MNI EUROPEAN MARKETS ANALYSIS: Japan Consumption Softens

• Risk sentiment faltered early, as US Eminis re-opened down 1%. We have recovered though to be back in positive territory. This has seen safe havens in the FX space off earlier highs versus the USD, AUD and NZD remain weaker though.
• Cash US tsys are 2-4bps richer, with a flattening bias after yesterday’s robust bull-steepener. Japan data showed more works needs to be done to boost consumer spending trends.
• Asia equities are lower, while gold has found some support amid broader risk volatility.
• Looking ahead, US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today.

MARKETS

US TSYS: Cash Bonds Richer But Off Bests As Risk Reverses Higher

In today's Asia-Pac session, TYM5 is currently at 111-19+, 0-09 from closing levels, after trading as high as 111-25 early on equity market weakness.

• Block Buy: +4,050 of TYM5 at 111-17+, post-time 04:08:07 GMT. The contract has traded higher since.
• Cash US tsys are 2-4bps richer, with a flattening bias after yesterday’s robust bull-steepener. The US 10-year is currently 3.8bps lower at 4.173%, after hitting a low of 4.15% earlier.
• Today’s key release is January JOLTS job openings, with February CPI on Wednesday.

JGBS: Sharply Richer With US Tsys, PPI & 20Y Supply Tomorrow

JGB futures are sharply higher and at session highs, +85 compared to settlement levels.

• “Japan's Economy Minister Ryosei Akazawa said on Tuesday the government will work closely with the Bank of Japan (BOJ) in reaching its 2% inflation target as rising living costs hurt households. The government and central bank are striving to achieve the inflation goal in a stable manner and have made some progress so far, and Akazawa said in a regular press conference.” (per RTRS)
• Cash US tsys are 2-4bps richer, with a flattening bias after yesterday’s robust bull-steepener. The US 10-year is currently 3.8bps lower at 4.173%, after hitting a low of 4.15% earlier. Today’s key US release is January JOLTS job openings, with February CPI on Wednesday.
• Cash JGBs are flat to 8bps richer across benchmarks, with the futures linked 7-year and 10-year leading the rally. The benchmark 10-year yield is 8.4bps lower at 1.493% versus the cycle high of 1.584% set yesterday.
• Swap rates are 3-5bps lower. Swap spreads are mostly wider.
• Tomorrow, the local calendar will see PPI and BSI Industry Survey data alongside 20-year supply.

JAPAN DATA: Q4 GDP Revised Lower On Consumption, Policy To Focus On Wage Gains

Japan Q4 GDP growth was revised down a touch. The final outcome saw q/q growth at 0.6% (versus 0.7% forecast and initially reported). In annualized terms, growth was 2.2%, also below expectations of 2.8%. Private consumption was revised down to flat, after initially being reported as a modes t0.1% rise. Some offset came from business spending, which was nudged up to 0.6%q/q (from an initial outcome of 0.5%, the market consensus for the revision was 0.4%). Other components weren't changed much. The GDP deflator slightly stronger at 2.9%y/y. 

• Earlier data showed January real household spending up just 0.8%y/y, versus 3.7% forecast and 2.7% prior. The chart below plots this household spending measure (white line) against labor earnings (orange line), which is also in real terms.
• Nominal spending rose +5.5%y/y, but real income was -1.1%.
• This, coupled with flat aggregate consumption growth for Q4 as a whole, will underscore efforts to boost real wages in 2025. PM Ishiba stating late yesterday companies and corporates should push for this. 

Fig 1: Japan Real Household Spending & Real Labor Earnings - Y/Y

Source: MNI - Market News/Bloomberg 

AUSSIE BONDS: Holding Richer, Off Bests With US Tsys, Dec-34 Supply Tomorrow

ACGBs (YM +7.0 & XM +6.0) are stronger after today’s consumer and business confidence data.

• March Westpac consumer confidence jumped 4.0% m/m to 95.9, the highest in three years, boosted by the RBA’s 18 February 25bp rate cut, the start of an easing cycle.
• NAB business confidence continued its trend of oscillating around the zero mark. Business conditions were one point higher at +4 driven by profitability and trading. Prices were encouraging, signalling a further moderation in inflation in Q1 but costs picked up.
• Cash US tsys are 2-3bps richer after yesterday’s robust bull-steepener.
• Cash ACGBs are 6-7bps richer with the AU-US 10-year yield differential at +20bps.
• Swap rates are 7-8bps lower, with the 3s10s curve steeper.
• The bills strip has bull-flattened beyond the first contract, with pricing flat to +10.
• RBA-dated OIS pricing is 1-8bps softer across meetings today.
• Tomorrow, the local calendar will be empty. Melbourne Institute inflation expectations for March print on Thursday. The previous month they jumped 0.6pp to 4.6%, the highest since November 2023.
• Tomorrow, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond.

AUSTRALIA DATA: NAB Prices Signal Lower Inflation, Costs Need Monitoring

NAB business confidence continued its trend of oscillating around the zero mark with it falling to -1 in February from January’s +5. Business conditions were one point higher at +4 driven by profitability and trading but most components only saw small moves. Prices were encouraging signalling a further moderation in inflation in Q1 but costs picked up.

• Purchase costs rose 1.5% 3m/3m in February, the highest rate since August. It remains to be seen if demand is strong enough for this to feed into higher inflation as the price of finished products rose only 0.5% 3m/3m, the slowest rate in four years. Retail price rises remained strong +1.0% in line with January despite still cautious spending. 

Australia NAB prices vs CPI y/y%

• Labour costs rose 1.5% 3m/3m down from 1.7% in January but still above the series average of 1.2% but this is not surprising with labour demand also above average. Employment fell only slightly to 4.3 and the Q1 average is above Q4’s signalling that market-sector job creation continued into 2025.
• Trading conditions rose 0.8 points to 7.6 and while profitability rose 0.5 points it remained slightly negative at -1.2. Forward orders point to a weak outlook holding steady at around -3. Exports rose moderately to 0.

Australia NAB business conditions vs orders

Source: MNI - Market News/Refinitiv

AUSTRALIA DATA: Lower Rates & Inflation Drive Improved Consumer Sentiment

March Westpac consumer confidence jumped 4.0% m/m to 95.9, the highest in three years, boosted by the RBA’s 18 February 25bp rate cut, the start of an easing cycle. It also revised down 2025 underlying inflation projections and said that it has “more confidence that inflation is moving sustainably towards the midpoint” of the band after lower-than-expected Q4 CPI. Cost-of-living has been the main concern for households and both of these developments appear to have reassured them that their financial situation will improve. 

Australia Westpac consumer confidence

Source: MNI - Market News/Refinitiv

• RBA Governor Bullock sounded very cautious regarding the outlook for further easing, which may keep a lid on consumer confidence along with significant global uncertainties depending on how data and events unwind. Westpac expects rates to be left at 4.1% on April 1 but is forecasting another cut at the May 20 meeting.
• In terms of news-recall, respondents said that while domestic news had improved, it had deteriorated from overseas. “Inflation” remained the main topic though with 40% recalling it but the share seeing it as bad was down 10pp to 65%.
• Westpac notes that the improvement in sentiment was broad based as the index approaches the 100-breakeven level. The 12-month and 5-year ahead economic outlooks were stronger but still below their November 2024 peaks, when the US election was held. Both past and future family finance assessments improved.
• With the economy still creating jobs and the unemployment rate only 4.1%, unemployment expectations fell 6.3% to their lowest in over two years.
• The “time to buy a major household item” jumped 6.9% to 97.1, signalling that the recovery in household spending is likely to continue.
• The “Mortgage Rate Expectations Index” fell 2.2% to 88.2 with 36% expecting rates to fall over the next year, 22% no change and 26% expect them to rise.
• The February monetary easing boosted the “time to buy a dwelling” and house price expectations components. 

Australia Westpac unemployment expectations

BONDS: NZGBS: Bull-Steepener As Long End Gains Pared

NZGBs closed 2-5bps richer, with a steeper curve as the long end moved away from session bests in line with US tsys. Cash US tsys sit mid-range, 1-3bps richer, after equities reversed early Asia-Pac session weakness. 

• NZGBs underperformed the $-bloc, with the NZ-US and NZ-AU 10-year yield differentials 7bps and 2bps wider respectively.
• In the Fortnightly Economic Update, the NZ Treasury stated that “Q4 GDP likely increased according to indicators released so far. Data indicated that different sectors are at different stages of recovery with retail spending and net exports increasing, while construction activity is still falling. Forward-looking indicators all point to a gradual improvement in activity over 2025.” (per BBG)
• NZ Finance Minister Nicola Willis stated “I am not holding out hope for an overall positive fiscal surprise” in May’s budget.
• Swap rates closed 5bps lower
• RBNZ dated OIS pricing closed flat to 3bps softer. 25bps of easing is priced for April, with a cumulative 78bps by November 2025.
• Tomorrow, the local calendar will see Card Spending data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.

FOREX: USD Index Lower, But Safe Havens Lose Ground As US Equity Futures Recover

The major currencies are firmer against the USD, although safe havens JPY and CHF are away from best levels as US equity futures recovered some ground. The BBDXY index was last near 1269.7, off around 0.10% versus end NY close levels from Monday. 

• Focus today has remained on US equity trends. Eminis slumped after re-opening, down 1%. This was fresh lows for the active contract back to Sep last year. US growth concerns still remain, although we didn't see any fresh catalyst for this morning's move down.
• Sentiment has stabilized as the session progressed, with Eminis now marginally higher for the session. We did enter oversold territory for the active contract (based off RSI 14), which may have helped drive some short covering.
• USD/JPY got to fresh lows of 146.54, before stabilizing with US equity futures. We were last near 147.05/10, still up around 0.15% in yen terms. Earlier data showed weaker than forecast Jan household spending, while Q4 GDP was revised down due to flat consumption growth. This underscores policy efforts to boost real wages growth this year (something endorsed by PM Ishiba yesterday).
• USD/CHF is back under 0.8800, around 0.20% stronger in CHF terms. EUR is near 1.0850, also up modestly.
• AUD and NZD are tracking modestly weaker. Data prints in both countries today not shifting sentiment. AUD/USD was last under 0.6270, while NZD was under 0.5690, challenging EMA support.
• US yields are lower but away from session troughs. The 10yr got to 4.15% not long after the open, following US equity futures. We were last near 4.18%, still off 3bps.
• Looking ahead, US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today.

ASIA STOCKS: Day of Red Across the Region. 

Asian stocks followed overnight leads we a sea of red across the regions with fall of over 2% for some bourses. 

• China’s key markets were all down, led by the Hang Seng which fell -0.75%.  The CSI 300 was down -0.45%, Shanghai -0.33% and Shenzhen lost -0.43%.
• Despite better than expected early trade data, Korean markets brushed that aside with the KOSPI falling heavily, down -1.15%.
• Malaysia’s FTSE Bursa KLCI is down for it’s fourth day in a row, by -0.90%.
• Indonesia’s Jakarta Composite fell -0.91%, taking it to over -7.5% year to date.
• India is opening up only marginally lower, down by -0.09%, having lost -0.41% in yesterday’s trading.
• Other notable market moves include Singapore’s FTSE Straits Times down -2.23%, Philippines down -2.8% and Taiwan -1.60%. 

ASIA STOCKS: Large Outflows Continue to Dominate. 

Large outflows for South Korea, Taiwan and India dominate flows as general risk aversion in markets is on the increase given rapid falls in equities overnight.   

• South Korea: Recorded outflows of -$310m yesterday, bringing the 5-day total to -$497m. 2025 to date flows are -$4,345m. The 5-day average is -$99m, the 20-day average is -$157m and the 100-day average of -$121m.
• Taiwan: Had outflows of -$833m yesterday, with total outflows of -$4488m over the past 5 days. YTD flows are negative at -$10,744m. The 5-day average is -$898m, the 20-day average of -$435m and the 100-day average of -$161m.
• India: Saw outflows of -$369m as of the 7th, with a total outflow of -$1,828m over the previous 5 days. YTD outflows stand at -$15,599m. The 5-day average is  -$366m, the 20-day average of -$338m and the 100-day average of -$212m.
• Indonesia: Posted outflows of -$51m as of Friday , bringing the 5-day total to -$71m. YTD flows are negative at -$1,419m. The 5-day average is -$14m, the 20-day average is -$45m the 100-day average of -$32m.
• Thailand: Recorded outflows of -$99m yesterday, totaling -$184m over the past 5 days. YTD flows are negative at -$754m. The 5-day average is -$37m, the 20-day average of -$25m the 100-day average of -$18m.
• Malaysia: Experienced outflows of -$82m Friday, contributing to a 5-day outflow of -$266m. YTD flows stand at -$1,478m. The 5-day average is -$53m, the 20-day average of -$37m the 100-day average of -$30m.
• Philippines: Saw inflows of +$25m yesterday, with net inflows of +$26m over the past 5 days. YTD flows are negative at -$228m. The 5-day average is +$5m, the 20-day average of -$7m the 100-day average of -$7m.

OIL: Crude Off Intraday Lows, EIA Report & Inventory Data Later Today

Oil prices fell sharply earlier in the APAC session as the risk-off tone from Monday driven by global growth concerns continued but they have bounced off the intraday low to be little changed today but are still retaining yesterday’s losses. WTI is down 0.2% to $65.91/bbl after falling to $65.29, just above initial support. Brent is slightly lower at $69.26/bbl following a low of $68.63, holding above support at $68.33. The USD index is 0.1% lower. 

• At the CERAWeek conference in Houston, the Vitol CEO said that oil prices in the $60-$80 range was “reasonable” for the next few years, according to Bloomberg. The Trump administration is eager to increase the US’ oil output, which producers support. Industry-based US inventory data is published later today.
• The US Energy Secretary Wright said at the conference that the government is ready to enforce sanctions against Iran. The supply outlook is particularly unclear with tighter sanctions against Iran and Venezuela possibly reducing global supply, while increased output from the US and potentially an easing of sanctions on Russia offsetting that but the effect of each development is unknown.
• The US’ EIA publishes its short-term energy outlook later today. The IEA publishes its March report on Thursday and OPEC on Wednesday.
• Later US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today. 

Gold Rises on Volatility. 

• Opening at US$2,888.71Gold jumped in the afternoon as equity volatility drove markets in the region.
• Reaching $2,900.50 briefly, gold then backed off to be at $2,897.76
• Gold is usually highly correlated to negative market sentiment and displays it’s ‘safe-haven’ status yet overnight, gold’s drivers appear mixed.
• With global market volatility elevated due to the implementation of tariffs and their potential impact on the US and Global economies, equity markets are down and bond yields rallying gold resumed its year long rally today and  with expectations that this volatility is likely to continue, it is an environment where gold usually does well.   
• The overnight move has moved back above the 20-day EMA of $2,892.24.
• CFTC data shows that money managers have cut their bullish gold bets to the least in nine weeks, a sign that profit taking is the key driver of the downward pressure on prices. 

SOUTH KOREA: Early Month Trade Data Stronger than Forecasts

• South Korea reported its first 10 days trade data pointing to the effects of the Lunar New Year holidays now past.
• Against prior month’s result of +0.8%, exports rose 2.9% in early March.
• The daily average rose 12.3 y/y, whilst chip exports were virtually flat at just +0.03% y/y and exports to China declined -6.6% y/y.
• In a sign of things to come exports to the US rose 5.5% y/y
• Imports too were stronger than expected rising +7.3% y/y from just +0.3% the month prior.
• This produced a trade deficit of US$2.046bn. 

INDONESIA: Q1 Sentiment Higher Than Q4 Signalling Robust Consumption Growth

February consumer confidence fell to 126.4 from 127.2, the second consecutive decline bringing it to its lowest since November. Sentiment is still around 2 points above the Q4 2024 average though, signalling continued solid consumption growth and possibly a pickup in Q1 from Q4’s 5.0% y/y (see chart below). 

Indonesia consumption

• Bank Indonesia has cut rates twice now to “drive economic growth” and it continues to use macroprudential policies to support the economy, which is likely to be maintained given rupiah weakness in the face of global uncertainty (USDIDR +0.5% today to 16425.5). In February it said that growth is “solid” but “must still be encouraged”, which suggests that it would like to reduce rates further if the currency will allow.
• The decline in consumer confidence last month was driven by the expectations component which fell 1.5% m/m driven by broad-based weakness, while economic conditions rose 0.6% m/m driven by the durable goods purchase measure. Current and expected employment indices were lower.
• Consumer confidence is a good indicator for real quarterly consumption. Monthly data has not been as robust though with retail sales volumes lacklustre up 1.8% y/y in December. Auto sales growth is off its early 2024 lows but continues to contract falling 11.3% y/y in January. Credit growth to individuals is also off its high growing 3.2% y/y in January down from 9.8% y/y in January 2024.
• Tourist arrivals remain robust rising 13.9% y/y in December but this was down from December 2023’s 32.5% y/y.

INDIA: Data Preview – Looking for Impact from Rate Cut. 

• India’s industrial production data will be the first release for it post the RBI cut and markets expects a small rise.
• Having averaged over 4% for the last year, the last print of 3.2% may have been somewhat of a warning shot for the RBI as they decided on rates and the voting members will be watching this release for signs of any early impact that monetary policy changes may have.
• India also sees the February CPI release where forecasters expect a further moderation.
• Against a RBI target of 4%, January’s release of 4.31% may not be achieved as prices slow further driven by food.
• The market expects February CPI to be at 3.98%, supporting the rate cut at the prior meeting.
• The RBI has a target of 4% +/-2% and would likely want to see sustained downward pressure on prices before the cut again.
• The bond market is currently pricing 19bps of cuts over the next three months.    

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
11/03/2025	1000/0600	**	US	NFIB Small Business Optimism Index
11/03/2025	-	***	CN	New Loans
11/03/2025	-	***	CN	Money Supply
11/03/2025	-	***	CN	Social Financing
11/03/2025	1255/0855	**	US	Redbook Retail Sales Index
11/03/2025	1400/1000	***	US	JOLTS jobs opening level
11/03/2025	1400/1000	***	US	JOLTS quits Rate
11/03/2025	1600/1200	***	US	USDA Crop Estimates - WASDE
11/03/2025	1700/1300	***	US	US Note 03 Year Treasury Auction Result
12/03/2025	0001/0001	*	GB	RICS House Prices
12/03/2025	0730/0730		GB	DMO propose calendar for first 3 weeks of FY25/26
12/03/2025	0845/0945		EU	Lagarde at "ECB and Its Watchers" conference Frankfurt
12/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
12/03/2025	1100/0700	**	US	MBA Weekly Applications Index
12/03/2025	1100/1200		EU	ECB Wage Tracker
12/03/2025	1230/0830	***	US	CPI
12/03/2025	1345/0945	***	CA	Bank of Canada Policy Decision