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This morning’s Deepseek triggered risk-off has partially faded in major EGB futures, which are off session highs, with markets assessing the European impact as more equity-focused (ASML shares are over 11% lower today).

• Bund futures nonetheless remain +56 ticks today at 131.81. Resistance at the 20-day EMA (132.15) remains intact for now.
• German yields are 4-5bps lower, with the belly outperforming. German ASWs (vs 3m Euribor) have widened ~1bp as a result of the risk-off trade.
• The German January IFO survey was a little stronger-than-expected on the business climate and current assessment components, but the expectations component was below consensus. The print suggests the ongoing slump in German economic conditions is not to subside anytime soon.
• The EU will hold an auction to sell up to E3bln of the 5-year 2.875% Oct-29 EU-bond and up to E2bln of the 10-year 3.00% Dec-34 EU-bond at 1030GMT/1130CET.
• Weaker European equities sees 10-year EGB spreads to Bunds widen.
• Broader regional focus remains on Thursday’s ECB decision, alongside the heavy regional data calendar later this week. 

• The assumption that US firms will remain market-leaders in artificial intelligence was challenged this weekend with the rise and rise of China's Deepseek - a product demonstrating that not only can AI be rolled out extremely cheaply and effectively, but also that the US' targeted chips sanctions are failing to contain China's tech industry.
• The sharp Deepseek-triggered slide in equity futures (Nvidia's pre-market trade has wiped out near $300bln in market cap) is helping underpin haven currencies this morning, tipping USD/JPY to new YTD lows. 2025 range in GBP/JPY has been defined by the upleg posted off late November lows - with markets finding both the 76.4% retracement of the fade off highs as a decent support mid-January and 194.81, the 38.2% Fib, as a solid inflection point to cap last week's rally.
• As a result, AUD and NZD are among the poorest performers, with the effect compounded by Trump's tariff sabre-rattling toward Colombia over the weekend. The USD Index is near last week's lows, holding close to the lowest levels of 2025. The Fed decision mid-week looks key here - as Powell's messaging on rates across this year is set to steer price action.  
• Focus for the Monday session remains on the ebb and flow of risk sentiment, with fragility in market-leading US tech stocks driving both headlines indices as well as broader price action. US new home sales, Chicago Fed national activity and Dallas Fed manufacturing activity data are the schedule highlights. Central bank comms are set to be quiet, with both the Fed and ECB inside their pre-decision media blackout periods.

The slightly stronger-than-expected German IFO print has not moved the needle for the single currency on Monday, as broader tech concerns continue to dominate risk-off sentiment across global markets.

• This has seen EUR crosses come under significant pressure against the notorious safe havens, with EURJPY and EURCHF printing fresh session lows in recent trade, down 1.16% and 0.67% respectively on the session.
• EURCHF has now mostly eradicated its strong Friday gains, inspired by the stronger-than-expected Eurozone PMIs, and support here is at 0.9416, the 20-day EMA.
• However, note the fact that the impact of lingering reconsideration of tech capex spending necessities appears US-centred - EURUSD is well off its daily lows and has just edged back above 1.05 in recent trade. Immediate resistance stands at 1.0521 (Friday’s high), and above here the market will look to 1.0574, the 38.2% retracement of the Sep 25 - Jan 13 bear leg. Support for the pair moves up to 1.0377, the 20-day EMA.