US equity futures firmer, crude and gold remain underpinned by geopolitics, despite a firmer USD - Newsquawk US Market Open

• European bourses are mixed with price action choppy; US futures gain a touch awaiting geopolitical updates as US and Russia begin Ukraine peace talks.
• USD is broadly firmer vs. peers, AUD bucks the trend after the RBA delivered a cautious cut.
• Gilts underperform on wage data though Bailey has pared some of this, EU joint issuance in focus.
• Crude and gold remain underpinned by geopolitics despite the firmer Dollar.
• Looking ahead, Canadian CPI, Japanese Exports/Imports, Speakers including ECB’s Cipollone, Fed’s Daly, Waller & Barr.

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TARIFFS

• US President Trump re-posted comments from Truth last week on tariffs in which he stated that he decided, for purposes of fairness, to charge a reciprocal tariff meaning, whatever countries charge the US, we will charge them “No more, no less!".
• US President Trump will sign executive orders at 16:00 EST (21:00 GMT)

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 U/C) began the session with a modest upward bias, but price action has been choppy since; indices currently display a mixed picture.
• European sectors are mixed after initially opening with a slight positive bias; the breadth of the market is fairly narrow. Banks take the top spot, mainly driven by UK banks after the region’s latest jobs data saw a slight paring of BoE rate cut bets; Dec'25 -58bps (prev. -62.8bps).
• US equity futures are modestly firmer, with slight outperformance in the NQ (+0.4%), as the region returns from holiday on account of Presidents’ Day.
• BofA Fund Manager Survey highlights that investors are bullish and are long stocks, and short "everything else"; cash levels have hit their lowest in 15 years. 89% of respondents said US stocks are overvalued. On positioning: Euro-area longs rose to an eight-month high, UK shorts to a 11-month high. Interestingly, the survey suggests that the trade war is seen as no more than a "tail risk".
• EU antitrust chief said she is ready to issue decisions on Apple (AAPL) and Meta (META) next month; says EU will not engage in transactions with the US over democracy and Europe's values.
• Baidu (BIDU/ 9888 HK) Q4 (CNY): Adj. EPS 14.26 (exp. 14.13). Revenue 34.1bln (exp. 33.4bln). Co. expects AI investments to deliver more significant results this year
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FX

• USD is a little firmer vs peers. Focus for today is on US officials who are currently meeting with Russian counterparts to discuss a path towards ending the Russia-Ukraine conflict. Given the absence of Ukraine and Europe in the discussions, it remains to be seen how much progress can be made. There are few Tier 2 data releases today, with attention also on Fed speak from Daly and Barr. DXY has ventured as high as 107.05 but failed to hold a move above the 107 mark.
• EUR is weaker vs. the USD and to a lesser-extent GBP. Focus in Europe remains on discussions between European leaders over the Russia-Ukraine conflict. The likely need for greater bond issuance to fund additional defence spending commitments has placed upside pressure on yields, however, this has failed to provide support for the EUR since the beginning of the week. ZEW data (which were a little better than expected) had little impact on the Single-Currency; currently within a 1.0453-86 range.
• USD/JPY has regained some composure after the recent declines and but has failed to hold above the 152.00 level with gains potentially capped by the recent stronger-than-expected Japanese economic growth. Comments from BoJ Governor Ueda proved to be non-incremental this morning, noting that the Bank is aware of views that guidance was not clear enough. If USD/JPY is able to reclaim 152, yesterday's peak kicks in at 152.39.
• GBP is softer vs. the USD but to a lesser-degree than peers on account of the latest UK jobs data. The release saw the unemployment rate unexpectedly hold steady at 4.4% (vs. 4.5%), whilst employment change was higher-than-expected and headline earnings growth a touch above expectations. Elsewhere, focus is on the fiscal front with The Telegraph writing that Chancellor Reeves will have to raise taxes by an extra GBP 12bln if she wants to boost defence spending to 2.5% of GDP. Cable ventured as high as 1.2625 post-data before fading gains; currently sits within yesterday's 1.2579-1.2635 range.
• Diverging fortunes for the antipodeans with AUD resilient vs. the broadly firmer USD following a cautious cut from the RBA overnight. RBA Governor Bullock also suggested that further rate cuts implied by market are not guaranteed.
• PBoC set USD/CNY mid-point at 7.1697 vs exp. 7.2538 (prev. 7.1702).
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FIXED INCOME

• USTs are slightly softer. Action which comes as cash plays catch up to yesterday’s action and as such yields are firmer across the curve, steepening and outperforming European peers. Thus far, USTs down to a 109-01 trough which is comfortably clear of Monday’s 108-26 base. Ahead, Fed speak from Barr and Daly; attention also on the Russia-US meeting in Saudi.
• Bunds are on the backfoot, but off worst levels following a pair of well-received outings from Germany and the UK. Downside not to quite the same extent as USTs given the marked European pressure on Monday as leaders met to discuss how to fund additional defence spending. Reports suggest that an emergency meeting will be held on/around 24 February, where markets will be attentive to details on the size of the defence spending. No sustained move to the German ZEW figures which came in firmer than expected across the board, ZEW puts this down to expectations of policy progress after this weekend’s election and assistance from recent ECB easing. Bunds have made their way off the above low and have climbed above 132.00 and look to retest the overnight peak at 132.16.
• Gilts are in the red, in tandem with peers but with specific pressure from a hawkish set of employment/wage data. In the wake of this, market pricing continues to point to the next 25bps move occurring in June but thereafter the timing for a second move has just about been pushed from September to November. BoE's Bailey spoke on the latest jobs data, saying that there is nothing in the latest jobs data which fundamentally changes their view, a remark which came alongside a robust UK auction and has lifted Gilts to retest their 92.78 peak.
• Orders for new 8yr "BTP Plus" bond reach EUR 6bln since start of offer, via Reuters citing bourse data.
• UK sells GBP 1.75bln 4.0% 2063 Gilt: b/c 2.8x (prev. 3.10x), average yield 5.076% (prev. 4.557%), tail 0.3bps (prev. 1.3bps)
• Germany sells EUR 3.54bln vs exp. EUR 4.5bln 2.20% 2027 Schatz: b/c 2.7x (prev. 2.8x), average yield 2.14% (prev. 2.26%), retention 21.33% (prev. 23.68%)
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COMMODITIES

• A firm session across crude prices this morning with WTI not experiencing a settlement on Monday amid the US Presidents' Day holiday, whilst Brent Apr settled with gains of 0.48/bbl. Geopolitical updates have been plentiful as US-Russia high-level delegations met in Riyadh to discuss a peace path for Russia-Ukraine. Elsewhere, Lebanon said any remaining Israeli presence on Lebanese soil would be considered an occupation. Brent Apr sits in a USD 75.05-75.89/bbl parameter.
• Softer price action across nat gas with European prices well under EUR 50/MWh from levels above EUR 58/MWh last week. US-Russia talks on a Ukrainian peace deal is likely one of the main sources of this recent pressure.
• Mixed trade across precious metals with mild gains seen in gold despite the firmer Dollar (to which silver is succumbing to), with the yellow metal propped up by uncertainty and geopolitics. Spot gold resides in a current USD 2,892.07-2,915.76/oz range.
• Base metals are mostly lower amid the firmer Dollar and cautious risk tone. Copper futures prodded Monday's lows overnight with demand hampered amid the mixed risk appetite in Asia, coupled with a mostly lower picture in Europe.
• Goldman Sachs has raised its gold price target to USD 3,100/ troy ounce by the end of 2025, driven by central-bank buying and increased ETF inflows.
• "The presence of Kirill Dmitriev among the Russia delegation in Riyadh for the Washington-Moscow talks suggest that oil is going to be on the table.", according to Bloomberg's Blas. "Perhaps in the form of US oil sanction relief, or as a quid pro quo opening Russian oil again for American companies"
• CPC says it continues oil transit via Tengiz-Novorossiysk route.
• Russia's Transneft says reduction of oil pumping volumes from Kazakhstan via CPC are estimated at around 30%. Consequences of the drone strike will take 1.5-2 months to eliminate.
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NOTABLE DATA RECAP

• UK ILO Unemployment Rate (Dec) 4.4% vs. Exp. 4.5% (Prev. 4.4%); Employment Change (Dec) 107k vs. Exp. 48k (Prev. 35k)
• UK Avg Earnings (Ex-Bonus) (Dec) 5.9% vs. Exp. 5.9% (Prev. 5.6%); Avg Wk Earnings 3M YY (Dec) 6.0% vs. Exp. 5.9% (Prev. 5.6%, Rev. 5.5%)
  • UK Claimant Count Unem Chng (Jan) 22.0k (Prev. 0.7k, Rev. -15.1k)
  • German ZEW says rising optimism is probably due to hopes for a new German government capable of action; ZEW Economic Sentiment (Feb) 26.0 vs. Exp. 20.0 (Prev. 10.3); ZEW Current Conditions (Feb) -88.5 vs. Exp. -90.0 (Prev. -90.4)
  • EU ZEW Survey Expectations (Feb) 24.2 (Prev. 18)
  • French CPI (EU Norm) Final YY (Jan) 1.8% vs. Exp. 1.8% (Prev. 1.8%); CPI (EU Norm) Final MM (Jan) -0.2% vs. Exp. -0.2% (Prev. -0.1%)

NOTABLE EUROPEAN HEADLINES

• ECB's Holzmann said there's some probability of a March rate cut and decisions in favour of more cuts are getting harder, according to Bloomberg.
• UK Chancellor Reeves will have to raise taxes by an extra GBP 12bln if she wants to boost defence spending to 2.5% of GDP and avoid a fresh round of austerity, according to The Telegraph.
• BoE Governor Bailey says "we are in a period of heightened uncertainty"; disinflation is continuing. Facing weak growth environment in the UK. Hump in inflation due to administered prices. Risks are on two sides, could go either way. "Careful" language was chosen to reflect more uncertainty. Latest UK labour data looks on the quantity not far out of line with what was expected. Latest UK pay growth has risen less than we expected. Yet to see anything in the data that fundamentally changes the view of the BoE's outlook. Bond term premia are being moved by US comments on tariffs. Agree with US Treasury Sec's comments on whishing to see smaller moves in term premia. Yet to see anything in the data (referencing this morning's jobs data) that fundamentally changes the view of the BoE's outlook.

NOTABLE US HEADLINES

• Fed's Waller (voter) said tariffs are expected to have a modest and non-persistent impact on prices that the Fed should try to look through when setting policy, while he added the recent CPI reading was disappointing but may be the result of seasonal adjustment issues. Waller also commented that the Fed cannot let uncertainty about policy paralyse action and decisions must be guided by data but added that it is appropriate to keep rates on hold for now and seasonal effects may be distorting data, as well as noted that he sees inflation progress in the past year as excruciatingly slow.
• Crews responded to a plane crash at the Toronto Pearson airport, while the incident occurred upon landing involving a Delta Airlines (DAL) plane arriving from Minneapolis although all passengers and crew are accounted for.

GEOPOLITICS

MIDDLE EAST

• Israeli Foreign Minister Saar says "we will begin negotiations on the second phase of the hostage deal; we demand a complete demilitarisation of Gaza". Will visit Brussels next week, and Washington "soon"
• Lebanon says any remaining Israeli presence on Lebanese soil would be considered an occupation; Lebanon says it has the right to use all means to ensure Israeli withdrawal from Lebanese land.
• "Iranian government spokesperson: It makes no sense to negotiate when the other side imposes a policy of maximum pressure", according to Al Jazeera
• Israeli security official said they are preparing to receive the bodies of four hostages on Thursday and are working to secure the release of six living hostages on Saturday.
• Sources noted that the Egyptian plan on Gaza includes reconstruction within a period ranging from 3 to 5 years without displacing the population, according to Asharq News.
• US President Trump posted on Truth that US forces conducted a precision airstrike against a member of al-Qaeda in Syria this weekend.
• Iran’s Foreign Minister said they will never negotiate under pressure or threat but if the US negotiates with respect and dignity, the Iranian response will be with the same language.
• Russia is ready to help Tehran in solving problems related to Iran's nuclear program and the start of Russia-US talks will have no impact on Russia-Iran cooperation, according to TASS citing the Kremlin.

RUSSIA-UKRAINE

• Russia's Kremlin says cannot give an evaluation of the negotiation with US officials yet as they have only just started. No understanding of a Russian President Putin-US President Trump meeting, today's talks may bring more clarity. Putin has repeatedly said he is ready to speak about peace. "Main thing is to achieve our aims, Of course, we would prefer to achieve our aims peacefully." Asked if Ukraine could join the EU: This is the sovereign right of any country, we are not going to dictate.
• Russia's sovereign wealth fund chief Dmitriev said "we are still at the beginning of the dialogue with America on sanctions", according to Al Arabiya." It must be realized that sanctions have affected Washington more than Moscow." US companies will return to Russia at some point." Projects with America must move forward, including in the Arctic." Trump administration is now ready to understand Russia's concerns". Progress of negotiations with Washington is possible in the next two months", according to Al Arabiya
• Journalist Rahman says "Few concrete results were expected from Paris, it was organised so quickly. Expectations now running high for an additional high-level emergency meeting on/around 24 Feb in Kyiv, hosted by the Ukrainian Govt."
• Russia's sovereign wealth fund chief Dmitriev said in Riyadh that US-Russia talks on ending the Ukraine war are important and US businesses have lost millions due to leaving Russia, while he added that US businesses have lost USD 300bln after leaving Russia and believes US oil majors will at some point return to Russia.
• Russia’s sovereign wealth fund chief Kirill Dmitriev said he has already met with several members of the Trump team in Riyadh on Monday, via CNN; “All I can say is they’re great problem-solvers. And I think President Trump is a great problem-solver,” he said. “I think the promise is: let’s have dialogue, let’s figure out the best solution for our countries, for other countries, for the global community,” he said. “I think it’s very important to build bridges. I think US-Russia relations are very important for the world,” he said.
• Ukrainian President Zelensky said he had a "long" call with French President Macron on security guarantees and achieving peace in Ukraine.
• US President Trump spoke with French President Macron about Ukraine, the European meeting, and Saudi talks between US and Russian officials.
• French President Macron said he spoke with US President Trump and then with Ukrainian President Zelensky, while he added that they will continue discussions about Ukraine in the coming days and work will continue based on the European Commission’s proposals, supporting Ukraine and investing in defence.
• UK PM Starmer said part of his message to European allies is that they’ve all got to step up on capability and on spending and funding, while he added that includes the UK which is why he has made a commitment to spend more, according to FT.
• German Chancellor Scholz rejected UK PM Starmer's call for Europe to step up and deploy troops to Ukraine as part of any peace deal, according to The Telegraph.
• Polish PM Tusk said all participants in the meeting on Ukraine had similar opinions to Poland on key issues and all agreed close cooperation within NATO is needed. Tusk added they realise that transatlantic relations are in a new stage and European partners realise that the time has come for greater European defence capabilities and spending.
• Danish PM said they must ramp up military preparedness and see no signs that the Russians want peace.
• European leaders at the Paris meeting agreed it would be dangerous to conclude a Ukraine ceasefire without a peace agreement at the same time, while they are ready to provide Ukraine with security guarantees depending on the level of US support.

OTHER

• Taiwan is considering a multi-billion-dollar weapons purchase from the US which could be between USD 7-10bln and could include coastal defence missiles and HIMARS rockets, while the package would send a message that Taiwan is committed to its defence, according to Reuters sources.
• North Korea’s Foreign Ministry said the US is pursuing an outdated and absurd plan of denuclearisation of the Korean Peninsula, while North Korea will adhere to bolstering its nuclear force, according to KCNA.

CRYPTO

• Bitcoin is a little lower and trading around USD 95k whilst Ethereum sees losses to a slightly larger magnitude.

APAC TRADE

• APAC stocks traded somewhat mixed in the absence of a lead from Wall St owing to the Presidents' Day holiday, while participants in the region braced for central bank updates beginning with the RBA rate decision.
• ASX 200 traded negative amid underperformance in energy and the top-weighted financials sector, while sentiment failed to benefit from the RBA's widely expected 25bps rate cut as it also signalled caution on further cuts.
• Nikkei 225 gained but with upside capped after swinging between gains and losses amid firmer yields and a quiet calendar.
• Hang Seng and Shanghai Comp were varied as the Hong Kong benchmark resumed its recent outperformance with the help of strength in tech and auto names, while the mainland was lacklustre as US-China frictions lingered and after reports noted that the PBoC may further limit its MLF rollover to prevent idle funds.

NOTABLE ASIA-PAC HEADLINES

• RBA cut the Cash Rate by 25bps to 4.10%, as expected, and said underlying inflation is moderating and the outlook remains uncertain, while it added that sustainably returning inflation to the target is the priority and the board will continue to rely on data and evolving risk assessments to guide decisions. RBA stated the board is more confident that inflation is moving toward the midpoint of the 2–3% target range but noted that upside risks remain and the board remains cautious on prospects for further policy easing. Furthermore, it stated that forecasts suggest that easing monetary policy too soon could stall disinflation and cause inflation to settle above the target midpoint.
• RBA Statement on Monetary Policy stated inflation and GDP have been softer than expected, while the labour market remains strong and domestic financial conditions are restrictive, with rates above neutral. RBA also noted a wide range of estimates for the neutral rate, with some estimates declining and it forecast GDP to grow by 2.0% in June 2025, 2.3% in June 2026, and 2.2% in June 2027, while CPI is forecast at 2.4% in June 2025, 3.2% in June 2026, and 2.7% in June 2027 with the trimmed mean inflation forecast at 2.7% for June 2025, 2026, and 2027. Furthermore, its forecasts assumed a cash rate of 4.0% in June 2025, 3.6% in December 2025, and 3.4% in June 2026.
• RBA Governor Bullock said in the post-meeting press conference that it is clear high rates have worked and cannot declare victory on inflation yet, while the strength of the jobs market has been surprising and further rate cuts implied by the market are not guaranteed. Bullock said cannot get too ahead of ourselves on rates and the rate cut was a difficult decision, as well as stated that they have to be patient and it is really important to get inflation down.
• China's state planner said 'precise' policies are to be implemented to help ease difficulties faced by private companies and the current political, economic, and social environment is conducive to the development of the private economy. NDRC stated that China will further break down barriers to market access and revise the negative list for market access as soon as possible, while it will continue efforts to solve financing difficulties and high costs for private enterprises, as well as plans to speed up preparations for the implementation of the private economy promotion law.
• BoJ Governor Ueda says last summer's volatility was mainly caused by market concern over weak US jobs data, US economic slowdown; says BoJ aware of views that guidance was not clear enough.

DATA RECAP

• RBNZ Survey showed household 1-year inflation expectation is at 4.0% (prev. 3.0%), 2-year inflation expectation is at 3.0% (prev. 3.0%) and 5-year inflation expectation is at 3.6% (prev. 3.4%).