US stocks mostly gained and S&P 500 touched just shy of 5k - Newsquawk Asia-Pac Market Open

• US stocks mostly continued on this year's advances with the S&P 500 and Nasdaq printing fresh record highs in which the former rose to within a whisker of the 5,000 level although futures breached the psychological level. The majority of sectors were green and heavyweight industries such as Tech, Consumer Discretionary and Communication Services all outperformed. Meanwhile, bonds were choppy and ultimately retreated from the peaks seen early in the US session on NYCB concerns which were later eased following a new executive announcement and liquidity update.
• USD was relatively flat amid a choppy yield environment in response to fluctuations in NYCB shares after a downgrade to junk status by Moody's, downgrades by JPM and BofA, a liquidity update and new executive announcement, while there were also several Fed speakers which mostly stuck to the script although Kugler stated that every meeting is live from here onwards.
• Looking ahead, highlights include Japanese Current Account Balance & Eco Watchers Survey, Australian Building Approvals, New Zealand Inflation Expectations, Chinese CPI & PPI, RBI Rate Decision, Holiday Closures in Taiwan, Indonesia & Vietnam.

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LOOKING AHEAD

• Highlights include Japanese Current Account Balance & Eco Watchers Survey, Australian Building Approvals, New Zealand Inflation Expectations, Chinese CPI & PPI, RBI Rate Decision, Holiday Closures in Taiwan, Indonesia & Vietnam.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks mostly continued on this year's advances with the S&P 500 and Nasdaq printing fresh record highs in which the former rose to within a whisker of the 5,000 level although futures breached the psychological level. The majority of sectors were green and heavyweight industries such as Tech, Consumer Discretionary and Communication Services all outperformed. Meanwhile, bonds were choppy and ultimately retreated from the peaks seen early in the US session on NYCB concerns which were later eased following a new executive announcement and liquidity update.
• SPX +0.82% at 4,995, NDX +1.04% at 17,775, DJIA +0.40% at 38,677, RUT -0.17% at 1,950.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (voter) said the labour market is still tight and the challenge on inflation coming down is that it is not that broad with services and rent inflation staying more elevated. Barkin also said it makes sense to be patient on rate cuts and his forecast is uncertain as the forecast from eight weeks ago has been "confused" by recent data. Furthermore, he said inflation has been coming down nicely over the past seven months but is concerned the significant decline in goods prices might be a "head fake" and rebound in coming months, while he added if inflation continues on its downward path, and if it starts to broaden out into many categories, that’s the type of signal he is looking for to start cutting rates, according to a MarketWatch interview.
• Fed's Kugler (voter) said at some point the cooling of inflation and labour markets may make it appropriate to cut rates, but if disinflation progress stalls, it may be appropriate to hold the policy rate steady for longer. Kugler said disinflation was rapid in H2 2023 and housing inflation has been persistent but is expected to come down, while she also commented that every meeting is live from here onwards.
• Fed's Collins (non-voter) said the Fed is likely to cut rates later this year if the economy meets expectations and noted that monetary policy is well positioned for the current outlook. Collins also said economic risks have come into better balance and it is important for the Fed to be sure on its path to lower inflation, while she said the Fed does not need to go all the way back to 2% inflation to ease and that the jury is out when it comes to the neutral rate level.
• Fed's Kashkari (non-voter) reiterated that the economy is being remarkably resilient, allowing the Fed to take more time to look at the data before cutting rates. Kashkari also stated that two to three rate cuts this year currently seem appropriate, according to a CNBC interview.
• US CBO Budget and Economic Outlook forecasts Core PCE at 2.4% in 2024 and 2.3% in 2025, while it forecasts the unemployment rate at 4.4% in 2024 through to 2026 and real GDP at 1.5% in 2024 and 2.2% in 2025 and 2026.
• US Senate Majority Leader Schumer is planning to bring the negotiated foreign aid package up for a vote today which would occur after the broader security supplemental is blocked, according to Punchbowl.
• New York Community Bancorp (NYCB) named Alessandro Dinello as Executive Chairman and the Executive Chair said the bank is committed to building liquidity further, has a strong liquidity and deposit base and has seen virtually no deposit outflow from retail branches. Furthermore, it was noted that NYCB is willing to shrink and sell assets if needed and it is dealing with a "serious situation" but "remains strong", while it was later reported that NYCB is in talks to offload mortgage risk and plans to sell RV loans.

DATA RECAP

• US International Trade (USD)(Dec) -62.2B vs. Exp. -62.2B (Prev. -63.2B, Rev. -61.9B)
• US Consumer Credit (Dec) 1.56B vs. Exp. 16.0B (Prev. 23.75B)
• US Manheim Wholesale Used Vehicle Index (Jan) 0.0% (Prev. -0.5%); YY -9.2% Y/Y (prev. -7.0%) at 204.0

FX

• USD was relatively flat amid a choppy yield environment in response to fluctuations in NYCB shares after a downgrade to junk status by Moody's, downgrades by JPM and BofA, a liquidity update and new executive announcement, while there were also several Fed speakers which mostly stuck to the script although Kugler stated that every meeting is live from here onwards.
• EUR eked mild gains but with upside capped amid light catalysts and disappointing German Industrial Production.
• GBP traded slightly higher and retained its footing above 1.2600, while there were comments from BoE's Breeden who echoed the BoE's latest statement in which she noted that she has become less concerned that rates might need to be tightened further and that the focus has shifted to how long rates need to remain at the current level.
• JPY marginally weakened with USD/JPY oscillating around 148.00 amid choppy US yields.

FIXED INCOME

• Treasuries were choppy amid sovereign supply and recent banking fears.
• BoC Minutes noted they were 'particularly' concerned about persistent inflation and lowering rates 'prematurely' in the January policy-setting meeting, while the GC forecasts risk of inflation being more persistent than expected, requiring rates to stay restrictive for longer.

COMMODITIES

• Oil prices were slightly firmer amid the weaker dollar and ongoing geopolitical tensions.
• US EIA Weekly Crude Stocks w/e 5.521M vs. Exp. 2.0M (Prev. 1.234M)

GEOPOLITICAL

• Israeli PM Netanyahu said war decisions will be made in the mini-ministerial council from now on and then referred to the war council, while he added that the war in Gaza will last for months, not years and they are on the way to a decisive victory to eliminate Hamas and return all abductees. Netanyahu also said the goals of the war in Gaza have not changed and there is no other solution except total victory with no alternative to Hamas’s military collapse which must be completed and is within reach. Furthermore, he said there should be mediated negotiations but based on the Hamas response, they are not there.
• Senior Hamas official said Israeli PM Netanyahu's remarks on the ceasefire proposal show he intends to pursue the conflict in the region and Hamas is prepared to deal with all options.
• Israeli PM Netanyahu told US Secretary of State Blinken that he cannot end the war without eliminating Hamas in Rafah, according to Israeli Channel 12. There was an earlier report that Netanyahu gave the green light to a Gaza ceasefire in the period between the stages of the upcoming Hamas deal, according to Sky News Arabia.
• Israeli Defence Minister Gallant told US Secretary of State Blinken that Hamas’ negative response to the hostage deal proposal will push Israel to expand its ground operation in Gaza soon, according to Axios.
• Senior Israeli official believes they will reject Hamas' response to the plan for hostage release and the onus would then be on mediators to pressure Hamas to agree to a more reasonable framework, according to Axios's Ravid.
• Israeli official said that some of the demands made by Hamas in the counterproposal are 'entirely unacceptable', according to Spectator Index. This is after Hamas proposed a 135-day truce which will be in three phases.
• There will be a new round of negotiations tomorrow in Cairo regarding the truce in Gaza and exchange, according to Al Arabiya citing sources.
• US Biden administration senior official doubts the possibility of reaching an agreement soon and hopes that it will happen in the next two weeks, according to NBC.
• A drone strike hit a vehicle belonging to Iraq's popular mobilisation forces in eastern Baghdad, according to security sources. It was separately reported that a senior Kataib Hezbollah commander was killed in the drone strike on a vehicle in Baghdad, according to Al Jazeera.
• Russian Security Council Deputy Chairman Medvedev said if Russia and NATO go to war, "it will not be conducted in trenches" but added that "Ballistic and cruise missiles with special warheads will be used to protect the territorial integrity", according to Telegram.

ASIA-PAC

NOTABLE HEADLINES

• Chinese President Xi targets strengthening the economic recovery this year and praised China's economic achievements and stable prices, according to state TV.
• China's National People's Congress Standing Committee is to hold a meeting between February 26th-27th.
• China replaced securities regulator head Yi Huiman with Wu Qing.
• Shanghai's government plans to give faster approvals for foreign firms' cross-border data transfer from China, according to Reuters sources.
• US President Biden is poised to limit Americans’ personal data going to China with the administration planning to issue an order as soon as next week, according to Bloomberg.
• Chinese hackers have lurked in some US infrastructure systems for ‘at least five years’, according to CNN.

EU/UK

NOTABLE HEADLINES

• BoE's Breeden said she has become less concerned that rates might need to be tightened further and the focus has shifted to how long rates need to remain at the current level.

DATA RECAP

• German Industrial Output MM (Dec) -1.6% vs. Exp. -0.4% (Prev. -0.7%)