US stocks gained in quiet trade amid lower yields and after the US Treasury cut is quarterly funding estimates - Newsquawk Asia-Pac Market Open

• US stocks and bonds were firmer in a quiet US session with geopolitics in the limelight and amid a softer yield environment, while the gains in stocks and treasuries accelerated in late trade after the Treasury financing estimates for the quarter ahead were reduced.
• USD was rangebound with price action kept within tight parameters amid a quiet day aside from geopolitics and as participants await this week's slew of key risk events.
• Looking ahead, highlights include Japanese Unemployment Rate, Australian Retail Sales, Supply from Japan.

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LOOKING AHEAD

• Highlights include Japanese Unemployment Rate, Australian Retail Sales, Supply from Japan.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks and bonds were firmer in a quiet US session with geopolitics in the limelight and amid a softer yield environment, while the gains in stocks and treasuries accelerated in late trade after the Treasury financing estimates for the quarter ahead were reduced.
• SPX +0.76% at 4,927, NDX +1.01% at 17,596, DJIA +0.59% at 38,333, RUT +1.67% at 2,011.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury expects to borrow USD 760bln in net marketable debt for the January-March period which is down USD 55bln from the October 2023 estimate and it expects to borrow USD 202bln in the April-June period, assuming an end-June cash balance of USD 750bln. Furthermore, in the October-December 2023 period it borrowed USD 776bln and ended the quarter with a cash balance of USD 769bln.

DATA RECAP

• US Dallas Fed Manufacturing Business Index (Jan) -27.4 (Prev. -9.3, Rev. -10.4)

FX

• USD was rangebound with price action kept within tight parameters amid a quiet day aside from geopolitics and as participants await this week's slew of key risk events.
• EUR softened and briefly fell below the 1.0800 handle after dovish comments from ECB's Centeno who noted the ECB should begin cutting rates sooner rather than later and that there is no need to wait for Q1 wage data to make a decision on rates, although the single currency then pared some of its losses after the announcement of the US Treasury cuts its quarterly funding estimates.
• GBP clawed back early losses and returned to 1.2700 territory as traders await Thursday's BoE.
• JPY strengthened and USD/JPY trickled further below 148.00 amid the softening of US yields.
• SNB's Chair Jordan said his expectation is inflation will again rise a little but noted the situation regarding inflation has improved and looks relatively good. Furthermore, he stated that inflation should be below 2% in 2024 and that Swiss inflation probably accelerated in January.

FIXED INCOME

• Treasuries saw a notable bid ahead of this week's refunding announcement and FOMC, despite another deluge of corporate debt supply.

COMMODITIES

• Oil prices were lower after gradually reversing the initial gains seen on the back of the US casualties reported over the weekend in Jordan.
• US Department of Energy’s Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3.1mln barrels of US-produced crude oil for the SPR and the DOE will issue a new solicitation later this week to purchase oil for SPR replenishment for a June delivery date.

GEOPOLITICAL

• Israel’s War Council was reportedly discussing a proposal for a 45-day truce in exchange for the release of 35 detainees, according to Al Arabiya citing Israeli media.
• Negotiators from Israel, the US, Egypt and Qatar have agreed in Paris on a framework for the release of the remaining American and Israeli hostages in phases, according to Sky News.
• Qatar PM said progress on hostage talks is improving vs. a few weeks ago and they made good progress on Sunday to lay the foundation for a way forward on hostages. Furthermore, the PM stated the current phase of talks could lead to a permanent ceasefire in the future but a possible US retaliation over the attack on US soldiers would have an impact on hostage talks and regional security.
• Hamas said Israel must halt its aggression and withdraw from Gaza before any prisoner exchange deal takes place.
• US President Biden and other top US officials discussed on Sunday a "significant military response" against pro-Iranian militias over the weekend attack which killed three US soldiers, according to Axios.
• US Defense Secretary Austin said neither he nor US President Biden will tolerate attacks on US forces and will take "all necessary actions" to defend them.
• Pentagon said the number of troops injured in the attack on the Jordan base is now more than 40 and the drone attack has 'footprints' of Kataib Hezbollah. Pentagon said they know Iran funds these groups that are attacking US troops but it added they do not seek a war and do not think Iran is seeking a war.
• UKMTO said a merchant vessel was approached on its starboard bow by three small craft 44 nautical miles west of Yemen's Al-Murkha, while the vessel carried out self-protection measures and the crew were reported as safe and the vessel is proceeding to the next port of call, according to an advisory note.

ASIA-PAC

NOTABLE HEADLINES

• China's Vice Premier said will step up support for high-quality firms which are listed and that promoting the high-quality development of listed firms will assist high-level scientific and technological self-reliance.
• Two US lawmakers asked the Biden administration to impose export restrictions on four Chinese companies involved in the planned Ford (F) Michigan battery plant, according to a letter seen by Reuters.
• RBNZ Chief Economist Conway said recent economic data suggests that monetary policy is working with the economy slowing and inflation easing, but they still have a way to go to get inflation back to the target midpoint of 2%.

EU/UK

NOTABLE HEADLINES

• ECB's de Guindos said inflation risks are to the downside and thinks the disinflation process can continue.
• ECB's Centeno said the ECB should begin cutting rates sooner rather than later and avoid abrupt moves, while he said there is no need to wait for Q1 wage data to make a decision on rates, according to Reuters.
• ECB's Kazimir said the next move will be a rate cut and it is within reach, while he added that a rate cut in June is more probable than in April but the exact timing is secondary to the decision's impact.
• French President Macron said the country has firmly reiterated to the EU Commission it was impossible to conclude trade deal talks with Mercosur countries, while the Commission understood it was impossible to reach a deal in this context and the French understanding is that the EU Commission has instructed negotiators to end talks in Brazil.