MNI EUROPEAN MARKETS ANALYSIS: US CPI In Focus Later

• Trump's steel and aluminium came into effect (with no country exemptions), with the EU announcing countermeasures. Equity sentiment has been mostly positive in the US and EU futures space though.
• The USD is tracking higher against the majors and Asian currencies. Cash US bonds are dealing ~1bp richer after yesterday’s heavy session. Gold has traded a tight range.
• US CPI for February is out later and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. February budget and real earnings data are also released. The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak.

MARKETS

US TSYS: Futures Stronger Ahead Of CPI Data

In today's Asia-Pac session, TYM5 is 110-30, 0-03+ from closing levels. 

• Cash US bonds are dealing ~1bp richer after yesterday’s heavy session.
• The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
• Analyst unrounded estimates see core CPI inflation easing to a still solid 0.28% M/M in February after a far stronger-than-expected 0.45% M/M in January. This report won't influence March's FOMC decision, but with only one more report before the May decision, the main risk given current market pricing is that the data could largely cement a "hold" until at least June. (see MNI US CPI Preview here)

US INFLATION: MNI US CPI Preview: Calm Before The Tariff Storm

We've just published our preview of the February CPI report, due for release on Wednesday March 12 at 0830ET.

• Download Full Report Here

GLOBAL MACRO: Growth Indicators Subdued But Not Flashing Red Yet

Markets have become increasingly concerned over the global growth outlook with signs that US confidence has been hit by uncertainty over US tariffs and likely retaliation. The RBA’s Hauser said that the Fed estimated that global growth was reduced by 1pp in 2019 due to uncertainty alone. Growth indicators are still suggesting that global IP should hold up for now. They continue to be at subdued levels though in line with recent muted growth, but are yet to flash red. 

• The Q1 average of JP Morgan’s global composite PMI at 51.7 is below Q4’s 52.4 driven by services signalling slower but still positive growth. February’s composite was the lowest in over a year at 51.5. Manufacturing though has seen a pickup in Q1 but it is too early to tell if this is an attempt to front run US tariffs. China’s manufacturing PMI is down slightly in Q1 at 50.5.
• LME metal prices have been moving sideways for the last year and picked up at the start of this year but within the recent range. This is in line with continued global IP growth of around 2-2.5%. Iron ore has also been moving sideways, while wool has been recovering over the last 6 months.

Global IP y/y% vs LME metal prices

Source: MNI - Market News/Refinitiv

• Global money supply growth has been in a relatively tight range for the last two years. It tends to lead global IP growth and is also consistent with it staying positive but at subdued rates.
• Container freight rates have been trending lower since end-2024 with the easing in geopolitical tensions but the Baltic Freight Index has been recovering but remains off 2024’s highs.

Global IP vs money supply growth y/y%

Source: MNI - Market News/Refinitiv/Bloomberg

JGBS: Cheaper Apart From 20Y After Supply, US CPI Due Later

JGB futures are weaker, -35 compared to settlement levels, after dealing in a narrow range. 

• Several headlines have filtered out today on pledged wage rises from major Japanese firms for 2025. Some companies have met lofty demand, while others have come in a little below demands.
• This is a key watch point for the authorities and the BoJ, as it seeks to durably achieve the 2% inflation target.
• The BoJ's board will set policy next week, with economists expecting no move this month, but anticipating a terminal rate of 1.25% in this cycle.
• Cash US bonds are flat to 2bps richer. The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
• Cash JGBs are 1bp richer to 3bps cheaper across benchmarks, with the 20-year outperforming after today’s supply. The 20-year auction delivered mixed results. The low price underperformed dealer forecasts. However, the cover ratio increased to 3.4594x and the auction tail shortened dramatically to 0.20 from 0.55.
• Swap rates are 1-2bps lower, with swap spreads tighter.
• Tomorrow, the local calendar will see Weekly International Investment Flow data. 

JAPAN DATA: PPI Close To Expectations, Import Prices Back Negative In Y/Y Terms

Japan's PPI for Feb was close to expectations. The m/m outcome was flat, versus a -0.1% forecast. The Jan read was +0.3%. In y/y terms, we printed at 4.0%, in line with forecasts, but just below the Jan 4.2% print. The chart below plots the PPI versus headline Japan CPI. The slight downtick in PPI momentum is not suggesting much headline CPI relief, although as we note below import price momentum has also cooled. 

• The manufacturing PPI was +0.2%m/m, little changed from Jan. Most of the sub-categories rose in m/m terms, although utilities were down -3.8%m/m. Y/Y trends were broadly similar to Jan, although utilities eased.
• In terms of trade prices, export and import prices were both down in m/m terms. In y/y terms, import prices were -0.7%, ending a positive y/y run for the past two months (we were +2.3% in Jan). This is consistent with a stronger yen in recent months. 

Fig 1: Japan PPI & Headline CPI Y/Y 

Source: MNI - Market News/Bloomberg 

JAPAN DATA: 2025 Pay Agreements Emerging, Some Below Union Demand Levels

A number of headlines have filtered out today on pledged wage rises from major Japanese firms for 2025. Some companies have met lofty demand, while others have come in a little below demands. See below for more details. 

• This is a key watch point for the authorities and the BoJ, as it seeks to durably achieve the 2% inflation target. As noted yesterday, consumption spending has not been a strong point for the economy in recent months. Positive real wage growth is a key in terms of aiding the recovery in spending. Hence these developments will be an on-going watch point for markets.
• Here are some of the key companies that have crossed so far today: "TOYOTA RESPONDS IN FULL TO UNION'S TOTAL WAGE HIKE DEMAND, COMPANY SAYS - [RTRS]"
• "NEC AGREES TO UNION'S WAGE HIKE DEMAND FOR 2025 IN FULL - [RTRS]",
• "NISSAN AGREES TO 16,500 YEN AVERAGE MONTHLY WAGE HIKE VS UNION DEMAND OF 18,000 YEN FOR 2025 - [RTRS]",
• "MITSUBISHI ELECTRIC AGREES TO 15,000 YEN AVERAGE MONTHLY WAGE HIKE VS UNION DEMAND OF 17,000 YEN FOR 2025 - [RTRS]",
• "NIPPON STEEL AGREES TO 12,000 YEN AVERAGE MONTHLY WAGE HIKE VS UNION DEMAND OF 15,000 YEN FOR 2025 - [RTRS]"
• "HITACHI AGREES TO 17,000 YEN AVERAGE MONTHLY WAGE HIKE VS UNION DEMAND OF 17,000 YEN FOR 2025 - [RTRS]"
• "PANASONIC AGREES TO 13,000 YEN AVERAGE MONTHLY WAGE HIKE VS UNION DEMAND OF 17,000 YEN FOR 2025 - [RTRS]"
• The largest union, Rengo, is seeking an average hike of near 6.1%, after last year's 5.85% increase.
• Rtrs adds: "Much of the focus on this year's "shunto" talks is whether there will also be strong pay gains at small and medium-sized firms which employ around 70% of Japan's workforce." See this link for more details.  
   

AUSSIE BONDS: Cheaper, No Steel/AL Tariff Exemption For Oz, US CPI Out Later

ACGBs (YM -6.0 & XM -7.5) are weaker but mid-range on a data-light session.

• “Australia has failed to secure an exemption from US steel and aluminum tariffs despite Prime Minister Anthony Albanese's government's lobbying efforts. Albanese called the tariffs "entirely unjustified" and "economic self-harm" on the part of the US, but said Australia would not take reciprocal measures and would instead work to diversify exports.” (per BBG)
• Cash US bonds are flat to 2bps richer in today’s Asia-Pac session. The February CPI report is the highlight of today’s US session, while some attention will be paid to the BoC which is expected to deliver a 25bp cut.
• Cash ACGBs are 5-8bps cheaper with the AU-US 10-year yield differential at +18bps.
• Swap rates are 5-8bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -1 to -5.
• RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut in April is given an 8% probability, with a cumulative 65bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar will see Melbourne Institute inflation expectations for March. The previous month they jumped 0.6pp to 4.6%, the highest since November 2023.

AUSTRALIA: May Election Likely But Polls Still Point To Hung Parliament

Over the weekend, there were widespread press reports that a federal election would have been called for April 12 to avoid a mini budget having to be announced but had to be delayed because of Cyclone Alfred. Given the legal requirement that 33 days need to pass between the announcement and the vote, the time has now elapsed making a May poll the most likely. It has to be held by May 17. Recent polls have shown a narrowing between the two major parties but consistently point to a minority government outcome, which is likely to result in political instability. 

• Polls generally have the 2-party preferred vote split around 49:51 with some in favour of the incumbent Labor Party (ALP) and some the opposition coalition of Liberals and Nationals, leaving the average around 50:50. In the May 2022 election, the split was 52.1% for Labor and 47.9% the coalition.
• In terms of the primary vote, the average of the March polls has the coalition gaining 1.7pp from the May 2022 election to 37.4%, ALP losing 2.5pp to 30.1%, Greens gaining 0.8pp to 13%, One Nation 1.2pp to 6.2% and independents 1.7pp to 12.1%. The latest Essential survey suggests that undecideds are low at only 5% of the total.
• The ALP has 77 seats out of a total of 151 in the current parliament and a 2.1% swing against it would see the Coalition win 5 seats from it. This would leave it still the largest party in parliament but short of the 76 needed for a majority. It could form a coalition with the Greens, who currently hold 4 seats, or with left-leaning independents who have around 8 seats. 

BONDS: NZGBS: Closed With A Bear-Steepener, US CPI Due Later Today

NZGBs closed showing a bear-steepener, with benchmark yields 5-7bps higher. That said, yields finished away from their worst levels, with US tsys partially retracing some of yesterday’s weakness. 

• Cash US bonds are ~1bp richer in today’s Asia-Pac session. The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
• NZ-US and NZ-AU 10-year yield differentials closed little changed.
• The AFR revealed that RBNZ Orr’s resignation was tied to him refusing to pull back from imposing one of the world’s heaviest capital burdens on the big four Aussie banks, which dominate the Kiwi banking system.
• Swap rates closed 4-7bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed flat to 4bps firmer across meetings. 25bps of easing is priced for April, with a cumulative 74bps by November 2025.
• Tomorrow, the local calendar will see Net Migration data.
• The NZ Treasury also 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.

NEW ZEALAND: Transactions Suggest Spending Recovery Still Very Gradual

Total card spending was flat again in February driving a modest rise in the annual rate to 1.3% from 0.2%. Retail expenditure rose 0.3% m/m after falling 1.6% in January and is now down 0.6% y/y an improvement from -1.9% y/y. It has been gradually recovering since June’s -4.4% y/y but it remains soft. It’s positive though that 3-month momentum rose to its fastest pace since December 2022. The RBNZ expects the economy to recover gradually over the year and is likely to cut rates 25bp at each of the April and May meetings to support it.

NZ card transactions 3m/3m average ann%

• Core retail spending was a bit stronger rising 0.5% m/m driven by apparel (+1.0%).
• Non-retail ex services was flat in February, while services fell 0.4% m/m.
• The Q1 average of retail card transactions is up 0.3% q/q after 1.7% q/q in Q4, which was likely boosted by the start of the easing cycle and festive discounts encouraging spending at the right price. The monthly data though is suggesting that Q1 retail sales are likely to have increased at a slower pace than Q4’s 1.4% q/q nominal and +0.9% real. 

NZ retail spending y/y%

Source: MNI - Market News/Refinitiv

FOREX: USD Edges Up, But Still Close To Recent Lows, Risk Appetite More Stable

The USD BBDXY index has ticked up as the Wednesday Asia Pac session has unfolded. We were last just above 1268.0, up around 0.20% versus end Tuesday levels in NY. The index continues to oscillate around its simple 200-day MA and isn't too far from recent lows of 1264.63. EUR/USD is already above its simple 200-day MA, but USD/CNY bounced off the 200-day MA support zone today. 

• Comments from US President Trump at a business roundtable around economic growth and downplaying recession fears, as aided risk appetite. Moving away from some tariff threats on Canada has also likely helped. Tariffs on steel and aluminium came into effect though, with no exemptions.
• US equity futures are modestly higher today, but Eminis remain sub 5600. This benchmark and Nasdaq futures are around 0.30% firmer at this stage. US yields are down slightly, off a little over 1bps for some of the key benchmarks, but this follows Tuesday's sharp rebound.
• USD/JPY is back above 148.00, last near 148.20/25, off around 0.30% in yen terms. Earlier remarks by BoJ Governor Ueda in parliament suggested little concern around the run up in local JGB yields and that there wasn't a big difference between the BOJ and the market's view. Such remarks should support the yen, but better risk appetite is likely offsetting.
• Data showed the PPI close to expectations, but import prices back in negative territory in y/y terms.
• AUD/USD has ticked back under 0.6290, with the A$ a clear laggard during this recent USD run lower (particularly against EU bloc currencies). Local equities are off 1.6%, with Australia not securing an exemption from steel and aluminium tariffs. NZD/USD has also edged down, last back close to 0.5705.
• EUR/USD has edged back to 1.0900, but is close to recent highs of 1.0947. EU equity futures are up around 0.85% so far today.
• US CPI for February is out later and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. February budget and real earnings data are also released. The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak.

ASIA STOCKS: Asia Equities Mixed, Eminis Still Sub 5600

Asia Pac equity market trends are mixed in Wednesday trade. We have seen higher trends for some of the tech sensitive plays. The South Korean Kospi is up around 1.5%, while the Taiex is also +1% firmer. In Japan, the Topix is up around 1.00%, but the NKY is up more modestly. 

• Comments from US President Trump at a business roundtable on Tuesday around economic growth and downplaying recession fears, has aided risk appetite. US equity futures are firmer, led by Nasdaq, but Eminis remain sub 5600 at this stage, so still close to recent lows.
• Australian  markets are underperforming though, the ASX 200 off 1.4%. Australia failed to win a reprieve in terms of steel and aluminum tariffs placed on Australian exports to the US. Some miners are lower, but so too are some finance companies. The material sub index is off close to 1%, while the finance sub sector is down by 1.6%, so slightly underperforming the headline moves.
• The ASX 200 is not back to levels not seen since August last year. We are close to 10% off recent Feb highs. See the chart below. The index is now in oversold territory though.
• Hong Kong markets have seen some volatility since the open, but the aggregate HSI is holding modestly lower at this stage, last off nearly 0.70%. The tech index is off a little over 1%.
• Mainland China markets are struggling for positive territory, but modest losses have been seen so far, with the CSI 300 down 0.30%.
• In South East Asia, most markets are weaker. Malaysian markets are down over 1.85%. Indonesian markets up are though. Singapore is close to flat. 

Fig 1: Australian Equities Nearly 10% Off Earlier Feb Highs 

Source: MNI - Market News/Bloomberg 

OIL: Prices Higher, US CPI, OPEC Report & EIA US Inventories Released Later

Oil prices have continued rising during today’s APAC session driven by reduced excess supply expectations. WTI is 0.7% higher at $66.72/bbl after falling to $66.49 before rising to $66.84. Brent is up 0.7% to $70.03/bbl after an intraday low of $69.79 and a high of $70.13. The USD index is up 0.2%.

• OPEC’s March monthly report is published today with the IEA’s on Thursday. OPEC’s forecasts tend to be more optimistic. On Tuesday, the US’ EIA revised down its global excess supply expectations for both 2025 and 2026 due to the projected impact of tighter sanctions and enforcement on Iran and Venezuela.
• The supply outlook remains highly uncertain though with it still unclear if Iran and Venezuela will find ways to evade sanctions and if there will be an easing of restrictions on Russia. The US administration is also planning to increase US production, while higher tariffs have raised uncertainty around global demand substantially.
• The US 30-day ceasefire proposal will now be presented to Russia following Ukraine’s readiness to agree but Russia has said that it will only approve it on its own terms and not the US’. If it refuses, President Trump has threatened more sanctions and also tariffs on the country.
• Bloomberg reported that US crude inventories rose 4.2mn barrels last week after a drawdown the previous week, according to people familiar with the API data. Gasoline stocks were down 4.6mn while distillate rose 400k. The official EIA data is out later today.
• US CPI for February is out later (see MNI CPI Preview) and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. February budget and real earnings data are also released. The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak. 

GOLD: Bullion In Tight Range Ahead Of US CPI

Gold prices are little changed during APAC trading rising moderately to $2916.5/oz, close to March’s high of $2930.31. It is up 2.1% this month benefiting from flight-to-quality flows driven by increased global uncertainty. Risk appetite improved following the US taking a step back from an escalation of the US-Canada trade war and Ukraine agreeing to a US ceasefire proposal. This drove bullion down to $2910.96 early in today’s session but it has now recovered. Markets are waiting for US February CPI data out later.

• Slightly lower US Treasury yields have provided support for gold’s recovery today but the 0.2% rise in the USD index is capping gains.
• The US 30-day ceasefire proposal will now be presented to Russia following Ukraine’s readiness to agree to it but Russia has said that it will only approve it on its own terms and not the US’. A refusal would likely result in further quality flows into bullion.
• Gold’s trend condition remains bullish and recent moves appear corrective. Initial support is at $2880.3, 10 March low, while resistance is at $2930.3, 7 March high. The bull trigger is at $2956.2.
• US CPI for February is out later (see MNI CPI Preview) and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. An undershoot is likely to increase Fed easing expectations and buoy gold prices. February budget and real earnings data are also released.
• The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak at the “ECB and Its Watchers” conference. 

SOUTH KOREA: Jobless Rate Dips, Against Forecasts, Jobs Growth Stabilizes

South Korea Feb jobs data was better than expected. The unemployment rate eased to 2.7% from 2.9% prior. The consensus forecast was 3.0%. This puts the unemployment rate well off late 2024 highs of 3.7%. Recent cycle lows for the unemployment rate rest at 2.5%. 

• Jobs growth was 136k in y/y terms. This is up slightly from the Jan pace of +135k. Still, some stability in this metric will be welcome from the authorities from a domestic demand standpoint.
• By industry, jobs growth is negative in manufacturing and construction (in y/y terms) but positive in service related fields. 

ASIA FX: Most USD/Asia Pairs Higher, USD/CNY Rebounds From 200-day MA Support

USD/Asia pairs are mostly higher, which is line with G10 FX trends where the dollar has risen against all of the majors (with yen down around 0.30%). The won has outperformed at the margins. Equity sentiment is mixed in the region, up for tech sensitive plays, but lower in some parts of South East Asia. 

• USD/CNH saw a sharp drop to fresh lows under 7.2200 (7.2157), as onshore CNY opened firmer. This came despite a USD/CNY fixing, which was lower but still close to 7.1700. The dip was short lived and coincide with the simple 200-day MA support level for onshore USD/CNY spot (which comes in near 7.2175). USD/CNH has rebounded back to 7.2400, same for USD/CNY. The stability in broader USD sentiment against the majors has likely been a factor.
• Spot USD/KRW is stuck in recent ranges, last near 1452, but up slightly in won terms for the session. Onshore equities are up 1.4% for the session, slightly best levels. Offshore equity outflows were large yesterday though. On the data front we have arguably had some modestly hawkish developments today from a BoK standpoint. The unemployment rate dipped to 2.7%, against a 3% forecast, as jobs growth stabilized. Feb bank lending to households also rose and looks to be at fresh record highs.
• USD/MYR has pushed higher, last above 4.4350, around 0.50% weaker in ringgit terms. Downside support appears evident for this pair ahead of 4.4000. The 200-day EMA resistance zone is back near 4.4770. On the data front, Jan IP was a little below forecasts at 2.1%y/y, versus 2.7% expected. The prior outcome was 4.6%.
• USD/THB has crept higher, but at 33.85 remains sub recent highs near 34.00. Headlines have crossed from the MinFin that baht volatility is hurting exports. Efforts are still made to lift growth to 3-3.5%, with the aid of foreign investment.
• USD/IDR has risen a little further despite recent BI intervention efforts, the pair last near 16450.
• USD/SGD is higher, last at 1.3325, while USD/PHP is back in the 57.35/40 region. 

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
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	-	***	CN	New Loans
12/03/2025	-	***	CN	Money Supply
12/03/2025	-	***	CN	Social Financing
12/03/2025	1230/0830	***	US	CPI
12/03/2025	1345/0945	***	CA	Bank of Canada Policy Decision
12/03/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
12/03/2025	1515/1615		EU	Lane at "ECB and Its Watchers" conference Frankfurt
12/03/2025	1700/1300	**	US	US Note 10 Year Treasury Auction Result
12/03/2025	1800/1400	**	US	Treasury Budget
13/03/2025	0700/0800	***	SE	Inflation Report
13/03/2025	0950/1050		EU	de Guindos in fireside chat at EIOPA Sustainable Finance Conference
13/03/2025	1000/1100	**	EU	Industrial Production
13/03/2025	1230/0830	*	CA	Building Permits
13/03/2025	1230/0830	*	CA	Household debt-to-income
13/03/2025	1230/0830	***	US	Jobless Claims
13/03/2025	1230/0830	**	US	WASDE Weekly Import/Export
13/03/2025	1230/0830	***	US	PPI