ASIA STOCKS: A Better Day on Tariff Pause Headlines.
Asia’s major bourses had a better day after President Trump paused import duties on consumer electronics giving a boost to investor sentiment across the region. Whilst the pause is temporary, it gives markets time to pause and focus on other areas in the global economy where risks are rising.
- In China the Hang Seng led the way today rising +2.4%, with the CSI 300 up +0.47%, Shanghai up +0.86% and Shenzhen up +1.5%.
- The Kospi had a solid day rising +0.91% in a week where the Central Bank meets.
- In Malaysia, the FTSE Malay KLCI is up +1.4% in a week where 1Q GDP is released.
- For Indonesia, the Jakarta Composite is putting in another day of solid gains rising +2.00% following stronger than expected FX Reserve data.
- In Singapore, the MAS eased policy and pointed to lower growth whilst the FTSE Straits Times rose +1.46%.
- India’s NIFTY 50 is very strong this morning, rising +1.9% ahead of this week’s CPI release where it is expected that inflation will continue to moderate.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
