EXECUTIVE SUMMARY
Fig 1: USD BBDXY Index & Nominal 10yr Tsy Yield
Source: MNI - Market News/Bloomberg
UK
BOE (MNI BRIEF): Bank of England external Monetary Policy Committee member Alan Taylor, one of two members who backed a 50 basis point cut in May, described himself as "being a bit activist" and said he had supported faster easing because, looking at energy prices, weak activity surveys and evidence of slowing pay growth, he had the clarity he needed to justifying easing.
PENSION FUNDS (BBG): “UK pension fund managers have agreed to invest at least 5% of their assets at home, marking a win for the Labour government that’s seeking to boost the economy by drawing billions of pounds into local startups and infrastructure projects.”
EU
ECB (BBG): “ European Central Bank Governing Council member Martins Kazaks urged for caution even as he backed a further reduction in borrowing costs.
SANCTIONS (BBG): “ European leaders are ready to wait until after a possible meeting between Ukraine’s President Volodymyr Zelenskiy and Russia’s Vladimir Putin in Turkey before pushing the US to announce fresh sanctions on Moscow, people familiar with the matter said.”
US
US/CHINA (BBG): “ US President Donald Trump said China had agreed to remove non-tariff barriers to US imports as he announced a deescalation of his trade war with Beijing, suggesting even greater concessions could be in store if talks progress.”
FISCAL (RTRS): “Republicans in the U.S. Congress proposed new tax breaks for tipped income, overtime pay, private school tuition, seniors, and state and local taxes on Monday as they fleshed out a sweeping budget package that would also cut taxes and tighten healthcare benefits for the poor.”
FISCAL (MNI BRIEF): The U.S. Treasury collected USD15.6 billion in net customs duties in April, nearly double the USD8.2 billion seen in March after new tariffs kicked in, the Treasury Department said Monday. Fiscal year-to-date, net customs duties totaled USD59.2 billion, up from USD44.1 billion in the year-ago period.
FED (MNI BRIEF): Federal Reserve Governor Adriana Kugler said Monday the 90-day rollback of sky-high tariffs on goods flowing between the U.S. and China will mean a reduction in the impact on the U.S. economy.
OTHER
JAPAN (MNI BRIEF): Several Bank of Japan's board members expressed caution about raising interest rates at the April 30-May 1 meeting, citing significant uncertainty over the outlook for the economy and prices, according to the summary of opinions released Tuesday, with policymakers agreeing that the timing of any future rate hike must be considered carefully.
JAPAN (MNI): MNI discusses the impact of consumer spending on the BOJ's outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
JAPAN (RTRS): Japanese Finance Minister Katsunobu Kato said on Tuesday that he would seek to meet U.S. Treasury Secretary Scott Bessent on the sidelines of the G7 meetings in Canada next week to discuss foreign exchange.
BRAZIL/CHINA (MNI BRIEF): “The Central Bank of Brazil (BCB) and the People's Bank of China (PBOC) will sign a BRL157 billion currency swap deal this Tuesday at an event in Beijing. "The main objective of the agreement is to provide liquidity to support the functioning of financial markets in times of need," the Brazilian central bank said in a statement.
AUSTRALIA (BBG): "Australia’s center-right Liberal party has elected Sussan Ley as its new leader, the first woman to head the party since it was founded in 1944, taking up the task of leading the opposition back to government after a devastating election loss 10 days ago."
CHINA
CHINA/US (PEOPLE’S DAILY): “China is willing to continue trade talks with the US based on the positive outcomes from the meeting in Geneva, even though the road ahead may be bumpy, according to a commentary by People’s Daily, the flagship newspaper of the Chinese Communist Party.”
POLICY (MNI BRIEF): The People’s Bank of China will downplay quantitative targets and focus more on price-based tools like interest rates in future, Deputy Governor Xuan Changneng said at the Central Bank of Iceland's Annual Economic Conference, according to a statement on the PBOC website Tuesday.
AUTOS (CAAA): “Auto production and sales in China hit 10.1 and 10.0 million units in the first four months of the year, up 12.9% and 10.8% y/y, marking the first time both exceeded 10 million simultaneously, according to the China Association of Automobile Manufacturers.”
MINERALS (CSJ): “Beijing will strengthen its supply chain control of strategic mineral exports, China Securities Journal reported, following a Ministry of Commerce meeting with several departments. Central and provincial officials managing concentrations of strategic mineral resources must closely track flows, strengthen information sharing and enhance early warnings to strictly prevent illegal outflows, the meeting outlined.”
CHINA MARKETS
MNI: PBOC Net Drains CNY225 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY180 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY225 billion after offsetting the maturities of CNY405 billion today, according to Wind Information.
MNI: PBOC Sets Yuan Parity Lower At 7.1991 Tues; +0.15% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1991 on Tuesday, compared with 7.2066 set on Monday. The fixing was estimated at 7.2197 by Bloomberg survey today.
MARKET DATA
AUSTRALIA MAY WESTPAC CONSUMER CONFIDENCE INDEX 92.1; PRIOR 90.1
AUSTRALIA APR NAB BUSINESS CONFIDENCE -1; PRIOR -3
AUSTRALIA APR NAB BUSINESS CONDITIONS 2; PRIOR 3
JAPAN APR MONEY STOCK M2 Y/Y 0.5%; PRIOR 0.8%
MARKETS
US TSYS: Asia Wrap - Yields Drift Lower
TYM5 has traded slightly higher within a range of 110-02 to 110-08 during the Asia-Pacific session. It last changed hands at 110-07, up 0-02 from the previous close.
JGBS: Twist-Flattener After Solid 30Y Auction, PPI Data Tomorrow
JGB futures are holding sharply weaker and near session lows, -86 compared to settlement levels, despite a solid post-auction rally at the long end of the curve.
AUSSIE BONDS: Heavy Session As ACGBs Track Global Bonds
ACGBs (YM -11.0 & XM -7.5) are weaker and hovering near Sydney session lows.
BONDS: NZGBS: Closed Cheaper & Near Worst Levels, Tracking US Tsys
NZGBs closed near session cheaps, with benchmark yields 6-8bps higher and the 2/10 curve steeper. With the domestic calendar again empty, today’s local market price action reflected heavy trading in global bonds following yesterday’s news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
FOREX: G10 Wrap - USD Breaks Resistance, Can it Extend ?
The BBDXY has had an Asian range of 1237.68 - 1240.11, Asia is currently trading around 1237. USD/JPY has edged lower after Japanese Finance Minister Kato said he will seek an opportunity to discuss currency matters with US Treasury Secretary Scott Bessent when the two are in Canada for a meeting of Group of Seven officials."*UCHIDA: WAGES EXPECTED TO KEEP RISING DUE TO TIGHT LABOR MARKET" - BBG. The USD/CNY fix was set at 7.1991. Today's fixing is sub the 7.2000 level for the first time since Apr 7. It comes despite the stronger USD index levels overnight, although some offset was from lower USD/CNY levels.
Data/Events :Ger ZEW Survey, US CPI
Fig 1: GBP/USD Spot Daily Chart
FOREX: Antipodean Wrap - AUD & NZD Outperform Thanks To China
The S&P is down 0.39% this morning in the Asian session. Some intra-day retracement is to be expected but the broader risk-on move might still have a couple of days to play out as the price action shows the market was not expecting such a positive outcome so quickly. The Westpac May consumer sentiment report for Australia rose 2.2%m/m to put the index back at 92.10. We remain sub recent highs, with 95.9 recorded back in March of this year. The NAB Australian business survey saw conditions ease to +2 from a revised +3 reach in March. On the confidence front, the reading edged up to -1 from -3 prior. These headline measures aren't suggesting a sharp turnaround in domestic economic growth momentum in the near term. The USD/CNY fix was set at 7.1991. Today's fixing is sub the 7.2000 level for the first time since Apr 7. It comes despite the stronger USD index levels overnight, although some offset was from lower USD/CNY levels.
AUD/NZD - Asian range 1.0869 - 1.0888, the Asian session is currently trading 1.0880. The Cross has not backed off once since making a low of 1.0654 on the 23 April, it is now challenging the pivot around 1.0900 a sustained break above would turn the focus higher.
Fig 1 : NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
ASIA STOCKS: Optimism Dropping Off
Optimism may be dropping off throughout Asia with only some major bourses up again today as the trade truce remains at the forefront of investors minds. Some investors are now turning their attention to whether the trade truce means no further stimulus is forthcoming in China and hence are likely to focus on the actual impact of tariffs on company’s profitability.
Oil Backs Off From Strong Rally
Gold Steadies from Last Night's Fall
UP TODAY (TIMES GMT/LOCAL)
Date | GMT/Local | Impact | Country | Event |
13/05/2025 | 0600/0700 | *** | ![]() | Labour Market Survey |
13/05/2025 | 0900/1100 | *** | ![]() | ZEW Current Expectations Index |
13/05/2025 | 0900/1000 | * | ![]() | Index Linked Gilt Outright Auction Result |
13/05/2025 | 0900/1000 | * | ![]() | Index Linked Gilt Outright Auction Result |
13/05/2025 | 1000/0600 | ** | ![]() | NFIB Small Business Optimism Index |
13/05/2025 | - | ![]() | ECB's De Guindos At ECOFIN Meeting | |
13/05/2025 | 1230/0830 | *** | ![]() | CPI |
13/05/2025 | 1255/0855 | ** | ![]() | Redbook Retail Sales Index |
13/05/2025 | 1530/1130 | ** | ![]() | US Treasury Auction Result for 52 Week Bill |
14/05/2025 | 0130/1130 | *** | ![]() | Quarterly wage price index |
14/05/2025 | 0600/0800 | *** | ![]() | Final Inflation Report |
14/05/2025 | 0600/0800 | *** | ![]() | HICP (f) |
14/05/2025 | 0700/0900 | *** | ![]() | HICP (f) |
14/05/2025 | 0715/0815 | ![]() | BOE Breeden At ISDA Conference | |
14/05/2025 | 0900/1000 | ** | ![]() | Gilt Outright Auction Result |
14/05/2025 | 0915/0515 | ![]() | Fed Governor Christopher Waller | |
14/05/2025 | 1100/0700 | ** | ![]() | MBA Weekly Applications Index |
14/05/2025 | - | *** | ![]() | Money Supply |
14/05/2025 | - | *** | ![]() | New Loans |
14/05/2025 | - | *** | ![]() | Social Financing |
14/05/2025 | 1230/0830 | * | ![]() | Building Permits |
14/05/2025 | 1240/1440 | ![]() | ECB's Cipollone On Liquidity Issues Panel | |
14/05/2025 | 1310/0910 | ![]() | Fed Vice Chair Philip Jefferson |