MNI US OPEN - BoJ Hold Policy Rate, Lower Economic Forecasts
EXECUTIVE SUMMARY
- BOJ KEEPS RATE AT 0.50%; LOWERS GDP, INFLATION FORECASTS
- US HAS REACHED OUT TO CHINA TO INITIATE TARIFF TALKS, CCTV SAYS
- US AND UKRAINE SIGN RESOURCES DEAL AFTER FRAUGHT NEGOTIATIONS
- WIDESPREAD HOLIDAY CLOSURES ACROSS EUROPE TODAY
Figure 1: Brent crude futures hit new multi-year low in £ terms
Source: MNI/Bloomberg
NEWS
BOJ (MNI): BOJ Keeps Rate at 0.50%, Keeps Rate Hike Stance
The Bank of Japan board decided unanimously to keep policy interest rate at 0.50% amid high uncertainties over the outlook for the economy and inflation. The board's decision was largely anticipated. However, the bank maintained its stance of gradually raising the interest rate if underlying CPI inflation converges toward the bank’s 2% price target as projected as real interest rates remain at low levels.
BOJ (MNI): BOJ Sees FY25 CPI at 2.2%, Delays 2% Target Timing
The Bank of Japan on Thursday lowered its median forecasts for economic growth in fiscal 2025 and 2026 to 0.5% and 0.7%, down from 1.1% and 1.0% projected in January, due to the growing impact of U.S. trade policies on Japan’s economy. For fiscal 2027, the BOJ projected growth at 1.0%, marking its first forecast for that year. The central bank also cut its core consumer price index forecasts, projecting 2.2% inflation this fiscal year and 1.7% in fiscal 2026, down from 2.4% and 2.0%. Core CPI for fiscal 2027 is forecast at 1.9%.
BOJ (MNI): Ueda Signals Policy Hike Delay
Bank of Japan Governor Kazuo Ueda on Thursday signaled a potential delay in raising the 0.5% policy interest rate, citing a likely temporary pause in the improvement of underlying inflation, following the board's decision to hold on Thursday. “Economic growth will likely be under downward pressure due to the U.S. trade policies," Ueda told reporters. "As a result, the rise in wages and prices is somewhat weaker and the improvement of underlying CPI inflation is likely to stall."
MNI US PAYROLLS PREVIEW: Tailwinds Ebb as Storm Gathers
Nonfarm payrolls are seen increasing a seasonally adjusted 135k in April in the Bloomberg survey after a stronger than expected 228k in March. Primary dealer analysts also see 135k whilst the Bloomberg whisper is weaker again, currently at 120k. April won’t benefit from the favorable weather and returning strikers that helped March employment growth. Immigration restrictions are likely to increasingly drag on employment growth ahead although this month’s report could be a little early.
US/CHINA (BBG): US Has Reached Out to China to Initiate Tariff Talks, CCTV Says
US President Donald Trump’s administration has been seeking contact with Beijing to initiate talks on the massive tariffs Washington has imposed on China, according to a state-run media outlet. The US government recently reached out to China though various channels, Yuyuantantian, a Weibo account affiliated with China Central Television that regularly signals Beijing’s views on trade, said in a post. It cited unidentified people with knowledge of the matter, providing no further details.
US/UKRAINE (BBG): US and Ukraine Sign Resources Deal After Fraught Negotiations
The US and Ukraine reached a deal over access to the country’s natural resources, offering a measure of assurance to officials in Kyiv who had feared that President Donald Trump would pull back his support in peace talks with Russia. The deal will grant the US privileged access to new investment projects to develop Ukraine’s natural resources including aluminum, graphite, oil and natural gas. It’s been seen as critical to fostering Trump’s goodwill as his administration pushes to end the war that began when Russia mounted its full-scale invasion more than three years ago.
US/RUSSIA (BBG): Graham Says He Has Broad Senate Support for New Russia Sanctions
A key US Senate ally of President Donald Trump said he has the commitment of 72 colleagues for a bill that would enact “bone-crushing” new sanctions on Russia and tariffs on countries that buy its oil, gas and other key products if Vladimir Putin doesn’t engage in serious negotiations to end the war in Ukraine. “The goal is to help the president,” Lindsey Graham, a South Carolina Republican, told reporters Wednesday.
US (BBG): Trump Barely Defeats Challenge to His Tariff War in Senate
Donald Trump barely repelled a challenge to his global tariff offensive in the Republican-controlled US Senate as the president’s trade policy stokes public fears of inflation and recession. The Senate tied 49-49 in a Wednesday vote on a resolution to end the barrage of import taxes the president announced earlier this month on China and most other US trading partners. Republicans immediately pivoted to a procedural motion to effectively kill the measure, a move that required Vice President JD Vance to cast the tie-breaking vote.
US (BBG): Musk Says DOGE ‘Should Definitely’ Examine Federal Reserve Costs
Billionaire Elon Musk said he is considering sending his government efficiency team to the Federal Reserve, citing a costly renovation of the central bank’s Washington, DC, headquarters as an example of potential government waste. “Since at the end of the day, this is all taxpayer money, I think we certainly — we should definitely — look to see if indeed the Federal Reserve is spending two and a half billion dollars on their interior designer,” Musk told reporters Wednesday at the White House.
EUROPE (MNI): Widespread Holiday Closures Across Europe Today
A reminder that there are widespread market closures across Europe today, owing to the observance of the Labour Day holiday.
UK (FT): Tories Braced for Losses as England Votes in Five-Party Race
The Conservatives are bracing for heavy losses in the local elections on Thursday, as England prepares for its first set of polls in which five political parties are set to be competitive.
AUSTRALIA (MNI): Recent Polls Little Changed, Labour Looks Likely to Retain Government
Opinion polls continue to point to a return of the incumbent Labor government following Saturday's federal election but it remains unclear whether it can hold onto its majority which is likely to depend on developments in a number of individual seats. In the first half of April, the average of surveys had a 2-party preferred breakdown of 53% to 47% in favour of Labor (ALP) and this has barely shifted in the second half of the month at 52.5% to 47.5%.
SOUTH KOREA (MNI): Overturn of Lee's Acquittal Could Upend Election Campaign
The presidential election campaign could be upended following a Supreme Court ruling that overturns a previous Seoul High Court decision that acquitted opposition liberal Democratic Party of Korea (DPK) leader Lee Jae-myung. Lee faced charges of violating election law by lying in a presidential debate and a parliamentary hearing in 2021. Chosun reports that the High Court is bound by the Supreme Court's ruling, meaning Lee must be found guilty. He will now face a second trial to determine his sentence after a sentencing hearing. If he is fined more than KRW1mn (USD700), Lee will be barred from running for office for five years. Opinion polls and political betting markets have shown DPK leader Lee Jae-myung as the clear frontrunner in the election.
INDIA/PAKISTAN (BBG): India Renews Call for ‘Justice’ After Rubio Urges De-Escalation
Foreign Minister Subrahmanyam Jaishankar reiterated that “perpetrators, backers and planners” of an attack that killed dozens of people in Indian-controlled Kashmir must be brought to justice, hours after speaking with his US counterpart Marco Rubio who had sought to de-escalate tensions. Secretary of State Rubio had spoken with top officials from India and Pakistan on Wednesday, asking them to “maintain peace and security in South Asia.” He told Shehbaz Sharif, Pakistan’s prime minister, of the need to condemn the attack and re-establish direct communications, according to a statement from the State Department.
INDIA/PAKISTAN (BBG): Pakistan Offers to Join India in Probe Into Kashmir Attack: Geo
Pakistan is ready to join a probe by Indian officials into the attack in Kashmir to find facts and avoid conflict between the two neighbors, Rana Sana Ullah Khan, advisor on political affairs to Pakistan’s prime minister, tells Geo News on Thursday. An investigation by a third party is another option. Pakistan condemns the attack that killed dozens of people. War will be destructive for both nations, Khan says.
CORPORATE (BBG): Microsoft Shares Surge on Strong Quarterly Cloud Growth
Microsoft Corp. shares jumped after the company reported stronger-than-expected quarterly sales and profit growth, suggesting customer demand for cloud services has held steady despite a wave of tariffs and economic turbulence. Total revenue in the fiscal third quarter increased 13% to $70.1 billion, while adjusted profit was $3.46 a share, the company said in a statement Wednesday. Analysts on average estimated sales of $68.5 billion and adjusted per-share earnings of $3.21.
CORPORATE (BBG): Meta Jumps on Resilient Ad Sales, Plans to Navigate Tariffs
Meta Platforms Inc. shares jumped in early trading after the company’s advertising sales quelled Wall Street concerns about the impact of the Trump administration’s trade war, with first-quarter revenue beating expectations. The maker of Facebook and Instagram reported $42.3 billion in first-quarter sales. That beat analysts’ estimates for $41.4 billion for the quarter ended March 31. The company also said Wednesday that current-quarter revenue will be in line with analysts’ expectations, and that it is responding to the trade war by rethinking suppliers and projecting higher costs for infrastructure.
DATA
UK DATA (MNI): Upward Revision to April Manufacturing PMI; But Details Still Soft
- UK FINAL APRIL MANUF PMI 45.4 (FLASH 44.0, MAR 45.3)
Decent upward revision to the UK April manufacturing PMI, with he final read printing at 45.4 (vs 44.0 flash, 44.9 prior). It's still the seventh consecutive month in contractionary territory, though. The broad themes of the report align with the flash release: Trade
uncertainty is weighing on demand, particularly in export markets; Increased NIC and wage costs are dragging on employment; and Input price increases are being passed onto output prices. This data, alongside the services and composite PMIs next Tuesday, will set the scene for the BOE's May decision. A 25bp rate cut is widely expected, with focus on updated projections and any tweaks to the statement guidance.
UK MAR M4 MONEY SUPPLY +0.3% M/M, +3.4% Y/Y (MNI)
UK BOE MAR MORTGAGE APPROVALS 64,309 (MNI)
UK BOE MAR SECURED LENDING GBP13 BLN (MNI)
UK BOE MAR CONSUMER CREDIT GBP0.88 BLN (MNI)
SWITZERLAND DATA (MNI): Retail Sales Overall Solid, Up For Positive Q1 GDP Contribution
- SWISS MAR RETAIL SALES +0.6% M/M, +2.2% Y/Y
Swiss (real) retail sales saw a solid March, at +0.55% M/M (vs -1.31% prior) and +2.21% Y/Y (vs +1.16% prior). This means that despite the weak February, private consumption in Switzerland should have the potential for a positive Q1 GDP contribution. On a broad Y/Y 3m average basis, Swiss retail sales continue to print above their long-term average recently - suggesting that the sector overall is in solid shape. The Q1 SNB business cycle signals report meanwhile indicated that "customers are still price-sensitive", resulting in them opting for lower-cost product lines in the food sector, and in non-food, firms feel competition from online retailers aboard.
JAPAN DATA (MNI): Japan Q1 GDP to Drop 0.2% Q/Q; Annualised -0.5%
Japan’s economy is expected to have shrunk in the January–March quarter for the first time in four quarters, as weak private consumption and falling net exports outweigh gains in capital investment, private economists predicted. Preliminary data forecast a 0.2% quarter-on-quarter GDP decline, or -0.5% annualised, reversing Q4’s 0.6% growth (2.2% annualised). Private consumption, which accounts for 60% of GDP, is estimated to have edged up just 0.1%, while net exports likely contracted 0.6 percentage points after adding 0.7 pp to growth in Q4.
AUSTRALIA DATA (MNI): Q1 Exports to US Up Sharply
- AUSTRALIA MAR TRADE BALANCE A$+6900
While it is too early to see the impact of the 10% tariff on US imports from Australia and 25% on its steel and aluminium, there was a sharp jump in exports to the US in Q1 to beat the deadlines, but there is likely to be some unwind in Q2 due to the new duties and the frontloaded shipments. Export growth to much of Asia improved in March as commodity volumes rose. Goods exports to the US rose 140.5% q/q in Q1 due to tariff fears was up 200% y/y in March. The US is a relatively small export destination for Australia worth 4.6% of total exports in 2024 compared to 34.6% for China.
FOREX: JPY Falters as BoJ Kick the Can on Rate Hikes
- A dovish turn from the BoJ board has contained the JPY, pressuring the currency against all others in G10 headed into the NY crossover. USD/JPY rallied comfortably through the Y144.00 handle to touch Y144.74 - thereby pressuring the next major topside level at 145.55 - the 50% retracement of the downleg posted off the late March high.
- Moves follow the BoJ not only stressing the uncertainty surrounding current monetary policy, but also cutting their growth outlook over the short- and medium-term as well as pushing back their forecast for when they will achieve their domestic price target. The dovish turn pressured BoJ rate hike pricing, with only 10bps now priced for the rest of the year.
- GBP/USD slipped across the Asia-Pac session, pressuring GBP/USD to a new weekly low at 1.3275 as the bearish tweezer top candle pattern formed on Monday & Tuesday played out. The rate appears to have bottomed out into the crossover, as the USD Index drifts off the overnight high.
- ISM Manufacturing data is the calendar highlight Thursday, and follows the lower-than-expected MNI Chicago PMI print yesterday. The Fed remain inside their pre-meeting media blackout, keeping central bank communications very light.
GILTS: 2-Year Yields Hit Lowest of '25, 10s Near Next Key Level
Weakness in crude oil futures and spillover from the JGB rally that followed the BoJ decision & press conference provide support for gilts this morning.
- Futures last 93.70 vs. session highs of 93.86.
- The contract has traded at the highest level seen since April 7, with the recent bullish phase extending further.
- Our technical analyst’s next resistance level of note is located at 94.00.
- Yields little changed to 1bp lower across the curve.
- 2s have printed the lowest level since September ’24, sub-3.80%. Next yield support seen at 3.761%.
- 10-Year yields traded as low as 4.419%, with uptrend support drawn off the December 8 ’21 low located at 4.415% today.
- GBP STIRs off dovish session extremes as gilts are off highs.
- BoE-dated OIS showing 96bp of cuts through year-end after testing April extremes of 97bp.
- SONIA futures 0.5-2.5 higher. April highs are intact across much of the strip, although there are some exceptions in the greens.
- Much of Europe is observing the Labour Day holiday, reducing the potential sources of market catalysts and limiting liquidity/trading activity at this stage.
- Expect headlines out of the U.S. to drive things for much of the day, with continued focus on the tariff/global trade backdrop, while the ISM manufacturing survey and weekly jobless claims readings present the highlights of the macro data calendar.
EQUITIES: Break of 50-Day EMA Strengthens E-Mini S&P Bull Cycle
Eurostoxx 50 futures maintain a positive tone and are holding on to their recent gains. The contract has cleared the 20-day EMA and pierced the 50-day EMA, at 5102.56. A clear break of this average would strengthen the current bull cycle and signal scope for a continuation of the corrective uptrend. This would open 5165.00 next, the Apr 3 high. Support to watch lies at 4812.00, the Apr 16 low. Clearance of this level would highlight a reversal. A corrective bull cycle in S&P E-Minis that started on Apr 7, remains in play. The contract has breached a number of important short-term resistance points. Price has cleared the 20-day EMA and pierced 5528.75, the Apr 10 high. The next key resistance is 5618.25, the 50-day EMA. A clear breach of this EMA would strengthen a bull theme. Initial key support lies at 5127.25, the Apr 21 low. A break would be bearish.
- Japan's NIKKEI closed higher by 406.92 pts or +1.13% at 36452.3 and the TOPIX ended 12.15 pts higher or +0.46% at 2679.44.
- Dow Jones mini up 241 pts or +0.59% at 40993, S&P 500 mini up 60 pts or +1.07% at 5645.5, NASDAQ mini up 308.25 pts or +1.57% at 19958.75.
Time: 09:55 BST
COMMODITIES: Latest Move Lower for WTI Futures Reinforces Bearish Theme
A medium-term bearish theme in WTI futures remains intact and the latest move down reinforces this theme, signalling the end of the correction between Apr 9 - 23. The correction allowed an oversold trend condition to unwind. A clear resumption of the bear cycle would open $53.72, a Fibonacci projection. Initial support to watch is at $58.29, the Apr 29 low. Resistance to watch is $65.38, the 50-day EMA. Gold is unchanged and the yellow metal continues to trade below its recent highs. The trend needle points north and the latest move down appears corrective. The retracement has allowed an overbought condition to unwind. Moving average studies are in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, a Fibonacci projection. Initial firm support to watch lies at 3239.5, the 20-day EMA.
- WTI Crude down $0.92 or -1.58% at $57.33
- Natural Gas up $0.07 or +2.01% at $3.391
- Gold spot down $54.4 or -1.65% at $3232.42
- Copper up $4.5 or +0.98% at $465.55
- Silver down $0.36 or -1.1% at $32.227
- Platinum down $3.06 or -0.32% at $967.35
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 01/05/2025 | - | *** |  US | Domestic-Made Vehicle Sales |
| 01/05/2025 | 1230/0830 | *** | US | Jobless Claims |
| 01/05/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 01/05/2025 | 1345/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 01/05/2025 | 1400/1000 | *** | US | ISM Manufacturing Index |
| 01/05/2025 | 1400/1000 | * | US | Construction Spending |
| 01/05/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 01/05/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 01/05/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 02/05/2025 | 0130/1130 | * |  AU | Producer price index q/q |
| 02/05/2025 | 0130/1130 | *** | AU | Retail trade quarterly |
| 02/05/2025 | 0130/1130 | ** | AU | Retail Trade |
| 02/05/2025 | 0630/0730 |  GB | DMO to announce details of long syndication for W/C 19 May | |
| 02/05/2025 | 0715/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 02/05/2025 | 0745/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 02/05/2025 | 0750/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 02/05/2025 | 0755/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 02/05/2025 | 0800/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 02/05/2025 | 0900/1100 | *** | EU | HICP (p) |
| 02/05/2025 | 0900/1100 | ** | EU | Unemployment |
| 02/05/2025 | 1130/2030 | * |  JP | Labor Force Survey |
| 02/05/2025 | 1230/0830 | *** | US | Employment Report |
| 02/05/2025 | 1400/1000 | ** | US | Factory New Orders |
| 02/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 02/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
