MNI EUROPEAN MARKETS ANALYSIS: Equities Up, Euro Top Performer

• The EUR is 0.40% higher vs the USD, outperforming all other G10 currencies as European leaders scrambled to offer Ukraine their support amid concerns of a US pullback.
• Crypto saw largely moves last week, with Bitcoin plunging to 78,225. Trump then caused cryptos to surge over the weekend, with Bitcoin rising over 10%.
• The 30yr JGB reached it highest yield since 2008, while focus will turn to China's upcoming NPC with invesotrs hopeful for a ramp-up in fiscal spending.

MARKETS

US TSYS: Tsys Yields Cheaper, Curve Bear-Steepens

• Tsys futures are trading lower today, although within Friday's ranges, volumes are high, however this is largely linked to roll activity, with no notable tsys flows to note, there was however a large buyer in fed funds April 25 futures, 95.685 in 34k. TU is -01 at 103-14+, while TY is trading -02 at 111-01 and now -09 from Friday's highs.
• Cash tsys curves are slightly steeper, with yields 2-3bps cheaper. The 2yr is +2bps at 4.009%, while the 10yr is the worst performing across the curve +2.7bps at 4.235%. The 2s10s is +0.6bps at 22.128.
• Earlier, Zelenskiy expressed willingness to meet Trump for a constructive dialogue to address serious issues, following a tense White House encounter and emphasized Ukraine’s readiness to finalize a minerals deal with the US that was recently paused. Speaking in London on Sunday after a European security summit, Zelenskiy underscored the need for equal dialogue, avoided an apology for prior friction, and defended Ukraine’s dignity while affirming openness to any cooperative format with the US.
• later today we have S&P Global US Manufacturing PMI & ISM data

JGBS: Futures Weaker & Near Lows, US Tsys Weighing

JGB futures are holding weaker at session cheaps, -30 compared to the settlement levels.

• Outside of the previously outlined Jibun Bank Manufacturing PMI data, there hasn't been much by way of domestic drivers to flag.
• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets that haven demand could lose its appeal should prospects improve for an end to fighting in Ukraine.
• Nevertheless, this weakness has started to reverse as some anticipate that slower US growth expectations could see traders increasingly price in a potential Federal Reserve rate cut as soon as June.
• “Moreover, the risk of a government shutdown from March 15 appears greater than ever.” (per BBG)
• Cash JGBs are flat (40-year) to 3bps cheaper (5-10-year zone) across benchmarks. The benchmark 10-year yield is 2.6bps higher at 1.404% versus the cycle high of 1.466%.
• The 30-year yield is 0.6bp higher at 2.366% after hitting a high of 2.371%, the highest since 2008.
• Swap rates are 1-2bps higher. Swap spreads are mixed.
• Tomorrow, the local calendar will see Labour Market, Capital Spending, Company Profits, Monetary Base and Consumer Confidence data alongside 10-year supply.

AUSSIE BONDS: Cheaper With US Tsys, More Q4 GDP Partials Tomorrow

ACGBs (YM -3.0 & XM -4.0) are weaker after today’s stronger-than-expected domestic data drop, namely Q4 Inventories and Company Profits.

• However, the key driver of today’s movements has been US tsys. Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets that haven demand could lose its appeal should prospects improve for an end to fighting in Ukraine.
• Nevertheless, this weakness has started to reverse as some anticipate that slower US growth expectations could see traders increasingly price in a potential Federal Reserve rate cut as soon as June.
• “Moreover, the risk of a government shutdown from March 15 appears greater than ever.” (per BBG)
• Cash ACGBs are 3bps cheaper with the AU-US 10-year yield differential at +10bps.
• Swap rates are 3bps higher.
• The bills strip has bear-steepened, with pricing flat to -3.
• Tomorrow, the local calendar will see Q4 Current Account Balance and Net Exports of GDP, and January Retail Sales data alongside the RBA Minutes of the February Policy Meeting.
• This week, the AOFM plans to sell A$800mn of the 4.25% 21 March 2036 bond on Wednesday and A$700mn of the 1.00% 21 December 2030 bond on Friday. 

NZGBS: Closed Slightly Cheaper, US Tsys Driving Seat

NZGBs closed showing modest weakness, with benchmark yields 1-2bps higher. 

• With the domestic calendar relatively light, the driver of today’s movements has been US tsys. Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets that haven demand could lose its appeal should prospects improve for an end to fighting in Ukraine.
• “Treasury futures’ early selloff is likely to reverse in North American trading, as the domestic focus is for slower US growth with traders pricing for the next Federal Reserve rate cut to arrive as early as June. Moreover, the risk of a government shutdown from March 15 appears greater than ever. This would add a downbeat tone to the growth outlook. Meanwhile, recent housing and jobs data is a reminder of the headwinds the US economy is facing.” (per BBG)
• Swap rates closed with a twist-steepener, 1bp lower to 1bp higher.
• Tomorrow, the local calendar will see Building Permits data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

ASIA STOCKS: Equities Higher On Strong China Data

• Hong Kong’s HSI jumped 1.2%,  driven by a 2% rise in the HS China Enterprises Index, with tech giants like Alibaba (+4.6%), Tencent (+3.7%), and Meituan (+2.5%) leading the charge, while the debut of Mixue Bingcheng’s shares soared 40% after its $444 million IPO. The Shanghai Composite edged up 0.3% to 3,332.27, and the CSI 300 rose as much as 1% before paring some gains, supported by stronger-than-expected February PMI data reflecting increased new orders amid tariff-driven export rushes, though the ChiNext jumped nearly 2.9%.
• In Japan the Nikkei 225 climbed 1.6%, while the TOPIX jumped 1.80&, while Australia’s ASX 200 advanced 0.8% reflecting optimism around potential US rate cuts and a pause in yen appreciation. 
• However, Taiwan’s Taiex dropped 1.5%, and Bangkok’s SET fell 0.7%, while South Korean markets were closed for a holiday. 
• Investors are focused on China’s upcoming National People’s Congress, hoping for a significant stimulus package to counter US tariffs—set to rise to 20% on Chinese goods this week—though uncertainty lingers as traders watch for last-minute tariff negotiations and broader geopolitical developments.

ASIA STOCKS: Foreign Investors Continue Selling Asian Equities

Large outflows on Friday for South Korea, while outflows have increased across Indonesia, Thailand, Malaysia & Philippines.

• South Korea: Recorded -$1.26b in outflows Friday bringing the 5-day total to -$2.15b. YTD flows remain negative at -$3.85b. The 5-day average is -$431m, worse than the 20-day average of -$142m and the 100-day average of -$120m.
• Taiwan: Taiwan was out on Friday. YTD flows remain negative at -$5.15b. The 5-day average is -$499m, significantly worse than the 20-day average of -$167m and the 100-day average of -$103m.
• India: Recorded +$128m in inflows Thursday, bringing the 5-day total to -$1.66b. YTD outflows remain heavy at -$12.40b. The 5-day average is -$332m, worse than the 20-day average of -$219m and the 100-day average of -$236m.
• Indonesia: Posted -$176m in outflows Friday, bringing the 5-day total to -$622m. YTD flows remain negative at -$1.34b. The 5-day average is -$124m, worse than the 20-day average of -$56m and the 100-day average of -$35m.
• Thailand: Saw -$145m in outflows Friday, bringing the 5-day total to -$300m. YTD flows remain negative at -$525m. The 5-day average is -$60m, worse than the 20-day average of -$14m, but better than the 100-day average of -$19m.
• Malaysia: Registered -$145m in outflows Friday, bringing the 5-day total to -$285m. YTD flows are negative at -$1.20b. The 5-day average is -$57m, worse than the 20-day average of -$25m, but better than the 100-day average of -$28m.
• Philippines: Recorded -$59m in outflows Friday, bringing the 5-day total to -$83m. YTD flows remain negative at -$259m. The 5-day average is -$17m, worse than the 20-day average of -$7m, and in line with the 100-day average of -$7m.

Table 1: EM Asia Equity Flows

OIL: Crude Higher As Easing Of Russian Sanctions Appears Elusive

Oil prices are higher during today’s APAC trading but are off their intraday high coinciding with the US dollar rising from its lows. The market realises that a peace in Ukraine that allows sanctions on Russian energy to be eased is a long way off after the difficult meeting at the White House. WTI is up 0.6% to $70.18/bbl after reaching $70.60 earlier, while Brent is 0.6% higher at $73.21/bbl following a high of $73.67. The USD index is still down 0.2%. 

• Europe is planning ways to fund an increase in defence spending and appears to have the start of a proposal for a one-month sea and air ceasefire in Ukraine. According to UK PM Starmer there is a “coalition of the willing” with countries offering forces as peacekeepers.
• Crude has been alternating between being concerned about the negative impact of increased protectionism on global demand and the possible effect on supplies. Bloomberg reports that around 80% of the US’ oil imports could be at risk from trade and sanctions policies. 10% tariffs on purchases of energy from Canada and Mexico are due to be imposed on Tuesday.
• News from the Global Times today said that China is considering its options with the US vowing to add an extra 10% tariff on imports from China also from Tuesday. US agricultural products may be targeted and both tariff and non-tariff measures are being examined.
• The oil market has been concerned about demand in China for some time, given that it is the world’s largest crude importer. China holds its National People’s Congress from Wednesday and further government stimulus measures will be looked for.
• Later the Fed’s Musalem speaks and February US manufacturing PMI/ISM print. The ECB’s Buch appears and European February manufacturing PMIs and euro area preliminary February CPI data are released.

LNG: Gas Prices Lower Heading Towards Spring

Natural gas prices were lower on Friday. European gas fell 1.9% to EUR 44.30 to be down 16.6% in February as hopes rose of more flexible EU refilling regulations ahead of next winter and the weather warmed. There were also nascent hopes of a peace deal for Ukraine that would allow Russian gas flows through Ukraine again. Prices troughed late in February at EUR 41.09.

• The argument between the White House and President Zelensky makes a peace deal for Ukraine less likely, but the meeting between the latter and the EU appears to have been tentatively more promising with plans to increase Ukraine’s defences and for a month-long ceasefire at sea and in the air. UK PM Starmer has said he will discuss the results with US President Trump. Zelensky has also said he’s prepared to sign the natural resources deal with the US, which includes energy.
• US gas fell 2.9% to $3.82 on Friday but was still over 24% higher last month. It reached a peak of $4.35 on February 20 and trended lower to month end. Prices had been supported by increased heating demand from a cold snap but the forecast for much of the US is showing above-average temperatures in the second week of March, while the West Coast is likely to see cooler weather, according to Maxar.
• US lower-48 gas production rose 2.9% y/y on Friday while demand fell 10.7% y/y.
• North Asian gas demand has been robust due to colder weather after a mild start to the heating season.

Gold Post Modest Gains After First Weekly Loss for Year.

• Gold finished last week down for the first time in 2025, falling by 2.6%.
• Earlier last week, gold hit all time highs of US$2,951.73 and has trended lower since.
• Gold has exhibited its ‘safe-haven’ status given the uncertainty around the implementation of tariffs by President Trump in 2025, which followed on from last 2024 when it performed due to expected rate cuts.
• The moves in recent trading sessions comes despite the fundamental reasons for its rally remaining in place.
• The move lower last week still sees gold up over 8% for the year and opens at $2,857.83 gaining gradually throughout the day to reach @2,866.25
• The move lower however sees gold breach the 20-day EMA of $2,878.48, marking the first breach of this technical level this year.
• The moving averages are still trending upwards, a sign that the bullish momentum remains after eight successive weeks of gains.
• It appears that the US is moving closer to imposing tariffs on Canada, Mexico and China as soon as this week, a move that could see support for gold return.

FOREX: US$ Weakens After Friday’s Gains As Europe Outperforms

The US dollar is unwinding Friday’s gain during today’s APAC session. The BBDXY USD index is down 0.25% after rising 0.3% at the end of last week following the clash between the White House and President Zelensky which increases global uncertainty. Yesterday European leaders worked on a plan to increase Ukraine’s defences and for a month-long ceasefire at sea and in the air. UK PM Starmer has said he will discuss the results with US President Trump. This has supported European currencies, which have generally outperformed today.

• EURUSD is up 0.4% to 1.0418 after falling to a low of 1.0360 on Friday. EURGBP is up 0.2% to 0.8264 after a trough of 0.8241.
• Aussie and kiwi have made gains against the greenback today helped by a better risk tone and a pickup in China’s PMIs for February. AUDUSD is up 0.3% to 0.6228, close to the intraday high, after closing at 0.6209 on Friday. NZDUSD is 0.2% higher at 0.5610 leaving AUDNZD 0.1% higher at 1.1099 after breaking 1.1100 briefly a number of times.
• The yen has strengthened moderately against the US dollar after weakening on Friday. USDJPY is down 0.1% to 150.44, close to its intraday low. EURJPY is 0.3% higher at 156.69 after a high of 157.30.
• Equities are generally stronger with the Hang Seng up 1.5%, Nikkei +1.1% and CSI 300 +0.4%, while the S& e-mini is little changed. Commodity prices are higher with WTI +1.1% to $70.529/bbl, copper +1.0% and iron ore up to around $103/t.
• Later the Fed’s Musalem speaks and February US manufacturing PMI/ISM print. The ECB’s Buch appears and European February manufacturing PMIs and euro area preliminary February CPI data are released.

INDONESIA: Headline Distorted By Discounts, Core Still Trending Higher

Headline CPI inflation in February printed significantly below expectations at -0.1% y/y after +0.8% y/y. This number doesn’t signal that Bank Indonesia needs to be worried about deflation though as the start of 2025 is impacted by a 50% discount on electricity rates for some consumers. Core inflation is a better indicator of price pressures and it rose 0.1pp to 2.5%, to be at the mid-point of BI’s target corridor. After reaching a high of 16593 on Friday, USDIDR is down 0.5% today to 16488 helped by new forex rules and a softer greenback given the better risk tone. 

• Core inflation has been trending higher for the last year. It troughed in January 2024 at 1.66% y/y, while headline has been shifting lower but it has consistently been impacted by subsidies and price caps. BI’s focus has been persistently on underlying inflation as it reflects second-round effects from changes in headline. 

Indonesia CPI y/y%

• The next BI meeting is March 19 and rising core inflation, elevated USDIDR and weak IDR NEER, which is also likely to driven higher imported inflation, mean that it is likely to be on hold again. However, in the current volatile global environment and with the Prabowo government cutting spending, BI could still cut rates.
• In January, the electricity rebate drove a 22.9% fall in CPI electricity/household fuel. The discount is scheduled to be reversed in March and so headline inflation should return to positive territory this month. The utilities component fell 12.1% y/y in February down from -8.75%.
• Volatile food prices rose 0.6% y/y down from 3.1% y/y in January with the moderation due to rice, tomatoes and chilies.
• Most other categories were little changed on the year. Personal care rose 8.4% y/y up from 7.3% and transportation to 0.9% from 0.8%.

Indonesia imported inflation 

Source: MNI - Market News/Refinitiv

ASIA: ASEAN Manufacturing Improves Driven By Stronger Orders & Output

February S&P Global manufacturing PMIs across the Asian region improved despite heightened global uncertainty around US trade policy. The ASEAN PMI rose to 51.5 from 50.4, signalling the fastest pace of growth in the sector since July 2024 driven by output and new orders, which supported job creation and improved business sentiment. The rise was predominantly driven by Indonesia but all countries saw an increase in the PMI except the Philippines, even if some are still recording a contraction in activity. Price & cost pressures remained subdued and were little changed.

• Indonesia outperformed the rest of ASEAN with the manufacturing PMI rising to 53.6 from 51.9, the highest since March last year. It has posted improvements for four straight months. A pickup in new orders (highest growth since March 2024) drove increases in output, hiring and purchasing as well as the most optimistic business confidence in almost three years. The improvement in orders was due to domestic demand as export orders fell slightly.
• The weak currency added to cost pressures from raw materials and other input costs. Producer selling price inflation though was subdued and at its slowest in four months.
• Thailand’s manufacturing activity growth returned to positive territory with the PMI rising to 50.6 from 49.6 in January due to a recovery in output. The index has averaged around the breakeven-50 mark over the last 6 months. Orders and employment levels were steady but productivity advances were cited. There were slight reductions in cost and selling price inflation in February.
• The Philippines outperformed ASEAN in H2 2024 but is seeing slower growth in the sector in Q1 2025 with the PMI dropping to 51.0 from 52.3 driven by slower output and orders growth with overseas demand also softer. Inflation trends also moderated.

ASEAN S&P Global manufacturing PMIs

STIR: RBA Dated OIS Pricing Slightly Firmer Today

RBA-dated OIS pricing is flat to 3bps firmer across meetings today. 

• Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through July are 2-5bps firmer, while those beyond are 2-9bps softer.
• Last week, January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”.
• A 25bp rate cut in April is given a 9% probability, with a cumulative 57bps of easing priced by year-end (based on an effective cash rate of 4.09%). 

Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels

Source: MNI – Market News / Bloomberg

STIR: RBNZ Dated OIS Pricing Mixed Vs Pre-RBNZ Decision Levels

RBNZ dated OIS pricing closed flat to 6bps softer today. 

• Today’s move leaves pricing mixed versus pre-RBNZ policy decision levels. While pricing for the April meeting is 2bps firmer, meetings from May to November are 4-9bps softer.
• Currently, 26 bps of easing is priced for April, with a cumulative 74bps by November 2025.

Figure 1: RBNZ Dated OIS Today vs. Pre-RBNZ (%)

Source: MNI – Market News / Bloomberg

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
03/03/2025	0700/0200	*	TR	Turkey CPI
03/03/2025	0815/0915	**	ES	S&P Global Manufacturing PMI (f)
03/03/2025	0845/0945	**	IT	S&P Global Manufacturing PMI (f)
03/03/2025	0850/0950	**	FR	S&P Global Manufacturing PMI (f)
03/03/2025	0855/0955	**	DE	S&P Global Manufacturing PMI (f)
03/03/2025	0900/1000	**	EU	S&P Global Manufacturing PMI (f)
03/03/2025	0900/1000		IT	Deficit to GDP 2024/ GDP Y/Y
03/03/2025	0930/0930	**	GB	BOE Lending to Individuals
03/03/2025	0930/0930	**	GB	BOE M4
03/03/2025	0930/0930	**	GB	S&P Global Manufacturing PMI (Final)
03/03/2025	1000/1100	***	EU	HICP (p)
03/03/2025	-	***	US	Domestic-Made Vehicle Sales
03/03/2025	1445/0945	***	US	S&P Global Manufacturing Index (final)
03/03/2025	1500/1000	***	US	ISM Manufacturing Index
03/03/2025	1500/1000	*	US	Construction Spending
03/03/2025	1630/1130	*	US	US Treasury Auction Result for 26 Week Bill
03/03/2025	1630/1130	*	US	US Treasury Auction Result for 13 Week Bill
03/03/2025	1735/1235		US	St. Louis Fed's Alberto Musalem
04/03/2025	2330/0830	*	JP	Labor Force Survey
04/03/2025	0001/0001	*	GB	BRC Monthly Shop Price Index
04/03/2025	0030/1130		AU	RBA Meeting Minutes
04/03/2025	0030/1130		AU	Balance of Payments: Current Account
04/03/2025	0030/1130	**	AU	Retail Trade
04/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
04/03/2025	1000/1100	**	EU	Unemployment