MNI EUROPEAN OPEN:US Equity Future Swings Impact Risk Appetite
EXECUTIVE SUMMARY
- US-CHINA TARIFF TALKS STUCK AT LOWER LEVELS, STOKING FRUSTRATION - BBG
- UKRAINE MEETING INTENDED TO CLARIFY WHAT’S POSSIBLE, RUBIO SAYS - BBG
- WEAKER CONSUMPTION DRIVES JAPAN’S Q4 GDP LOWER - MNI BRIEF
- ROOM FOR MORE CHINA STIMULUS - MNI EXCLUSIVE
- CHINA DEVELOPERS NEED MORE HELP TO CONSOLIDATE - MNI
Fig 1: US Equity Futures
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
POLITICS (BBC): “Addressing Labour MPs on Monday evening, the prime minister said the current welfare system was "the worst of all worlds", discouraging people from working while producing a "spiralling bill".”
EU
GERMANY (BBG): “Germany’s Greens demanded tougher rules for defense spending, making a counteroffer in talks aimed at unleashing hundreds of billions of euros for a prospective ruling coalition of the conservatives and the Social Democrats.”
UKRAINE (FIRSTPOST): “Following a summit of European leaders regarding the situation in Ukraine, British Prime Minister Sir Keir Starmer announced earlier this month that a “coalition of the willing”. To figure out the specifics of the plan, European defence chiefs and defence ministers will meet in Paris on Tuesday and Wednesday, according to i newspaper.”
UKRAINE (BBC): “America's top diplomat has said that he sees promise in Ukraine's proposal for a partial ceasefire to end the war with Russia, ahead of talks in Saudi Arabia between US and Ukrainian officials.”
BUSINESS (ECONOMIST): “Volkswagen will look back on a tough year as it unveils annual results on Tuesday. The world’s second-biggest car manufacturer has forecast sales of around €320bn ($347bn), roughly on a par with 2023. But profits may have fallen as operating margins slide from 7% to an expected 5.6%.”
GREENLAND (BBC): “Residents of Greenland head to the polls on Tuesday in a vote that in previous years has drawn little outside attention - but which may prove pivotal for the Arctic territory's future. US President Donald Trump's repeated interest in acquiring Greenland has put it firmly in the spotlight.”
US
US/CHINA (BBG): “Talks between the US and China on trade and other issues are stuck at lower levels, people familiar with the matter said, with both sides talking past each other and failing to agree on the best way to proceed.”
US/UKRAINE (BBG): “Tuesday’s US-Ukraine meeting in Saudi Arabia is intended to help clarify what concessions might be possible in the push toward a ceasefire with Russia, Secretary of State Marco Rubio said, playing down the possibility of a major breakthrough.”
INFLATION (MNI): U.S. consumers' uncertainty about inflation rose in February as median inflation expectations rose a tenth to 3.1% at the year-ahead horizon and were unchanged at the three-year-ahead and five-year-ahead horizons at 3.0%, according to a monthly New York Fed survey.
MINERALS (RTRS): “U.S. President Donald Trump aims to build metals refining facilities on Pentagon military bases as part of his plan to boost domestic production of critical minerals and offset China's control of the sector, two senior administration officials told Reuters.”
OTHER
JAPAN (MNI BRIEF): Japan's economy for the October-December period grew at a slower pace as private consumption was revised down, although capital investment was revised up, second preliminary data released by the Cabinet Office showed on Tuesday.
CANADA (MNI BOC WATCH): Canada's central bank is seen lowering interest rates for a seventh consecutive meeting Wednesday as U.S. tariff hikes damage exports and investment, overwhelming domestic momentum from past cuts.
CANADA (MNI): Carney To Take On Trump, Be Fiscally Cautious - Ministers.
CHINA
STIMULUS (MNI EXCLUSIVE): Room For More China Stimulus, A senior China advisor sees greater room for fiscal and monetary stimulus. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
HOUSING (MNI): A senior China advisor eyes official support for property company consolidations. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
HOUSING (SECURITIES TIMES): “China’s second-hand housing market transaction volume increased 38.45% y/y last week in 10 key cities, continuing the recent recovery, Securities Times reported.”
AUTOS (PCA): “China saw new car average prices reach CNY30,000 during the first two months of the year, a decrease of 12.6%, with new energy vehicles down 13%, data from the Passenger Car Association showed.”
CHINA MARKETS
MNI: PBOC Net Drains CNY0.5 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY37.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY0.5 billion after offsetting the maturity of CNY38.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7097% at 09:31 am local time from the close of 1.8149% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Monday, compared with the close of 50 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1733 Mon; -0.60% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1733 on Monday, compared with 7.1705 set on Friday. The fixing was estimated at 7.2408 by Bloomberg survey today.
MARKET DATA
UK BRC FEB LIKE-FOR-LIKE SALES +0.9% Y/Y; EST. +2.0%; JAN +2.5% Y/Y
UK BARCLAYS UK FEB CONSUMER SPENDING +1.0% Y/Y; JAN +1.9%
NEW ZEALAND Q4 MANUFACTURING VOLUMES +1.1% Q/Q; Q3 -0.9%
NEW ZEALAND Q4 MANUFACTURING SALES +2.6% Q/Q; Q3 +0.2%
AUSTRALIA MARCH WESTPAC CONSUMER CONFIDENCE +4% M/M; FEB. +0.1%
AUSTRALIA MARCH WESTPAC CONSUMER CONFIDENCE 95.9; FEB. 92.2
AUSTRALIA FEB. NAB BUSINESS CONFIDENCE -1; JAN. +5
AUSTRALIA FEB. NAB BUSINESS CONDITIONS +4; JAN. +3
JAPAN JAN. HOUSEHOLD SPENDING +0.8% Y/Y; EST. +3.7%; DEC. +2.7%
JAPAN Q4 F GDP GROWS 0.6% Q/Q; EST. 0.7%; Q3 +0.4%
JAPAN Q4 F GDP GROWS 2.2% ANNUALIZED; EST. 2.8%; Q3 +1.4%
JAPAN Q4 F NOMINAL GDP +1.1% Q/Q; EST. +1.3%; Q3 +0.7%
JAPAN Q4 F PRIVATE CONSUMPTION 0.0% Q/Q; EST. 0.1%; Q3 +0.7%
JAPAN Q4 F BUSINESS SPENDING +0.6% Q/Q; EST. 0.4%; Q3 -0.1%
JAPAN Q4 F INVENTORY CONTRIBUTION -0.3 PPTS; EST. -0.2 PPTS; Q3 +0.1 PPTS
JAPAN Q4 F NET EXPORTS CONTRIBUTION +0.7 PPTS; EST. +0.7 PPTS; Q3 -0.1 PPTS
JAPAN FEB. M2 +1.2%; JAN. +1.3%
JAPAN FEB. M3 +0.7%; JAN. +0.8%
MARKETS
US TSYS: Cash Bonds Richer But Off Bests As Risk Reverses Higher
In today's Asia-Pac session, TYM5 is currently at 111-19+, 0-09 from closing levels, after trading as high as 111-25 early on equity market weakness.
- Block Buy: +4,050 of TYM5 at 111-17+, post-time 04:08:07 GMT. The contract has traded higher since.
- Cash US tsys are 2-4bps richer, with a flattening bias after yesterday’s robust bull-steepener. The US 10-year is currently 3.8bps lower at 4.173%, after hitting a low of 4.15% earlier.
- Today’s key release is January JOLTS job openings, with February CPI on Wednesday.
JGBS: Sharply Richer With US Tsys, PPI & 20Y Supply Tomorrow
JGB futures are sharply higher and at session highs, +85 compared to settlement levels.
- “Japan's Economy Minister Ryosei Akazawa said on Tuesday the government will work closely with the Bank of Japan (BOJ) in reaching its 2% inflation target as rising living costs hurt households. The government and central bank are striving to achieve the inflation goal in a stable manner and have made some progress so far, and Akazawa said in a regular press conference.” (per RTRS)
- Cash US tsys are 2-4bps richer, with a flattening bias after yesterday’s robust bull-steepener. The US 10-year is currently 3.8bps lower at 4.173%, after hitting a low of 4.15% earlier. Today’s key US release is January JOLTS job openings, with February CPI on Wednesday.
- Cash JGBs are flat to 8bps richer across benchmarks, with the futures linked 7-year and 10-year leading the rally. The benchmark 10-year yield is 8.4bps lower at 1.493% versus the cycle high of 1.584% set yesterday.
- Swap rates are 3-5bps lower. Swap spreads are mostly wider.
- Tomorrow, the local calendar will see PPI and BSI Industry Survey data alongside 20-year supply.
AUSSIE BONDS: Holding Richer, Off Bests With US Tsys, Dec-34 Supply Tomorrow
ACGBs (YM +7.0 & XM +6.0) are stronger after today’s consumer and business confidence data.
- March Westpac consumer confidence jumped 4.0% m/m to 95.9, the highest in three years, boosted by the RBA’s 18 February 25bp rate cut, the start of an easing cycle.
- NAB business confidence continued its trend of oscillating around the zero mark. Business conditions were one point higher at +4 driven by profitability and trading. Prices were encouraging, signalling a further moderation in inflation in Q1 but costs picked up.
- Cash US tsys are 2-3bps richer after yesterday’s robust bull-steepener.
- Cash ACGBs are 6-7bps richer with the AU-US 10-year yield differential at +20bps.
- Swap rates are 7-8bps lower, with the 3s10s curve steeper.
- The bills strip has bull-flattened beyond the first contract, with pricing flat to +10.
- RBA-dated OIS pricing is 1-8bps softer across meetings today.
- Tomorrow, the local calendar will be empty. Melbourne Institute inflation expectations for March print on Thursday. The previous month they jumped 0.6pp to 4.6%, the highest since November 2023.
- Tomorrow, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond.
BONDS: NZGBS: Bull-Steepener As Long End Gains Pared
NZGBs closed 2-5bps richer, with a steeper curve as the long end moved away from session bests in line with US tsys. Cash US tsys sit mid-range, 1-3bps richer, after equities reversed early Asia-Pac session weakness.
- NZGBs underperformed the $-bloc, with the NZ-US and NZ-AU 10-year yield differentials 7bps and 2bps wider respectively.
- In the Fortnightly Economic Update, the NZ Treasury stated that “Q4 GDP likely increased according to indicators released so far. Data indicated that different sectors are at different stages of recovery with retail spending and net exports increasing, while construction activity is still falling. Forward-looking indicators all point to a gradual improvement in activity over 2025.” (per BBG)
- NZ Finance Minister Nicola Willis stated “I am not holding out hope for an overall positive fiscal surprise” in May’s budget.
- Swap rates closed 5bps lower
- RBNZ dated OIS pricing closed flat to 3bps softer. 25bps of easing is priced for April, with a cumulative 78bps by November 2025.
- Tomorrow, the local calendar will see Card Spending data.
- On Thursday, the NZ Treasury 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 Index Lower, But Safe Havens Lose Ground As US Equity Futures Recover
The major currencies are firmer against the USD, although safe havens JPY and CHF are away from best levels as US equity futures recovered some ground. The BBDXY index was last near 1269.7, off around 0.10% versus end NY close levels from Monday.
- Focus today has remained on US equity trends. Eminis slumped after re-opening, down 1%. This was fresh lows for the active contract back to Sep last year. US growth concerns still remain, although we didn't see any fresh catalyst for this morning's move down.
- Sentiment has stabilized as the session progressed, with Eminis now marginally higher for the session. We did enter oversold territory for the active contract (based off RSI 14), which may have helped drive some short covering.
- USD/JPY got to fresh lows of 146.54, before stabilizing with US equity futures. We were last near 147.05/10, still up around 0.15% in yen terms. Earlier data showed weaker than forecast Jan household spending, while Q4 GDP was revised down due to flat consumption growth. This underscores policy efforts to boost real wages growth this year (something endorsed by PM Ishiba yesterday).
- USD/CHF is back under 0.8800, around 0.20% stronger in CHF terms. EUR is near 1.0850, also up modestly.
- AUD and NZD are tracking modestly weaker. Data prints in both countries today not shifting sentiment. AUD/USD was last under 0.6270, while NZD was under 0.5690, challenging EMA support.
- US yields are lower but away from session troughs. The 10yr got to 4.15% not long after the open, following US equity futures. We were last near 4.18%, still off 3bps.
- Looking ahead, US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today.
OIL: Crude Off Intraday Lows, EIA Report & Inventory Data Later Today
Oil prices fell sharply earlier in the APAC session as the risk-off tone from Monday driven by global growth concerns continued but they have bounced off the intraday low to be little changed today but are still retaining yesterday’s losses. WTI is down 0.2% to $65.91/bbl after falling to $65.29, just above initial support. Brent is slightly lower at $69.26/bbl following a low of $68.63, holding above support at $68.33. The USD index is 0.1% lower.
- At the CERAWeek conference in Houston, the Vitol CEO said that oil prices in the $60-$80 range was “reasonable” for the next few years, according to Bloomberg. The Trump administration is eager to increase the US’ oil output, which producers support. Industry-based US inventory data is published later today.
- The US Energy Secretary Wright said at the conference that the government is ready to enforce sanctions against Iran. The supply outlook is particularly unclear with tighter sanctions against Iran and Venezuela possibly reducing global supply, while increased output from the US and potentially an easing of sanctions on Russia offsetting that but the effect of each development is unknown.
- The US’ EIA publishes its short-term energy outlook later today. The IEA publishes its March report on Thursday and OPEC on Wednesday.
- Later US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today.
- Opening at US$2,888.71Gold jumped in the afternoon as equity volatility drove markets in the region.
- Reaching $2,900.50 briefly, gold then backed off to be at $2,897.76
- Gold is usually highly correlated to negative market sentiment and displays it’s ‘safe-haven’ status yet overnight, gold’s drivers appear mixed.
- With global market volatility elevated due to the implementation of tariffs and their potential impact on the US and Global economies, equity markets are down and bond yields rallying gold resumed its year long rally today and with expectations that this volatility is likely to continue, it is an environment where gold usually does well.
- The overnight move has moved back above the 20-day EMA of $2,892.24.
- CFTC data shows that money managers have cut their bullish gold bets to the least in nine weeks, a sign that profit taking is the key driver of the downward pressure on prices.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 11/03/2025 | 1000/0600 | ** |  US | NFIB Small Business Optimism Index |
| 11/03/2025 | - | *** |  CN | New Loans |
| 11/03/2025 | - | *** | CN | Money Supply |
| 11/03/2025 | - | *** | CN | Social Financing |
| 11/03/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 11/03/2025 | 1600/1200 | *** | US | USDA Crop Estimates - WASDE |
| 11/03/2025 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 12/03/2025 | 0001/0001 | * |  GB | RICS House Prices |
| 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 | 1230/0830 | *** | US | CPI |
| 12/03/2025 | 1345/0945 | *** |  CA | Bank of Canada Policy Decision |
