US: USTR To Hold March 11 Hearing On China Semiconductor Policy
The United States Trade Representative has announced that it will hold a hearing on March 11, "regarding the Section 301 investigation on China’s acts, policies, and practices related to targeting of the semiconductor industry for dominance." The hearing details can be found here.
- The hearing comes after US President Donald Trump suggested in his address to Congress that lawmakers should kill the USD$52 billion Biden-era CHIPS and Science Act - a bipartisan piece of legislation aimed at competing with China in high-end chips.
- Politico notes: "Rolling back the law itself would be a sharp reversal of one of the Biden administration’s signature policies, one with broad bipartisan support and global implications."
- SCMP notes: "Trump has expressed support for the overall goal of boosting domestic chipmaking, but he has consistently derided the Chips Act as a means of achieving it.... Instead, Trump has called for tariffs to stoke investment in the US, and he has signalled that import levies on chips could come as soon as next month..."
- The Wall Street Journal reported within the last hour: "The White House is weighing measures to restrict Chinese artificial-intelligence upstart DeepSeek, including banning its chatbot from government devices because of national-security concerns..."
- The Journal notes: "Banning the general public from using DeepSeek is a trickier issue than removing it from government devices. DeepSeek has made its AI models available open-source, meaning they are free to download and copy."
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EURIBOR OPTIONS: Further ERZ5 Upside Flow
ERZ5 98.1875/98.4375/98.6875 call fly vs. 97.50/97.25 put spread, paper paid 1.5 on 7.5K, buying the call spread.
BOE: Sellside analyst views for the rest of the year
- All the sellside previews that we read look for a 25bp cut this week.
- After February, the majority of analysts (18/21) look for the next cut to be in May. Deutsche Bank expect a longer pause to August while both Morgan Stanley and TD Securities both look for a March cut (while noting heightened risks of a delay).
- In terms of 2025 outlook, over 60% of analysts (13/21) expect 100bp of cuts across the year to 3.75%. Only NatWest Markets (4.00%) looks for fewer cuts (despite this being the closest forecast to market pricing). Most remaining analysts (6/21) are equally split between 3.50% and 3.25% (i.e. considerably larger number of cuts than markets price).
- In terms of terminal rate, the majority of analysts 17/21 (81%) have their base case in a 3.00-3.75% range, almost evenly split. Other than NatWest Markets (4.00%) other outliers are to the downside. The mean terminal rate is 3.27%.
STIR: Market Nearly Evenly Split Between 3 Or 4 BoE Cuts In '25
BoE-dated OIS still hasn’t managed to price in greater than 50/50 odds of 4x 25bp cuts through year-end (on a binary 3 or 4 cut basis), with the bid in core global FI markets resulting in a fresh dovish cycle extreme of ~86.5bp of cuts being priced at one stage today.
- A reminder that the market priced ~36bp of cuts over the same horizon as recently as January 15.
- The market continues to price just under 24bp of easing for tomorrow’s decision and ~48bp of cuts through the May MPC.
- We look for cuts at both tomorrow’s decision and the May meeting.
- SONIA futures flat to +9.0.
- Dec highs in SFIZ5 remain unchallenged.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.467 | -23.7 |
Mar-25 | 4.414 | -29.1 |
May-25 | 4.227 | -47.8 |
Jun-25 | 4.140 | -56.4 |
Aug-25 | 4.009 | -69.5 |
Sep-25 | 3.969 | -73.5 |
Nov-25 | 3.893 | -81.1 |
Dec-25 | 3.865 | -83.9 |
