EXECUTIVE SUMMARY
Fig 1: Australia Real Household Consumption y/y%
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
POLITICS (BBC): “Asked if he would be willing to water down attempts to forge closer ties with the EU in exchange for keeping the US on side, Sir Keir said both relationships were important to the UK.”
UKRAINE (POLITICO): “Keir Starmer tells EU countries to ‘step up’ for Ukraine. U.K. prime minister also wants the EU to target Russia’s energy revenues to keep the pressure on “rattled” leader Vladimir Putin.”
EU
GERMANY (DW): “The man likely to lead Germany's next government has said there would be no cooperation with the far-right AfD. Friedrich Merz's conservative CDU/CSU bloc has faced flak after accepting AfD support on legislation.”
GERMANY (DW): “Frank-Walter Steinmeier kicked off a three-day tour of the Middle East on Monday when he held talks with Saudi Arabia's Mohammed bin Salman. Berlin's reputation in the region has suffered due to its support for Israel.”
FRANCE (POLITICO): “French Prime Minister François Bayrou is planning to put his job on the line four times this week as he attempts to enact a long-overdue budget for 2025. The audacious gambit began Monday, when Bayrou pushed through part of the budget using a constitutional maneuver that allows the government to pass legislation without a vote, but that in turn allows opposition lawmakers to put forward no-confidence motions.”
BELGIUM (FRANCE24): “Conservative Bart De Wever was sworn in Monday as Belgium's new prime minister after seven months of tortuous negotiations to reach a coalition deal that shifts the country to the right. De Wever has pledged to crack down on irregular migration and has pushed for cuts in social benefits and pension reforms.”
US
US TARIFFS (MNI) : The U.S. and Canada will pause implementing tariffs for at least 30 days, Prime Minister Justin Trudeau said Monday after a call with President Donald Trump, averting for now a trade war between two of the world's largest trading partners unseen in generations and lifting the country's dollar from the lowest since 2003.
US RATES (MNI BRIEF) : Federal Reserve Bank of Atlanta President Raphael Bostic said Monday he's comfortable waiting "for a while" to see how the economy evolves after the Fed cut rates by 100 bps last year and the Trump administration makes changes to trade and regulatory policies. "I want to see what the 100 bps we did last year translates to in terms of the economy. Depending on what the data are, it might mean that we are waiting for a while," Bostic told the Rotary Club of Atlanta.
US (BBG) : President Donald Trump signed an executive action to create a sovereign wealth fund for the US, charging Treasury Secretary Scott Bessent and Commerce secretary nominee Howard Lutnick with spearheading the effort. The fund would be created within the next 12 months and could be used to facilitate the sale of TikTok, with officials submitting a plan to Trump within 90 days, including recommendations for funding and investment strategies.
OTHER
NEW ZEALAND DATA (MNI) Q4 labour market data are released on February 5 and Bloomberg consensus expectations are in line with the RBNZ’s November forecasts. The unemployment rate is projected to rise 0.3pp to 5.1%, employment fall 0.2% q/q and private wages rise 0.6% q/q. An outcome close to this is unlikely to derail another 50bp of easing on February 19. It would have to print significantly better than expected for a smaller move and given the weakness of activity that seems unlikely.
AUSTRALIA
AUSTRALIA HOUSEHOLDS (MNI) Australian household spending rose 0.4% m/m to be up 4.3% y/y in December, the highest since March. November was revised up significantly to +0.8% m/m & 3.2% y/y from 0.4% & 2.4%. This is consistent with the retail sales data released yesterday showing a recovery in household spending. Consistent with this is the third straight monthly rise in discretionary spending in December. Total household spending volumes rose 1.4% y/y in Q4 up from 0.2% in Q3 signalling a pickup including a solid quarterly rise in the national accounts version due on March 5. Furnishings, transport, clothing and recreation saw increases in annual growth.
CHINA
CHINA TRADE WAR (BBG) : China announced an investigation into Google and new tariffs on a range of US products in an apparent retaliatory move, moments after President Donald Trump slapped a 10% tariff on Beijing reigniting a trade war between the word’s largest economies. China will probe the US tech giant for alleged anti-trust violations, according to a Tuesday statement from the State Administration for Market Regulation. Beijing also announced 15% levies on coal and liquefied natural gas and 10% on oil and agricultural equipment from the US.
MARKET DATA
NEW ZEALAND BUILDING PERMITS MONTH ON MONTH DEC -5.6% : PRIOR 4.9% REVISED
AUSTRALIA HOUSEHOLD SPENDING YOY DEC 4.3%; EST. 3.4%; PRIOR 3.2% REVISED.
AUSTRALIA HOUSEHOLD SPENDING MOM DEC 0.4%; EST 0.3%: PRIOR 0.8% REVISED
JAPAN JAN. MONETARY BASE -2.5% Y/Y; PRIOR -1.0%
JAPAN MONETARY BASE END OF PERIOD Y653.4t : PRIOR Y660.3t
MARKETS
US TSYS: Tsys Futures Slightly Lower As China Tariff Deadline Nears
JGBS: Cheaper, Fresh Cyclical High For 10YY, BoJ Aims For 2% Core CPI
JGB futures are sharply weaker, -27 compared to the settlement levels, but slightly above the session low set early in the afternoon session.
AUSSIE BONDS: Cheaper With US Tsys, New Mar-36 Bond To Be Priced Tomorrow
ACGBs (YM -4.0 & XM -5.5) are cheaper after dealing in relatively narrow ranges on a second-tier data day.
BONDS: NZGBS: Closed With A Twist-Steepener Ahead Of Tomorrow’s Q4 Jobs Data
NZGBs closed showing a twist-steepener, with benchmark yields 2bps lower to 2bps higher, ahead of tomorrow’s Q4 Labour Market data. The ranges were relatively narrow.
FOREX: USD Index To Session Highs As China Announces Tariffs, Yen Outperforming
The USD index sits close to session highs at the time of writing. The USD BBDXY index is above 1310, as seemingly no deal has been reached to delay the US tariffs on China imports. China has just announced counter tariffs of its own and also announced an anti-trust probe into Google. This includes 10% tariffs on oil and agricultural machines from the US and 15% on US LNG and coal exports. These will come into effect on Feb 10 per the China FinMin.
Asian equities rebounded sharply as US President Donald Trump delayed tariffs on Mexico and Canada, fueling hopes of a potential reprieve for China. Hong Kong stocks surged, with the Hang Seng China Enterprises Index jumping nearly 4% before paring gains, its biggest move since October, as markets anticipated trade talks between Trump and Xi. Japan’s Nikkei 225 rose 1.6%, led by auto and electronics stocks, while South Korea’s Kospi climbed 1.6%. Australia’s ASX 200 edged up 0.13%, supported by gains in tech and mining stocks, with gold miners benefiting from record-high gold prices.
OIL: Crude Lower As Tariffs Delayed But Market Outlook Very Uncertain
Oil prices are lower again today with WTI down 1.1% to $72.37/bbl and Brent -0.5% to $75.55/bbl, holding above initial support levels. The 30-day postponement on US tariffs for Canada and Mexico has weighed on crude during APAC trading today. Talks are ongoing regarding the 10% on imports from China scheduled from midnight NY time today. The USD index is 0.1% lower.
GOLD: Gold Hits New Records in Tuesday’s Trading.
UP TODAY (TIMES GMT/LOCAL)
Date | GMT/Local | Impact | Country | Event |
04/02/2025 | 0745/0845 | ![]() | France Budget Balance | |
04/02/2025 | 1000/1000 | ** | ![]() | Gilt Outright Auction Result |
04/02/2025 | 1000/1000 | ** | ![]() | Gilt Outright Auction Result |
04/02/2025 | 1355/0855 | ** | ![]() | Redbook Retail Sales Index |
04/02/2025 | 1500/1000 | ** | ![]() | Factory New Orders |
04/02/2025 | 1500/1000 | *** | ![]() | JOLTS jobs opening level |
04/02/2025 | 1500/1000 | *** | ![]() | JOLTS quits Rate |
04/02/2025 | 1600/1100 | ![]() | Atlanta Fed's Raphael Bostic | |
04/02/2025 | 1630/1130 | * | ![]() | US Treasury Auction Result for Cash Management Bill |
04/02/2025 | 1900/1400 | ![]() | San Francisco Fed's Mary Daly | |
05/02/2025 | 2200/0900 | * | ![]() | S&P Global Final Australia Services PMI |
05/02/2025 | 2200/0900 | ** | ![]() | S&P Global Final Australia Composite PMI |
05/02/2025 | 2330/0830 | ** | ![]() | average wages (p) |
05/02/2025 | 0030/0930 | ** | ![]() | S&P Global Final Japan Services PMI |
05/02/2025 | 0030/0930 | ** | ![]() | S&P Global Final Japan Composite PMI |
04/02/2025 | 0030/1930 | ![]() | Fed Vice Chair Philip Jefferson | |
05/02/2025 | 0145/0945 | ** | ![]() | S&P Global Final China Services PMI |
05/02/2025 | 0145/0945 | ** | ![]() | S&P Global Final China Composite PMI |
05/02/2025 | 0745/0845 | * | ![]() | Industrial Production |
05/02/2025 | 0815/0915 | ** | ![]() | S&P Global Services PMI (f) |
05/02/2025 | 0815/0915 | ** | ![]() | S&P Global Composite PMI (final) |
05/02/2025 | 0845/0945 | ** | ![]() | S&P Global Services PMI (f) |
05/02/2025 | 0845/0945 | ** | ![]() | S&P Global Composite PMI (final) |
05/02/2025 | 0850/0950 | ** | ![]() | S&P Global Services PMI (f) |
05/02/2025 | 0850/0950 | ** | ![]() | S&P Global Composite PMI (final) |
05/02/2025 | 0855/0955 | ** | ![]() | S&P Global Services PMI (f) |
05/02/2025 | 0855/0955 | ** | ![]() | S&P Global Composite PMI (final) |
05/02/2025 | 0900/1000 | * | ![]() | Retail Sales |
05/02/2025 | 0900/1000 | ** | ![]() | S&P Global Services PMI (f) |
05/02/2025 | 0900/1000 | ** | ![]() | S&P Global Composite PMI (final) |
05/02/2025 | 0930/0930 | ** | ![]() | S&P Global Services PMI (Final) |
05/02/2025 | 0930/0930 | *** | ![]() | S&P Global/ CIPS UK Final Composite PMI |
05/02/2025 | 1000/1100 | ** | ![]() | PPI |
05/02/2025 | 1200/0700 | ** | ![]() | MBA Weekly Applications Index |
05/02/2025 | 1315/0815 | *** | ![]() | ADP Employment Report |
05/02/2025 | 1330/0830 | ** | ![]() | International Merchandise Trade (Trade Balance) |
05/02/2025 | 1330/0830 | ** | ![]() | International Merchandise Trade (Trade Balance) |
05/02/2025 | 1330/0830 | ** | ![]() | Trade Balance |
05/02/2025 | 1330/0830 | *** | ![]() | Treasury Quarterly Refunding |