MNI EUROPEAN OPEN: US Steel,Aluminium Tariffs Come Into Effect
EXECUTIVE SUMMARY
- TRUMP WALKS BACK 50% CANADA TARIFF THREAT, DOWNPLAYS RECESSION - BBG
- TRUMP EXTENDS TRADE FIGHT AS STEEL, ALUMINIUM TARIFFS TAKE EFFECT - BBG
- EU PLANS COUNTERMEASURES ON US GOODS EXPORTS WORTH UP TO €26B
- BOJ’S UEDA SEES NO GAP WITH MARKET L/T RATES VIEW - MNI BRIEF
- MAJOR JAPAN FIRMS AGREE TO LARGE WAGE HIKES FOR A THIRD STRAIGHT YEAR - RTRS
- MNI SPEAKS WITH THE PRESIDENT OF PBOC'S SHANGHAI HEAD OFFICE - MNI
Fig 1: USD BBDXY Index & 10yr Nominal Tsy Yield
Source: MNI - Market News/Bloomberg/Refinitiv
EU
TRADE (BBG): "European Commission has launched “swift and proportionate countermeasures” on US imports into the EU, in response to the imposition of US tariffs on EU steel and aluminum imports."
ECONOMY (POLITICO): “European Union leaders want to double down on cutting back red tape, lowering energy prices and unlocking private savings to jumpstart the bloc’s economy, according to a draft joint statement dated March 10 and obtained by POLITICO. They will convene in Brussels March 20-21 as part of the next European Council.”
DEFENCE (MNI): The European Commission looks set to stick with its proposal for a four-year national escape clause from the bloc's fiscal rules for states which boost their defence spending in its White Paper on defence funding due next week, according to sources close to the talks.
UKRAINE (BBC): “Ukraine has said it is ready to accept an immediate 30-day ceasefire with Russia proposed by the US, after a day of US-Ukraine talks in Saudi Arabia. US Secretary of State Marco Rubio said he would present the offer to Russia and that "the ball is in their court".”
RUSSIA (BBG): “Less than two weeks after Donald Trump lambasted Ukrainian President Volodymyr Zelenskiy in an Oval Office confrontation, the US president put the pressure on Russia to accept a ceasefire agreement hammered out with Zelenskiy’s advisers.”
UKRAINE (POLITICO): “The United States will immediately lift the pause in intelligence sharing and resume security assistance to Ukraine, according to a joint statement issued after a meeting of the Ukrainian and U.S. delegations in Jeddah, Saudi Arabia on Tuesday.”
POLAND/TURKEY (ECONOMIST): “Poland’s prime minister, Donald Tusk, heads to Ankara, Turkey’s capital, on Wednesday. He will discuss defence and security co-operation with Recep Tayyip Erdogan, Turkey’s president. Mr Tusk will want to gauge whether his host would send peacekeepers or provide security guarantees to Ukraine.”
PORTUGAL (BBG): “Portugal’s parliament toppled Prime Minister Luis Montenegro’s center-right minority government in a confidence vote Tuesday, likely leading the country to its third early election in just over three years.”
ROMANIA (BBC): “Romanian far-right populist Calin Georgescu has lost his appeal against a ruling barring him from participating in May's presidential election. The Constitutional Court issued the final ruling on Tuesday afternoon after deliberating for two hours. It said the decision was unanimous.”
GREENLAND (BBG): “The Greenlandic party seeking the fastest breakup with Denmark stands to gain a major boost, according to early counting of the votes in the parliamentary elections that have been overshadowed by Donald Trump’s plans to take over the Arctic Island.”
US
US/CANADA (BBG): “President Donald Trump dialed back his latest trade-war threat against Canada hours after making it, while downplaying the risk of a tariff-led recession that’s sent US markets into a nosedive.”
TARIFFS (BBG): "President Donald Trump’s latest tariffs on steel and aluminum imports came into force Wednesday, extending his trade wars to more of the US’s top trading partners in a risky bid to revive America’s industrial base. The president announced his plan last month to impose 25% duties on the metals. No exemptions have been granted."
FED (MNI INTERVIEW): Fed Nearly Done Easing Barring Slump-Benigno.
FISCAL (RTRS): “The Republican-controlled U.S. House of Representatives on Tuesday passed a stopgap bill to keep federal agencies funded past Friday, averting a partial shutdown beginning this weekend even as President Donald Trump dramatically cuts the government.”
OTHER
CANADA (MNI BRIEF): Ontario Premier Doug Ford said Tuesday he's only suspending a 25% tariff on electricity sent to the U.S. after Commerce Secretary Howard Lutnick agreed to talks on renewed free trade, warning escalation by President Donald Trump is damaging economies and stock markets.
CANADA (MNI): Farm industry leaders tell MNI they are pushing Canada's government to pay compensation for losses in a prolonged U.S. trade war and spend on expanded port and rail lines moving goods to new overseas markets, pressuring officials who are already missing deficit targets.
JAPAN (MNI BRIEF): Bank of Japan Governor Kazuo Ueda said on Wednesday that the rise in long-term interest rates reflects the change of market players’ view on the outlook for the economy and prices, and there is no contradiction between this and the BOJ.
JAPAN (MNI BRIEF): Japan's corporate goods price index rose 4.0% y/y in February, slowing from January’s 4.2%, while import prices posted their first drop in three months, data released by the Bank of Japan showed on Wednesday.
JAPAN (RTRS): "Many of Japan's biggest companies from Toyota to tech conglomerates have met union demands for substantial wage hikes for a third consecutive year, seeking to help workers cope with inflation and retain staff amid labour shortages.
CHINA
PBOC (MNI): MNI speaks with the President of the PBOC's Shanghai head office. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
RETAIL SALES (CSJ): “China's retail sales of refrigerators and other household appliances rose 56.1% y/y between October and February, with furniture and TV and other audio-visual equipment up 28.5% and 23.3%, amid government purchase subsidies, China Securities Journal reported citing VAT invoice data released by the State Administration of Taxation (SAT).”
HOUSING (SECURITIES TIMES): “China’s plan to give local governments more autonomy on how they buy unsold homes from developers and how they use the properties should help ease bottlenecks in the purchase process, Securities Times reports.”
AUTOS (CAAM): “China’s car sales and production reached 2.12 and 2.10 million in February, up 34.4% and 39.6% y/y, data from the China Association of Automobile Manufacturers showed.”
CHINA MARKETS
MNI: PBOC Net Drains CNY177.8 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY175.4 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY177.8 billion after offsetting the maturity of CNY353.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7667% at 10:04 am local time from the close of 1.8065% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Tuesday, compared with the close of 45 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1696 Weds; -0.47% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1696 on Wednesday, compared with 7.1741 set on Tuesday. The fixing was estimated at 7.2269 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND FEB. TOTAL CARD SPENDING UNCHANGED M/M; JAN. 0.0%
NEW ZEALAND FEB. RETAIL CARD SPENDING +0.3% M/M; JAN. -1.6%
JAPAN FEB. PRODUCER PRICES UNCHANGED M/M; EST. -0.1%; JAN. +0.3%
JAPAN FEB. PRODUCER PRICES +4.0% Y/Y; EST. +4.0%; JAN. +4.2%
JAPAN Q1 BSI LARGE MANUFACTURER CONFIDENCE -2.4 PPT Q/Q; Q4 +6.3
JAPAN Q1 BSI LARGE ALL-INDUSTRY CONFIDENCE +2.0 PPT Q/Q; Q4 +5.7
SOUTH KOREA FEB. ADJUSTED JOBLESS RATE 2.7%; EST. 3.0%; JAN. 2.9%
SOUTH KOREA FEB. EMPLOYED +136K Y/Y; JAN. +135K Y/Y
SOUTH KOREA FEB. HOUSEHOLD LENDING KRW1,143.7T; JAN. KRW1,140.5T
MARKETS
US TSYS: Futures Stronger Ahead Of CPI Data
In today's Asia-Pac session, TYM5 is 110-30, 0-03+ from closing levels.
- Cash US bonds are dealing ~1bp richer after yesterday’s heavy session.
- The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
- Analyst unrounded estimates see core CPI inflation easing to a still solid 0.28% M/M in February after a far stronger-than-expected 0.45% M/M in January. This report won't influence March's FOMC decision, but with only one more report before the May decision, the main risk given current market pricing is that the data could largely cement a "hold" until at least June. (see MNI US CPI Preview here)
JGBS: Cheaper Apart From 20Y After Supply, US CPI Due Later
JGB futures are weaker, -35 compared to settlement levels, after dealing in a narrow range.
- Several headlines have filtered out today on pledged wage rises from major Japanese firms for 2025. Some companies have met lofty demand, while others have come in a little below demands.
- This is a key watch point for the authorities and the BoJ, as it seeks to durably achieve the 2% inflation target.
- The BoJ's board will set policy next week, with economists expecting no move this month, but anticipating a terminal rate of 1.25% in this cycle.
- Cash US bonds are flat to 2bps richer. The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
- Cash JGBs are 1bp richer to 3bps cheaper across benchmarks, with the 20-year outperforming after today’s supply. The 20-year auction delivered mixed results. The low price underperformed dealer forecasts. However, the cover ratio increased to 3.4594x and the auction tail shortened dramatically to 0.20 from 0.55.
- Swap rates are 1-2bps lower, with swap spreads tighter.
- Tomorrow, the local calendar will see Weekly International Investment Flow data.
AUSSIE BONDS: Cheaper, No Steel/AL Tariff Exemption For Oz, US CPI Out Later
ACGBs (YM -6.0 & XM -7.5) are weaker but mid-range on a data-light session.
- “Australia has failed to secure an exemption from US steel and aluminum tariffs despite Prime Minister Anthony Albanese's government's lobbying efforts. Albanese called the tariffs "entirely unjustified" and "economic self-harm" on the part of the US, but said Australia would not take reciprocal measures and would instead work to diversify exports.” (per BBG)
- Cash US bonds are flat to 2bps richer in today’s Asia-Pac session. The February CPI report is the highlight of today’s US session, while some attention will be paid to the BoC which is expected to deliver a 25bp cut.
- Cash ACGBs are 5-8bps cheaper with the AU-US 10-year yield differential at +18bps.
- Swap rates are 5-8bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing -1 to -5.
- RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut in April is given an 8% probability, with a cumulative 65bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow, the local calendar will see Melbourne Institute inflation expectations for March. The previous month they jumped 0.6pp to 4.6%, the highest since November 2023.
BONDS: NZGBS: Closed With A Bear-Steepener, US CPI Due Later Today
NZGBs closed showing a bear-steepener, with benchmark yields 5-7bps higher. That said, yields finished away from their worst levels, with US tsys partially retracing some of yesterday’s weakness.
- Cash US bonds are ~1bp richer in today’s Asia-Pac session. The February CPI report is the highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
- NZ-US and NZ-AU 10-year yield differentials closed little changed.
- The AFR revealed that RBNZ Orr’s resignation was tied to him refusing to pull back from imposing one of the world’s heaviest capital burdens on the big four Aussie banks, which dominate the Kiwi banking system.
- Swap rates closed 4-7bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing closed flat to 4bps firmer across meetings. 25bps of easing is priced for April, with a cumulative 74bps by November 2025.
- Tomorrow, the local calendar will see Net Migration data.
- The NZ Treasury also plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
FOREX: USD Edges Up, But Still Close To Recent Lows, Risk Appetite More Stable
The USD BBDXY index has ticked up as the Wednesday Asia Pac session has unfolded. We were last just above 1268.0, up around 0.20% versus end Tuesday levels in NY. The index continues to oscillate around its simple 200-day MA and isn't too far from recent lows of 1264.63. EUR/USD is already above its simple 200-day MA, but USD/CNY bounced off the 200-day MA support zone today.
- Comments from US President Trump at a business roundtable around economic growth and downplaying recession fears, as aided risk appetite. Moving away from some tariff threats on Canada has also likely helped. Tariffs on steel and aluminium came into effect though, with no exemptions.
- US equity futures are modestly higher today, but Eminis remain sub 5600. This benchmark and Nasdaq futures are around 0.30% firmer at this stage. US yields are down slightly, off a little over 1bps for some of the key benchmarks, but this follows Tuesday's sharp rebound.
- USD/JPY is back above 148.00, last near 148.20/25, off around 0.30% in yen terms. Earlier remarks by BoJ Governor Ueda in parliament suggested little concern around the run up in local JGB yields and that there wasn't a big difference between the BOJ and the market's view. Such remarks should support the yen, but better risk appetite is likely offsetting.
- Data showed the PPI close to expectations, but import prices back in negative territory in y/y terms.
- AUD/USD has ticked back under 0.6290, with the A$ a clear laggard during this recent USD run lower (particularly against EU bloc currencies). Local equities are off 1.6%, with Australia not securing an exemption from steel and aluminium tariffs. NZD/USD has also edged down, last back close to 0.5705.
- EUR/USD has edged back to 1.0900, but is close to recent highs of 1.0947. EU equity futures are up around 0.85% so far today.
- US CPI for February is out later and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. February budget and real earnings data are also released. The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak.
ASIA STOCKS: Asia Equities Mixed, Eminis Still Sub 5600
Asia Pac equity market trends are mixed in Wednesday trade. We have seen higher trends for some of the tech sensitive plays. The South Korean Kospi is up around 1.5%, while the Taiex is also +1% firmer. In Japan, the Topix is up around 1.00%, but the NKY is up more modestly.
- Comments from US President Trump at a business roundtable on Tuesday around economic growth and downplaying recession fears, has aided risk appetite. US equity futures are firmer, led by Nasdaq, but Eminis remain sub 5600 at this stage, so still close to recent lows.
- Australian markets are underperforming though, the ASX 200 off 1.4%. Australia failed to win a reprieve in terms of steel and aluminum tariffs placed on Australian exports to the US. Some miners are lower, but so too are some finance companies. The material sub index is off close to 1%, while the finance sub sector is down by 1.6%, so slightly underperforming the headline moves.
- The ASX 200 is not back to levels not seen since August last year. We are close to 10% off recent Feb highs. See the chart below. The index is now in oversold territory though.
- Hong Kong markets have seen some volatility since the open, but the aggregate HSI is holding modestly lower at this stage, last off nearly 0.70%. The tech index is off a little over 1%.
- Mainland China markets are struggling for positive territory, but modest losses have been seen so far, with the CSI 300 down 0.30%.
- In South East Asia, most markets are weaker. Malaysian markets are down over 1.85%. Indonesian markets up are though. Singapore is close to flat.
Fig 1: Australian Equities Nearly 10% Off Earlier Feb Highs
Source: MNI - Market News/Bloomberg
OIL: Prices Higher, US CPI, OPEC Report & EIA US Inventories Released Later
Oil prices have continued rising during today’s APAC session driven by reduced excess supply expectations. WTI is 0.7% higher at $66.72/bbl after falling to $66.49 before rising to $66.84. Brent is up 0.7% to $70.03/bbl after an intraday low of $69.79 and a high of $70.13. The USD index is up 0.2%.
- OPEC’s March monthly report is published today with the IEA’s on Thursday. OPEC’s forecasts tend to be more optimistic. On Tuesday, the US’ EIA revised down its global excess supply expectations for both 2025 and 2026 due to the projected impact of tighter sanctions and enforcement on Iran and Venezuela.
- The supply outlook remains highly uncertain though with it still unclear if Iran and Venezuela will find ways to evade sanctions and if there will be an easing of restrictions on Russia. The US administration is also planning to increase US production, while higher tariffs have raised uncertainty around global demand substantially.
- The US 30-day ceasefire proposal will now be presented to Russia following Ukraine’s readiness to agree but Russia has said that it will only approve it on its own terms and not the US’. If it refuses, President Trump has threatened more sanctions and also tariffs on the country.
- Bloomberg reported that US crude inventories rose 4.2mn barrels last week after a drawdown the previous week, according to people familiar with the API data. Gasoline stocks were down 4.6mn while distillate rose 400k. The official EIA data is out later today.
- US CPI for February is out later (see MNI CPI Preview) and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. February budget and real earnings data are also released. The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak.
GOLD: Bullion In Tight Range Ahead Of US CPI
Gold prices are little changed during APAC trading rising moderately to $2916.5/oz, close to March’s high of $2930.31. It is up 2.1% this month benefiting from flight-to-quality flows driven by increased global uncertainty. Risk appetite improved following the US taking a step back from an escalation of the US-Canada trade war and Ukraine agreeing to a US ceasefire proposal. This drove bullion down to $2910.96 early in today’s session but it has now recovered. Markets are waiting for US February CPI data out later.
- Slightly lower US Treasury yields have provided support for gold’s recovery today but the 0.2% rise in the USD index is capping gains.
- The US 30-day ceasefire proposal will now be presented to Russia following Ukraine’s readiness to agree to it but Russia has said that it will only approve it on its own terms and not the US’. A refusal would likely result in further quality flows into bullion.
- Gold’s trend condition remains bullish and recent moves appear corrective. Initial support is at $2880.3, 10 March low, while resistance is at $2930.3, 7 March high. The bull trigger is at $2956.2.
- US CPI for February is out later (see MNI CPI Preview) and forecast to show a 0.1pp moderation in headline and core to 2.9% y/y and 3.2% y/y respectively. An undershoot is likely to increase Fed easing expectations and buoy gold prices. February budget and real earnings data are also released.
- The BoC decision is announced and it is forecast to cut rates 25bp. The ECB’s Lagarde and Lane speak at the “ECB and Its Watchers” conference.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 12/03/2025 | 0730/0730 |  GB | DMO propose calendar for first 3 weeks of FY25/26 | |
| 12/03/2025 | 0845/0945 |  EU | Lagarde at "ECB and Its Watchers" conference Frankfurt | |
| 12/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 12/03/2025 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 12/03/2025 | 1100/1200 | EU | ECB Wage Tracker | |
| 12/03/2025 | - | *** |  CN | New Loans |
| 12/03/2025 | - | *** | CN | Money Supply |
| 12/03/2025 | - | *** | CN | Social Financing |
| 12/03/2025 | 1230/0830 | *** | US | CPI |
| 12/03/2025 | 1345/0945 | *** |  CA | Bank of Canada Policy Decision |
| 12/03/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 12/03/2025 | 1515/1615 | EU | Lane at "ECB and Its Watchers" conference Frankfurt | |
| 12/03/2025 | 1700/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 12/03/2025 | 1800/1400 | ** | US | Treasury Budget |
| 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 | 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 |
