MNI US OPEN - Ball in Trump's Court on Russian Sanctions
EXECUTIVE SUMMARY:
- JAPAN'S RENGO PAY DEMANDS FALL SHORT OF RECENT SURVEY ESTIMATES
- UK GDP DATA SURPRISES LOWER, CONTRACTING IN JANUARY
- TRUMP MUST DECIDE ON FURTHER SANCTIONS AS PUTIN DECLINES FIRST PASS AT CEASEFIRE
- UMICH WATCHED FOR STAGFLATIONARY FORCES AT PLAY
Figure 1: Final German Inflation Breadth
NEWS
US (WSJ): Trump’s Ukraine Peace Strategy Put to Test After Putin Balks at Cease-Fire
President Trump finds himself a “yes” away from brokering a cease-fire between Russia and Ukraine. But it is Russian President Vladimir Putin who has to say it, and he is leaning in the other direction. That has put Trump, the self-professed master dealmaker, in a bind of his own making. After promising Putin wants peace and pressuring Kyiv to back the 30-day fighting pause, Trump will face a decision on imposing new sanctions on Moscow, as he has vowed to do if the Kremlin balks at the U.S.-brokered plan.
US (WSJ): Democrats Clear Way for GOP Funding Bill, Ending Threat of Government Shutdown
The leader of Senate Democrats moved to take the threat of a government shutdown off the table, following a grueling intraparty fight in which lawmakers struggled with how best to resist President Trump’s fast-paced efforts to slim down federal agencies.
ECB (BBG): ECB’s Villeroy Sees Victory Over Inflation ‘Very Soon’
The European Central Bank will win the battle against inflation this year, Governing Council member Francois Villeroy de Galhau said. Price increases will return to the ECB’s 2% target “during” 2025 after already falling below that level in France, the Bank of France governor said.
Japan's largest labour confederation Rengo said on Friday its member unions won an average 5.46% increase in wages this year, exceeding 2024's 33 year high of 5.28%, providing impetus for a possible interest rate hike by the Bank of Japan, local media reported. The wage increase is slightly higher than forecasts by BOJ officials, however, recent surveys and hearing had suggested they could print stronger.
CHINA (BBG): Officials to hold press conference on consumption measures Monday
China’s benchmark stock index rallied the most in two months on Friday, with consumer shares leading gains on expectations of more policy support for the sector. Officials from the finance ministry, commerce ministry, the central bank and other government bodies plan to hold a press conference Monday on measures to boost consumption.
MNI INTERVIEW: RBA More Reactive In Future - Former Economist - On MNI Policy MainWire now, for more details please contact sales@marketnews.com
DATA
**MNI: SPAIN FEB HICP +0.4% M/M, +2.9% Y/Y
**MNI: FRANCE FEB HICP +0.1% M/M, +0.9% Y/Y
MNI: GERMANY FINAL FEB HICP 0.5% M/M, 2.6% Y/Y
The UK economy contracted modestly in January, weighed by a slowdown in the manufacturing sector, the Office for National Statistics said Friday. Monthly real GDP is estimated to have fallen by 0.1%, after growth of 0.4% in December, although the economy is estimated to have grown by 0.2% in the three months to January, compared with the three months to October 2024, mainly because of growth in the services sector.
MNI: SWEDEN FEB UNEMPLOYMENT 9.4%
EGBS: Bund Futures Easing Back Toward Session Lows As Equities Recover
Bund futures have eased back towards session lows as European equities recover, now -19 ticks at 127.25. A bearish theme remains intact, with the March 11 low at 126.53 providing initial support.
- German yields are 1.5-2.0bps higher today, while ASWs (vs 3-month Euribor) tighten a little. While the language deployed by the Greens during yesterday’s Bundestag debate on fiscal loosening was deemed combative, most still expect a deal to be done, paving the way for fiscal loosening ahead of the new Bundestag sitting on 25 March. The constitutional court rulings, which should come by 18 March, seem to present the major risks to the central view.
- German final February HICP inflation saw a 2 tenth downward revision to 2.6% Y/Y. Details indicated soft services price pressures – but this wasn’t a market mover. French and Spanish final HICP confirmed flash estimates.
- 10-year peripheral spreads to Bunds have tightened through the course of the morning alongside the equity recovery. The BTP/Bund spread is back at 112.5bps at typing (2.5bps narrower today).
- Several interesting ratings decisions are scheduled after hours, particularly against the backdrop of increased defence spending prospects. Moody’s could become the last of the three major agencies to grant Greece IG status (current rating Ba1, Outlook Positive).
GILTS: Away From Highs As Bunds Falter, Fiscal Questions Eyed
Gilts continue to hold off session highs, largely owing to weakness in Bunds.
- Futures +14 at 91.81, 91.76-92.03 range seen thus far.
- Initial support and resistance in futures sits at 91.07 & 92.63, with the bearish technical theme intact.
- Yields 1bp lower to 1bp higher, curve twist steepens.
- 50bp and 100bp continue to cap 2s10s and 5s30s curves, respectively, on a closing basis.
- 10s ~2.5bp tighter to Bunds after trading between 175-185bp over the past couple of sessions, failing to breach the support cluster at 175.0/174.5bp.
- BoE-dated OIS not showing much movement since the gilt open, 55.5bp of cuts priced through year-end.
- No impact from the uptick in the latest BoE/Ipsos consumer inflation expectations data,
- We noted earlier that while this morning’s softer-than-expected GDP data isn’t a needle mover for the BoE, at least in isolation, it will provide further fiscal headwinds.
- This comes as reports suggest that Chancellor Reeves is already receiving meaningful cabinet level pushback against her tabled welfare cuts, potentially limiting her room for manoeuvre.
- Macro cues set to dominate into the weekend.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.457 | +0.2 |
May-25 | 4.269 | -18.6 |
Jun-25 | 4.210 | -24.5 |
Aug-25 | 4.065 | -39.0 |
Sep-25 | 4.019 | -43.5 |
Nov-25 | 3.923 | -53.2 |
Dec-25 | 3.900 | -55.5 |
FOREX: JPY Falters as Rengo Tally Falls Short of Survey
- Rengo pay tallies have again proved market moving - while unions are set to demand a faster pace of pay rises this year (5.46% from 5.28%), the final demand may turn out lower than many surveys had estimated - undermining the JPY and helping aide USD/JPY toward the mid-week high of 149.19.
- UK economic data out this morning surprised to the downside, with GDP surprisingly contracting in January while industrial and manufacturing production data came in well below forecast. GBP is softer as a result, with sell-side marginally marking lower growth expectations for this year - meaning possible implications for the BoE's policy profile. GBP/USD's returned closer to the $1.2900 handle as a result, with 1.2914 marking first support before the psychological level.
- Antipodean currencies are undergoing a minor relief rally, helping tip AUD, NZD to the top end of the G10 table - although both AUD/USD and NZD/USD remain largely rangebound on the week. AUD/USD still sees S/T support at the 50-dma of 0.6274.
- Preliminary Uni of Michigan sentiment data marks the data highlight Friday, with markets likely to keep a close eye on the inflation expectations component - it's this figure that surprised materially to the upside last month, triggering market concern over stagflationary forces in the US economy. Consensus looks for the 1yr expectation to hold at 4.3% this month, with the longer-term expectation moderating to 3.4%.
EQUITIES: S&P Formally Enters Correction Territory
The trend condition in S&P E-Minis remains bearish and fresh cycle lows this week have reinforced current conditions. MA studies are in a bear-mode set-up highlighting a dominant downtrend Sights are on the next important support at 5499.25. The medium-term trend direction in the Eurostoxx 50 futures contract remains up and the latest pullback appears corrective - for now. However, support at the 50-day EMA, at 5311.55, has been pierced. A clear break of this average would highlight a strong short-term bear threat.
- Japan's NIKKEI closed higher by 263.07 pts or +0.72% at 37053.1 and the TOPIX ended 17.49 pts higher or +0.65% at 2715.85.
- Elsewhere, in China the SHANGHAI closed higher by 60.833 pts or +1.81% at 3419.562 and the HANG SENG ended 497.33 pts higher or +2.12% at 23959.98.
- Across Europe, Germany's DAX trades higher by 50.53 pts or +0.22% at 22616.03, FTSE 100 higher by 24.97 pts or +0.29% at 8567.69, CAC 40 up 35.51 pts or +0.45% at 7974.22 and Euro Stoxx 50 up 19.22 pts or +0.36% at 5347.35.
- Dow Jones mini up 206 pts or +0.5% at 41065, S&P 500 mini up 38.25 pts or +0.69% at 5565.75, NASDAQ mini up 175.75 pts or +0.91% at 19425.
COMMODITIES: Momentum Pointed Higher for Gold
A clear uptrend in Gold remains intact and yesterday’s move higher reinforces current conditions. The yellow metal has traded to a fresh all-time high and sights are on the psychological $3000 handle next. A bearish condition in WTI futures remains intact and the contract continues to trade closer to its recent lows. The latest sell-off resulted in a breach of $70.20, the Feb 6 low.
- WTI Crude up $0.86 or +1.29% at $67.42
- Natural Gas down $0.04 or -0.9% at $4.077
- Gold spot up $1.62 or +0.05% at $2990.56
- Copper up $2.2 or +0.45% at $494.9
- Silver up $0.11 or +0.32% at $33.975
- Platinum down $3.12 or -0.31% at $996.8
| Date | GMT/Local | Impact | Country | Event |
| 14/03/2025 | 0900/1000 | * |  IT | Industrial Production |
| 14/03/2025 | 0930/0930 |  GB | BoE/Ipsos Inflation Attitudes Survey | |
| 14/03/2025 | - | *** |  CN | New Loans |
| 14/03/2025 | - | *** | CN | Money Supply |
| 14/03/2025 | - | *** | CN | Social Financing |
| 14/03/2025 | 1230/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 14/03/2025 | 1230/0830 | ** | CA | Wholesale Trade |
| 14/03/2025 | 1315/1415 |  EU | Cipollone in panel discussion at "Fifty years of Consob: present and future - Reflections in Bocconi" Milan | |
| 14/03/2025 | 1400/1000 | *** |  US | U. Mich. Survey of Consumers |
| 14/03/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 14/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 14/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
