Another session with volatility weighted to second half of day

EU Mid-Market Update: Another session with volatility weighted to second half of day as market waits for first US CPI reading under Trump.

Notes/observations

- Europe cautiously higher as STOXX 50 hits highest since 2000 and STOXX 600 notches new all-time high. Food & Beverage leads gains while Oil & Gas lags. Heineken surged >10% on strong earnings, lifting Anheuser-Busch and luxury giant Kering. Banco BPM rises ~2% after upbeat profit targets, though Siemens Energy dips despite record €131B orders.

- All eyes on US January CPI (08:30 ET) with markets braced for mixed signals: Annual core inflation expected to ease to 3.1% (prev 3.2%), but monthly core seen ticking up to 0.3% (prev 0.2%). Sticky food/energy costs (eggs +18% MoM on bird flu, natural gas up) and Trump’s 25% steel/aluminum tariffs fuel worries of inflation resurgence.

- Fed Chair Powell reinforced patience during Senate testimony yesterday, stressing “no rush” to cut rates amid resilient growth. Powell also admitted that neutral rate may have risen meaningfully. US futures flat, Treasury yields hold near 4.55% as Powell to testify for second day.

- Earnings focus shifts to Vertiv, Cisco, CVS, and Robinhood post-close.

- Asia closed higher with Hang Seng outperforming +2.6%. EU indices +0.1-0.6%. US futures -0.1%. Gold -0.3%, DXY +0.1%; Commodity: Brent -1.1%, WTI -1.2%; Crypto: BTC -1.9%, ETH -2.7%.

Asia

- BOJ Gov Ueda reiterated in Parliamentary testimony its stance to conduct appropriate policy rate for the 2% price target. To monitor impact of US tariff and immigration policies.

Europe

- Bank of France forecasts Q1 GDP growth of 0.1-0.2%.

Americas

Fed Chair Powell semi-annual testimony in Senate stated that could maintain restraint for longer if the economy remained strong and inflation did not move towards 2%.

Fed's Williams (voter): Inflation expectations are well anchored; The economic outlook is highly uncertain due in part to Govt policy.

Energy

- Weekly API Crude Oil Inventories: +9.0M v +5.0M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.18% at 548.14, FTSE +0.06% at 8,782.75, DAX +0.31% at 22,102.87, CAC-40 +0.27% at 8,050.30, IBEX-35 +0.67% at 12,851.84, FTSE MIB +0.20% at 37,658.00, SMI -0.01% at 12,701.80, S&P 500 Futures -0.16%].

Market Focal Points/Key Themes: European indices open generally higher and remained in the green through the early part of the session; among sectors leading upwards are consumer discretionary and materials; lagging sectors include energy and industrials; Banco BPM raises its bid for Anima; reportedly Hon Hai could acquire Renaut’s stake in Nissan; focus on US CPI figures later in the day; earnings expected in the upcoming Americas session include Michelin, Deutsche Boerse, Cisco and Biogen.

Equities

- Consumer discretionary: Ahold Delhaize [AD.NL] -4.5% (Q4 results).

- Consumer staples: Heineken [HEIA.NL] +11.5% (Q4 results, announces €1.5B share buyback; sees no impact from aluminum tariffs on US prices), Carl Zeiss [AFX.DE] -5.5% (Q1 results).

- Energy: Siemens Energy [ENR.DE] +0.5% (Q1 results).

- Financials: ABN Amro [ABN.NL] +7.5% (Q4 results), Banco BPM [BAMI.IT] +1.0% (Q4 results, reportedly raises bid for Anima), Randstad [RAND.NL] -6.5% (earnings).

- Industrials: Barratt Redrow [BDEV.UK] +7.5% (H1 results) - Technology: Teamviewer [TMV.DE] +4.0% (Q4 results), DKSH [DKSH.CH] -6.5% (earnings).

Speakers

- Sweden Central Bank (Riksbank) Bunge noted that Jan CPI reading was slightly higher-than-expected but need to interpret figures with caution. Inflation seemed to remain in line with target but global tensions were a risk.

- Greece Parliament elected Konstantinos Tasoulas as President in fourth attempt.

- UAE Energy Min Mazrouei noted that US President Trump was expected to be pragmatic with OPEC.

Currencies/fixed income

- USD was steady in the aftermath of Fed Chair Powell first day of testimony in Congress. Fed indicated it was in no hurry to cut interest rates. Focus turned to the US CPI reading for Jan. Dealers noted the inflation data would probably going to be more telling for the market than Powell's testimony, Currently market participants had scaled back bets on Fed rate cuts this year and now only fully pricing in one quarter-point cut, with around a 40% chance of a second.

- EUR/USD was steady during a quiet session with the pair at 1.0370.

- USD/JPY was around 153.50 as higher US 10-year yield supported the greenback. Powell’s testimony on Tues helped to push 10-year Treasury yields up about 4 basis points.

- The German 10-year Bund yield at 2.44% with the Italian 10-year BTP yield at 3.53% and the 10-year Oat at 3.21%. US 10-year Bond yield at 4.51% by mid-session.

Economic data

- (SE) Sweden Jan PES Unemployment Rate: 3.9% v 3.9% prior.

- (JP) Japan Jan Preliminary Machine Tool Orders Y/Y: 4.7% v 12.6% prior.

- (FI) Finland Dec Current Account Balance: €0.9B v €0.3B prior.

- (CZ) Czech Jan Final CPI M/M: 1.3% v 1.3% prelim; Y/Y: 2.8% v 2.8% prelim.

- (IT) Italy Dec Industrial Production M/M: -3.1% v -0.2%e; Y/Y: -7.1% v -2.5%e; Industrial Production NSA (unadj) Y/Y: -1.2% v -4.56% prior.

Fixed income issuance

- (FR) France Debt Agency (AFT) opened its book to sell May 2056 Oat via syndication; guidance seen at +7bps to 3.25% May 2055 Oat.

- (IN) India sold total INR280B vs. INR280B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold DKK0M (nil) in 3-month bills; rejects all bids.

- (UK) DMO sold £1.0B in 0.625% Mar 2045 Inflation-linked Gilts; Real Yield: 1.732% v 1.328% prior; bid-to-cover: 3.48x v 3.57x prior.

- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2028 and 2035 bonds.

- (IT) Italy Debt Agency (Tesoro) sold €8.0B vs. €8.0B indicated in 12 month bills; Avg Yield: 2.323% v 2.517% prior; Bid-to-cover: 1.52x v 1.49x prior.

Looking ahead

- OPEC Monthly Oil Report (MOMR).

- (DE) Germany Dec Current Account Balance: No est v €24.1B prior.

- (CO) Colombia Jan Consumer Confidence: No est v -3.4 prior.

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

- 05:30 (IN) India Jan CPI Y/Y: 4.6%e v 5.2% prior.

- 05:30 (IN) India Dec Industrial Production Y/Y: 3.8%e v 5.2% prior.

-05:30 (CH) Switzerland to sell 2034 and 2043 Bonds.

- 05:30 (DE) Germany to sell combined €2.5B in 2050 and 2054 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.25-1.5B in 2034, 2042 and 2052 OT bonds.

- 06:00 (PT) Portugal Jan Final CPI M/M: No est v -0.5% prelim; Y/Y: No est v 2.5% prelim.

- 06:00 (PT) Portugal Jan Final CPI EU Harmonized M/M: No est v -0.6% prelim; Y/Y: No est v 2.7% prelim.

- 06:00 (CZ) Czech Republic to sell combined CZK10.0B in 2033, 2036 and 2044 Bonds.

- 06:30 (CL) Chile Central Bank (BCCh) Jan Minutes.

- 07:00 (US) MBA Mortgage Applications w/e Feb 7th: No est v 2.2% prior.

- 07:00 (BR) Brazil Dec IBGE Services Volume M/M: +0.1%e v -0.9% prior; Y/Y: 3.5%e v 2.9% prior.

- 07:00 (CZ) Czech Central Bank to comment on CPI data.

- 08:00 (HU) Hungary Central Bank (MNB) Jan Minutes.

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

- 08:30 (US) Jan CPI M/M: 0.3%e v 0.4% prior; Y/Y: 2.9%e v 2.9% prior.

- 08:30 (US) Jan CPI (Ex Food and Energy) M/M: 0.3%e v 0.2% prior; Y/Y: 3.1%e v 3.2% prior.

- 08:30 (US) Jan CPI Index NSA: 317.416e v 315.605 prior; CPI Core Index: 324.243e v 323.383 prior.

- 08:30 (US) Jan Real Avg Weekly Earnings Y/Y: No est v 0.5% prior (revised from 0.7%); Avg Hourly Earning Y/Y: No est v 1.2% prior (revised from 1.0%).

- 10:00 (US) Fed Chair Powell testifies to House Financial Services.

- 10:00 (UK) BOE's Greene.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (DE) ECB's Nagel (Germany) at OMFIF Event in London.

- 12:00 (US) Fed's Bostic on Economic Outlook.

- 13:00 (US) Treasury to sell $42B in 10-Year Notes.

- 13:30 (CA) Bank of Canada Summary of Deliberations.

- 14:00 (US) Jan Federal Budget Balance: -$89.2Be v -$86.7B prior.

- 14:00 (AR) Argentina Dec Wages M/M: No est v 3.8% prior.

- 15:10 (NZ) New Zealand Fin Min Willis.

- 16:00 (NZ) New Zealand Government 6-Month Financial Statements.

- 16:45 (NZ) New Zealand Jan Total Card Spending M/M: No est v 1.5% prior; Retail Card Spending M/M: No est v 2.0% prior.

- 18:50 (JP) Japan Jan PPI (domestic CGPI) M/M: 0.4%e v 0.3% prior; Y/Y: 4.0%e v 3.8% prior.

- 19:00 (AU) Australia Feb Consumer Inflation Expectation Survey: No est v 4.0% prior.

- 19:01 (UK) Jan RICS House Price Balance: 28%e v 28% prior.

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years; 10~25Years and 25Years~

- 21:00 (NZ) New Zealand Q1 2-year Inflation Expectation Survey: No est v 2.1% prior.

- 22:00 (KR) South Korea Dec M2 Money Supply M/M: No est v 0.8% prior; ‘L’ Money Supply M/M: No est v 0.7% prior.

- 22:45 (TH) Thailand Jan Consumer Confidence: No est v 57.9 prior; Economic Confidence: No est v 51.4 prior.

-23:00 (TH) Thailand Central Bank to sell THB35B in 12-month FRN.