEB CONSUMER CONFIDENCE 112.4 VS JAN 114.2
ITALY FEB SA MANUFACTURING MORALE 113.4 VS JAN 113.7
CONSUMER CONFIDENCE LOWEST SINCE MAY 2021 --ISTAT

BOND SUMMARY: Markets await Lagarde and Biden

• A more stable session for EGBs and Bund, after a fast market week.
• Investors and market participants are on sideline, with all the attention turning to ECB Lagarde and US President Biden, both speaking at 14.00GMT.
• ECB's Lagarde speaks after Eurogroup meeting in Paris.
• The President meets with fellow NATO Heads of State and Government in an extraordinary virtual summit to discuss the security situation in and around Ukraine.
• Bund and EGBs are a touch in the red, Bund is down 12 ticks, while peripheral spread are tighter this morning,.
• Greece lead by 3.3bps.
• Some divergence between UK Gilt and Europe, contracts are offered in Europe, while bid for Gilt.
• Gilt is up 16 ticks and the Gilt/Bund spread is 2.3bps tighter.
• Similar colour for Treasuries, they too are holding onto gains, but most of the volumes have been on the spread, which are very close to completion.
• Looking ahead, US PCE core deflator, and Durable Goods. Michigan is final reading. But all the attention is on Lagarde and Biden.

FOREX: Currencies on a More Stable Footing Following Late Equity Rally

• Following the rip higher on Wall Street late Thursday, currency market sentiment is more favourable early Friday, helping the likes of AUD and NZD climb to the top of the G10 table, with USD Index holding well off yesterday's highs. This leaves major pairs hovering at and around recent lows, but looking slightly more solid relative to other sessions this week.
• EUR/USD holds clear of the 1.1106 low printed yesterday, while EUR/JPY trades either side of the 129.00 handle at pixel time. Focus remains on the ongoing Ukraine crisis, with reports continuing to circulate of the Russian military presence in Kyiv, placing further pressure on the Ukrainian government to accede to demands from the Kremlin on neutrality and a removal of Western military hardware from the country.
• Outside of geopolitical risk, month-end flows will likely play a part into the London close, with most models pointing toward a USD-buying bias headed into the Friday fix.
• US personal income/spending data for January crosses later today as well as prelim durable goods numbers. ECB's Lagarde is due to be speaking at 1400GMT/0900ET following a Eurogroup meeting and is expected to address the implications of the Ukraine crisis on the Eurozone economy.
• Nonetheless, more attention will likely be paid to the sanctions and counter-sanctions traded between the West and Russia, as the Russian Parliament warn that they have prepared sanctions to hit the West's weak points. The NATO General Secretary speaks later today, holding a press conference at 1700GMT/1200ET.