MNI EUROPEAN OPEN: Australian Q1 Wages Stronger Than Forecast

May-14 05:14By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

TRUMP’S APPROVAL RATING RISES TO 44%; AMERICANS WORRY LESS ABOUT RECESSION - RTRS
A GERMAN INDUSTRY LEADER IN CHINA PROVIDES INSIGHT INTO GERMAN FDI - MNI
JAPAN APRIL CGPI RISES 4.0% Y/Y; IMPORT PRICE DROPS - MNI BRIEF
AUSSIE WAGES RISE 0.9% Q/Q IN Q1 - MNI BRIEF
MNI DISCUSSES THE RBA’S FUTURE EASING PATH - MNI

Fig 1: Australian Wages Firmed In Q1 - Led By The Public Sector

Source: MNI - Market News/Bloomberg/Refinitiv.

INSURANCE (BBG): “The UK markets watchdog is planning to pare its rules on how insurers can sell policies to large companies, the latest signal regulators are pivoting to a more pragmatic stance that leans heavily into the government’s growth agenda. “

GERMANY/CHINA (MNI): A leading German industry leader in China provides insight into German FDI. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

UKRAINE (BBG): “Ukrainian President Volodymyr Zelenskiy reinforced his intention to hold direct talks with Vladimir Putin in Turkey on Thursday, even though he said he had little hope that the Russian leader would show up.”

ECB (BBG): “The European Central Bank will probably lower borrowing costs again by the summer as trade tensions aren’t fueling inflation in the region, Governing Council member Francois Villeroy de Galhau said.”

TARIFFS (MNI BRIEF): The impact of tariffs on the European Commission’s upcoming Commission Spring Forecasts remains negative, despite the conclusion of an interim U.S.-China trade truce, Economy Commissioner Valdis Dombrovskis told reporters on Tuesday.

POLAND (MNI BRIEF): Polish Finance Minister Andrzej Domanski said on Tuesday that he is “hopeful” that the EU’s EUR150 billion SAFE loan facility for defence spending can be agreed this month.

APPROVAL RATING (RTRS): “President Donald Trump's approval rating rose this week as Americans worried less about his handling of the economy and prospects of a recession, according to a Reuters/Ipsos poll that closed on Tuesday.

TECH (BBG): " The Trump administration is clearing a path for two key Persian Gulf allies to pursue their artificial intelligence ambitions — and some of the biggest US tech companies are seizing on that opening with plans to spend billions of dollars in the region."

FED (BBG): “ President Donald Trump cited a softer-than-expected inflation report to again pressure Federal Reserve Chair Jerome Powell to lower interest rates.”

MIDDLE EAST (BBG): “President Donald Trump and Saudi Crown Prince Mohammed bin Salman touted a pledge for $1 trillion in commercial deals in Riyadh on Tuesday, a staggering figure that doesn’t quite stand up to scrutiny.”

FED (MNI INTERVIEW): Federal Reserve officials appear likely to await further clarity on an economic outlook muddled by evolving trade tensions before cutting interest rates further, former Dallas Fed President Robert Kaplan told MNI.

INFLATION (MNI BRIEF): U.S. CPI rose 0.221% in April or 0.237% excluding food and energy prices, both a tenth lower than Wall Street expectations. Over the past 12 months, headline and core CPI are 2.3% and 2.8%, respectively, the Bureau of Labor Statistics said Tuesday.

OTHER

JAPAN (MNI BRIEF): Japan’s Corporate Goods Price Index (CGPI) rose 4.0% year-on-year in April, slowing from a revised 4.3% increase in March, according to data released by the Bank of Japan on Wednesday.

AUSTRALIA (MNI): MNI discusses the RBA's future easing path. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

AUSTRALIA (MNI BRIEF): The Wage Price Index (WPI) rose 0.9% in the March quarter, and 3.4% annually, data released by the Australian Bureau of Statistics showed Wednesday. “Annual wage growth ticked up for the first time since the June quarter 2024,” said Michelle Marquardt, head of prices statistics at the ABS.

CANADA (MNI BRIEF): Prime Minister Mark Carney kept Francois-Philippe Champagne as Canada’s finance minister following their Liberal Party’s election win April 28, and ahead of a budget due after Parliament re-opens May 26, the government said Tuesday.

CHINA

YUAN (SECURITIES DAILY): “The recent easing in trade tensions has strengthened yuan momentum against the U.S. dollar in the near term, buoyed by improved market sentiment, Securities Daily reported, citing Wang Qing, an analyst at Golden Credit Rating.”

CHINA MARKETS

MNI: PBOC Net Drains CNY103.5 Bln via OMO Wednesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY92 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY103.5 billion after offsetting the maturities of CNY195.5 billion today, according to Wind Information.

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4844% at 09:52 am local time from the close of 1.5156% on Tuesday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 46 on Tuesday, the same as the close on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.1956 Weds; +0.43% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1956 on Wednesday, compared with 7.1991 set on Tuesday. The fixing was estimated at 7.1842 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND APR CARD SPENDING RETAIL M/M 0.0%; PRIOR -0.8%
NEW ZEALAND APR CARD SPENDING TOTAL M/M -0.2%; PRIOR -1.6%
NEW ZEALAND MAR NET MIGRATION 2480; PRIOR 4040

AUSTRALIA Q1 WAGE PRICE INDEX Q/Q 0.9%; MEDIAN 0.8%; PRIOR 0.7%
AUSTRALIA Q1 WAGE PRICE INDEX Y/Y 3.4%; MEDIAN 3.2%; PRIOR 3.2%
AUSTRALIA Q1 HOME LOANS VALUE Q/Q -1.6%; MEDIAN 0.0%; PRIOR 1.3%

JAPAN APR PPI M/M 0.2%; MEIDAN 0.3%; PRIOR 0.4%
JAPAN APR PPI Y/Y 4.0%; MEIDAN 4.0%; PRIOR 4.3%

MARKETS

US TSYS: Cash Bonds Little Changed After Yesterday's Tame CPI

TYM5 is dealing at 110-04, +0-05 from closing levels in today's Asia-Pac session.

According to MNI’s technicals team, Treasury futures maintain a softer tone following recent weakness. Support at 110-01+, a Fibonacci retracement point, has been broken. Clearance here strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low. Key near-term resistance has been defined at 111-22, the May 7 high. A break of this level is required to signal a potential reversal.
There has been no net movement in cash US tsys in today's Asia-Pac session after being little changed yesterday following the tame April CPI report.
The 10-year yield range seems to be 4.10% - 4.50%, with the yield currently testing the upper bound of this range. A sustained break above this level would see another round of selling targeting the 4.75% area.
Data: US MBA Mortgage Applications

JGBS: Cash Bonds Little Changed, 5Y Supply Tomorrow, Q1 GDP On Friday

JGB futures are stronger, +7 compared to the settlement levels, after dealing in a relatively narrow range in today’s Tokyo session.

There has been no net movement in cash US tsys in today's Asia-Pac session after being little changed yesterday following the release of April CPI data.
Cash JGB movements are bounded by +/- 1bp out to the 30-year and 3bps richer beyond.
“Japanese 30-year yields avoided climbing above 3% this week after a solid auction, but that looks like a temporary reprieve as rising German yields are likely to drag JGBs in the same direction. Indeed, bunds appear to be heading back toward the levels seen in March, even though the European Central Bank is forecast to lower interest rates again this year. Similar to Japan, the background is increased spending, especially on defence which will add to upward pressure on long-term rates.” (per BBG)
The benchmark 10-year yield is 0.7bps higher at 1.451% versus the cycle high of 1.596%.
Swap rates are 1bp lower to 2bp higher, with a steepening bias. Swap spreads are mixed.
Tomorrow, the local calendar will see International Investment Flow and Machine Tool Orders data alongside 5-year supply. Q1 GDP (P) is due on Friday.

AUSSIE BONDS: Cheaper But Better Than Worst Levels, Jobs Report Tomorrow

ACGBs (YM -3.0- & XM -4.5) are weaker but stronger than levels seen shortly after the Q1 Wage Price Index (WPI) surprised on the upside.

"Seasonally adjusted private sector annual wage growth was unchanged from the December quarter at 3.3 per cent. Annual public sector wage growth was higher than the private sector at 3.6 per cent in the March quarter 2025, up from 2.9 per cent in the December quarter 2024." (per ABS)
There has been no net movement in cash US tsys in today's Asia-Pac session.
Cash ACGBs are 3-5bps cheaper with the AU-US 10-year yield differential at +1bp.
The latest ACGB Dec-34 supply achieved a weighted average yield 0.46bp through prevailing mids. However, the cover ratio declined to 3.1708x from 3.9900x.
The bills strip has bear-steepened, with pricing flat to -5.
RBA-dated OIS pricing is mostly firmer across meetings today, with early 2026 leading. A 25bp rate cut in May is given a 96% probability, with a cumulative 78bps of easing priced by year-end (based on an effective cash rate of 4.09%).
Tomorrow, the local calendar will see the April Employment Report.
AOFM plans to sell A$800mn of the 2.50% 21 May 2030 bond on Friday.

BONDS: Heavy Session, Underperformed $-Bloc, Food Prices Tomorrow

NZGBs closed 7-10bps cheaper, underperforming its $-bloc counterparts. The NZ-US and NZ-AU 10-year yield differentials closed respectively wider by 3bps and 5bps.

There has been no net movement in cash US tsys in today's Asia-Pac session.
“A record number of people left New Zealand in the year through March, reducing the net gain through immigration to the lowest in more than two years. Some 123,256 people departed the country in the period, including 70,000 New Zealand citizens.” (per BBG)
Total card spending fell 0.2% m/m versus a revised -1.6% in March.
The RBNZ balance sheet shrunk further in April to its smallest since 2021.
Swap rates closed 9-15bps higher, with the 2s10s curve steeper.
RBNZ-dated OIS pricing is flat to 3bps firmer across meetings today, leaving rates 2–14bps above levels seen prior to the Q1 CPI release on April 17. 25bps of easing is priced for May, with a cumulative 69bps by November 2025.
Tomorrow, the local calendar will see Food Prices and a speech by Finance Minister Willis on Social Investment.
On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

FOREX: USD/JPY Drifts Lower, Steady G10 Trends Elsewhere

G10 forex moves have been fairly modest in Wednesday trade to date. The USD BBDXY index sits little changed, while the DXY index is down a touch, largely due to modest yen gains. This follows Tuesday's USD pullback, which was helped by the downside miss from the US CPI print.

Cross asset trends have been fairly muted, with US equity futures little changed, while US Tsy yields have also been very steady. Gold and oil are slightly weaker. Regional equity sentiment is mixed. Tech plays are outperforming, except for Japan markets.
We had Japan PPI print earlier, which was close to expectations at 4.0% y/y. It doesn't imply a shift in the CPI outlook and is just off recent highs. Import prices were down over 7% y/y.
USD/JPY has mostly drifted lower, down around 0.35%, last under 147.00. Note the 50-day EMA is at 146.28, in terms of potential downside support.
Australian Q1 wages data was stronger than expected, but the A$ couldn't regain the 0.6500 handle (highs of 0.64870 and we last tracked near 0.6475.
In NZ, card spending figures suggested a still fairly sluggish consumer spending backdrop, but NZD was unmoved. We track near 0.5945 in latest dealings, a touch up from end NY levels on Tuesday.
Looking ahead, on the data front we have final German inflation for April. In the US, mortgage applications are due. We have some central bank speak as well.

ASIA STOCKS: Good Day for Stocks with Taiwan Leading

Asia’s major bourses were mostly better today with Taiwan’s TAIEX continuing its good run on the back of strong external inflows. Expected earnings release from Tencent and Alibaba will give insight into the next leg for the tech rally with expectations remaining high.

China’s Hang Seng was strong today rising +1.4% erasing most of yesterday’s losses. The CSI 300 was up also but by just +0.27%, Shanghai +0.20% with Shenzhen the outlier falling -0.30%
Taiwan's TAIEX is up for a fourth straight day, up +1.76%
The KOSPI was up +1.23% and on track to deliver three successive days of gains and is up over 10% year to date.
In Malaysia, the FTSE Bursa Malaysia KLCI is marginally lower today by -0.22%, following yesterday's rise of over 2%.
In its first day of trading this week, the Jakarta Composite is up +1.6% to continue its strong period of performance.
The FTSE Straits Times in Singapore and the PSEi in the Philippines were both modestly down
Following yesterday's fall of -1.6% the NIFTY 50 has opened strongly today and is up +0.63%

Oil Drops After Four Days of Gains

Following four days of very strong gains, oil fell today in Asia.
Oil had reacted positively to the news of an evolving trade deal between US and China and got a further bump when President Trump threatened to intensify sanctions on Iran should a nuclear deal not be reached.
As President Trump tours the middle east, OPEC+ is preparing for their June 1 meeting with expectations growing that a further increase in supply is to be announced.
WTI had opened at US$63.62 bbl and declined by -0.40% to $63.39
Brent had opened at $66.56 and declined -0.41 to $66.30
As President Trump arrives in Saudi Arabia, Saudi Aramco announced plans to spend $3.4 billion on its Motiva refinery in Texas, the largest fuel making plant in the US.
Data on US call options show bullish bets on Brent have increased since the US China news.
US President Donald Trump appears to prefer oil prices between $40 and $50 a barrel, according to Goldman Sachs Group Inc., citing an in-house analysis of his social-media posts on the topic. (source BBG)

Gold Falls as Chinese Equities Rally

Gold slowly lost ground throughout the trading day as momentum in equities saw key indexes higher.
Overnight the latest CPI print in the US was softer, giving hope for rate cuts and pushing the USD dollar lower. It is likely that the impact of tariffs is yet to be felt in CPI prints and forecasters remain cautious on the data.
With limited key data in Asia today, gold took its lead from the equity move and is down -0.77% at US$3,226.46.
Gold remains at the mid-point between the 20-day EMA of $3,272.69 and the 50-day EMA of $3,166.88
UBS Group AG’s rich clients are increasingly shifting away from US-dollar assets, turning instead to gold, crypto and investments in China, according to the Swiss bank’s co-head of wealth management for Asia.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
14/05/2025	0600/0800	***	SE	Final Inflation Report
14/05/2025	0600/0800	***	DE	HICP (f)
14/05/2025	0700/0900	***	ES	HICP (f)
14/05/2025	0715/0815		GB	BOE Breeden At ISDA Conference
14/05/2025	0900/1000	**	GB	Gilt Outright Auction Result
14/05/2025	0915/0515		US	Fed Governor Christopher Waller
14/05/2025	1100/0700	**	US	MBA Weekly Applications Index
14/05/2025	-	***	CN	Money Supply
14/05/2025	-	***	CN	New Loans
14/05/2025	-	***	CN	Social Financing
14/05/2025	1230/0830	*	CA	Building Permits
14/05/2025	1240/1440		EU	ECB's Cipollone On Liquidity Issues Panel
14/05/2025	1310/0910		US	Fed Vice Chair Philip Jefferson
14/05/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
14/05/2025	2140/1740		US	San Francisco Fed's Mary Daly
15/05/2025	0130/1130	***	AU	Labor Force Survey
15/05/2025	0600/0700	**	GB	UK Monthly GDP
15/05/2025	0600/0700	**	GB	Index of Services
15/05/2025	0600/0700	***	GB	Index of Production
15/05/2025	0600/0700	**	GB	Output in the Construction Industry
15/05/2025	0600/0700	***	GB	GDP First Estimate
15/05/2025	0600/0800	**	NO	Norway GDP
15/05/2025	0600/0700	**	GB	Trade Balance
15/05/2025	0645/0845	***	FR	HICP (f)
15/05/2025	0700/0900		CH	Flash GDP
15/05/2025	0700/0900		EU	ECB's Cipollone at Payments Forum
15/05/2025	0750/0950		EU	ECB's Elderson At Green Finance Conference
15/05/2025	0900/1100	**	EU	Industrial Production
15/05/2025	0900/1100	***	EU	GDP (p)
15/05/2025	1015/1215		EU	ECB's De Guindos At ISDA Meeting
15/05/2025	1130/1330		EU	ECB's Cipollone In Digital Currency Fireside Chat
15/05/2025	1215/0815	**	CA	CMHC Housing Starts
15/05/2025	1230/0830	***	US	Jobless Claims
15/05/2025	1230/0830	**	US	WASDE Weekly Import/Export
15/05/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/05/2025	1230/0830	**	CA	Wholesale Trade
15/05/2025	1230/0830	***	US	Retail Sales
15/05/2025	1230/0830	***	US	PPI
15/05/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/05/2025	1230/0830	**	US	Philadelphia Fed Manufacturing Index
15/05/2025	1240/0840		US	Fed Chair Jerome Powell
15/05/2025	1300/0900	*	CA	CREA Existing Home Sales
15/05/2025	1315/0915	***	US	Industrial Production