MNI US OPEN - Norges Bank Hold, 2x25bp Cuts Likely in 2025
EXECUTIVE SUMMARY
- TRUMP UNVEILS 25% AUTO TARIFF, THREATENS NEW LEVIES ON ALLIES
- ISHIBA SAYS JAPAN WON’T RULE OUT COUNTERMEASURES ON CAR TARIFFS
- NORGES BANK HOLD RATES AT 4.50%, 2x25BP CUTS LIKELY IN 2025
- MNI BANXICO PREVIEW - 50BP CUT, FOCUS ON GUIDANCE
Figure 1: Norges Bank March MPR policy rate forecast changes
Source: Norges Bank, MNI
NEWS
US (BBG): Trump Unveils 25% Auto Tariff, Threatens New Levies on Allies
President Donald Trump signed a proclamation to implement a 25% tariff on auto imports and floated further duties on the EU and Canada, expanding a trade war and triggering threats of retaliation. “What we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” Trump said at the White House on Wednesday as he pushed ahead with a program seeking to bring more manufacturing jobs to the US.
US/CHINA (BBG): Trump Says He Could Cut China Tariffs to Secure TikTok Deal
President Donald Trump said he would consider lowering tariff rates imposed on China to secure Beijing’s support for a sale of the US operations of ByteDance Ltd.’s social video platform TikTok to an American company. “Every point in tariffs is worth more than TikTok,” Trump told reporters Wednesday in the Oval Office. He suggested that “in order to get China” to agree to a sale, “maybe I’d give them a reduction in tariffs.”
US/ASIA (BBG): China, Japan, South Korea to Meet as Trump Tariffs Take Shape
Top trade officials from South Korea and Japan are set to meet with their Chinese counterpart in Seoul this weekend to discuss economic cooperation as they seek ways to respond to increasing trade pressure from the US, according to a media report. South Korea’s Industry Minister Ahn Duk-geun will host the meeting with Japan’s Yoji Muto and China’s Wang Wentao on Sunday, the first such gathering among the three nations in five years, Yonhap News said. South Korea’s Industry Ministry declined to confirm the report.
US/JAPAN (BBG): Ishiba Says Japan Won’t Rule Out Countermeasures on Car Tariffs
Japanese Prime Minister Shigeru Ishiba said he won’t rule out taking countermeasures against the Trump administration’s 25% tariff on US car imports. “We must consider appropriate responses, and naturally all options are on the table,” Ishiba said Thursday in parliament. “The bottom line is that we must consider what will best serve the national interests of Japan.”
FED (MNI): Fed Should Create Backstop For Basis Trade Unwind - Paper
The Federal Reserve ought to consider creating a standing facility or conducting auctions that would cap the Treasury-futures basis in periods of extreme illiquidity in Treasury markets such as that of March 2020, according to a paper co-authored by former Fed Governor Jeremy Stein to be presented at the Brookings Institution on Friday.
NORGES BANK (MNI): Rates Held at 4.50%, 2x25bp Cuts Likely in 2025
Norges Bank held their policy rate at 4.50%. That's in line with consensus, but goes against prior guidance in December and March for a 25bp cut. Highlights from the policy statement: "Inflation has picked up and been markedly higher than expected. If the policy rate is lowered prematurely, prices may continue to rise rapidly. Therefore, we decided to leave the policy rate unchanged now." Looking into the details of the rate path a little closer, the "judgement factor" (i.e. the difference between the actual policy rate projection and model-implied projection) was dovish in Q2 2025, but hawkish across the remainder of the projection horizon.
DENMARK (MNI): Def Min-US Cannot Decide on Denmark's Future
Defence Minister Troels Lund Poulsen says that "We will not accept that the Americans believe that they can decide what the Commonwealth should be like in the future." Calls US President Donald Trump's statements regarding the ownership of Greenland "far-fetched in every way". Poulsen says that the US is "going too far" on the subject.
CHINA (MNI): PBOC to Make Timely RRR, Rate Cuts - Xuan
MNI (Beijing) The People’s Bank of China has ample policy space and will cut the reserve requirement ratio (RRR) and interest rates in a timely manner, depending on domestic and international economic, and financial conditions and market performance, said Deputy Governor Xuan Changneng on Thursday at the Boao Forum For Asia Annual Conference 2025.
CHINA (MNI): China to Stress Asian Unity Via Regional Econ Deals
MNI (Beijing) China will strengthen collaboration with Asian counterparts via regional trade agreements while facing increasing global uncertainty, and will further open up its key sectors and uphold multilateralism, said Vice-Premier Ding Xuexiang on Thursday at the opening ceremony of the Boao Forum For Asia Annual Conference 2025.
RBNZ (BBG): RBNZ Board Yet to Recommend Temporary Governor to Minister
New Zealand Finance Minister Nicola Willis has yet to receive a recommendation from the Reserve Bank Board on a temporary governor to replace Adrian Orr, her office said. “The Minister looks forward to receiving the Reserve Bank Board’s recommendation for the appointment of temporary governor,” her spokesman said Thursday in Wellington in response to questions about the likely timing of an announcement. “A decision on the appointment will be made as soon as practicable following this, and not before 1 April.”
MNI BANXICO PREVIEW - MARCH 2025: 50bp Cut, Focus on Guidance
Banxico is widely expected to deliver another 50bp policy rate cut to 9.00% on Thursday, amid weak economic activity and moderating inflation pressures. This would be the second consecutive 50bp move and recent peso resilience should bolster the central bank's confidence in its decision.
DATA
FRANCE DATA (MNI): 2024 Budget Deficit at 5.8%, Broadly In Line With Budg. Min Guidance
France posted a budget deficit worth of 5.8% GDP in 2024, three tenths below the Finance Ministry's latest projections. However, we note that Budget Minister Montchalin had suggested the deficit could come in "a little bit lower" than 6% in comments last week. Nonetheless, the figure will provide some temporary reprieve for markets, with France still facing medium-term fiscal and political risks. Expenditures totalled 57.1% of GDP in 2024 (vs 56.9% in 2023, 58.4% in 2022), while revenues totalled 51.3% (vs 51.5% in 2023, 53.7% in 2022). Interest costs accounted for 2.0% of GDP. The debt to GDP ratio increased to 113.0% in 2024, from 109.8% in 2023 and 111.4% in 2022.
SPAIN DATA (MNI): Retail Sales Rebound in February, But Q1 Trend Hard to Discern
Spanish retail sales rose 3.6% Y/Y in February, after 2.3% in January. Bloomberg consensus of 2.3% was formed of just three analysts. On a SWDA M/M basis, sales rose 1.3% M/M (vs -1.2% in Jan, 1.5% in Dec). That leaves 3m/3m growth at 0.6% (vs 0.3% in Jan, 0.9% in Dec). As such, it's hard to discern a clear trend for retail sales at present, other than that growth is positive and should support aggregate consumption somewhat in Q1.
SWEDEN DATA (MNI): First Positive Annual Corporate Loan Growth Reading Since Nov '23
Lending to non-financial corporations rose 0.1% Y/Y in February, up from -0.5% in January for the first positive reading since November 2023. Household lending growth ticked up again to 1.9% Y/Y (vs 1.8% prior). Past Riksbank rate cuts are gradually providing support to credit demand, but recent sentiment indicators (e.g. yesterday's March Economic Tendency Survey) suggests aggregate activity remains in a subdued state in Q1 2025.
FOREX: GBP Smoothly Digesting Spring Statement, Month-End in Focus
- GBP marginally outperforms relative to the rest of G10, with the stability off lows for GBP/USD overnight largely responsible. Markets continue to digest the outcomes and implications of yesterday's Spring Statement, and the smooth passage via Gilt markets will be seen as a positive considering the notable bad reception for last Autumn's Budget.
- Today marks month-end value-date, meaning month-end flow will be a particular focus as the session progresses. US corporate demand for dollars may show through into the NY crossover should models prove correct - with USD demand seen likely for March.
- The Norwegian central bank opted against a rate cut this morning, despite signalling March as the opportune month to start their easing cycle for much of 2025. Building inflationary pressure and higher-than-expected CPI outturns in recent months are the primary culprit, prompting a sharp revision higher for year-end rate projections. While the statement certainly erred hawkish, the pricing for a cut today had dwindled into the decision, leaving EUR/NOK broadly flat on the session, erasing an early rally.
- Weekly jobless claims, tertiary Q4 GDP and the advance goods trade balance numbers are the data highlights Thursday - while the ECB schedule is particularly busy: ECB's de Guindos, Wunsch, Escriva & Schnabel are all set to speak - while Fed's Collins & Barkin appear just after the US close.
BONDS: Early Bid Fades as Equities Recover From Lows & Tsys Sell Off
A recovery from lows in equities and weakness in Tsys counters the early European & UK bond rally that stemmed from the U.S. auto tariffs and threats to impose further levies on the EU & Canada.
- German curve bull steepens on the day, yields flat to 4bp lower.
- Bund bulls failed to test resistance at 128.83, although the 20-day EMA (128.66) was pierced.
- EGB spreads to Bunds generally back to little changed as the risk-off flows fade.
- The 10-Year OAT/Bund spread holds below 70bp, aided by the delivery of the telegraphed narrower-than-forecasted French Budget deficit for ’24 and comments from Finance Minister Lombard, stressing the need for more progress on the fiscal front.
- Gilt futures within yesterday’s range, bearish technical theme intact.
- Initial support at yesterday’s low (90.75) protects the bear trigger at the March 6 low (90.71).
- UK yields 1-5bp higher, curve steepens after yesterday’s Spring Statement-driven flattening.
- The UK’s policy mix (higher issuance risks and BoE easing) is expected to promote curve steepening in the medium-term, despite yesterday’s post-Spring Statement flattening.
- 10s ~6bp wider vs. Bunds given focus of U.S. tariffs and correlation to Tsys, spread nears 200bp.
- BoE dovish dissenter Dhingra offered little new in the early rounds of her latest appearance.
- ECBspeak from Schnabel, Villeroy, de Guindos, Wunsch & Escriva due today, with markets still leaning towards a cut next month (~80% priced).
- Meanwhile, ongoing comments from BoE’s Dhingra and Gilt supply (GBP3.0bln of 4.00% Oct-31) are eyed in the UK.
EQUITIES: E-Mini S&P Moving Average Studies Remain in Bear Mode Set Up
The medium-term trend direction in Eurostoxx 50 futures is up and recent short-term weakness - for now - appears corrective. Support to watch is the 50-day EMA, at 5295.60. It has recently been pierced. A clear break of it would highlight a stronger short-term bear threat and suggest scope for a retracement towards 5160.00, the Feb 4 low. The bull trigger is 5516.00, the Mar 3 high. Clearance of this level would resume the uptrend. S&P E-Minis traded lower yesterday but for now, the contract remains closer to its recent highs. The trend condition is bearish and the latest recovery appears corrective. MA studies are in a bear-mode set-up, highlighting a dominant downtrend. Note that the 20-day EMA has been breached. A continuation higher near-term - towards 5864.25, the Jan 13 low. A reversal lower would refocus attention on 5559.75, the Mar 13 low and bear trigger.
- Japan's NIKKEI closed lower by 227.32 pts or -0.6% at 37799.97 and the TOPIX ended 2.58 pts higher or +0.09% at 2815.47.
- Elsewhere, in China the SHANGHAI closed higher by 5.052 pts or +0.15% at 3373.749 and the HANG SENG ended 95.48 pts higher or +0.41% at 23578.8.
- Across Europe, Germany's DAX trades lower by 238.27 pts or -1.04% at 22554.91, FTSE 100 lower by 48.46 pts or -0.56% at 8629.33, CAC 40 down 56 pts or -0.7% at 7960.09 and Euro Stoxx 50 down 43.3 pts or -0.8% at 5359.94.
- Dow Jones mini up 60 pts or +0.14% at 42792, S&P 500 mini down 0.75 pts or -0.01% at 5756.5, NASDAQ mini down 29 pts or -0.14% at 20078.5.
Time: 08:55 GMT
COMMODITIES: Bearish WTI Future Trend Intact, Gains Considered Corrective
Despite recent gains, a bearish trend condition in WTI futures remains intact, and gains are considered corrective. However, a key resistance at $69.14, the 50-day EMA, has been pierced. The breach of this hurdle strengthens a bullish theme and opens $70.98, the Feb 25 high. For bears, a reversal lower would expose the bear trigger at $64.85, the Mar 5 low. Clearance of this level would resume the downtrend and open $63.73, the Oct 10 ‘24 low. The trend condition in Gold is unchanged, it remains bullish and the yellow metal is holding on to the bulk of its recent gains. Last week’s fresh trend high reinforces the bull theme and sights are on $3079.2 next, a Fibonacci projection. Note that moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Support is at $2974.8, the 20-day EMA.
- WTI Crude down $0.36 or -0.52% at $69.4
- Natural Gas down $0.11 or -2.87% at $3.737
- Gold spot up $17.76 or +0.59% at $3034.16
- Copper down $1 or -0.19% at $523.1
- Silver up $0.07 or +0.22% at $33.6592
- Platinum down $1.85 or -0.19% at $973.86
Time: 08:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 27/03/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 27/03/2025 | - |  FR | Insee publishes General Govt balance | |
| 27/03/2025 | 1230/0830 | * |  CA | Payroll employment |
| 27/03/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 27/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 27/03/2025 | 1230/0830 | *** | US | GDP |
| 27/03/2025 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/03/2025 | 1300/1400 |  EU | ECB's De Guindos at 2025 IIF European Summit | |
| 27/03/2025 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 27/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 27/03/2025 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/03/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/03/2025 | 1740/1840 | EU | ECB's Schnabel lecture on MonPol Transmission | |
| 27/03/2025 | 1805/1905 | EU | ECB's Lagarde prerecorded message for Women in Finance conference | |
| 27/03/2025 | 1900/1500 | *** |  MX | Mexico Interest Rate |
| 27/03/2025 | 2030/1630 | US | Richmond Fed's Tom Barkin | |
| 27/03/2025 | 2030/1630 | US | Boston Fed's Susan Collins | |
| 28/03/2025 | 2330/0830 | ** |  JP | Tokyo CPI |
| 28/03/2025 | 0700/0800 | * |  DE | GFK Consumer Climate |
| 28/03/2025 | 0700/0800 | ** |  SE | Retail Sales |
| 28/03/2025 | 0700/0700 | *** | GB | Retail Sales |
| 28/03/2025 | 0700/0700 | * | GB | Quarterly current account balance |
| 28/03/2025 | 0700/0700 | *** | GB | GDP Second Estimate |
| 28/03/2025 | 0700/0700 | ** | GB | Trade Balance |
| 28/03/2025 | 0745/0845 | ** | FR | PPI |
| 28/03/2025 | 0745/0845 | ** | FR | Consumer Spending |
| 28/03/2025 | 0745/0845 | *** | FR | HICP (p) |
| 28/03/2025 | 0800/0900 | *** |  ES | HICP (p) |
| 28/03/2025 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 28/03/2025 | 0830/0930 | EU | ECB de Guindos At Fed. of Female Professionals Conf | |
| 28/03/2025 | 0855/0955 | ** | DE | Unemployment |
| 28/03/2025 | 0900/1000 |  IT | Business and Consumer confidence | |
| 28/03/2025 | 0900/1000 | ** | EU | ECB Consumer Expectations Survey |
| 28/03/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 28/03/2025 | 1100/1200 | ** | IT | PPI |
| 28/03/2025 | 1230/0830 | *** | US | Personal Income and Consumption |
| 28/03/2025 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 28/03/2025 | 1400/1000 | *** | US | U. Mich. Survey of Consumers |
| 28/03/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 28/03/2025 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 28/03/2025 | 1615/1215 | US | Fed Governor Michael Barr | |
| 28/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 28/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 28/03/2025 | 1930/1530 | US | Atlanta Fed's Raphael Bostic |
