MNI US OPEN - Core CPI Seasonality Remains at the Fore
EXECUTIVE SUMMARY
- MNI US CPI PREVIEW - RESIDUAL CONCERNS
- TRUMP EASES AID THREATS BUT REPEATS CALL FOR DISPLACING GAZANS
- SPEAKER JOHNSON EYES USD1.5 TRILLION IN SPENDING CUTS - PUNCHBOWL
- BOJ’S UEDA SAYS RATE HIKE SIZE WILL DEPEND ON ECONOMY, PRICES
Figure 1: Recent US inflation developments
NEWS
MNI US CPI PREVIEW - JANUARY 2025: Residual Concerns
Consensus sees core CPI inflation accelerating to a seasonally adjusted 0.3% M/M (unrounded 0.29%) in January after what was, for now, seen as a slightly softer than expected 0.225% M/M in December. Headline is expected only a touch stronger, at 0.32% M/M for a pullback from 0.39% owing to a sequential slowing in energy prices vs stronger food prices amidst a serious bird flu outbreak. There's a good chance core CPI ‘surprises’ a tenth higher with 3.2% Y/Y owing to rounding, whilst headline CPI is widely expected to print 2.9% Y/Y.
US (MNI): Speaker Johnson Eyes USD1.5 Trillion in Spending Cuts - Punchbowl
Jake Sherman at Punchbowl reports that House Speaker Mike Johnson's (R-LA) budget resolution could target USD$1.5 trillion in spending cuts. Sherman notes on X that the yet-to-be-finalised resolution could cover USD$4.5 trillion for tax cuts, USD$300 billion increase in mandatory spending, and assumes 2.8% in economic growth. Johnson intends to mark up the resolution in the House Budget Committee on Thursday, ahead of a one-week recess. Johnson is targeting the last week of February for a full House vote.
US (WSJ): Trump Advisers Eye Bank Regulator Consolidation After Targeting CFPB
Trump administration officials are discussing plans to curtail and combine the power of banking regulators - without Congress’s input. In recent discussions, Trump advisers and allies have examined whether it is possible to collapse the Federal Deposit Insurance Corp. into the Treasury Department, according to people familiar with the matter. They have also discussed combining the FDIC’s regulatory role with the Office of the Comptroller of the Currency under Treasury.
US (WSJ): What We Know About Trump’s Reciprocal Tariffs
President Trump’s team is working to impose as soon as this week reciprocal tariffs on nations that have slapped levies on U.S. exports, using executive action to bring to life a far-reaching proposal from his first term that never came to fruition. Among Trump aides, Peter Navarro, the president’s senior counselor for trade and manufacturing, is a leading advocate for the reciprocal-tariff idea, according to people with knowledge of the situation. Navarro pushed the idea during Trump’s first term, advocating for lawmakers to sign on to a reciprocal-tariff bill put forth by then-Rep. Sean Duffy (R., Wis.), now Trump’s secretary of transportation.
US/MIDDLE EAST (BBG): Trump Eases Aid Threats But Repeats Call for Displacing Gazans
US President Donald Trump backed off his threat to withhold aid for Jordan after King Abdullah II agreed during a White House meeting to accept 2,000 ill children from Gaza. Still, Trump reiterated his desire for the US to take ownership of Gaza and for Jordan and Egypt to absorb Palestinians, which Arab states are firmly against. He also spoke of creating a “parcel of land” in each of the two nations for Gazans to live in.
US/EU (MNI): EU Trade Mins to Hold Emergency Meeting to Discuss Trump Metals Tariffs
The Polish presidency of the Council of the European Union has called an emergency meeting of EU trade ministers for this afternoon following the announcement of the imposition of tariffs on EU steel and aluminium exports to the US. Ministers will meet virtually from 1600CET (1000ET, 1500GMT). As Politico reports, there remain divisions between EU members on whether the Union should respond forcefully with its own tariffs or other measures, or attempt to placate US President Donald Trump in order to avoid more potentially damaging tariffs on sectors like the autos industry.
US/JAPAN (BBG): Japan Asks for Exemption From US Steel and Aluminum Tariffs
Tokyo asked US President Donald Trump to exclude Japanese companies from his fresh tariffs on steel and aluminum. The request was made on Wednesday Japan time, Trade Minister Yoji Muto told reporters. Finance Minister Katsunobu Kato and Chief Cabinet Secretary Yoshimasa Hayashi also conveyed Tokyo’s vigilance over the matter in separate press conferences, with Hayashi saying the exemption request was made via the embassy in Washington.
RUSSIA (MNI): Kremlin Spox - Prisoner Exchange w/US 'Unlikely to Be Turning Point'
Kremlin spox Dmitry Peskov has spoken to reporters following the release of US citizen Marc Fogel as part of a prisoner exchange on 11 Feb. Peskov confirms that one Russian citizen was released from a US jail as part of the deal. After meeting Fogel at the White House US President Donald Trump claimed, “I think this … could be a big, important part in getting the war over.”. However, Peskov pushed back saying "Such agreements are unlikely to be a turning point...These are gradual steps to increase mutual trust, which is now at a low point."
EU (FT): EU Weighs Temporary Gas Price Cap to Counter Diverging Costs With US
Brussels is weighing new powers to temporarily cap EU gas prices, which have recently hit record levels compared with the US. The European Commission is considering a cap as part of discussions about a “clean industrial deal” policy document to be presented next month, said three people with knowledge of the talks.
BOE (MNI): BOE to Cut Only Once More in 2025 - NIESR
The Bank of England will make only one further 25bp cut in 2025 and another in 2026, with Bank Rate troughing at 4.0%, according to the National Institute of Economic and Social Research. In an updated quarterly forecast round, NIESR projected that inflation would hit 3.2% in January and peak at 2.8% this quarter and average 2.4% for the year before dropping back to the 2% target with the BOE only having room for two more rate cuts.
RIKSBANK (MNI): Riksbank Bunge Backs Tentative Policy Approach
Riksbank Deputy Governor Aino Bunge said that as policy only works with a lag and as it was a mistake to place much weight on recent, single month data showing higher than expected inflation or stronger activity she favoured a "tentative" approach to rate setting. "There are early signs of a rebound, but it is important that we receive further information that confirms our forecast," Bunge said in a speech at a JP Morgan event.
CHINA (BBG): China Tightens Rules on New Copper Smelters to Curb Overcapacity
China has tightened requirements for building new copper smelters, in its latest attempt to curb relentless capacity expansion in the world’s top producer of the refined metal. Companies building new copper smelters should control enough mine supply - via outright ownership or equity stakes - to feed the plants, according to a 2025-2027 development plan for the country’s copper industry jointly issued by 11 ministries. This condition would likely be met by only a small number of major Chinese companies.
BOJ (BBG): BOJ’s Ueda Says Rate Hike Size Will Depend on Economy, Prices
Bank of Japan Governor Kazuo Ueda says that the size of interest rate hikes will depend on the economy, inflation and financial conditions at the time. BOJ’s rate hike to 0.5% last month from 0.25% was appropriate, Ueda says in response to questions in parliament. Risks aren’t zero that price increases in fresh and other foods are impacting sentiment and price expectations among households.
JAPAN (BBG): Japan Regulator Warns Banks on Risks of Repackaged JGBs
Japan’s financial regulator urged the country’s regional banks to pay closer attention to the risks of investing in so-called repackaged government bonds, which are gaining popularity, people familiar with the matter said. At a regular meeting with regional bank heads on Wednesday, a senior official at the Financial Services Agency told lenders that they should make sure they have proper risk management in place for the financial instruments.
RBA (MNI EXCLUSIVE): Australian Rate Cuts to Be Gradual - Former RBA Economists
Ex-RBA officials share their outlook for the February meeting. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
DATA
ITALY DATA (MNI): Italy IP Surprisingly Slides But Data Volatility Caveat
Italian December industrial production was weaker than expected falling 3.1% M/M swda (vs -0.2% consensus), after rising 0.3% in November. On a 3m/3m basis, industrial production deteriorated further to -1.1% from -0.7% in November. On the month, there were heavy declines across the main categories (consumer goods -3.3%, intermediate goods -3.6% and capital goods -3.3%) whilst energy bounced 1.0% - all on a SWDA basis.
SWEDEN DATA (MNI): Unemployment Claims Rate Looks to Have Stopped Rising
The Swedish unemployment claims rate was 7.0% for the third consecutive month in January. This supports our view that while overall labour market conditions remain subdued, it appears as though we have passed the peak pace of deterioration. This underscores expectations for the Riksbank to remain on hold in March, as its assesses the impact of past hikes on the economy. Total vacancies were ~100k in January, little changed from December. Relative to a year-ago, vacancies have fallen 22% Y/Y.
AUSTRALIA DATA (MNI): Home Loan Values Continue Rising
The new quarterly lending indicators that replace the monthly series were released today for Q4. The total number of home loans fell 0.4%, the first drop since Q1 2024, but the value rose 1.4% q/q, the third straight quarterly rise, to be up 16% y/y. In its December minutes, the RBA pointed out that while policy was restrictive, there were "indications that financial conditions were not restraining credit growth as much as had been expected". This data is consistent with that view.
FOREX: JPY Weakness Stands Out as Markets Looks for Inflection Point
- The JPY's overnight step lower stands out among G10 FX Wednesday, headlined by USD/JPY's rally back above Y153.00, closing in on the first major resistance at 154.46. Clearance here would be bullish. Despite pulling back from the morning highs, EURJPY remains 0.8% higher today as the cross extends the rebound from Friday’s low. While the move higher is allowing a recent oversold condition to unwind, the impressive recovery reached as much as 406 pips, perhaps exacerbated by a short-term positioning squeeze ahead of US inflation data. Furthermore, the hawkish ECB repricing and strength for European equities will have provided additional tailwinds.
- Meanwhile, GBP/USD's strong rally off yesterday's lows means the pair has now retraced over 50% of the post-BoE decision losses, putting the price within 100 pips of last week's highs. This signals that markets are taking Mann's views at face value this week - and that her vote for 50bps last week isn't the beginning of series of votes for aggressive easing given her preference for restrictive policy (we gauge bank rate as being ~100bps above her top estimate of neutral, therefore leaving little room for sizeable cuts).
- In contrast with JPY, CHF is firmer against all others in G10 - benefiting from the unwind of the sharp pullback in the CHF/JPY cross over the course of 2025. Moves come ahead of the January Swiss CPI print, at which markets expected the Y/Y inflation release to retreat further - hitting 0.4% and the lowest rate since early 2021.
- The US inflation print takes focus for the rest of the day, with markets anticipating a moderation in inflationary pressures for January - but the release could be muddier than usual due to the concurrent posting of annual revisions for inflation. Central bank speak also comes through thick and fast, as Powell faces a second appearance in front of lawmakers on top of appearances from BoE's Greene, ECB's Nagel and Fed's Bostic.
EGBS: Supply Weighing Once Again
Bund futures are just off session lows, currently -19 ticks at 132.51 (lows of 132.48). The 20-day EMA at 132.63 has been pierced, with 132.34 the next downside target. Sovereign supply has once again weighed on EGBs, with a downtick in oil prices providing only temporary reprieve.
- German yields are 2-3bps higher, with the curve lightly bear flattening.
- The spread has been set for today’s 30-year OAT syndication, while conventional issuance has come from Greece, Germany and Portugal.
- Italian industrial production was much weaker than expected at -3.1% M/M (vs -0.2% cons, 0.3% prior), though it can be a volatile series month-to-month.
- 10-year EGB spreads to Bunds are up to 1.5bps tighter.
- Resident ECB hawk Holzmann unsurprisingly warned against 50bp cuts – but this probably already aligns with the median Governing Council view.
- Broader macro focus remains on the US CPI report at 1330GMT/1430CET.
GILTS: Bullish Momentum Stalling
Supply-related pressure across wider core global FI markets and spillover from a rally in European equities weighed on gilts at the open, with fresh selling seen in recent trade.
- A downtick in oil has limited the weakness.
- Futures as low as 92.80.
- First support at the 20-day EMA (91.63), with the short-term bullish cycle still intact but losing some momentum.
- Yields 1.5-2.5bp higher across the curve.
- 10-Year spread to Bunds little changed at ~207.5bp.
- Local headline flow has been dominated by NIESR’s higher-for-longer view surrounding the BoE (looking for one cut in both ’25 and ’26, leaving Bank rate at 4.00%) and suggestions surrounding the erosion of the UK’s narrow fiscal headroom (not a new idea)
- GBP1bln of 0.625% 0.625 Mar-45 I/L supply was digested smoothly.
- Modest hawkish adjustments in GBP STIRs seen given the moves in the long end.
- 58.5bp of BoE cuts priced through year-end vs. 60bp early today.
- SONIA futures flat to -2.0.
- Comments from BoE MPC member Greene due this afternoon (15:00 GMT).
- Spill over from U.S. CPI data also eyed.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.407 | -4.7 |
May-25 | 4.211 | -24.3 |
Jun-25 | 4.134 | -32.0 |
Aug-25 | 3.989 | -46.5 |
Sep-25 | 3.953 | -50.1 |
Nov-25 | 3.883 | -57.2 |
Dec-25 | 3.869 | -58.5 |
EQUITIES: Recent Gains for Eurostoxx 50 Futures Confirms Resumption of Uptrend
Eurostoxx 50 futures traded higher Tuesday and the contract is holding on to its gains. The move higher confirms once again, a resumption of the uptrend that started on Nov 21 ‘24. Moving average studies are in a bull mode set-up too, highlighting a dominant uptrend. The focus is on 5434.10 next, a Fibonacci projection. Initial firm support to watch lies at 5243.32, the 20-day EMA. The 50-day EMA is at 5094.95. Price action on Feb 3 in the S&P E-Minis contract continues to highlight a possible short-term reversal threat. If correct, it suggests that the latest bounce is a correction. A resumption of weakness would open 5892.37, a Fibonacci retracement point. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 ‘24 high. Clearance of this hurdle would resume the primary uptrend.
- Japan's NIKKEI closed higher by 162.53 pts or +0.42% at 38963.7 and the TOPIX ended 0.32 pts higher or +0.01% at 2733.33.
- Elsewhere, in China the SHANGHAI closed higher by 28.328 pts or +0.85% at 3346.385 and the HANG SENG ended 563.06 pts higher or +2.64% at 21857.92.
- Across Europe, Germany's DAX trades higher by 72.71 pts or +0.33% at 22110.39, FTSE 100 higher by 5.7 pts or +0.06% at 8783.08, CAC 40 up 18.08 pts or +0.23% at 8046.98 and Euro Stoxx 50 up 12.45 pts or +0.23% at 5403.36.
- Dow Jones mini down 78 pts or -0.17% at 44630, S&P 500 mini down 9.25 pts or -0.15% at 6083.25, NASDAQ mini down 12 pts or -0.06% at 21774.75.
Time: 09:55 GMT
COMMODITIES: WTI Futures Moving Average Studies Remain in Bull-Mode Position
WTI futures have recovered from their recent lows. This highlights the fact that the 50-day EMA - at $72.21 - despite being pierced, has provided firm support. Moving average studies remain in a bull mode condition highlighting a dominant uptrend. The latest recovery also signals a stronger reversal of the Jan 15 - Feb 6 bear leg. Sights are on $75.18, the Feb 3 high. Key short-term support and the bear trigger lies at $70.43, the Feb 6 low. A bull cycle in Gold remains in play and the yellow metal is trading closer to its recent highs. The continued appreciation once again confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on the $2962.2, a Fibonacci projection. The first key support to watch is $2779.3, the 20-day EMA.
- WTI Crude down $0.7 or -0.95% at $72.59
- Natural Gas down $0.02 or -0.68% at $3.495
- Gold spot down $9.85 or -0.34% at $2888.16
- Copper down $0.5 or -0.11% at $459.75
- Silver down $0.06 or -0.2% at $31.7491
- Platinum down $3.58 or -0.36% at $985.23
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 12/02/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 12/02/2025 | - | *** |  CN | Money Supply |
| 12/02/2025 | - | *** | CN | New Loans |
| 12/02/2025 | - | *** | CN | Social Financing |
| 12/02/2025 | 1330/0830 | *** | US | CPI |
| 12/02/2025 | 1500/1000 | US | Fed Chair Jerome Powell | |
| 12/02/2025 | 1500/1500 |  GB | BOE's Greene speech at Institute of Directors | |
| 12/02/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 12/02/2025 | 1700/1200 | US | Atlanta Fed's Raphael Bostic | |
| 12/02/2025 | 1800/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 12/02/2025 | 1830/1330 |  CA | BOC Meeting Minutes | |
| 12/02/2025 | 1900/1400 | ** | US | Treasury Budget |
| 12/02/2025 | 2205/1705 | US | Fed Governor Christopher Waller | |
| 13/02/2025 | 0700/0700 | ** | GB | UK Monthly GDP |
| 13/02/2025 | 0700/0700 | ** | GB | Trade Balance |
| 13/02/2025 | 0700/0700 | ** | GB | Index of Services |
| 13/02/2025 | 0700/0700 | *** | GB | Index of Production |
| 13/02/2025 | 0700/0800 | *** |  DE | HICP (f) |
| 13/02/2025 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 13/02/2025 | 0700/0700 | *** | GB | GDP First Estimate |
| 13/02/2025 | 0730/0830 | *** |  CH | CPI |
| 13/02/2025 | 0840/0940 |  EU | ECB's Cipollone pre-recorded interview at Frankfurt Digital Finance conference | |
| 13/02/2025 | 1000/1100 | ** | EU | Industrial Production |
| 13/02/2025 | 1330/0830 | *** | US | Jobless Claims |
| 13/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 13/02/2025 | 1330/0830 | *** | US | PPI |
| 13/02/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 13/02/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 13/02/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 13/02/2025 | 1800/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
