MNI US OPEN - Surprise Income Tax Cut in Australia Budget
EXECUTIVE SUMMARY
- TOP TRUMP OFFICIALS DEBATED WAR PLANS ON UNCLASSIFIED CHAT SHARED WITH JOURNALIST
- INDIA EYES TARIFF CUT ON $23BLN OF US IMPORTS
- REEVES’ GLOOMY SPRING STATEMENT TO SET STAGE FOR AUTUMN AUSTERITY
- AUSTRALIA UNVEILS SURPRISE INCOME TAX CUT IN PRE-ELECTION BUDGET
Figure 1: Germany posts broad-based IFO uptick in March
Source: MNI/IFO
NEWS
US (WSJ): Top Trump Officials Debated War Plans on Unclassified Chat Shared With Journalist
Senior Trump administration national-security officials held detailed discussions of highly classified U.S. plans to launch airstrikes against Yemen’s Houthi militants using a nongovernment messaging service and mistakenly included a journalist in the conversation, U.S. officials said Monday. The chats over the encrypted Signal app spanned days and included specific information about weapons, targets and timing used in the attack, according to the Atlantic magazine, whose editor, Jeffrey Goldberg, was inadvertently included in the discussion and who disclosed the texts.
US/RUSSIA (RTRS): Russia, US Analyse Outcome of Riyadh Talks, Kremlin Says
Russian and the United States are analysing the outcome of talks between their officials in Saudi Arabia on Monday after the delegations reported back to their capitals, Kremlin spokesman Dmitry Peskov said. The two countries have said the talks in Riyadh were focused on a proposal for a ceasefire between Russia and Ukraine in the Black Sea. Peskov said the content of the negotiations would not be published. There are currently no plans for a conversation between Russian President Vladimir Putin and U.S. President Donald Trump, but such a conversation could be promptly organised if needed, Peskov said.
US/INDIA (RTRS): India Eyes Tariff Cut on $23bln of US Imports
India is open to cutting tariffs on more than half of U.S. imports worth $23 billion in the first phase of a trade deal the two nations are negotiating, two government sources said, the biggest cut in years, aimed at fending off reciprocal tariffs. The South Asian nation wants to mitigate the impact of U.S. President Donald Trump's reciprocal worldwide tariffs set to take effect from April 2, a threat that has disrupted markets and sent policymakers scrambling, even among Western allies. In an internal analysis, New Delhi estimated such reciprocal tariffs would hit 87% of its total exports to the United States worth $66 billion, two government sources with knowledge of the matter told Reuters.
US (BBG): Tech Chiefs, Foreign Leaders Urge Trump to Rethink AI Chip Curbs
Senior foreign officials and major tech companies are pushing the Trump administration to rethink the country’s global semiconductor strategy, as the US prepares a controversial framework for controlling artificial intelligence development around the world. The so-called AI diffusion rule, which restricts the number of AI processors that can be exported to most nations, prompted an outcry from tech giants like Nvidia Corp. after Biden officials unveiled it during their last week in office. US allies such as Israel and Poland also have chafed at the rules, which they worry will threaten their supply of the precious chips or make their countries less attractive for AI investment.
UK (FT): Reeves’ Gloomy Spring Statement to Set Stage for Autumn Austerity
Rachel Reeves’ Spring Statement on Wednesday is expected to last only about 25 minutes but she will have a lot of bad news to fit in. The problem for the chancellor is that, over the coming months, things could get even worse. Reeves will publish two politically toxic documents; the first is a gloomy forecast from the Office for Budget Responsibility, which is expected to roughly halve Britain’s expected growth in 2025 from 2 per cent to about 1 per cent. It is also expected to show that Reeves’ £9.9bn of headroom against her fiscal rule - which requires her to balance current spending with tax receipts by 2029-30 - has been wiped out, leaving her about £4bn in the red, according to people familiar with the forecast.
BOJ (MNI): BOJ Holds Cautious View on Future Hikes - Jan Minutes
Bank of Japan board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, the published minutes showed Tuesday. “Rather than raising the policy interest rate to achieve, for example, a specific neutral interest rate level, it would be necessary for the Bank to carefully adjust its monetary policy while examining the impact of the policy interest rate hike on economic activity and prices at the time of each rate hike,” one member noted.
BOJ (MNI): Stock Effect to Lower L/T JGB Yields - BOJ's Ueda
Bank of Japan Governor Kazuo Ueda said on Tuesday that the stock effect stemming from the BOJ’s significant government bond holdings would contribute to lower long-term interest rates for the time being as the pace of reducing its balance is moderate. Ueda also told lawmakers that the BOJ has no plan to immediately sell its exchange-traded fund holdings, and that the more time is needed to consider how best to dispose of the assets.
JAPAN (BBG): Japan’s Ishiba Plans Price Measures Through Existing Budgets
Japanese Prime Minister Shigeru Ishiba is planning measures to ease the impact of inflation on consumers that draw on policies already incorporated in the current and upcoming fiscal year budgets. “The Prime Minister didn’t intend to say we’re rolling out new budget spending,” government spokesman Yoshimasa Hayashi told reporters Tuesday. “Rather we’re going to fully utilize the policies outlined in this year’s additional budget and next year’s initial budget.”
CHINA (BBG): Chinese Funds Plan to Mop Up Stocks If US Tariffs Roil Markets
Any pullback in Chinese stocks from Donald Trump’s April 2 tariffs would be a buying opportunity, according to some of the nation’s most experienced money managers. The levies would probably be less destructive than feared, while China’s AI breakthrough and a business-friendly policy pivot are seen as game changers, five private fund managers said in separate interviews. They include investors with around two decades of experience at Shenzhen Zhengyuan Investment Co. and Granford (Beijing) Capital Management Co.
CHINA (BBG): PBOC’s New Loan Pricing May Lead to Stealth Rate Cut for Banks
The Chinese central bank’s new way to price its one-year policy loans may lead to a stealth reduction in funding costs for lenders, easing their pressure from elevated market borrowing rates in recent months as liquidity tightened. The People’s Bank of China will allow qualified banks to pay different interest rates for the loans, known as the medium-term lending facility, starting Tuesday, it said in a statement Monday. Lenders previously paid the same rate for the tool.
AUSTRALIA (MNI): Surprise Income Tax Cut in Pre-Election Budget
Details of the Australian budget release - surprise tax cut, slightly wider deficit vs. expectations. The budget release surprisingly includes a tax cut - that'll be phased in its
introduction: the lowest rate of income tax is to drop by 1ppts to 15% by mid-'26, and then again to 14% by mid'27 (that tax bracket captures those earning A$18,201 - 45,000), allowing the government to state that "every" taxpayer will receive a tax cut both next year, as well as the year after that. The total cost of this tax tweak (as well as some other measures) equates to A$17bln. Deficit numbers are projected slightly wider than exp: A$42.1bln through Jun'26 vs. exp. A$40bln.
TURKEY (BBG): Turkey Officials Move to Calm Markets After Imamoglu Arrest
Turkey’s top economic officials will speak with foreign investors on Tuesday, the latest attempt by the government to calm markets since the detention of a key opposition figure last week triggered billions of dollars in outflows from Turkish assets. Finance Minister Mehmet Simsek and central bank Governor Fatih Karahan are scheduled to speak at 1 p.m. London time in a teleconference organized by Citigroup Inc. and Deutsche Bank, the Treasury said on its website. Bloomberg first reported the meeting late on Monday.
INDONESIA (BBG): Indonesian Rupiah Tumbles to Lowest Since Asian Financial Crisis
The Indonesian rupiah pared losses after the country’s central bank intervened to prop up the currency from its weakest level since the Asian financial crisis. The rupiah fell 0.5% to 16,642 against the dollar earlier Tuesday, its weakest since June 1998, before narrowing the decline. The currency has slumped more than 3% this year, making it one of the worst performers in emerging markets. Bank Indonesia intervened in the spot foreign exchange, domestic non-deliverable forwards and bond markets to stabilize the rupiah, the central bank’s director for monetary management and asset securities Fitra Jusdiman said in a text message Tuesday.
MNI NBH PREVIEW - MARCH 2025: New Governor, Same Hawkish Stance
The National Bank of Hungary is expected to keep its base rate on hold at 6.50% again this month, in what will be the first meeting under the helm of new Governor Mihaly Varga. Varga said in his first public comments as new central bank chief that he will make price stability his main priority, and given the recent surge in inflation, this means we are highly unlikely to see any material changes to the NBH’s hawkish guidance either.
DATA
GERMANY DATA (MNI): Broad-Based IFO March Uptick
- GERMANY MAR IFO BUSINESS CLIMATE INDEX 86.7
Germany's IFO Business Climate Index rose in March for the 3rd consecutive month, to 86.7 (85.3 prior, revised from 85.2) for oming in exactly in line with expectations. The print suggests a more broad-based increase in sentiment than yesterday's PMI release, which saw manufacturing rebounding but services screening dovish. IFO concludes that "the German economy is hoping for improvement" - nevertheless, the overall print remains in contractionary territory.
SWEDEN DATA (MNI): Domestic Supply Inflation Momentum Remains Solid
The Swedish price index for domestic supply pulled back to 2.8% Y/Y in February (vs 3.6% prior). However, this masked diverging trends between domestic producer prices and import prices. Domestic producer price inflation accelerated for the third consecutive month to 4.8% Y/Y (vs 2.5% prior), while import price inflation eased to 1.2% Y/Y (vs 4.8% prior). The latter's development is likely a function of the stronger krona in February. Producer price inflation (which takes into account domestic producer prices and export prices) eased a tenth to 3.4% Y/Y.
CHINA DATA (MNI): China Steel Distributors PMI Up in March
China’s Steel Distributors PMI Index reached 52.6% in March, up 3.3 percentage points from February, breaking above the 50 expansionary mark for the first time since October 2024, the Lange Steel Network announced on Tuesday. The sales volume sub-index hit 55.2%, up 8.6 pp from the previous month, while new orders rose 8.3 pp m/m to 54.2%, the network said. The steel market in April is expected to maintain a volatile upward trend as the construction season begins.
FOREX: AUD Off Lows as Budget Looks to Lower Taxes
- Currency markets are mixed early Tuesday, with a small part of the recent JPY dip partially reversing and the USD Index broadly unchanged. This keeps tariff risk front and centre, as markets continue to look to gauge the extent to which the White House could narrow the scope of 'Liberation Day' tariffs next week.
- Scandi currencies remain firm and among the best performers YTD, with USD/SEK still well within reach of the 10.00 handle as European equities continue to gather poise and Germany's DAX builds a base to target the yearly highs.
- AUD recovered off early European lows, having underperformed alongside NZD for much of the session. The pre-election budget unveiled by the Labor government disclosed an income tax cut in both the next two fiscal years, and a minimally wider budget deficit. AUD/USD remains anchored to the 50-dma in the short-term, but AUD/NZD continues its recovery off lows: 1.1011 is the next major upside level.
- US new home sales and March consumer confidence data are the calendar highlights, with appearances from Fed's Kugler & Williams, ECB's Holzmann, Vujcic & Nagel.
EGBS: Bund Weakness Extends; Issuance and Equity Uptick Weighing
Bund futures have narrowed the gap to initial support at 127.88, with no discernible headline trigger noted for the latest round of weakness. Impending Bobl supply alongside heavy corporate issuance will likely be weighing on EGBs this morning, alongside a recovery in European equity futures. Bunds are -32 ticks at 127.95 at typing.
- The German curve has bear steepened, with 2-year yields up 2.5bps and 30-year yields 4bps higher.
- The March German IFO survey provided a more positive outlook than yesterday’s PMIs, with the expectations component stronger-than-expected at 87.7 (vs 87.3 cons, 85.6 prior).
- The Bund-led nature of the selloff sees 10-year EGB spreads biased tighter. 10-year DSL supply was digested smoothly.
- ECB’s Kazimir and Muller did not deviate materially from past remarks, the latter adopting a hawkish tone around the case for future rate cuts.
- ECB’s Holzmann, Vujcic and Nagel are scheduled to speak later today.
GILTS: Lower on Cross-Market Cues, Supply Due Shortly
Gilts to fresh session lows as the data-driven weakness in Bunds applies fresh weight.
- An uptick in European equities (driven by hope of U.S. tariff reprieve, as well as some stock/sector specifics), higher oil prices and hawkish Fedspeak provided cross-market pressure at the open.
- Lows of 91.06 seen so far, with bears trying to force a clean break of initial support at the Mar 13 low (91.07). The bearish technical structure remains intact.
- Fresh extension lower would target the Mar 6 low and bear trigger (90.71).
- Yields 2-3bp higher across the curve, light steepening seen.
- On the supply front, the DMO will come to market with GBP2bln of the 4.75% Oct-43 line this morning.
- Little else of note on the domestic calendar until tomorrow’s CPI & Spring Statement.
- Expect our detailed previews of those events to cross throughout today.
- As noted earlier, the FT has pointed to over GBP5bln of spending cuts in tomorrow’s Statement given the erosion of the fiscal headroom outlined in the Autumn Budget, while the OBR is set to slash its ’25 GDP growth forecast to ~1%.
- GBP STIRs see modest hawkish repricing given the weakness in the long end, with 41bp of cuts priced through year-end vs. ~43bp late yesterday. SONA futures flat to -2.0.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.315 | -14.1 |
Jun-25 | 4.285 | -17.1 |
Aug-25 | 4.191 | -26.5 |
Sep-25 | 4.147 | -31.0 |
Nov-25 | 4.072 | -38.5 |
Dec-25 | 4.046 | -41.0 |
EQUITIES: Medium-Term Trend Direction in Eurostoxx 50 Futures Points Up
The medium-term trend direction in Eurostoxx 50 futures is up and short-term weakness is considered corrective. Support to watch is the 50-day EMA, at 5288.25. 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. The trend condition in S&P E-Minis is bearish and the latest recovery appears corrective. MA studies are unchanged - they remain in a bear-mode set-up, highlighting a dominant downtrend. However, Monday’s gains resulted in a breach of the 20-day EMA, at 5803.08. This signals scope for 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 higher by 172.05 pts or +0.46% at 37780.54 and the TOPIX ended 6.64 pts higher or +0.24% at 2797.52.
- Elsewhere, in China the SHANGHAI closed lower by 0.052 pts or 0% at 3369.976 and the HANG SENG ended 561.31 pts lower or -2.35% at 23344.25.
- Across Europe, Germany's DAX trades higher by 62.03 pts or +0.27% at 22912.89, FTSE 100 higher by 32.9 pts or +0.38% at 8670.62, CAC 40 up 48.83 pts or +0.61% at 8071.16 and Euro Stoxx 50 up 24.12 pts or +0.45% at 5439.91.
- Dow Jones mini down 59 pts or -0.14% at 42840, S&P 500 mini down 10 pts or -0.17% at 5805.5, NASDAQ mini down 71 pts or -0.35% at 20303.25.
Time: 08:50 GMT
COMMODITIES: Bearish WTI Future Trend Intact Despite Latest Gains
Despite recent gains, a bearish trend condition in WTI futures remains intact. However, a key pivot resistance at $69.12, the 50-day EMA, has been pierced. A clear breach of this hurdle would strengthen a bullish theme and open $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 next, the Oct 10 ‘24 low. A clear uptrend in Gold remains intact and last week’s resumption of the bull cycle reinforces current conditions. The yellow metal is holding on to the bulk of its recent gains. Last Thursday’s fresh trend high reinforces the bull theme and sights are on $3079.2 next, a Fibonacci projection. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Support is at $2964.9, the 20-day EMA.
- WTI Crude up $0.29 or +0.42% at $69.4
- Natural Gas up $0.01 or +0.28% at $3.925
- Gold spot up $10.4 or +0.35% at $3021.36
- Copper up $4.1 or +0.81% at $513.15
- Silver up $0.24 or +0.72% at $33.2493
- Platinum up $8.13 or +0.83% at $983.93
Time: 08:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 25/03/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 25/03/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 25/03/2025 | 1230/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 25/03/2025 | 1240/0840 | US | Fed Governor Adriana Kugler | |
| 25/03/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 25/03/2025 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 25/03/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 25/03/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 25/03/2025 | 1305/0905 | US | New York Fed's John Williams | |
| 25/03/2025 | 1400/1500 | ** |  BE | BNB Business Confidence |
| 25/03/2025 | 1400/1000 | *** | US | New Home Sales |
| 25/03/2025 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 25/03/2025 | 1400/1000 | ** | US | Richmond Fed Survey |
| 25/03/2025 | 1700/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 26/03/2025 | 0030/1130 | *** |  AU | CPI Inflation Monthly |
| 26/03/2025 | 0700/0700 | *** | GB | Consumer inflation report |
| 26/03/2025 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 26/03/2025 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 26/03/2025 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 26/03/2025 | 0800/0900 | *** |  ES | GDP (f) |
| 26/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 26/03/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 26/03/2025 | - | GB | OBR Spring Forecasts | |
| 26/03/2025 | 1230/0830 | ** | US | Durable Goods New Orders |
| 26/03/2025 | 1230/1230 | GB | Chancellor Reeves to deliver Spring Statement | |
| 26/03/2025 | 1330/1330 | GB | DMO to announce FY25/26 financing remit (approx time) | |
| 26/03/2025 | 1400/1000 | US | Minneapolis Fed's Neel Kashkari | |
| 26/03/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 26/03/2025 | 1530/1530 | GB | DMO agenda for quarterly consultation | |
| 26/03/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/03/2025 | 1700/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/03/2025 | 1710/1310 | US | St. Louis Fed's Alberto Musalem | |
| 26/03/2025 | 1730/1330 |  CA | BOC Meeting Minutes | |
| 26/03/2025 | 1800/1900 |  EU | ECB's Cipollone in panel on Digital Finance |
