MNI US OPEN - Yields in Focus as German 10y Hits Multiyear High

NEWS

EU/UK (MNI): Protocol Deal Expected; Eurosceptic Conservative MPs & DUP Next Obstacles

A deal between the EU and UK on the Northern Ireland protocol is expected to be announced later today, with European Commission President Ursula von der Leyen in the UK for talks with PM Rishi Sunak. The two are set to meet in Windsor at around midday, while Politico reports a joint presser is penciled-in for 1530GMT (1030ET, 1630CET).

ECB (MNI): "Every Reason" To Believe ECB Hiking 50Bp In March

There is "every reason" to believe the European Central Bank will hike its key interest rates by another 50 basis points in March, President Christine Lagarde told Indian newspaper The Economic Times in an interview published on Monday. However, after that, policymakers "will see", with further decisions data dependent.

US/CHINA (MNI): China's Reopening Risks a More Hawkish Fed

China's reopening risks an inflationary impulse through commodity and raw material prices that could keep interest rates in the U.S. elevated for longer or keep the Federal Reserve raising rates higher than previously thought, National Association for Business Economics' Jack Kleinhenz told MNI.

US/CHINA (MNI): Beijing - US Plane in Taiwan Strait 'Disrupts Regional Situation'

Comments from the Chinese military stating that it has closely monitored a US military P-8A aircraft as it traversed the Taiwan strait. Says that, "The US' side's actions deliberately interferes with and disrupts the regional situation and endangers the peace and stability of Taiwan...We firmly oppose the US action."

JAPAN (MNI): BOJ Gov Nominee Ueda Says Easy Policy Appropriate

Bank of Japan governor nominee Kazuo Ueda on Monday again brushed off speculation about near-term policy tightening, saying it was appropriate for the BOJ to continue monetary easing. “It will take some time for the BOJ to achieve 2% price target and the bank needs to maintain the easy policy to support the economy, which will create an economic environment that enables firms to raise wages,” Ueda said.

JAPAN (MNI): BOJ Wary Rising Staff Costs May Crimp Wage Growth

Bank of Japan officials are worried about the sustainability of wage hikes as major firms will offer large wage rises this year and then endure considerably higher ongoing staffing costs, MNI understands. Bank officials are encouraged by the willingness of large companies to implement considerable wage hikes to alleviate pressure on workers from higher prices and living costs, and they hope wage hikes will help shift people’s deflationary mindset.

CHINA (MNI): E-CNY to Promote Yuan Cross-Border Use in GBA - CF40

China will expand the inner-regional and cross-border use of the e-CNY and facilitate capital movements in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to promote the yuan in financial transactions, as well as the internationalisation of the currency, according to a report unveiled at the 2023 Greater Bay Area Fintech Summit held by China Financial 40 Forum on Saturday.

TURKEY (BBG): Turkey Wealth Fund Allots $1 Billion for Stocks

Turkey’s sovereign wealth fund plans to channel cash into the nation’s main stock exchange via exchange-traded funds, in an open-ended attempt to keep the equities market from falling. The fund, known by its Turkish initials TVF, will allocate at least $1 billion initially to ETFs run by a state bank, according to people familiar with the matter. The move differs from previous attempts to support equities since the Borsa Istanbul resumed trading following a halt caused by two devastating earthquakes on Feb. 6.

DATA

EZ FEB ECONOMIC SENTIMENT INDICATOR 99.7; JAN 99.8r (MNI)

ITALY FEB CONSUMER CONFIDENCE 104 (MNI)
ITALY FEB BUSINESS CONFIDENCE 109.1 (MNI)

SWEDEN JAN RETAIL SALES -7.5% Y/Y (MNI)

AUSTRALIA DATA (MNI): Total Wage & Salary Bill Growth Highest Since 2007

• AUSTRALIA Q4 BIZ INDICATORS GROSS OP PROFITS +10.6%
• AUSTRALIA Q4 BIZ INDICATORS INVENTORIES -0.2%

Company profits partially unwound the sharp Q3 drop in Q4. They rose a more-than-expected 10.6% q/q following an upwardly revised 11.5% q/q drop. Total industry spend on wages and salaries posted another strong rise in Q4 of 2.6% q/q, which was the sixth quarterly consecutive rise of 2% or above, leaving them up 11.6% y/y, the second highest since the series began in 2002.

NEW ZEALAND (MNI): NZ's Q4 Retail Sales Fall as Rate Hikes Take Toll

Forecasts for New Zealand's Q4 GDP may be marked down after Q4 retail sales printed weaker than expected, according to data released Monday by StatsNZ. Retail sales declined 0.6% q/q, falling well short of expectations for a 0.2% q/q rise, showing households are tightening their belts amid elevated inflation and higher interest rates. Q3 retail sales growth was revised up to 0.6% q/q from 0.4% q/q. Q4 core sales volumes were down 1.3% q/q, showing retail sales values are being driven by higher prices.

HONG KONG (MNI): HK Exports Slide in January

Exports from Hong Kong dropped 36.7% y/y in January, the seventh consecutive month of declines and a sharp deterioration from December’s 28.9% y/y fall, according to data released by the Census and Statistics Department on Monday.

FOREX: AUD Downtrend Accelerates as US Curve Inverts Further

• Currency markets are more stable at the NY crossover despite a shakier start - a move which resulted in fresh highs for the greenback during Asia-Pac trade. The fresh high for the USD Index extends the currency's February winning streak, putting prices within range of 105.631, the January and YTD highs.
• Fixed income markets have been the focus so far this week, with yields at the belly of the curve seeing further upside pressure and putting the German 10y yield at the highest level since the wake of the Global Financial Crisis in 2011. In the US, curve inversion persists, with the short-end selling off at a faster pace to put 2yr yields higher by 3 bps vs 10y yield's 1.5bps gain.
• GBP/USD's pullback low at 1.1923 found support ahead of the mid-February low at 1.1915 and staged a respectable recovery back above the 200- and 100-dmas at 1.1928 and 1.1950 respectively.
• The poorest performers across G10 are AUD and NZD, which has resulted in an extension of the AUD/USD downtrend posted last week. AUD/USD has now solidly broken through 100-dma support at 0.6729, putting the pair at the lowest levels since January and within range of YTD lows at 0.6688.
• Prelim durable goods orders and pending home sales for January. The central bank speakers slate should prove to be of interest, with Fed's Jefferson, ECB's de Cos and ECB's Lane on the docket.

BONDS: Under Pressure

• EGBs and gilts are under some pressure this morning with Schatz and Bunds seemingly leading the moves. There are no real obvious headline drivers for the moves, other than the potential Brexit deal which is expected to be announced later today - but that does not seem to be the catalyst as we are still very light on details.
• SONIA / Euribor futures have also moved notably lower this morning - with Mar-24 SONIA seeing a 10 tick move on the day.
• The main release of the day will be US durable goods data at 13:30GMT / 8:30ET.
• The most interesting speech of the day is likely to come from the Fed's Jefferson who is dual to discuss inflation and the dual mandate. We will also from BOE's Broadbent and the ECB's de Cos and Lane (although none of those are due to discuss monpol).
• TY1 futures are down -0-4+ today at 110-25 with 10y UST yields up 1.3bp at 3.960% and 2y yields up 2.6bp at 4.843%.
• Bund futures are down -0.31 today at 133.74 with 10y Bund yields up 2.8bp at 2.562% and Schatz yields up 2.3bp at 3.044%.
• Gilt futures are down -0.26 today at 100.25 with 10y yields up 2.0bp at 3.780% and 2y yields up 4.8bp at 3.654%.

EQUITIES: E-Mini S&P Recovers Towards 4000.00 After Slipping to Feb Low Friday

Eurostoxx 50 futures finished near the lows of the week, with the 4175 level the lowest print since early February. Last week, dip buyers emerged on Wednesday to contain any break lower, but the shallow bounce off the Friday lows suggests a lower range to begin the week. Key support remains at 4097.00, the Jan 19 low. Major resistance holds at 4303.20, the 2.382 proj of the Sep 29 - Oct 4 rise from Dec 20 low. Further slippage Friday put the S&P E-Minis to fresh February lows, with weakness extending through the close. Last week’s price action put prices below first support at the 50-day EMA at 4024.94 and tilts the near-term view lower. 3901.75 marks next support, the Jan 19 low, although vol band support at 3940.3 could slow any decline. For the outlook to improve, bulls look for a close above the mid-week high at 4034.25.

• Japan's NIKKEI closed lower by 29.52 pts or -0.11% at 27423.96 and the TOPIX ended 4.38 pts higher or +0.22% at 1992.78.
• Elsewhere, in China the SHANGHAI closed lower by 9.126 pts or -0.28% at 3258.034 and the HANG SENG ended 66.53 pts lower or -0.33% at 19943.51.
• Across Europe, Germany's DAX trades higher by 222.42 pts or +1.46% at 15432.17, FTSE 100 higher by 65.48 pts or +0.83% at 7943.98, CAC 40 up 109.15 pts or +1.52% at 7296.42 and Euro Stoxx 50 up 70.91 pts or +1.7% at 4249.73.
• Dow Jones mini up 147 pts or +0.45% at 32971, S&P 500 mini up 20.75 pts or +0.52% at 3996.25, NASDAQ mini up 80 pts or +0.67% at 12076.25.

COMMODITIES: WTI Futures Recover From Last Week's Lows

WTI futures drifted lower into the Wednesday close, returning the outlook to neutral for now. Prices now sit back below the 50-day EMA, at $77.97, 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 for the continuation contract. Trend conditions in Gold are bearish for now, with prices trading heavy on the resumption of trade. This marks an extension of the pullback after the strong sell-off on Feb 2 / 3 as well as the break of support at the 50-day EMA. The clear break strengthens the bearish case and suggests scope for a deeper pullback. Vol band support (the 2.0% 10-dma envelope), successfully contained prices so far, keeping the focus on the level this week.

• WTI Crude up $0.35 or +0.46% at $76.7
• Natural Gas up $0.05 or +1.81% at $2.589
• Gold spot down $1.76 or -0.1% at $1809.3
• Copper up $2.15 or +0.54% at $397.65
• Silver down $0.05 or -0.24% at $20.7147
• Platinum up $4.14 or +0.45% at $917.49