MNI US OPEN - Putin Decries West's Pursuit of 'Limitless Power'

NEWS

RUSSIA (MNI): Putin - 'They Started The War...Objective Of West Is Limitless Power'

Russian President Vladimir Putin speaking to joint houses of parliament. Some key comments below:

• Putin: 'We will decide the tasks of special military operation step by step.'
• Putin: 'We did everything possible to resolve Donbas problem peacefully. But the West prepared a different scenario.'
• Putin: 'Kyiv held talks with the West about weapons supplies before military operation...the West cynically cheated its people.'
• Putin: 'We defend our interests and position that there should not be a divide between civilised countries and the rest.'
• Putin criticises US as having large number of military bases worldwide and for unilaterally exiting treaties. Says that 'We saw threats were increasing, a bloody operation in the Donbas had been planned.'
• Putin: 'They started the war...The objective of the west is limitless power.'
• Putin: 'Sevestopol in Crimes was the next target.'
• Putin states that "The more long-range weapons sent by the West to Ukraine, the more we will have to push them away from our borders." This comes as a clear signal that the provision of long range missiles or fighter jets by the West would be viewed in Moscow as a significant provocation.

JAPAN (MNI): Upper House to Hold BOJ Hearings on Feb 27, 28

The government will conduct hearings for the Bank of Japan nominees at the Upper House’s steering committee on Feb. 27 and 28, a Diet Official said. Japan's government on Feb. 10 officially nominated Kazuo Ueda, an economist and former BOJ board member, as the BOJ’s next governor to replace Haruhiko Kuroda, whose term ends on April 8.

CHINA (MNI): PBOC Should Avoid Excessive Easing - Huang

China’s central bank should avoid overly expansionary monetary easing and make only temporary use of its targeted tools given the economy could grow at up to 6% this year as pent-up demand fuels a recovery, a former People’s Bank of China adviser told MNI.

CHINA (BBG): China Party Leaders to Discuss Institutional Reform This Month

The Chinese Communist Party’s Central Committee will discuss a draft plan to reform party and government institutions at a plenary session scheduled for Feb. 26-28, Xinhua reports, citing a Politburo meeting held Tuesday.

BOK (MNI): Base Rate Likely Steady as Growth Concerns Rise

The Bank of Korea will likely keep its policy interest rate unchanged at 3.5% at its monetary policy board meeting on Thursday as the bank is more worried about a weaker economy than high inflation, observers said.

RBA (MNI): RBA Considered 50bp and 25bp Hike at Feb Meeting

The Reserve Bank of Australia discussed a 50bp hike at its February 7 meeting but stuck with its recent stance of 25bp rises given the uncertain outlook and the ability to adjust policy due to the frequency of its meetings, according to the minutes released on Tuesday.

MNI RBNZ Preview - February 2023: Another 50bp Amid Uncertainty

The RBNZ hasn't met since it hiked rates 75bp in November. A step down to 50bp is expected this month given the tentative peaking in inflation and labour market tightness, the housing correction and lackluster activity indicators. This would bring rates to 4.75% and cumulative tightening to 450bp. The NZD OIS market has 48bp priced in.

DATA

EUROZONE FEB FLASH MANUF PMI 48.5 (FCST 49.3); JAN 48.8 (MNI)
EUROZONE FEB FLASH SERVICES PMI 53.0 (FCST 51.0); JAN 50.8 (MNI)
EUROZONE FEB FLASH COMP PMI 52.3 (FCST 50.7); JAN 50.3 (MNI)

GERMANY FEB FLASH MANUF PMI 46.5 (FCST 48.1); JAN 47.3 (MNI)
GERMANY FEB FLASH SERVICES PMI 51.3 (FCST 51.0); JAN 50.7 (MNI)
GERMANY FEB FLASH COMP PMI 51.1 (FCST 50.3); JAN 49.9 (MNI)

GERMANY FEB ZEW EXPECTATIONS 28.1 (FCST 23.0); JAN 16.9 (MNI)
GERMANY FEB ZEW CURRENT SITUATION -45.1 (FCST -50.5); JAN -58.6 (MNI)

FRANCE FEB FLASH MANUF PMI 47.9 (FCST 51.0); JAN 50.5 (MNI)
FRANCE FEB FLASH SERVICES PMI 52.8 (FCST 49.8); JAN 49.4 (MNI)
FRANCE FEB FLASH COMP PMI 51.6 (FCST 49.8); JAN 49.1 (MNI)

UK DATA (MNI): Big Feb PMI Beat Led By Services Strength

• UK FEB FLASH MANUF PMI 49.2 (FCST 47.5); JAN 47.0
• UK FEB FLASH SERVICES PMI 53.3 (FCST 49.2); JAN 48.7
  
• UK FEB FLASH COMP PMI 53.0 (FCST 49.0); JAN 48.5

Overall a very solid report across the board, particularly for the services sector, with inflationary dynamics and weaker manufacturing new orders the main concerns. From the S&P Global / CIPS report: "Survey respondents cited rising customer demand and improving business confidence in February, due to lower economic uncertainty, fewer supply shortages and falling inflation." Overall new orders rose for the first time in 7 months, though that was due to a solid upturn in services, vs a slight drop for manufacturers.

UK JAN PSNCR GBP-28.96 BN (MNI)
UK JAN PSNB GBP-6.24 BN (MNI)
UK JAN PSNB-X GBP-5.42 BN (MNI)
UK JAN CGNCR GBP-20.94 BN (MNI)

JAPAN (MNI): Japan Govt Maintains Domestic, Overseas Assessment

Japan's government left its main economic assessment from the previous month unchanged and also kept its assessment of overseas economies unchanged, the Cabinet Office said on Tuesday. “The Japanese economy is picking up moderately, although some weakness have been seen recently," the government said. The assessment of economic components was largely unchanged from the previous month.

FOREX: GBP Outperforms on Multi-Month High PMI

• GBP outperforms, rallying against all others as PMI data topped expectations. The services sector was a particular source of strength, with February PMI jumping to 53.3 vs. Exp. 49.2. The release marked an 8-month high for both Composite and Services, and a 7-month high for Manufacturing PMI (albeit still in contractionary territory).
• GBP/USD futures volumes surged on the back of the PMI beat, putting spot at fresh session highs. Over 3,000 contracts traded in the reaction (cash equivalent ~ $250mln) - putting the pair to just below the Feb16 high at 1.2075. 1.2092 (50% retracement for the Feb14 - Feb 17 downleg) sits as next intraday resistance.
• The greenback made modest gains ahead of the NY crossover, while AUD and NOK make up the poorest performers of the session so far.
• Canadian retail sales and inflation data are top of the docket Tuesday, with US February PMIs also due. Existing home sales for January round off the calendar, with ECB's Lagarde also scheduled.

BONDS: Europe Dragging Tsys Lower on PMI Beats

European bonds are lower in early Tuesday trade following stronger-than-expected February flash PMI data.

• Each of the French, German, and Eurozone composite PMIs beat expectations (though services did the heavy lifting, with manufacturing disappointing), followed by a much stronger-than-expected UK print.
• The German and UK curves bear flattened, with ECB and BoE terminal rate expectations rising. Gilts are underperforming, with short-end/belly yields higher by more than 10bp.
• The European core FI move dragged Treasuries lower, with U.S. PMIs and existing home sales the highlights of the data slate.
• ECB's Lagarde is the session's major central bank speaker of note.
• In supply, we get a $42bln 2Y Note auction in the U.S., with Germany selling E5bln of Bobl and Spain selling new 15Y Obli via syndication.

Latest levels:

• Mar 10-Yr futures (TY) down 12.5/32 at 111-19.5 (L: 111-19 / H: 112-00.5)
• Mar Bund futures (RX) down 31 ticks at 134.55 (L: 134.32 / H: 134.97)
• Mar Gilt futures (G) down 53 ticks at 102.51 (L: 102.44 / H: 103.23)
• Italy / German 10-Yr spread 2.7bps wider at 189.6bps

EQUITIES: Equity Futures Recover From Intraday Lows as Putin Addresses Federal Assembly

EUROSTOXX 50 futures moderated through Friday and Monday trade, finishing flat on the session. This keeps prices just below first resistance at 4303.20, the 2.382 proj of the Sep 29 - Oct 4 rise from Dec 20 low, but still above 4265.00, the Feb 3 high. Note that the trend is overbought. A pullback would represent a healthy correction. Key support lies at 4097.00, the Jan 19 low. Initial support is at 4167.50, the 20-day EMA. The S&P E-Minis trend condition is bullish and the latest pullback is considered corrective. The contract has pierced initial support at 4069.52, the 20-day EMA. Firmer support lies at the 50-day EMA, at 4006.63. A clear break of this average would signal scope for a deeper pullback and potentially highlight a reversal. Key resistance and the bull trigger intersect at 4208.50, the Feb 2 high. A breach would resume the uptrend.

• Japan's NIKKEI closed lower by 58.84 pts or -0.21% at 27473.1 and the TOPIX ended 2.25 pts lower or -0.11% at 1997.46.
• Elsewhere, in China the SHANGHAI closed higher by 16.186 pts or +0.49% at 3306.524 and the HANG SENG ended 357.47 pts lower or -1.71% at 20529.49.
• Across Europe, Germany's DAX trades lower by 82.45 pts or -0.53% at 15384.65, FTSE 100 lower by 21.11 pts or -0.26% at 7992.98, CAC 40 down 41.2 pts or -0.56% at 7288.14 and Euro Stoxx 50 down 31.41 pts or -0.74% at 4236.55.
• Dow Jones mini down 191 pts or -0.56% at 33677, S&P 500 mini down 30.25 pts or -0.74% at 4058, NASDAQ mini down 129 pts or -1.04% at 12267.5.

COMMODITIES: Gold Consolidates Close to Recent Lows

WTI futures drifted into the Friday close, returning the outlook to neutral for now. Prices have drifted back below the 50-day EMA, at $78.34, however the medium-term view remains unchanged. Key resistance remains at $82.66, the Jan 18 high. On the downside, initial firm support has been defined at $72.25, the Feb 6 low. Trend conditions in Gold are bearish for now, despite the late recovery into the Friday close. This follows the strong sell-off on Feb 2 / 3 as well as the break of support at the 50-day EMA early Wednesday. A clear break here would strengthen a bearish case and suggest scope for a deeper pullback. Vol band support (the 2.0% 10-dma envelope), successfully contained prices Friday, keeping the focus on the level this week.

• WTI Crude down $0.04 or -0.05% at $76.12
• Natural Gas down $0.02 or -0.92% at $2.254
• Gold spot down $5.36 or -0.29% at $1835.06
• Copper up $4.5 or +1.1% at $414.3
• Silver down $0.04 or -0.18% at $21.7415
• Platinum up $0.28 or +0.03% at $927.21