MNI US OPEN - Ukraine Discussions Top of Agenda for MSC

EXECUTIVE SUMMARY

• UKRAINE DISCUSSIONS TOP OF AGENDA FOR MUNICH SECURITY CONFERENCE
• VANCE WIELDS THREAT OF SANCTIONS, MILITARY ACTION TO PUSH PUTIN INTO UKRAINE DEAL - WSJ
• TRUMP FLOATS DEAL WITH RUSSIA, CHINA TO CUT DEFENSE SPENDING
• SNB MAY NEED SUBZERO-RATE TOOL TO STEER FRANC, TSCHUDIN SAYS

Figure 1: Eurostoxx 50 targeting all-time highs

Source: MNI/Bloomberg

NEWS

CHINA (MNI): China Machinery Expects Stable Trade in 2025

MNI (Beijing) China’s machinery industry expects foreign trade to remain stable in 2025, after growing 7.5% last year, accounting for 19% of the country's goods trade, Luo Junjie, executive vice president of the China Machinery Industry Federation, told a conference on Friday.  Luo noted the machinery industry faced pressure last year from insufficient effective demand and continued price declines, but expected the government’s trade-in and upgrade policies would drive market improvement this year.

S.KOREA (WaPo): South Korea’s Likely Next Leader Wants Warmer Ties With China, North Korea

South Korea's likely next leader would support President Donald Trump's efforts to restart dialogue with North Korea's Kim Jong Un - and would even consider nominating him for the Nobel Peace Prize if there was a significant breakthrough, signaling a sharp change from Seoul's current hard-line approach toward Pyongyang. Lee Jae-myung would also temper South Korea's hawkish approach toward China - potentially putting him at odds with the Trump administration - if he becomes the country's president and returns a progressive government to Seoul.

DATA

EUROZONE DATA (MNI): Flash Estimate of Q/Q GDP Revised A Tenth Higher

• EUROZONE FLASH Q4 GDP +0.1% Q/Q, +0.9% Y/Y

Eurozone flash estimate of GDP for Q4 on a quarterly basis was revised up from preliminary flash estimate to 0.1% Q/Q (vs 0.4% in Q3, 0.2% ECB Dec f'cast), though it remained unrevised on an annual basis at 0.9% Y/Y (0.9% in Q3 as well). Q4 2024 remains the weakest quarter of 2024. Looking ahead the ECB forecast GDP growth of 0.3% in the first quarter of 2025.

EUROZONE DATA (MNI): Sluggish Productivity Trend Persists in Q4

Eurozone real productivity per employee fell 0.1% Q/Q in Q4, ending a streak of three consecutive positive readings. On an annual basis, productivity rose 0.2% Y/Y, up from 0.0% in Q3 and the highest since December 2022. However, this was still below the ECB's December MPR projection of 0.5%. A cyclical recovery in productivity growth is key to the ECB's projection for a rebound in economic activity. Although the declining trend in productivity growth appears to have been arrested over the past few quarters, evidence of a upswing is still lacking.

SPAIN DATA (MNI): Non-Energy Cooling in Spanish HICP Despite Weight Boost

• SPAIN JAN HICP -0.1% M/M, +2.9% Y/Y

Spain January final HICP inflation confirmed flash estimates at 2.9% Y/Y (vs 2.8% in Dec) and the sequential reading at -0.1% M/M (vs 0.4% in Dec). The national CPI was one-tenth below flash and consensus at 2.9% (vs 3.0% flash, 2.8% prior), after flash came a tenth higher than expected, though on a sequential basis it confirmed flash at 0.2% M/M (vs 0.5% in Dec). All major HICP sub-components softened except for energy. Services inflation softened to 3.5% Y/Y (vs 3.7% prior). Package holidays fell 14.9% M/M reversing most of Decembers 17.5% gain, transport services also decreased by 4.9% M/M (vs -0.1% in December), as did accommodation prices printing -4.9% M/M (-1.8% prior).

CHINA DATA (MNI): China Jan Yuan Loans, Financing Beat Expectations

• CHINA JAN NEW LOANS CNY5.13 TRLN VS MEDIAN CNY4.53 TRL
• CHINA JAN TSF CNY7.06 TRLN VS MEDIAN CNY6.50 TRLN
• CHINA END-JAN M2 +7.0% Y/Y VS MEDIAN +7.3%; END-DEC +7.3% Y/Y
• CHINA END-JAN M1 +0.4% Y/Y VS -1.4% Y/Y END-DEC
• CHINA END-JAN M0 +17.2% Y/Y VS +13.0% Y/Y END-DEC

MNI (Beijing) China's new yuan loans and aggregate finance both beat market expectations in January amid the traditional boom season, while M1 turned positive partly due to the revised statistical methods, data released Friday by the People's Bank of China showed. M1 money supply grew by 0.4% y/y, reversing December's 1.4% fall and turning positive for the first time after falling for nine straight months. The PBOC has broadened M1's statistical scope to further include personal demand deposits and customers’ provisions of non-bank payment institutions, starting Jan 2025. 

CHINA DATA (MNI): China 2024 Real Estate Loan Recovered: PBOC

MNI (Beijing) China’s real estate loans bounced back in 2024 as the country strengthened policy support to the sector,  data on the People’s Bank of China  website showed Friday. At the end of the fourth quarter, the total balance of real estate loans was CNY52.8 trillion, down 0.2% year-on-year, but the growth rate was 0.8 percentage points higher than at the end of 2023 and also higher than the 1% decline in the first three quarters in 2024.

RATINGS: Austrian & Irish Updates Headline This Evening’s Sovereign Schedule

Sovereign rating reviews of note scheduled for after hours on Friday include:

• Fitch on the Czech Republic (current rating: AA-; Outlook Stable)
• Moody’s on Ireland (current rating: Aa3; Outlook Positive) & Switzerland (current rating: Aaa; Outlook Stable)
• S&P on Austria (current rating: AA+; Outlook Positive)
• Morningstar DBRS Latvia (current rating: A, Stable Trend)
• Scope Ratings on Ireland (current rating: AA; Outlook Stable) & Sweden (current rating: AAA; Outlook Stable)

Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025. Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.

FOREX: Lower Close for USD Index Would be Fifth Consecutive Decline

• The greenback is again on the backfoot early Friday, meaning a negative close today would confirm a fifth consecutive session of losses, with the USD Index having already plumbed a new year-to-date low today. This leaves the greenback within ~0.6% of the next major support, crossing at the 106.207 100-dma.
• The non-specific installation date of reciprocal tariffs remains the latest driver of currency price action, with the USD remaining on the backfoot after Trump confirmed that levies will be installed, but declined to provide a specific deadline.
• As a result, growth and risk proxies are trading well - putting AUD and NZD toward the top-end of the G10 table - while the phase of corrective JPY strength into the Thursday close has moderated considerably.
• Focus for the session ahead rests on the US retail sales release for January, as well as import/export prices indices and Industrial production for the same month. The central bank speaker slate is uncharacteristically quiet, with just Fed's Logan on the docket - taking part in a moderated Q&A. 

EGBS: Bund Futures Off Session Lows as Tariff Announcements Digested

Bund futures have moved away from session lows, now -10 ticks at 132.75 (from a low of 132.55). The prospect of delayed US reciprocal tariffs appeared to weigh at the open, with immediate downside growth risks removed for now. 

• Eurozone Q4 GDP growth saw a small upward revision to 0.1% Q/Q , though remains below the ECB’s December projection. Productivity per employee growth remains sluggish.
• Long-end German ASWs have widened for a second day (albeit off intraday highs at typing). Positioning and spillover from US spread widening are possible drivers.
• 10-year Bund yields peaked at 2.445%, but have since fallen back to 2.429%. This dynamic allowed 10-year EGB spreads to Bunds widen away from opening lows.
• Spreads are generally within 1bp of yesterday’s closing levels, with GGBs underperforming a little. Spreads remain tighter on the week, aided by further solid European equity performance. 

GILTS: A Little Softer Alongside Modest Hawkish Repricing in Short End

Gilts are off session lows after increased odds of U.S. tariff implementation on the UK (owing to the use of VAT) weighed at the open.

• Markets seem to favour trading off the risks to inflation posed by the tariffs, although related downside risks to growth (and the potential for the BoE to react dovishly if GDP takes a meaningful hit) may be limiting losses.
• Note there is a window for negotiation, with the tariffs not set to go into play until early April. This may also be limiting the sell off.
• Futures comfortably within yesterday’s range, leaving initial support and resistance (92.31/94.35) untouched, with the bull cycle remaining in play in the contract.
• Yields ~2bp higher in a parallel shift across the curve.
• BoE-dated OIS shows ~56.5bp of cuts through year-end vs. ~57.5bp late yesterday and after briefly showing ~55bp earlier today.
• Expect macro and cross-market cues to continue to dominate on Friday, with little of note on the UK calendar and domestic focus pinned on next week’s labour market and inflation data.

EQUITIES: Eurostoxx 50 Target March 2000 All-Time High at 5525.00

The Eurostoxx 50 futures contract continues to appreciate. The move higher this week 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. Sights are on a major resistance at 5525.00, the March 2000 all-time high. Clearance of this level would highlight a key bullish break. Initial firm support to watch lies at 5283.40, the 20-day EMA. S&P E-Minis have traded higher this week. The recovery undermines a recent bearish threat and attention turns to the next resistance at 6162.25, the Jan 24 high. Clearance of this level would expose key resistance at 6178.75, the Dec 6 ‘24 high. A move above this hurdle would resume the primary uptrend. On the downside, initial key support has been defined at 6014.00, the Feb 10 low. A break would be viewed as a bearish development.

• Japan's NIKKEI closed lower by 312.04 pts or -0.79% at 39149.43 and the TOPIX ended 6.38 pts lower or -0.23% at 2759.21.
• Elsewhere, in China the SHANGHAI closed higher by 14.241 pts or +0.43% at 3346.724 and the HANG SENG ended 805.96 pts higher or +3.69% at 22620.33.
• Across Europe, Germany's DAX trades lower by 13.43 pts or -0.06% at 22598.42, FTSE 100 lower by 18.01 pts or -0.21% at 8746.68, CAC 40 up 41.79 pts or +0.51% at 8206.31 and Euro Stoxx 50 up 16.08 pts or +0.29% at 5516.79.
• Dow Jones mini down 47 pts or -0.1% at 44764, S&P 500 mini up 1.5 pts or +0.02% at 6136.75, NASDAQ mini up 17.75 pts or +0.08% at 22131.

Time: 09:50 GMT

COMMODITIES: Gold Trading Close to This Week's Highs, Bullish Theme Strengthens

WTI futures have pulled back from Tuesday high and price has again traded below the 50-day EMA - at $72.14. Attention is on $70.43, the Feb 6 low. It has been pierced, a clear break would undermine a bullish theme and confirm a breach of the 50-day EMA. This would strengthen a bearish threat and open $68.05, the Dec 20 ‘24 low. Key S/T resistance has been defined at $75.18. A move above this level is required to reinstate a bull theme. A bull cycle in Gold remains in play and the yellow metal is trading closer to its latest highs. Recent gains once again confirm a resumption of the uptrend and maintain 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 $2820.6, the 20-day EMA.

• WTI Crude up $0.28 or +0.39% at $71.59
• Natural Gas up $0.07 or +1.79% at $3.693
• Gold spot up $7.09 or +0.24% at $2935.29
• Copper up $1.45 or +0.3% at $484
• Silver up $0.93 or +2.88% at $33.2715
• Platinum up $9.73 or +0.97% at $1009.67

Time: 09:50 GMT

Date	GMT/Local	Impact	Country	Event
14/02/2025	1330/0830	**	CA	Monthly Survey of Manufacturing
14/02/2025	1330/0830	**	CA	Wholesale Trade
14/02/2025	1330/0830	***	US	Retail Sales
14/02/2025	1330/0830	**	US	Import/Export Price Index
14/02/2025	1415/0915	***	US	Industrial Production
14/02/2025	1500/1000	*	US	Business Inventories
14/02/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
14/02/2025	2000/1500		US	Dallas Fed's Lorie Logan
17/02/2025	2350/0850	***	JP	GDP