MNI US OPEN - UK CPI Slightly Soft Ahead of Spring Statement
EXECUTIVE SUMMARY
- MNI UK SPRING STATEMENT PREVIEW
- TRUMP MAY IMPLEMENT COPPER IMPORT TARIFFS WITHIN WEEKS
- CLOTHING THE MAJOR DRIVER OF UK CPI SURPRISE; REST LARGELY CANCELS OUT
- BOJ'S KOEDA SEES UNDERLING CPI MOVES TOWARD 2%
Figure 1: Contributions to change in UK annual CPIH inflation rate
Source: ONS
NEWS
UK (MNI): UK Spring Statement 2025 Preview
We look at key timings for the Spring Statement, DMO remit and DMO consultation agendas. We look at how fiscal headroom currently stands and where it stood in the Autumn. Without Chancellor Reeves making any changes, there will be an extra c. GBP15bln of headroom available to her next year due to a little noticed detail in the fiscal rules. We look at how defence spending could lead to additional headroom. We also look at the likelihood that Reeves is removed as Chancellor and what would happen to her fiscal rules.
UK (MNI): Times Reports GBP5bln Welfare Cuts Announced Last Week Aren't GBP5bln
The Times has reported that the GBP5bln of welfare cuts announced last week by the government have been assessed by the OBR to only save GBP3.4bln. As a consequence it states that Chancellor Reeves will announce further welfare cuts in the Spring Statement today, alongside other larger departmental cuts.
US (BBG): Trump May Implement Copper Import Tariffs Within Weeks
US tariffs on copper imports could be coming within several weeks, months earlier than the deadline for a decision, according to people familiar with the matter. Copper traded in New York rose to a record. US President Donald Trump in February directed the Commerce Department to open an investigation into potential copper tariffs and submit a report within 270 days, though it’s now expected to be resolved sooner, said the people who asked not to be identified because the discussions are confidential.
US (BBG): Trump: Not ‘Too Many’ Exceptions on April 2 Tariffs
“I don’t want to have too many exceptions,” for the tariffs scheduled to take effect on Apr. 2, President Donald Trump said in an interview on Newsmax. “I’ll probably be more lenient than reciprocal, because if I was reciprocal, that would be that would be very tough for people”
US/RUSSIA (BBG): Trump Says It’s Possible Putin Is Dragging His Feet on Ceasefire
President Donald Trump said it was possible that Vladimir Putin was avoiding finalizing a ceasefire agreement, but that he remained confident the Russian leader intended to strike a deal. “I think that Russia wants to see an end to it, but it could be they’re dragging their feet,” Trump said Tuesday in an interview with Newsmax. “I’ve done it over the years. You know, I don’t want to sign a contract. I want to sort of stay in the game, but maybe I don’t want to do it quite — I’m not sure.”
US/CHINA (FT): Nvidia’s China Sales Face Threat From Beijing’s Environmental Curbs
Beijing has introduced energy efficiency rules for the use of advanced chips that would prevent Chinese companies from buying Nvidia’s best-selling processors in the country if implemented strictly. The National Development and Reform Commission, China’s top economic planner, is advising Chinese groups to use chips that meet stringent requirements in new data centres and expansion of existing facilities, according to documents reviewed and analysed by Financial Times.
FED (FT): Top Federal Reserve Official Says Market Angst Over Inflation Would Be ‘Red Flag’
Signs that investors in the US bond market are baking in higher inflation would be a “major red flag” that could upend rate-setters’ plans to cut interest rates, a top Federal Reserve official warned. The remarks from Austan Goolsbee, president of the Chicago Fed and a voting member of the Federal Open Market Committee, come just over a week after a closely watched University of Michigan poll showed households’ long-term inflation projections hit the highest level since 1993.
ISRAEL/MIDEAST (BBG): Israel Deploys Troops in Syria as Part of New Defense Doctrine
The blue-helmeted United Nations peacekeepers are mostly gone, replaced by thousands of Israeli troops in nine new bases with vistas all the way to Damascus. A six-meter-deep (20-foot) trench is being dug out of the volcanic rock to trap anything rolling toward Israel. Much has changed in the Middle East since Hamas operatives swarmed into southern Israel 18 months ago, triggering a war in Gaza and decline in Iranian influence. One of the biggest shifts — the December collapse of the Syrian regime of Bashar al-Assad – has ended a half-century peacekeeping operation.
EUROPE (BBG): Draghi Calls Germany’s Shift on Defense Spending ‘Game Changer’
Former European Central Bank President Mario Draghi said Germany’s decision to ramp up defense spending is a “game changer” but warned there are risks when it comes to how it’s implemented. The size of Germany’s commitment and the constitutional changes it entailed are among reasons why the move marks a turning point, Draghi told Bloomberg Television’s Joumanna Bercetche on a panel at the HSBC Global Investment Summit in Hong Kong on Wednesday.
GERMANY (MNI): Constitutional Court Rejects Solidarity Surcharge Appeal
Matching media reports headline on the German constitutional court rejecting the solidarity surcharge appeal, which could have seen a potential E65bln levy payback to taxpayers in a worst-case scenario if it had gone through. The rulings will be seen as a boost for the incoming Chancellor, but are broadly as-expected. The rulings effectively mean that the federal authorities can keep raising the solidarity surcharge, and no fiscal gap is to be created, as would have been feared if the appeal would have gone through.
SPAIN (MNI): Sanchez - We Will Boost Defence & Security w/o Touching Social Spending
Speaking to the Congress of Deputies regarding EU plans to increase defence spending, Prime Minister Pedro Sanchez has said that "We are going to make this effort in security and defence without touching a cent of social spending." Sanchez says that his gov't "will start a plan to develop defence by the summer". The PM cannot get agreement within his minority coalition on boosting defence spending. Moreover, the gov't has yet to present a 2025 budget due to a lack of clear support. Without the step of presenting a budget, there are significant limits to what can be done to boost defence spending.
BOJ (MNI): BOJ's Koeda Sees Underling CPI Moves Toward 2%
Newly appointed Bank of Japan board member Junko Koeda said on Wednesday that underlying inflation is moving toward the 2% price target and the bank is focused on achieving it in a stable and sustainable manner, but she did not give any indication on the pace or timing of the next hike. “Real interest rates are at considerably low levels,” she told reporters, declining to elaborate on the outlook for monetary policy. Koeda said she will carefully monitor and discuss various data at the next policy-setting meeting scheduled between April 30 and May 1, when asked about the prospects for an additional hike.
BOJ (MNI): BOJ's Ueda Sees Upside, Downside Risks to Prices
Bank of Japan Governor Kazuo Ueda said on Wednesday that there is both upside and downside risks to prices as uncertainties due to the global economy and inflation driven by U.S. trade policies. Ueda told lawmakers that the medium- to long-term CPI inflation, which the BOJ is focused on, is still slightly below the Bank's 2% target and that meeting its goal remains out of sight. The BOJ will not review the target, he added. Ueda declined to comment on whether he sees the need to change or abolish a joint statement between the government and the BOJ made in 2013.
BOJ (MNI): BOJ Ueda Sees 3% Wage Hikes Vital For 2% Target
The Bank of Japan is focused on whether the economy will achieve wage hikes of around 3% and spread broadly, Governor Kazuo Ueda told lawmakers Wednesday. “I hope wages continue to rise to around 3%, including 1% from the rise in productivity, and it is consistent with 2% price target,” he said. The BOJ is focused on whether wage hikes transfer to services prices appropriately and the bank continues to analyse whether the medium- to long-term inflation will rise toward 2%, he continued.
CHINA (MNI): China to Boost Demand as Tariffs Rise - PBOC's Huang
MNI (Beijing) China will make further efforts to boost domestic demand, particularly by stimulating consumption as trade barriers are rising across the board, said Huang Yiping, member of MPC of the People’s Bank of China, at Boao Asia Forum on Wednesday. Expanding domestic demand has become China’s top priority and the overarching policy direction, said Huang, noting the "dual circulation" strategy underscores the critical role of the domestic cycle.
DATA
UK DATA (MNI): Clothing the Major Driver of CPI Surprise; Rest Largely Cancels Out
- UK FEB CPI +0.4% M/M, +2.8% Y/Y
- UK FEB CORE CPI +0.4% M/M, +3.5% Y/Y
- UK FEB SERVICES CPI +0.5% M/M, +5% Y/Y
- UK FEB RPI +0.6% M/M, +3.4% Y/Y
Headline CPI is only one hundredth lower than the BOE's forecast (despite the 2 tenth rounded downside surprise - but note that it is a "high" 2.8%). Services at 10 hundredths above the BOE's forecast. Core goods saw a notable decline from 1.56% Y/Y in Jan to 1.07% Y/Y in February which is the biggest surprise here. Food and non-alcoholic bevs increased to 3.909% Y/Y from 3.709% in Jan - that's a slightly smaller increase than expected, we think. Energy was broadly in line with expectations. Overall, a slightly softer print on the back of core goods.
SPAIN Q4 FINAL GDP +0.8% Q/Q (MNI)
SPAIN Q4 FINAL GDP +3.4% Y/Y (MNI)
FRANCE MAR CONSUMER SENTIMENT 92 (MNI)
SWEDEN DATA (MNI): March Economic Tendency Survey Highlights Difficult Riksbank Trade-Offs
The March Economic Tendency Indicator highlighted the difficult trade-off faced by the Riksbank going forward. Consumer confidence fell markedly alongside weaker sentiment in the retail and services sectors, but expected price metrics continued to climb. Consumer confidence fell markedly in 89.8 (vs 94.6 prior, revised from 95.0 initial), the lowest since April 2024. This reflected a drop in sentiment in the "micro" (i.e. household's view of their own situation) and "macro" (i.e. household's view of the general Swedish economic situation) subindices.
NORWAY DATA (MNI): Steady Credit Growth in February; Divergence Across Sectors
Norwegian February credit growth was steady at 3.6% Y/Y, but this masked diverging developments across major sectors. Overall, we view the weak development in corporate lending growth as a reflection of sluggish mainland demand, particularly in rate-sensitive sectors. Tomorrow's Norges Bank decision remains a close call between a hold and 25bp cut.
JAPAN DATA (MNI): Japan Feb Services PPI Rises 3.0% vs. Jan 3.2%
- JAPAN FEB SERVICES PPI +3.0% Y/Y; JAN REV +3.2%
- JAPAN FEB SERVICES PPI +0.0% M/M: JAN UNREV -0.5%
Japan’s services producer price index rose 3.0% y/y in February, decelerating from January’s revised 3.2%, but remained consistent with solid corporate pass-through of cost increases, preliminary data released by the Bank of Japan on Wednesday showed. Advertising services (+0.8% vs. +3.3%) and transportation, and postal services (+3.3% vs. 3.5%) drove the index lower.
The SPPI was unchanged m/m in February after falling 0.5% in January.
AUSTRALIA DATA (MNI): Aussie Trimmed Mean at 2.7% Y/Y Over Feb
- AUSTRALIA MONTHLY FEB CPI 0.1% MM, 2.4% YY
Monthly annual trimmed mean inflation fell 10 basis points to 2.7% y/y in February, while the headline CPI indicator printed at 2.4%, data from the Australian Bureau of Statistics showed Wednesday. Food and non-alcoholic beverages (+3.1 per cent), alcohol and tobacco (+6.7 per cent), and housing (+1.8 per cent) represented the largest contributors to the monthly gauge. Insurance and financial services rose 4.5%, compared to January’s 5.3%.
FOREX: GBP Softer, But Weakness on CPI Could Prove Fleeting
- GBP is softer against all others in G10 on the back of the February CPI print - the headline missed expectations, with Y/Y CPI 0.2ppts lower than forecast at 2.8%, however the underlying details were more mixed, with services CPI proving stickier than expected against both market and BoE expectations. In addition, slowing core goods inflation came in large part due to clothing discounting, which is often swiftly reversed.
- As a result, GBP/USD has faded further off highs, narrowing the gap with 1.2886 - the March 23rd low and key support. The sustainability of any further weakness will be dependent on how seriously the market sees this slower CPI print as a threat to the BoE's policy cycle. SONIA markets have priced in slightly more aggressive easing this year as a result, but the market is moving quickly to reverse the move into the US crossover.
- AUD and NZD trade well despite the moderation in Australian CPI Y/Y for February, and as the currencies shrug off the softer showing from global equities. Cross demand is largely responsible here, with NZD/JPY rising through resistance at the 50-dma of Y86.29. AUD/JPY is yet to rise through the same level, which has been tested on several occasions this year - meaning a break of 95.37 would be a bullish signal.
- Prelim US durable goods data is the data highlight Wednesday, while the CB speaker slate sees Fed's Kashkari & Musalem, ECB's Knot & Cipollone as well as the BoC minutes release.
EGBS: Bund Futures Move Away From Session Highs
Bund futures have moved away from session highs but remain above yesterday’s settlement levels owing to the softer-than-expected UK inflation report and pullback in European equity futures since the cash open. Bunds are +8 ticks at 128.21 at typing.
- Bund futures are holding on to the bulk of their recent gains. Resistance remains intact and - for now - the latest move higher is considered corrective. Initial resistance is Monday's gap of 128.48, which shields the 20-day EMA at 128.72.
- The German curve has lightly bull steepened, with 2-year yields down 1.5bps and 30-year yields up 0.5bps. Today’s 15-year Bund supply will likely be containing rallies at the long-end.
- There was little net reaction in Bunds/German ASWs on today’s constitutional court judgement, which allows the government to keep raising the solidarity surcharge (and so no further fiscal shortfall was created).
- This morning, Bank of Italy Governor Panetta played down the role of r* in calibrating near-term policy when rates are close to plausible neutral rate estimates (he views this range at 1.50-2.50%). He noted that “the ECB must remain pragmatic and data driven”, but its worth recalling he'll approach most decisions with a dovish bias.
- The equity pullback sees 10-year EGB spreads to Bunds biased wider. BTP Short Term and BTPei supply is due at 1000GMT.
- The EFSF has sent an RFP to a selection of banks with regards to an upcoming transaction. We pencil in a transaction on 31 March / 1 April, but don't have a strong conviction on the size / maturity.
GILTS: Most Of Early Rally Holds, Fiscal Situation & Gilt Remit Eyed
Gilts hold onto the bulk of their early morning rally.
- The prospect of deeper fiscal spending cuts in today’s Spring Statement (increased odds following several press reports pointing to deeper welfare/government department reductions) and slightly softer-than-expected (on net) CPI data drove this morning’s bid.
- Futures traded as high as 91.58 but have backed off to ~91.40, still ~40 ticks higher on the day.
- Our technical analyst notes that the short-term technical outlook in the contract remains bearish.
- Yesterday’s low (90.93) protects key support at the Mar 6 low (90.71).
- Key short-term resistance has been defined at 93.01, the Mar 20 high.
- Yields 3-7bp lower, curve steepens on the dovish BoE repricing following CPI.
- 2s10s still ~2.5bp below the psychological 50bp level, although 5s30s has managed to push above the 100bp mark. Next upside level of note in 5s30s is the May ’21 closing high (103.3bp).
- 10s ~4bp tighter to Bunds, spread back into 192bp.
- Dovish adjustment in GBP STIRs post-CPI.
- BoE-dated OIS shows ~46.5bp of cuts through year-end vs. ~40bp late yesterday.
- SONIA futures 1.5-9.0 firmer.
- Our full preview of the Spring Statement is here.
EQUITIES: Recent Gains in E-Mini S&P Considered Technically Corrective
The medium-term trend direction in Eurostoxx 50 futures is up and recent short-term weakness is considered corrective. Support to watch is the 50-day EMA, at 5293.33. 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 are trading at their recent highs. The trend condition is bearish and the latest recovery appears corrective. MA studies remain in a bear-mode set-up, highlighting a dominant downtrend. However, this week’s gains have resulted in a breach of the 20-day EMA. 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 246.75 pts or +0.65% at 38027.29 and the TOPIX ended 15.37 pts higher or +0.55% at 2812.89.
- Elsewhere, in China the SHANGHAI closed lower by 1.279 pts or -0.04% at 3368.697 and the HANG SENG ended 139.07 pts higher or +0.6% at 23483.32.
- Across Europe, Germany's DAX trades lower by 37.19 pts or -0.16% at 23073.46, FTSE 100 higher by 15.83 pts or +0.18% at 8679.66, CAC 40 down 18.66 pts or -0.23% at 8089.93 and Euro Stoxx 50 down 9.36 pts or -0.17% at 5465.72.
- Dow Jones mini down 31 pts or -0.07% at 42875, S&P 500 mini down 5 pts or -0.09% at 5821.25, NASDAQ mini down 27 pts or -0.13% at 20460.75.
Time: 08:50 GMT
COMMODITIES: WTI Futures Pierce Key Pivot Resistance at 50-Day EMA
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 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 remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Support is at $2970.1, the 20-day EMA.
- WTI Crude up $0.28 or +0.41% at $69.29
- Natural Gas up $0.09 or +2.27% at $3.927
- Gold spot up $5.15 or +0.17% at $3025.63
- Copper up $7.4 or +1.42% at $528.45
- Silver down $0.11 or -0.31% at $33.628
- Platinum down $4.26 or -0.43% at $976.6
Time: 08:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 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 | |
| 27/03/2025 | - |  NO | NorgesBank Meeting | |
| 27/03/2025 | 0830/0830 | GB | BOE's Dhingra on inflation targeting in the UK post pandemic period | |
| 27/03/2025 | 0900/1000 | *** | NO | Norges Bank Rate Decision |
| 27/03/2025 | 0900/1000 | ** | EU | M3 |
| 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 |
