MNI EUROPEAN OPEN: RBA On Hold As Expected

EXECUTIVE SUMMARY

• TRUMP TO UNVEIL COUNTRY-BASED TARIFFS APRIL 2 IN ROSE GARDEN - BBG 
• WILLIAMS SAYS FED ON HOLD FOR SOME TIME - MNI BRIEF 
• KEY SENTIMENT SLIPS, SOLID CAPEX PLANS: TANKAN - MNI 
• CAIXIN MAR MANUFACTURING PMI HITS FOUR-MONTH HIGH - MNI BRIEF 
• RBA HOLDS CASH RATE AT 4.1% AS EXPECTED - MNI BRIEF 

Fig 1: USD BBDXY Index Versus 10yr Tsy Yield 

Source: MNI - Market News/Bloomberg/Refinitiv. 

UK 

PRICES (BBG): “The British Retail Consortium-NielsenIQ in London report the March shop price index. Food +2.4% y/y vs Feb. +2.1% y/y. Non-food -1.9% y/y vs Feb. -2.1% y/y.”

EU

FRANCE (POLITICO): “French far-right leader Marine Le Pen said on Monday there was “no way” she was leaving politics and that she planned to fight for her right to run for president after a court barred her from running for public office for five years as punishment for embezzlement. Crucially, she played down the prospect that she could soon have to pass her mantle over to her 29-year-old protégé Jordan Bardella to stand as the National Rally’s presidential candidate in 2027.”

FRANCE (BBG): “Marine Le Pen’s election ban risks a surge in anti-establishment sentiment in France that could undermine efforts to stabilize the nation’s creaky public finances.”

FRANCE (ECONOMIST): “On Tuesday France takes over the monthly rotating chairmanship of the United Nations Security Council.”

FRANCE/US (POLITICO): “A court’s decision to ban French far-right leader Marine Le Pen from seeking public office is “a very big deal,” U.S. President Donald Trump said Monday.”

GERMANY (POLITICO): “The extremist youth group affiliated with the far-right Alternative for Germany (AfD) dissolved itself on Monday to avert a possible ban that might have damaged the party as it tries to broaden its appeal among German voters.”

RUSSIA (POLITICO): “Russian President Vladimir Putin has ordered another 160,000 Russian citizens be called up to serve in the military, Russian news agency Interfax reported Monday.”

ITALY (MNI):  Italy Sees Lower 2025 Growth, Deficit Target Achievable

US

TARIFFS (BBG): “President Donald Trump will announce his reciprocal tariff push on Wednesday during an event in the White House Rose Garden, his top spokeswoman said. Treasury Secretary Scott Bessent said in a Fox News interview Monday that the tariff announcement would be at 3 p.m. Washington time.” 

RUSSIA (BBG): “US President Donald Trump said he believed Russian President Vladimir Putin would follow through on striking a ceasefire agreement and accused Ukraine of attempting to renegotiate an economic deal with the US, in the latest turn in his whipsaw effort to negotiate a temporary truce in the ongoing conflict.” 

MIDDLE EAST (BBG): “President Donald Trump said the first presidential trip of his second term would likely include visits to Saudi Arabia, the United Arab Emirates, and Qatar as well as additional stops.” 

FED (MNI BRIEF): New York Fed President John Williams said Monday policy uncertainty emanating from Washington, D.C. puts upside risks on inflation and is starting to affect household and business behavior, but the economy is robust and the federal funds rate is well-placed to remain on hold for some time. 

OTHER 

JAPAN (MNI): Japan's business sentiment benchmark posted the first drop in four quarters over Q1, but the index for major non-manufacturer sentiment posted its second straight rise, the Bank of Japan’s March Tankan survey released Tuesday showed. The diffusion index for sentiment among major manufacturers stood at +12 in March, down from +14 in December, the first drop in four quarters and the lowest level since March 2024. The index is likely to print at +12 in June.

JAPAN (MNI BRIEF): Japanese firms' one-year, three- and five-year inflation expectations rose over Q1, holding above the Bank of Japan's 2% target and supporting the view that inflationary norms are changing, the BOJ March Tankan survey released on Tuesday showed.

JAPAN (MNI BRIEF): The Bank of Japan promoted on Tuesday Koji Nakamura, director-general in the Research and Statistics Department, to one of the six new executive director roles.

SOUTH KOREA (BBG): “South Korea is poised to rule on the political fate of impeached President Yoon Suk Yeol, deciding whether to permanently remove him from office for his short-lived martial law decree or reinstate him.” 

AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia monetary policy board left the cash rate at 4.10% Tuesday, noting future decisions would rely on data and the assessment of risks.

CHINA 

MANUFACTURING (MNI BRIEF): China's Caixin manufacturing PMI came in at 51.2 in March, up from February's 50.8, staying in the expansionary zone above the 50 mark for the sixth straight month and hitting the highest level since December 2024, the financial publisher said on Tuesday.

CREDIT (SECURITIES DAILY): “The Ministry of Finance’s planned CNY500 billion special treasury bond issuance to replenish the core tier-one capital of four major state-owned banks will leverage CNY4 trillion of additional credit, Securities Daily reported, citing analysts’ expectations.” 

REGULATIONS (SHANGHAI SECURITIES NEWS): “The China Securities Regulatory Commission will make the regulatory environment for companies going public overseas more transparent, efficient and predictable, Shanghai Securities News reported, citing a CSRC statement.

CHINA MARKETS 

MNI: PBOC Net Drains CNY313 Bln via OMO Tuesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY64.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY313 billion after offsetting the maturity of CNY377.9 billion today, according to Wind Information. 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6129% at 09:30 am local time from the close of 2.1888% on Monday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 63 on Monday, compared with the close of 45 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.1775 Tues; -0.25% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1775 on Tuesday, compared with 7.1782 set on Monday. The fixing was estimated at 7.2540 by Bloomberg survey today.

MARKET DATA

UK MARCH BRC SHOP PRICE INDEX -0.4% Y/Y; est. -0.4% Y/Y; FEB. -0.7%

AUSTRALIA S&P GLOBAL MAR. MANUFACTURING PMI 52.1; PRE. 52.6; FEB. 50.4

AUSTRALIA CORELOGIC HOME VALUES MAR. +0.4% M/M; FEB. +0.3%

AUSTRALIA FEB. RETAIL SALES RISE 0.2% M/M; EST. 0.3%; JAN. +0.3%

JAPAN FEB. JOBLESS RATE 2.4%; EST 2.5%; JAN. 2.5%
JAPAN FEB. JOB-TO-APPLICANT RATIO 1.24; EST. 1.26; JAN. 1.26

JAPAN MARCH LARGE MANUFACTURER TANKAN 12; EST. 12; DEC. 14
JAPAN NEXT LARGE MANUFACTURER TANKAN SEEN AT 12; EST. 9; PRIOR 13
JAPAN MARCH SMALL MANUFACTURER TANKAN +2; EST. -1; DEC. +1
JAPAN MARCH LARGE NON-MANUFACTURER TANKAN 35; EST. 33; DEC. 33
JAPAN NEXT LARGE NON-MANUFACTURER TANKAN SEEN AT 28; EST. 29; PRIOR 28
JAPAN NEXT SMALL MANUFACTURER TANKAN SEEN AT -1; EST. -3; PRIOR 0
JAPAN MARCH SMALL NON-MANUFACTURER TANKAN 16; EST. 15; DEC. 16

JAPAN JIBUN BANK MANUFACTURING PMI MAR. F 48.4; PRE. 48.3; FEB. 49.0

CHINA MARCH CAIXIN MANUFACTURING PMI 51.2; EST. 50.6; FEB. 50.8

SOUTH KOREA MARCH EXPORTS +3.1% Y/Y; EST. +5.0%; FEB. +0.7%
SOUTH KOREA MARCH IMPORTS +2.3% Y/Y; EST. +2.2%; FEB. +0.2%
SOUTH KOREA MARCH TRADE SURPLUS $4.985B; EST. +$6.008B; FEB. $4.152B

SOUTH KOREA S&P GLOBAL MFG PMI MAR. 49.1; FEB. 49.9

MARKETS

US TSYS: Cash Bonds Slightly Richer Ahead Of JOLTS & ISM MFG Data

TYM5 is 111-17, +0-10 from closing levels in today's Asia-Pac session.

• According to MNI's technicals team, TYM5 remains well off the initial technical resistance of 111-22.5 (today's intraday high) - next resistance above at 112-01 (High Mar 4 and a bull trigger).
• Cash US tsys are slightly richer in today’s Asia-Pac session after small losses early.
• Month/quarter-end rebalancing flow tempered Monday morning's risk-off support ahead of Wednesday's US tariff deadline.
• From our latest US Treasury Deep Dive (Here) - the Treasury isn’t expected to raise the size of its coupon offerings until Q4 2025 at the earliest, with consensus on such a shift moving following the February refunding announcement to Nov 2025/early 2026, from Aug/Nov 2025 prior.
• Today’s US calendar will be highlighted by JOLTS and ISM Mfg data. 

JGBS: Futures Holding Weaker Ahead OF US Jolts & ISM Data

JGB futures are holding weaker, -18 compared to the settlement levels.

• Outside of the previously outlined labour market and Tankan survey data, there hasn't been much by way of domestic drivers to flag.
• " The impact of the tariffs on Japan could range from minimal to severe, depending on whether the US focuses solely on agricultural tariffs or also includes value-added taxes and non-tariff barriers. Japan's response is unclear, but Prime Minister Shigeru Ishiba may seek to win concessions by relaxing non-tariff barriers to US imports rather than planning retaliation." (per BBG)
• Cash US tsys are ~1bp richer in today's Asia-Pac session after yesterday's modest gains. Today's US calendar will be highlighted by JOLTS and ISM Mfg data.
• Cash JGBs are flat to 3bps cheaper, with a steepening bias, across benchmarks. The benchmark 10-year yield is 1.6bps higher at 1.506% versus the cycle high of 1.596%.
• Swap rates are little changed. Swap spreads are tighter.
• Tomorrow, the local calendar will see Monetary Base data alongside BoJ Rinban Operations covering 1-3-year and 25-years+ JGBs. 

AUSSIE BONDS: Slightly Richer, RBA Leaves Cash Rate Unchanged

ACGBs (YM +1.0 & XM +1.5) sit slightly stronger after the RBA decision to leave the cash unchanged at 4.10%. According to the accompanying statement:

• Inflation has significantly declined since 2022, aligning with forecasts, but the Board remains cautious.
• Domestic demand is recovering, though some sectors struggle to pass on costs. Labour market conditions remain tight despite easing wage pressures. Economic uncertainty persists, with risks to growth, inflation, and global trade.
• The Board prioritises sustainably returning inflation to target and will adjust policy as needed. Future decisions will be guided by economic data, global developments, and financial market trends to ensure long-term price stability and full employment.
• Cash US tsys are slightly richer in today's Asia-Pac session.
• Cash ACGBs are 1bp richer to 2bps cheaper with the AU-US 10-year yield differential at +20bps.
• Swap rates are 1bp lower.
• The bills strip is flat across contracts.
• Tomorrow, the local calendar will see Building Approvals and a speech from RBA Assistant Governor Chris Kent, who oversees financial markets, at the KangaNews Debt Capital Market Summit.
• The AOFM plans to sell A$800mn of the 3.75% 21 May 2034 bond tomorrow and A$600mn of the 1.00% 21 November 2031 bond on Friday.

BONDS: NZGBS: Twist Steepener After NZ Treasury May-32 Tap Launch

NZGBs closed modestly richer, slightly off session bests, out to the 5-year. However, the 10-year yield closed sharply higher following the NZ Treasury’s launch of the syndicated tap of the 2.00% 15 May 2032 bond. 

• The Treasury expects to issue at least NZ$3.0bn and will be capped at NZ$4.0bn. Initial price guidance is 14 to 17bps over the 15 May 2031 nominal bond. The issue will be priced tomorrow, and further issuance of the bond will not occur before July 2025.
• ANZ Bank New Zealand Limited; Bank of New Zealand; Citigroup Global Markets Limited; and Westpac Banking Corporation, New Zealand are Joint-Lead Managers for the issue.
• Cash US tsys are slightly richer in today's Asia-Pac session, with the NZ-US 10-year yield differential 9bps wider at +38bps, the widest since October last year.
• Swap rates closed little changed.
• RBNZ dated OIS pricing is little changed. 24bps of easing is priced for April, with a cumulative 72bps by November 2025.
• Tomorrow, the local calendar will see Building Permits ahead of CoreLogic Home Value and ANZ Commodity Price data on Thursday. 

FOREX: A$ Ticks Up Post RBA Hold, USD Softer Elsewhere

The USD has retraced some of Monday's gain in the first part of Tuesday dealings. The USD BBDXY index was last near 1273, off around 0.10% versus end Monday levels in NY. A better regional equity tone to start April has helped, while US yields have edged down a touch.  

• As expected, the RBA held rates unchanged at 4.10%. The statement was cautious given uncertainties around the outlook, particularly on the international trade/tariff front. Governor Bullock stated at the press conference that a rate cut wasn't explicitly considered today.
• This backdrop along with broader USD softness has seen the A$ rise. We were last near 0.6265/70, up close to 0.35%. Earlier lows were at 0.6232, amid the earlier risk off.
• US equity futures re-opened lower, but are away from worst levels. Eminis were last off around 0.40%. Regional equities are more positive, with South Korea and Taiwan rebounding, along with Hong Kong, the latter helped by the stronger Caixin PMI out of China.
• This has helped higher beta FX at the margins. NZD/USD saw earlier lows of 0.5633, but sits higher now at 0.5685/90, up around 0.15%.
• USD/JPY is lower, last at 149.55/60. Up around 0.25% in yen terms. Earlier we had resilient Tankan survey data, although this is unlikely to have fully reflected recent auto tariff announcements from the US.
• US yields have ticked down, with 10yr yields down around 1bps in the Tsy space.
• Tomorrow (Wednesday) we have the reciprocal tariff announcements from the US at 3pm EST. Trump spoke earlier about the announcement but details remain light in terms of what will be announced.
• Later, the ECB’s Lagarde, Lane and Cipollone speak and European March manufacturing PMIs and euro area CPI are released. In the US, the Fed’s Barkin speaks on policy and the economic outlook. US final March manufacturing PMI, March manufacturing ISM, February JOLTS job openings and March Dallas Fed services print.

ASIA STOCKS: A Better Day for Stocks as China Leads the Rally. 

China Vanke, often viewed as a bellwether for the property sector saw shares up +2.5% in Hong Kong despite missing earnings. 

Following the lifting of a ban on short selling, global funds accounted for 90% of the short sales in stocks on the KOSPI on Monday according to exchange data. 

Foreign outflows in Taiwan continue unabated and has seen over $3bn leave the market in the last five trading days. 

A better day in general for Asian bourses as China’s markets performed well across the board, giving impetus to others. 

• China’s Hang Seng lead the way rising +1.06%, gradually pushing it into positive territory over the last five days.  The CSI 300 is up +0.29%, Shanghai Comp +0.59% and Shenzhen up +0.90%.
• Taiwan's TAIEX is up strongly despite the outflows, rising by +2.53% for its strongest day since early January.  
• Following yesterday’s declines the KOSPI has roared today, rising by +1.94% spurred on by positive economic data releases.
• Having been closed yesterday, Singapore’s Straits Times is playing catch up on yesterday’s regional falls, down -0.20% whilst the Philippines is up for a second day by +0.54%.
• India’s NIFTY 50 has enjoyed a strong period of gains, but is giving back at this morning’s open, down -0.25%. 

OIL: Crude Holds Onto Monday’s Gain As Risks To Russian Supply Drive Direction

Oil prices have held onto Monday’s close to 3% gain as market worries regarding US tariffs on Russia and buyers of Russian oil outweigh concerns over the impact on global demand from increased trade protectionism. WTI is up 0.2% to $71.65/bbl after a high of $71.73, still trading below key resistance at $72.91. Brent is 0.2% higher at $74.95 after breaking $75 briefly. The bull trigger is at $76.26. The USD index is slightly lower but off its intraday trough.

• US President Trump has said this week that he believes Putin won’t “go back on his word” and he wants him to make a deal but will introduce “secondary tariffs on Russian oil” if needed. Russia is the world’s third largest producer and India and China have been large buyers of its discounted crude since the full invasion of Ukraine. The actioning of Trump’s threats would impact these countries and global prices significantly.
• The Russia issue along with threats directed at Iran has so far outweighed worries over US reciprocal tariffs to be announced at 3pm ET (8pm BST) on Wednesday. Press secretary Leavitt said that there would be “no exemptions at this time”.
• Oil found some support from the better-than-expected Caixin China manufacturing PMI in March. It rose 0.4 points to 51.2 signalling moderate growth in the sector.
• Later the Fed’s Barkin speaks on policy and the economic outlook. US final March manufacturing PMI, March manufacturing ISM, February JOLTS job openings and March Dallas Fed services print. The ECB’s Lagarde, Lane and Cipollone speak and European March manufacturing PMIs and euro area CPI are released.

Gold’s Lustre Shows No Sign of Fading

• Gold continues to climb, seemingly hitting new highs daily at present.
• Opening the Asian trading day at a new high of US$3,123.57, gold’s relentless climb continues at it hits $3,143.35.
• Some forecasters believed their forecasts of $3,200 may have been aggressive at the beginning of the year, only now to have questions as to whether they need to restate.
• As the world anxiously awaits news of further tariffs, investors flock to gold as a safe haven, driving up the prices.
• The rally in recent days has seen gold’s year to date performance through a 20% gain. 

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
01/04/2025	0630/0830	**	CH	Retail Sales
01/04/2025	0715/0915	**	ES	S&P Global Manufacturing PMI (f)
01/04/2025	0745/0945	**	IT	S&P Global Manufacturing PMI (f)
01/04/2025	0750/0950	**	FR	S&P Global Manufacturing PMI (f)
01/04/2025	0755/0955	**	DE	S&P Global Manufacturing PMI (f)
01/04/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (f)
01/04/2025	0815/0915		GB	BoE's Greene on ‘UK MP/macro conjuncture’
01/04/2025	0820/1020		EU	ECB's Cipollone At Croatian National Bank Meeting
01/04/2025	0830/0930	**	GB	S&P Global Manufacturing PMI (Final)
01/04/2025	0900/1100	***	EU	HICP (p)
01/04/2025	0900/1100	**	EU	Unemployment
01/04/2025	-	***	US	Domestic-Made Vehicle Sales
01/04/2025	1230/1430		EU	ECB's Lagarde At AI Conference
01/04/2025	1255/0855	**	US	Redbook Retail Sales Index
01/04/2025	1300/0900		US	Richmond Fed's Tom Barkin
01/04/2025	1345/0945	***	US	S&P Global Manufacturing Index (final)
01/04/2025	1400/1000	***	US	ISM Manufacturing Index
01/04/2025	1400/1000	*	US	Construction Spending
01/04/2025	1400/1000	***	US	JOLTS jobs opening level
01/04/2025	1400/1000	***	US	JOLTS quits Rate
01/04/2025	1430/1030	**	US	Dallas Fed Services Survey
01/04/2025	1530/1130	*	US	US Treasury Auction Result for Cash Management Bill
01/04/2025	1630/1830		EU	ECB's Lane At AI Conference
02/04/2025	0030/1130	*	AU	Building Approvals
02/04/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
02/04/2025	1030/1230		EU	ECB's Schnabel At SciencesPo Conference
02/04/2025	1100/0700	**	US	MBA Weekly Applications Index
02/04/2025	1215/0815	***	US	ADP Employment Report