Diplomatic channels remain open on Ukraine but no concrete plans for any Putin-Biden summit

Notes/Observations

- Headline roulette remains on Ukraine situation.

- Risk appetite aided by continued dialogue on Ukraine front between US-Russia; keeps hope alive for a diplomatic solution to the Ukraine crisis.

- Putin to hold an extraordinary meeting of the Russian Security Council on Monday (Feb 21st).

- Major European PMI data mixed (Beats: France, UK; misses: Germany, Euro Zone).

Asia

- Australia Feb Preliminary PMI Manufacturing registered its 21st month of expansion (57.6 v 55.1 prior).

- Japan Feb Preliminary PMI Manufacturing registered its: 13th month of expansion (52.9 v 55.4 prior).

- China PBoC Monthly Loan Prime Rate (LPS) Setting left both 1-year and 5-year rates unchanged at 3.70% and 4.60% respectively.

- China Sec Journal article reiterated China had tools and ability for further stimulus. Govt should take further monetary measures such as cutting RRR or interest rates, or strengthening flexibility of yuan exchange rate to boost demand and market confidence.

Russia/Ukraine

- White House Spokesperson confirmed President Biden and Russia President Putin agreed in principle to hold summit; US is always ready for diplomacy. The summit brokered by France President Macron on the condition that Russia did invade Ukraine. The content of the summit to be prepared by US Sec of State Blinken and Russia Foreign Min Lavrov.

- Russia and Belarus to extend military drills past Sunday Feb 20th deadline, the decision was taken because of military activity near the borders of Russia and Belarus as well as the escalation in eastern Ukraine's Donbass region.

- President Biden said to have prepared an initial package of sanctions against Russia if they did invade Ukraine, US institutions would be barred from processing transactions from major Russian banks. US would enable a sanctioning tool against certain Russian individuals and companies by putting them on Specially Designated Nationals list.

Americas

- US markets closed for President Day holiday.

- Fed Chair Powell to give his regular semiannual policy update to the US House Financial Services Committee on March 2nd.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.14% at 460.14, FTSE +0.28% at 7,534.43, DAX +0.13% at 15,061.41, CAC-40 -0.36% at 6,904.99, IBEX-35 +0.02% at 8,592.13, FTSE MIB -0.55% at 26,362.00, SMI +0.18% at 12,031.33, S&P 500 Futures +0.16%].

Market Focal Points/Key Themes: European indices open generally higher but later turned to trade lower; fluctuating risk sentiment attributed to geopolitical developments; sectors among those leading to the upside are industrials and consumer discretionary; laggard sectors include energy and utilities; Worldline to sell its TSS unit to Apollo; Hammerson confirms is looking to acquire Redical; Halma acquires ILT; Clipper confirms potential takeover from GXO; US, Canada closed for holiday.

Equities

- Consumer discretionary: Clipper Logistics [CLG.UK] +14% (confirms received offer).

- Financials: NatWest [NWG.UK] +2% (commences buyback), Almirall [ALM.ES] +7% (earnings; new President), Synairgen [SNG.UK] -85% (trial results).

- Industrials: Faurecia [EO.FR] -2% (earnings; guidance).

- Technology: Atari [ATA.FR] -4% (recapitalization), Worldline [WLN.FR] -0.5% (confirms divestment).

Speakers

- France Fin Min Le Maire stated that sanctions were ready should Russia invade Ukraine; reiterates stance on need for diplomatic.

- Russia govt spokesperson Peskov stated that had no concrete plans at this time between Putin and Biden but such a case remained possible, Tensions were growing over Ukraine. President Putin to address Russia's Security Council imminently in an extra-ordinary meeting. Situation in Donbas was extremely tense and worrying. Putin and Macron agreed to continue dialogue through the foreign ministers and political advisors.

- Donbas separatists leader Pushilin stated that Ukrainian forces were using heavy artillery, mortars, grenade launchers and tanks.

- Sweden Central Bank (Riksbank) Fed Minutes: Policy needs to give continued support. No broad upturn in inflationary pressures to date and long-term expectations close to 2.0%.

- Japan PM Kishida stated in Parliament that he would appropriate successor to BOJ Gov when the time was right. He had no comment on who was appropriate for BOJ Gov position at this time (**Note: Kuroda terms ends in April 2023).

- China Foreign Min Wang stated that the govt to punish Raytheon and Lockheed Martin for Taiwan arms sales.

- Iran Foreign Ministry spokesperson noted that the remaining issues in nuclear talks were the hardest to overcome. Negotiations with US not on the agenda because it will not lead to any breakthroughs.

Currencies/Fixed income

- USD began the week on a softer toe as focus remained on the Ukraine situation. Dealers noted that the softer price action reflected a combination of relief that Russia did not invade the Ukraine over the weekend and the door for diplomatic channels remained open.

- Dealers also noted that focused also remained on central bank policy from and continued to seek clues on the speed and size of interest rate hikes in major markets.

Economic data

- (DE) Germany Jan PPI M/M: 2.2% v 1.5%e; Y/Y:25.0 % v 24.4%e (highest annual pace since 1949).

- (SE) Sweden Q4 Industry Capacity: 90.8% v 90.7% prior.

- (TW) Taiwan Jan Export Orders Y/Y: 11.7% v 14.5%e (23rd straight month of growth).

- (CH) Swiss Jan M3 Money Supply Y/Y: 0.6% v 1.4% prior.

- (TR) Turkey Jan Foreign Tourist Arrivals Y/Y: 151.4% v 170.6% prior.

- (FR) France Feb Preliminary Manufacturing PMI: 57.6 v 55.5e (15th month of expansion); Services PMI: 57.9 v 54.0e; Composite PMI: 57.4 v 53.0e.

- (HK) Hong Kong Jan Unemployment Rate: 3.9% v 4.1%e.

- (DE) Germany Feb Preliminary Manufacturing PMI: 58.5 v 59.8e (20th month of expansion); Services PMI: 56.6 v 53.1e; Composite PMI: 56.2 v 54.5e.

- (EU) Euro Zone Feb Preliminary Manufacturing PMI: 58.4 v 58.7e (20th month of expansion); Services PMI: 55.8 v 52.1e; Composite PMI: 55.8 v 52.9e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 725.2B v 725.1B prior; Domestic Sight Deposits: 662.9B v 661.6B prior.

- (PL) Poland Jan Real Retail Sales M/M: -22.8% v -22.6%e; Y/Y: 10.6% v 10.5%e; Retail Sales Y/Y: 20.0% v 19.7%e.

- (PL) Poland Jan Construction Output Y/Y: % v 4.0%e.

- (UK) Feb Preliminary PMI Manufacturing: 57.3 v 57.0e (21st straight expansion); Services PMI: 60.8 v 55.5e; Composite PMI: 60.2 v 55.2e.

Fixed income Issuance

- No seen.

Looking ahead

- (RO) Romania Central Bank (NBR) Feb Minutes.

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

- 05:30 ((DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-3.0B in 3-month and 6-month bills.

- 06:00 (IL) Israel Jan Unemployment Rate: No est v 4.3% prior; Unemployment Rate (including covid effect): No est v 6.0% prior.

- 06:00 (IL) Israel Dec Manufacturing Production M/M: No est v -3.5% prior.

- 06:00 (IL) Israel to sell 2024, 2026, 2031, 2032 and 2051 Bonds.

- 06:00 (RO) Romania to sell RON500M in 4.85% 2029 Bonds.

- 06:45 (US) Daily Libor Fixing.

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

- 07:00 (TR) Turkey to sell Bonds.

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

- 09:00 (FR) France Debt Agency (AFT) to sell €4.7-5.9B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%.

- 16:00 (KR) South Korea Feb Consumer Confidence: No est v 104.4 prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 103.2 prior.

- 18:00 (NL) Netherlands Jan House Price Index M/M: No est v -0.3% prior; Y/Y: No est v 20.4% prior.

- 18:50 (JP) Japan Jan PPI Services Y/Y: 1.2%e v 1.1% prior.

- 21:00 (NZ) New Zealand Jan Credit Card Spending M/M: No est v 0.2% prior; Y/Y: No est v 1.2% prior.

- 22:00 (KR) South Korea Q4 Household Credit (KRW): No est v 1.845T prior.

- 22:00 (TH) Thailand Central Bank to sell THB50B in 3-month Bills.

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