MNI EUROPEAN OPEN: Japan GDP Rises, But Below Forecasts

Feb-16 05:35By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

RAMPANT AI DEMAND FOR MEMORY IS FUELING A GROWING CHIP CRISIS - BBG
SUPREME COURT SCHEDULES OPINIONS ON FEB. 20 AS TARIFF CASE LOOMS - BBG
PM TAKAICHI TO MEET BOJ’S UEDA ON MONDAY - MNI BRIEF
JAPAN Q4 GDP POSTS 1st GROWTH IN 2 QUARTERS - MNI

Fig 1: Japan GDP - Key Components Only Post Modest Growth

Source: Bloomberg Finance L.P./MNI

HOUSE PRICES (BBG): “UK home sellers refrained from increasing prices further this month as an abundance of properties on estate agents’ books strengthened the bargaining power of buyers, according to a survey by Rightmove.”

ECB (BBG): “European Central Bank President Christine Lagarde said creating incentives for investments in Europe is a better approach to prevent capital outflows to other regions than imposing taxes.”

EUR (BBG): “The European Central Bank is prepared to offer euro liquidity to monetary authorities from around the world, an effort to prevent market tensions and increase global use of the single currency.”

RUSSIA (BBG): “China increased its support for Russia’s war in Ukraine in 2025 and is likely to deepen cooperation with Moscow further this year, Western officials said, casting doubt on efforts by European leaders to improve relations with Beijing.”

INFLATION (MNI BRIEF): U.S. January CPI and core CPI rose just 0.171% and 0.295%, respectively, both a tenth below Wall Street expectations, adding to the case for the Federal Reserve keeping interest rates where they are for the time being. The Bureau of Labor Statistics reported the 12-month headline measure down a tenth to 2.4% and core CPI steady at 2.5%.

TARIFFS (BBG): "The US Supreme Court scheduled Feb. 20 as its next opinion day amid a global wait for a ruling that could invalidate most of President Donald Trump’s signature tariffs."

JAPAN

BOJ (MNI BRIEF): Prime Minister Sanae Takaichi will meet Kazuo Ueda, Governor of the Bank of Japan, on Monday to exchange views on the economy and financial markets, a local newspaper reported Saturday.

ECONOMY (MNI): Japan's economy over Q4 rose 0.1% q/q, or an annualised 0.2%, marking the first growth in two quarters, but the rebound from the Q3 contraction was weak as gains in capital investment and private consumption were modest, preliminary GDP data released by the Cabinet Office showed Monday.

OTHER

TECH (BBG): “A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse.”

IRAN (BBG): “Israeli Prime Minister Benjamin Netanyahu said he proposed terms for any deescalation deal with Iran during a meeting with US President Donald Trump last week.”

NEW ZEALAND (BBG): “ Latest jobs data indicates the labor market is improving, the Treasury Dept. says in its Fortnightly Economic Update published Monday in Wellington.”

CHINA

YUAN (CCTV/BBG): “While exchange rate volatility remains possible, current trends indicate the yuan is increasingly viewed as a currency for trading, investment and financing, according to a report from Yuyuantantian, a social media account affiliated with state broadcaster China Central Television.”

ECONOMY (BBG): "Xi Jinping called for anchoring economic growth around domestic demand as its “main driver” in a speech delivered by the Chinese president at a key policy meeting late last year and released on Sunday."

MARKET DATA

NEW ZEALAND JAN PERFORMANCE OF SERVICES INDEX 50.9; PRIOR 51.7
NEW ZEALAND JAN CARD SPENDING RETAIL M/M -1.1%; PRIOR -0.3%
NEW ZEALAND JAN CARD SPENDING TOTAL M/M -0.7%; PRIOR -1.3%

JAPAN Q4 P GDP Q/Q 0.1%; MEDIAN 0.4%; PRIOR -0.7%
JAPAN Q4 P GDP NOMINAL Q/Q 0.6%; MEDIAN 1.0%; PRIOR 0.0%
JAPAN Q4 GDP DEFLATOR Y/Y 3.4%; MEDIAN 3.2%; PRIOR 3.5%
JAPAN Q4 P PRIVATE CONSUMPTION Q/Q 0.1%; MEDIAN 0.1%; PRIOR 0.4%
JAPAN Q4 P BUSINESS SPENDING Q/Q 0.2%; MEDIAN 0.6%; PRIOR -0.3%
JAPAN Q4 P INVENTORY CONTRIBUTION -0.2%; MEDIAN -0.1%; PRIOR -0.1%
JAPAN Q4 P NET EXPORTS CONTRIBUTION 0.0%; MEDIAN 0.1%; PRIOR -0.3%

JAPAN INDUSTRIAL PRODUCTION DEC F Y/Y 2.6%; PRIOR 2.6%

MARKETS

US TSYS: Bond Market Awaits FED Minutes as CPI Miss Raises Cut Hopes

An unsurprisingly quiet day in US bond futures given much of Asia out and US on holiday Monday (no cash trading). The US 10-Yr future had a modest amount of volume for a quiet day and traded in a range of 113-03 to 113-07+. Currently at 113-05 sees TYH6 flat on the day.

The run up in bonds last week has the TYH6 consolidate above all major moving averages and nearing overbought on the 14-day relative strength index. This suggests that in the short term (as markets await FED minutes) further rallies could be capped.

A push pull last week for bonds with strong employment data followed by a weaker January CPI reigniting rate cut hopes. Headline CPI / core were below expectations albeit with some (very modest) signs of early stage inflation in the detail. Rate cut expectations remain muted with a full rate cut not priced in until July and -63bps by year end.
FED minutes are out this week and will be watched for any signs of discussion on raising the bar for rate cuts.

Cash unsurprisingly finished Friday strong with yields lower across the curve and curves flatter.

For the week last week:

The 2-Yr finished at 3.41% - down 9.9bps
The 5-Yr finished at 3.606% - down 15.4bps
The 10-Yr finished at 4.05% - down 15bps
The 30-Yr finished at 4.697% - down 15.6 bps

JGBS: Twist-Steepener Leaves YC Hovering At Bottom Of Range

JGB futures are stronger, +10 compared to settlement levels, but off session bests.

MNI AU - Japan Q4 GDP Edges Up But Barely Positive, Key Drivers Close To Flat: The data showed Japan's economy only grew marginally in Q4 last year, signalling more needs to be done to boost economic growth, which is a key goal for the Takaichi regime. From a BoJ standpoint, it shouldn't add to near term expectations around tightening.
The US is out today for the Presidents' Day Holiday.
Cash JGBs have twist-steepened across benchmarks, with yields 1-2bps lower out to the 10-year and 2-3bps higher beyond.
After reaching a record steepness in mid-January, the 2/40 yield curve tested on Friday the lower bound of the well-defined range that has contained price action since mid-year.
Notably, while the 2/5 segment has flattened, it was the 5/40 curve which broke through the bottom of the range on Friday, albeit retesting the breakdown level today.
Swap rates are 1bp lower to 6bps higher, with a steepening bias.
Tomorrow, the local calendar will see Tertiary Industry Index data alongside 5-year supply.

Source: Bloomberg Finance LP

AUSSIE BONDS: Curve Continues To Flatten In Line With Expected Cash Rate

ACGBs (YM +2.0 & XM +4.5) are stronger after dealing in relatively narrow ranges in today’s session.

Cash US tsys are out today for the Presidents' Day Holiday.
Cash ACGBs are 2-4bps richer with the 3/10 curve flatter. At 46bps, the curve sits at its flattest since late 2024, some 70bps below its April high. The move has been consistent with the dramatic reversal for market expectations for the RBA policy rate 12-months forward (see chart).
The bills strip is slightly richer, with pricing flat to +2.
RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 15% for March to 91% by June and 141% by December 2026.
Tomorrow, the local calendar will see the RBA Minutes of Feb. Policy Meeting. The Q4 Wage Cost Index is due for release on Wednesday with the January Employment on Thursday.
This week, the AOFM plans to sell A$1200mn of the 4.25% 21 October 2036 bond on Wednesday and A$800mn of the 3.25% 21 April 2029 bond on Friday.

Bloomberg Finance LP

BONDS: NZGBS: Richer, PSI Holding Firm, RBNZ Policy Decision On Wed

NZGBs closed 3bps richer across benchmarks, with the NZ-AU 10-year yield differential little changed at -26bps.

Cash US tsys are out today for the Presidents' Day Holiday.
The NZ Jan Performance of Services Index eased off Dec highs to 50.9. The Dec reading was revised up a touch to 51.7 (originally reported as a 51.5 outcome). That outcome was the firmest print since the first half of 2023. The index spent much of 2024 and 2025 sub 50.0, so in contraction territory before recovering. 2023 highs in the index were near 59.0, so whilst the index has recovered it isn't suggesting a return to the heady growth periods of 2021/2022.
RBNZ published the Q1 Household Expectations Survey results, with mean expected inflation in two years at 3.4% down from 4.3% in Q4. Mean expected inflation in one year was 5.2% down from 5.5% in Q4.
Swap rates closed 3bps lower.
RBNZ-dated OIS pricing closed slightly softer across meetings. No tightening is priced for this week, while December 2026 assigns 40bps.
Tomorrow, the local calendar will see Food Prices ahead of PPI data and the RBNZ Policy Decision on Wednesday.
On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond and NZ$250mn of the 4.50% May-35 bond.

Bloomberg Finance LP

FOREX: USD - BBDXY Holds Below 1185-1187

The BBDXY has had a range today of 1181.54 - 1182.53 in the Asia-Pac session; it is currently trading around 1182. The USD stalled toward 1185 and drifted lower as US yields continued to price in rate cuts. Risk steadied itself and recency bias tends to dismiss it evolving into anything more. The market is very bearish the USD so if we should get some form of a deeper correction in risk and the USD finds demand as a hedge, the market is not positioned for this. On the day, the first resistance remains toward the 1185-1187 area and then 1195 where I suspect we could see sellers return. A sustained break below 1175-1180 is needed to potentially signal the start of another leg lower.

EUR/USD - Asian range 1.1859-1.1878, Asia is currently trading 1.1865. The pair continues to trade sideways below 1.1900 albeit with a slightly heavy tone. Price action remains constructive, can it build a base above 1.1800 and then find the momentum to push on? On the day, the first support is back toward 1.1820-1.1840 and then the 1.1750 area. A sustained move back above 1.1925-1.1940 is needed to give it the thrust it needs to have another look toward the 1.2000 area.
GBP/USD - Asian range 1.3637-1.3650, Asia is currently dealing around 1.3640. GBP continues to look like 1.3580-1.3730 to me for now as we wait to see how the big USD trades when the US returns from its day off.
Cross asset : SPX +0.20%, Gold $4975, US 10-Year 4.05%, BBDXY 1182, Crude Oil $62.76
Data/Events : Germany Bloomberg Feb. Germany Economic Survey, Spain Bloomberg Feb. Spain Economic Survey, EZ Bloomberg Feb. Eurozone Economic Survey/Industrial Production, France Bloomberg Feb. France Economic Survey, Italy Bloomberg Feb. Italy Economic Survey

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: USD/JPY - Consolidating Around 153.00

The USD/JPY range today has been 152.64-153.16 in the Asia-Pac session, it is currently trading around 153.03, +0.22%. USD/JPY was faded on Friday night again on a bounce back toward 154.00 as US yields continued to extend lower after the US CPI. The headwinds for Yen shorts are growing and putting pressure on the leveraged funds. This price action does look messy but I still believe dips back toward the 149-152 will probably provide solid support again should we see it, until then it looks like we chop around albeit with a heavy tone. On the day, the first resistance is back towards 153.50-154.00 and then the 155.00 area as the market pares back its overextended USD longs and looks for another base to form from which to potentially move higher again.

MNI AU - Japan Q4 GDP Edges Up But Barely Positive, Key Drivers Close To Flat: The data showed Japan's economy only grew marginally in Q4 last year, signalling more needs to be done to boost economic growth, which is a key goal for the Takaichi regime. From a BoJ standpoint, it shouldn't add to near term expectations around tightening.
CFTC Data up to 10/02/2026 shows Asset Managers still reducing their JPY longs, +25808(Last +33483). The Leveraged community continues to pare back their large shorts after the failure to extend higher, –48686(Last -56850).
Options : Close significant option expiries for NY cut, based on DTCC data: 153.90($545m), 154.40($599m), 155.00($518m). Upcoming Close Strikes : 153.00($2.68b Feb 19), 155.00($1.41b Feb 19),156.00($1.87b Feb 17) - BBG.
The USD/JPY Average True Range(ATR) for the last 10 Trading days: 126 Points

Fig 1 : JPY CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

AUD/USD - Drifts Higher Thanks To CNH Strength

The AUD/USD has had a range today of 0.7057 - 0.7087 in the Asia- Pac session, it is currently trading around 0.7085, +0.15%. The AUD drifted higher in our day as USD/CNH came under pressure moving below 6.8900 with China out for Lunar New Year. With the US also out today I suspect it could be a very quiet start to the week. Crypto has started the week back under pressure so worth keeping an eye on. CFTC data shows leveraged funds continue to add to their longs as further hikes are potentially priced in. On the day, the first support is again back toward 0.7020-0.7050, a break below here could signal a deeper pullback as the 0.7100-0.7200 continues to cap the move higher, how risk holds up when the US returns will be a key factor.

CFTC Data up to 10/02/2026 shows Asset managers continuing to pare back shorts, -13098(Last -18707). The Leveraged community was again adding to its longs, +63674(Last +57115). These longs will be looking for risk to stabilise in order to challenge 0.71-0.72.
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.7110(AUD360m). Upcoming Close Strikes : 0.6980(AUD694m Feb 18) - BBG
The AUD/USD Average True Range for the last 10 Trading days: 63 Points

Fig 1: AUD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

NZD/USD - Holding Above 0.6000 As Risk Steadies

The NZD/USD had a range today of 0.6013-0.6041 in the Asia-Pac session, it is currently trading around 0.6030, -0.15%. The NZD found demand back towards 0.6000 and this support will need to continue to hold if we are to get an eventual test of the 0.6100 area. Risk has stabilised for now and we should have a quiet start to the week with both the US and China out. On the day, the first support remains in the 0.5985-0.6015 area; a break below here could signal a deeper pullback toward 0.5900. For now the 0.6100 area continues to cap but the bulls will be hoping for risk to firm up to have another go

MNI AU - NZ Card Spending Further Unwinds Nov Bounce, Negative Y/Y: At face value this data still points to a stop/start recovery pace in terms of consumer spending, although we often see volatility in the spending outcomes around the calendar new year period. Still, the central bank has time on its hands in terms of assessing spending trends, particularly with the next move from the RBNZ seen as a hike employment index printed at 52.9 (versus 53.7 prior), but we are above 2025 lows.
(Bloomberg) - "The RBNZ Shadow Board recommends the Official Cash Rate should remain on hold at 2.25% this week, the NZ Institute of Economic Research says. "Members agreed that New Zealand's economic recovery is starting to gain traction, but there remains a considerable degree of spare capacity in the economy, while headline inflation has increased."
"NZ Mean Household 2Y Inflation Expectations 3.4%: RBNZ Survey. Mean expected inflation in two years is 3.4% down from 4.3% in 4q. Median expected inflation rate in two years is 3%. Unchanged for eighth straight quarter." - BBG
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6000(NZD308m), 0.6050(NZD395m). Upcoming Close Strikes : 0.5700(NZD400m Feb18), 0.5860(NZD420m Feb 19), 0.6000(NZD308m Feb 19) - BBG
The NZD/USD Average True Range for the last 10 Trading days: 47 Points

Fig 1: NZD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

ASIA: NKY Regains from Losses Earlier After GDP Shock

With much of Asia closed Monday, all eyes were on the NIKKEI which had reached new highs early last week post election. The NKY posted modest gains early to reach 57,219 but gave back those gains following the weaker than expected Q4 GDP release. Japan's economy grew by a mere +0.2% YoY in 4Q, significantly missing the median forecast of +1.6%. This underscored persistent weaknesses in business spending and private consumption, dampening investor sentiment and sending the NKY to lows of 56,748. The NKY is staging a modest comeback in the afternoon session up +0.15% on the day.

The NKY remains up over 5% following the February 8 election and some investment houses now appear to be happy to lock in profits and wait for further clarity on policy. With expectations of further stimulus growing the next key data release is the January National CPI Friday and expectations are for a moderation from the December result. The momentum for the NKY remains positive with the MACD (white) line trending above the Signal (red) line, a bullish indicator. This suggests pullbacks could continue to see dip buyers emerge as hopes of stimulus support investor sentiment.

COMMODITIES: Oil Flat Ahead of US Iran Meeting, Gold Back Below $5,000

With much of Asia out today oil markets were quiet, watching news flow from US Iran talks.
A second round of nuclear negotiations between the US and Iran is to take place on Tuesday in Geneva. Discussions are expected to focus on a potential suspension of uranium enrichment for three to five years and the removal of highly enriched uranium from Iran in exchange for sanctions relief.
Iranian officials stated Sunday that any agreement must include mutual economic benefits via joint investments in oil, gas, mining, and aircraft purchases. Iranian lawmakers have insisted they will not accept a total ban on enrichment or the transfer of their entire nuclear stockpile abroad.
U.S. Secretary of State Rubio emphasized that Trump prefers a diplomatic settlement, even though he said Friday that regime change was the best outcome for Iran.
WTI traded in a tight range Monday of $62.76 - $63.30, last near US$63.30 where it opened.
Brent traded in a range of $67.62 - $68.13 and is at US$67.76 bbl, where it opened.
Gold has given back some of Friday's gains Monday with falls of -1.2% and back below US$5,000 at US$4,974.75.
Momentum indicators like the moving average convergence divergence (MACD) show that bearish momentum still remains, given the MACD (white) line remains below the Signal (red) line. This could limit rallies in the short term until the after shocks of the sell off are no longer.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
16/02/2026	0430/1330	**	JP	Industrial Production
16/02/2026	0700/0800	**	SE	Unemployment
16/02/2026	0800/0900	*	CH	CH Flash GDP
16/02/2026	1000/1100	**	EU	EZ Industrial Production
16/02/2026	-		EU	ECB Lagarde and Cipollone at Eurogroup meeting
16/02/2026	1315/0815	**	CA	CMHC Housing Starts
16/02/2026	1325/0825		US	Fed's Michelle Bowman
16/02/2026	1330/0830	**	CA	Monthly Survey of Manufacturing
17/02/2026	0700/0700	***	GB	Labour Market - AWE & Unemployment
17/02/2026	0700/0700	***	GB	Labour Market - Payrolls & Claimants
17/02/2026	0700/0700	***	GB	Labour Market - Payrolls & Claimants
17/02/2026	0700/0700	***	GB	Labour Market - AWE & Unemployment
17/02/2026	0700/0800	***	DE	Germany CPI (f)
17/02/2026	0700/0800	***	DE	Germany CPI (f)
17/02/2026	0900/1000		IT	Foreign Trade
17/02/2026	1000/1100	***	DE	ZEW Current Expectations Index
17/02/2026	-		EU	ECB de Guindos at ECOFIN Meeting
17/02/2026	1330/0830	*	CA	International Canadian Transaction in Securities
17/02/2026	1330/0830	**	CA	Wholesale Trade
17/02/2026	1330/0830	**	US	Empire State Manufacturing Survey
17/02/2026	1330/0830	***	CA	CPI