MNI EUROPEAN OPEN: Equity Sentiment Remains Poor
EXECUTIVE SUMMARY
- SCHUMER SAYS DEMOCRATS WILL BLOCK GOP PLAN TO AVERT SHUTDOWN - BBG
- US BUDGET DEFICIT AT $1.15T THRU FEB - MNI BRIEF
- TRUMP VOWS US WILL RESPOND TO EUROPE'S METAL TARIFF RETALIATION - BBG
- STARMER SAYS 'ALL OPTIONS ON TABLE' ON US TARIFFS - BBC
- CHINA CONSUMER SATISFACTION UP - MNI BRIEF
Fig 1: US Equity Futures & AUD/JPY Cross
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
UKRAINE (BBG): “The UK and France are scrambling to bolster Ukraine’s negotiating position as US President Donald Trump seeks to force through a settlement in its war with Russia.”
HOUSE PRICES (BBG): “London is expected to record the largest drop in house prices in the UK in the near term, according to property agents, as the capital is disproportionately hit by economic uncertainty and higher taxes.”
TRADE (BBC): “Prime Minister Sir Keir Starmer has said the UK will "keep all options on the table" as US President Donald Trump's tariffs on imports of steel and aluminium take effect. The UK exports hundreds of millions of pounds worth of steel to the US every year, which will be subject to the 25% levy.”
EU
TARIFFS (BBG): “President Donald Trump said the US would respond to the European Union’s countermeasures against his new 25% tariffs on steel and aluminum, raising the risk of further escalation in his global trade war.”
DEFENCE (POLITICO): “France, Germany, Italy, Poland and the United Kingdom want to cut regulations on weapon-makers to help them boost production. "We are calling for the defense industry to no longer be treated as just another industry," France's Sébastien Lecornu told reporters Wednesday, speaking after a meeting with defense ministers of the so-called E5 format in Paris.”
GERMANY (BBC): “German economy has contracted for the past two years and with tariffs, the country "could expect a recession for this year" too, Joachim Nagel, the head of the Deutsche Bundesbank, told the BBC World Service in an exclusive interview.”
RUSSIA (BBG): “Russian President Vladimir Putin will probably agree to eventual truce terms with Ukraine but wants his own conditions met beforehand, likely dragging out the negotiations.”
RUSSIA (BBC): “US officials are headed to Russia to discuss a potential ceasefire in Ukraine, according to President Donald Trump.”
RUSSIA (POLITICO): “Russian President Vladimir Putin has ordered his troops to defeat Ukrainian forces occupying its Kursk border region as soon as possible, shortly before an American delegation heads to Moscow to negotiate a ceasefire.”
UKRAINE (POLITICO): “Polish Prime Minister Donald Tusk said he reached a “historic breakthrough” with Recep Tayyip Erdoğan on Wednesday, as he tried to convince the Turkish president to play a role in securing peace between Ukraine and Russia.”
IRELAND (BBC): “Ireland is ready to work with the United States to bring "just, lasting and sustainable peace" to Ukraine and the Middle East, the taoiseach (Irish PM) has said. The comments come as Micheál Martin presented US President Donald Trump with a bowl of shamrocks in the White House as part of St Patrick's Day celebrations.”
US
FISCAL (MNI BRIEF): The U.S. budget deficit has grown to USD1.147 trillion in the first five months of the fiscal year, up USD318 billion or 38% from the same time last year, the Treasury Department reported Wednesday.
FISCAL (BBG): “ Senate Democratic leader Chuck Schumer said his party would block a Republican spending bill to avert a government shutdown on Saturday and urged the GOP to accept a Democratic plan to provide funding through April 11 instead.”
OPINION POLLS (RTRS): “A majority of Americans believe President Donald Trump is being too “erratic” in his moves to shake up the U.S. economy, as his imposition of tariffs against some of the nation's top trading partners hammers stock markets, a new Reuters/Ipsos poll found.
TECH (BBG): “The US Federal Trade Commission is moving ahead with a sprawling antitrust probe of Microsoft Corp. that was opened in the waning days of the Biden Administration, signaling that Donald Trump’s new FTC Chair Andrew Ferguson is going to prioritize scrutiny of tech giants.”
OTHER
CANADA (MNI BRIEF): “Bank of Canada Governor Tiff Macklem said officials saw little need to go beyond the quarter-point interest-rate cut on Wednesday to a half-point move, because domestic data remains solid and the U.S. trade war is a fluid situation.”
CANADA (BBC): “Canada's Prime Minister-designate Mark Carney has said he is ready to negotiate a renewed trade deal with President Donald Trump, as long as there is "respect for Canadian sovereignty".”
CHINA
SMES (SECURITIES DAILY): "China’s Small and Medium Sized Enterprise Index rebounded to 89.8 in February, up 0.8 points from January, reflecting increased demand and investment willingness, according to Liu Xiangdong, deputy director at the China International Economic Exchange Center."
EXPORTS (YICAI): "China’s export container market remained low during the past week as volumes increased less than expected after Chinese New Year, Yicai reported, citing a recent Shanghai Shipping Exchange report."
YUAN (SECURITIES DAILY): "China’s yuan has room to rise further against the US dollar as fluctuation risks of the US currency have increased in the short term and more overseas funds flow into Chinese assets, Securities Daily reports."
CONSUMER (MNI BRIEF): China’s Consumer Satisfaction Evaluation Report reached 80.36 points in 2024, up 0.44 points from the previous year, according to the China Consumers' Association on Thursday. Eastern, central and western regions reached 83.70, 78.02 and 76.78, rising 0.29%, 1.26% and 0.67% y/y.
CHINA MARKETS
MNI: PBOC Net Drains CNY68.6 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY35.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY68.6 billion after offsetting the maturity of CNY104.5 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7484% at 10:05 am local time from the close of 1.8047% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Wednesday, compared with the close of 50 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1728 Thurs; -0.64% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1728 on Thursday, compared with 7.1696 set on Wednesday. The fixing was estimated at 7.2433 by Bloomberg survey today.
MARKET DATA
UK FEB. RICS HOUSE PRICE BALANCE 11%; EST. 20%; JAN. 21%
AUSTRALIA MAR. MI CONSUMER INFLATION EXPECTATIONS 3.6%; FEB. 4.6%
NEW ZEALAND JAN. S/ADJ NET MIGRATION +2380; DEC. +4740
MARKETS
US TSYS: Cash Bonds Slightly Richer, PPI & Claims Data Later
In today's Asia-Pac session, TYM5 is 110-25, 04+ from closing levels.
- Cash bonds are 1-2bps richer in today’s Asia-Pac session as Asian investors digest yesterday's lower-than-expected CPI data.
- Yesterday, Headline CPI inflation data came out lower than expected (0.2% vs. 0.3% est, 0.5% prior). However, focus quickly turned to Core & Supercore CPI - while lower than expected - remained hot: Core CPI surprisingly eased to 3.12% Y/Y in February (cons 3.2) from what had been a surprisingly strong 3.26% in January.
- Supercore (core services ex-housing) inflation pulled back more than expected on the month, although as noted above, it was dragged lower by softer-than-expected airfares and vehicle insurance (for which PPI and not CPI feed into PCE).
- This afternoon we saw "block of 15,000 contracts in five-year bond June futures traded at a price of 107-26+ on CBOT," along with " A block of 10,000 contracts in 10-year bond June futures traded at a price of 110-25 on CBOT." per BBG.
- Today’s calendar will see PPI and Jobless Claims data.
JGBS: Futures Lower, Bear Trend Intact, Ueda Expects Improvement In Real Wages
JGB futures sit up slightly from session lows (137.83), last near 137.87, -.11 versus settlement levels for the June contract. JGBs have underperformed the more positive bias seen in US Tsy futures so far in Thursday trade.
- Remarks from BoJ Governor, who is before parliament, have been attributed to the weakness since the lunchtime break. Ueda stated that real wages and consumption should improve, while noting the shift in believe around wage-inflation is important (per BBG). He stated though the price trend is still below the 2% target.
- Earlier he commented on food price strength and that it would take time to find the right balance sheet size.
- JGB futures remain in a downtrend. Sights are on 136.57, a Fibonacci projection. For bulls, a show through 140.33 resistance would signal a possible reversal, and open early December highs should the pace be maintained. 144.48 is the medium-term target on any recovery.
- Cash JGB yields have ticked up, albeit more so at the front end. The 5yr is back above 1.14%, after being sub 1.12% earlier. Longer dated tenors are lower in yield terms though, the 20yr back under 2.24%. Swap rates are higher in yield terms across the board.
- The JGB cash 2/10s curve has moved off recent highs (+70bps), back to +67bps today.
- Tomorrow, the local calendar will be empty apart from Auction for Enhanced-Liquidity 1-5 years.
AUSSIE BONDS: Mixed Ahead Of US PPI & Claims Data, Light Calendar Tomorrow
ACGBs (YM -1.0 & XM +1.5) sit slightly mixed. That said, both contracts are dealing near Sydney session highs after today’s consumer inflation expectations data.
- The Melbourne Institute’s consumer inflation expectations rose sharply by 0.6pp to 4.6% in February but more than reversed that in March with a 1pp decline to 3.6%. This was the lowest reading since Covid-impacted August 2021 and is now down around 3pp from June 2022’s peak.
- The move away from the session’s worst levels has also been assisted by US tsys. Cash US tsys are currently 1-2bps richer in today’s Asia-Pac session as Asian investors digest yesterday's lower-than-expected CPI data. Today’s US calendar will see PPI and Jobless Claims data.
- Cash ACGBs are 1bp cheaper to 1bp richer with a flatter curve and the AU-US 10-year yield differential at +12bps.
- Swap rates are flat to 3bps higher, with the 3s10s curve flatter.
- The bills strip is slightly weaker, with pricing -1 to -3.
- RBA-dated OIS pricing is 1-3bps firmer across meetings today. A 25bp rate cut in April is given a 6% probability, with a cumulative 63bps of easing priced by year-end.
- Tomorrow, the local calendar will be empty.
BONDS: NZGBS: Closed Little Changed As Early Weakness Reversed
NZGBs closed 1bp cheaper to 2bp richer after being 2-3bps cheaper early in the session following the negative lead-in from US tsys after yesterday's NY session.
- After initially plunging on the lower-than-expected US CPI data yesterday, US yields quickly rebounded to session highs, ending higher levels on the day. The 2-year yield was up by 4bps to 3.99%, while the 10-year yield rose to 4.31%, up 3bps.
- However, cash US tsys are 1-2bps richer in today’s Asia-Pac session ahead of today’s PPI and Jobless Claims data.
- NZ-US 10-year yield differential is 4bps lower at +28bps. Nevertheless, it currently sits near its widest level since November.
- Today’s supply saw very strong demand across the lines, with cover ratios ranging from 4.90x to 5.05x.
- “Electricity generated in the 4q was the lowest since 2016 amid lower demand from industrial users including the Tiwai aluminum smelter.” (per BBG)
- Swap rates closed showing a twist-flattening, with rates 3bps higher to 2bps lower.
- RBNZ dated OIS pricing closed flat to 4bps firmer. 25bps of easing is priced for April, with a cumulative 70bps by November 2025.
- Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI and Food Prices.
FOREX: Yen Firmer As US Equities Dip & JGB Yields Firm, Steady Elsewhere
USD indices are little changed in the first part of Thursday dealing, the BBDXY index last near 1266.30, which is where we ended Wednesday NY trade. USD/JPY has drifted a little lower, with fresh softness in US equity futures. JGB futures are also lower as BoJ Governor Ueda appears before parliament. Elsewhere aggregate moves are not much beyond 0.10%.
- USD/JPY has dipped under 148.00 this afternoon, session lows rest at 147.88 for the pair, which is where we track close to currently. US equity futures weren't to sustain earlier positive gains and sit back in negative territory with Eminis back under 5600. HK equities are also weaker to the lunchtime break.
- BoJ Governor Ueda is before parliament again today and stated that real wages and consumption should improve, while noting the shift in believe around wage-inflation is important (per BBG). He stated though the price trend is still below the 2% target.
- JGB futures are weaker post the lunchtime break, while some JGB yields have ticked higher, along with swap rates, providing some yen support. US Tsy yields are down a little over 1bps at this stage.
- AUD/USD is down a touch, last near 0.6315 and off earlier highs at 0.6334. NZD/USD is also off earlier highs, but is slightly outperforming AUD, last near 0.5730. Both currencies have broadly tracked risk appetite trends from the equity space.
- EUR/USD is little changed at 1.0885/90.
- Looking ahead, the main focus will be on US data, with PPI and jobless claims due.
EQUITIES: Sentiment Deteriorates, HK Tech Weaker, US Futures Back In The Red
Asia Pac equity markets are mixed. Focus remains on the US equity market backdrop. Eminis have reversed earlier gains and sit modestly in the red, with the index back sub 5600. Recent lows are just under 5550 (currently at 5590). Nasdaq futures are off by slightly more, down close to 0.50% at this stage.
- Hong Kong markets are in negative territory as we approach the lunchtime break. The HSI last off around 0.70%. The index remains within recent ranges though. The HSTECH is off over 2%, after falling by a similar amount yesterday.
- There doesn't appear a fresh catalyst for this weakness so far today, other than recurring drivers around trade conflict concerns with the US. Hong Kong is reportedly considering lowering the threshold to buy stocks, which could boost trading (see this BBG link).
- Mainland China markets are also down, but losses are modest at this stage, with the CSI 300 sitting off 0.20%.
- Tech plays in terms of the Kospi and Taiex have struggled to hold gains. Foreign investor outflows from Taiwan have been particularly strong this week. The negative lead from US tech futures has likely dampened risk appetite so far today. Japan markets are holding positive territory though, the Tpoix up around 0.60%.
- Australia's market has also struggled for upside momentum, with the correction off Feb highs now around 10%. NZ markets are also at risk of entering correction territory.
- In SEA, Malaysian markets are up strongly, last near +1.3%. Trends are much steadier elsewhere with a mixture of modest gains and losses.
OIL: Crude Holds Onto Recent Gains, IEA Monthly Report Out Later
Oil prices have range traded through today’s APAC session holding onto Wednesday’s 2% gains driven by a better supply/demand outlook. There has been some pullback in risk today but it hasn’t pressured crude materially in the session. WTI is down 0.2% to $67.58/bbl after falling to $67.48 earlier. Brent is 0.1% lower at $70.90/bbl after a low of $70.79 followed by a high of $71.10. The USD index is flat.
- The demand outlook was unrevised in OPEC’s March report but it showed that its February output exceeded targets due to Kazakhstan significantly exceeding its quota. It plans to reduce its production. On Tuesday, the US’ EIA cut back its forecasts for excess supply in 2025 and 2026 because of tighter sanctions on Iran and Venezuela. The IEA publishes its report later today.
- Europe and Canada retaliated for the US’s import duties on steel and aluminium. Oil markets have been worried about the impact of increased protectionism on global growth and Brent is down almost 10% since President Trump’s inauguration. It is also concerned about plans to increase US production, which was supported by the large US energy companies at this week’s CERAweek conference in Texas.
- Later US February PPI and jobless claims print. The ECB’s Lagarde and de Guindos appear and January euro area IP is released.
GOLD: Bullion Higher On Lower US Inflation & Softer Risk Sentiment
Gold prices are moderately higher during APAC trading today as US Treasury yields are down slightly and US equity futures and some Asian indices are lower signalling a pullback in risk as trade tensions rise. Bullion is up 0.3% to $2944.65/oz, close to the intraday high of $2946.11 and above initial resistance at $2930.3. They rose 0.6% yesterday supported by the lower-than-expected US February CPI reading and are up around 1.3% this week.
- The trend condition for gold remains bullish and the break above initial resistance has opened up $2956.2, the bull trigger. Initial support is at $2880.3, 10 March low.
- It is unclear what the impact of increased US protectionism is likely to be for gold in the medium-term as it could increase inflation but could also weigh on global growth. Europe and Canada retaliated for the US’s duties on steel and aluminium.
- Ukraine said on Tuesday that it was ready to agree to the US’ proposal for a 30-day ceasefire. America is now taking the plan to Russia, which has said it will only accept on its own terms but Bloomberg reported that President Putin is considering it. The US is threatening more sanctions as well as tariffs if Russia is uncooperative, which would also likely drive gold prices higher.
- Later US February PPI and jobless claims print. The ECB’s Lagarde and de Guindos appear and January euro area IP is released.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 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 | - | *** |  CN | New Loans |
| 13/03/2025 | - | *** | CN | Money Supply |
| 13/03/2025 | - | *** | CN | Social Financing |
| 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 |
| 13/03/2025 | 1400/1000 | * | US | Services Revenues |
| 13/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 13/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 13/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 13/03/2025 | 1700/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 14/03/2025 | 0700/0700 | ** |  GB | UK Monthly GDP |
| 14/03/2025 | 0700/0800 | ** | SE | Unemployment |
| 14/03/2025 | 0700/0700 | ** | GB | Trade Balance |
| 14/03/2025 | 0700/0700 | ** | GB | Index of Services |
| 14/03/2025 | 0700/0700 | *** | GB | Index of Production |
| 14/03/2025 | 0700/0800 | *** |  DE | HICP (f) |
| 14/03/2025 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 14/03/2025 | 0730/0730 | GB | DMO calendar for first 3 weeks of FY 25/26 confirmed | |
| 14/03/2025 | 0745/0845 | *** |  FR | HICP (f) |
| 14/03/2025 | 0800/0900 | *** |  ES | HICP (f) |
| 14/03/2025 | 0900/1000 | * |  IT | Industrial Production |
| 14/03/2025 | 0930/0930 | GB | BoE/Ipsos Inflation Attitudes Survey | |
| 14/03/2025 | 1230/0830 | ** | CA | Monthly Survey of Manufacturing |
| 14/03/2025 | 1230/0830 | ** | CA | Wholesale Trade |
| 14/03/2025 | 1315/1415 | EU | Cipollone in panel discussion at "Fifty years of Consob: present and future - Reflections in Bocconi" Milan |
