- US equity futures have recovered some ground with lower government shutdown odds, after Democrat Senator Chuck Schumer stated he will support the stopgap funding bill. Cash bonds are flat to 2bps cheaper, with a steepening bias, in the Asia-Pac session after yesterday’s modest rally.
- The USD is higher, although mainly against safe havens like the yen. AUD and NZD have edged higher as China/HK equities surged ahead of a Monday press conference in China, which is aimed at boosting consumption.
- Looking ahead, note we should have Rengo's (the largest Japanese trade union) initial pay tally later for 2025 wage outcomes. This is a key watch point for the BoJ and the authorities.
- In the UK we have GDP data, while in France final Feb CPI is due. In the US, the March U. of Mich. sentiment report is out.
MARKETS
In today's Asia-Pac session, TYM5 is 110-28, -0-02 from closing levels.
- Cash bonds are flat to 2bps cheaper, with a steepening bias, in the Asia-Pac session after yesterday’s modest rally.
- Yesterday, US tsys were supported by risk-off amid ongoing trade war uncertainty.
- However, US equity futures are higher today with US Government shutdown odds seemingly falling. Rtrs noted: "Top U.S. Senate Democrat Chuck Schumer told colleagues behind closed doors on Thursday that he would vote to advance a stopgap funding bill, signaling that his party would provide the votes to avert a government shutdown, Punchbowl News reported, citing Democratic aides and lawmakers."
- Today’s calendar highlight is U of Mich Sentiment data.
STIR: $-Bloc Markets Muted Over the Past Week, Except For Canada
In the $-bloc, rate expectations through December 2025 showed muted movements over the past week, outside of Canada, where pricing softened by 11bps. The US saw pricing firm 5bps, while Australia and New Zealand saw 5bp softenings.
- In Canada, the BoC cut at the seventh consecutive meeting in March, by 25bp to an overnight rate target of 2.75%, in line with analyst consensus and market pricing.
- The easing since June brings rates to what Governor Macklem characterized as the middle of the “neutral” range, putting policy in a finely poised position with the escalating trade war between Canada and the US looming large over the economic outlook. Overall, the press conference leaned marginally hawkish, as Macklem was if anything more emphatic on the need to keep inflation/inflation expectations under control.
- The US saw lower-than-expected prints for CPI and PPI but its ability to impart a positive influence on the market was overshadowed by ongoing trade war uncertainty.
- Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.62%, -71bps; Canada (BOC): 2.29%, -46bps; Australia (RBA): 3.41%, -69bps; and New Zealand (RBNZ): 2.99%, -76bps.
Figure 1: $-Bloc STIR (%)
Source: MNI – Market News / Bloomberg
JGBS: Futures Higher But Off Highs, Rengo Wage Outcome Due
JGB futures are higher, +8 compared to settlement levels, but well off session bests.
- Cash US tsys are 1-2bps cheaper in the Asia-Pac session after yesterday’s modest rally. US equity futures are higher today with US Government shutdown odds seemingly falling. Rtrs noted: "Top U.S. Senate Democrat Chuck Schumer told colleagues behind closed doors on Thursday that he would vote to advance a stopgap funding bill.”
- This week BoJ Governor Ueda largely delivered a repeat of previous hawkish statements. While no change is expected at next week’s BoJ meeting, the timing of recent messaging suggests the decision will come with a hawkish outlook. This may see the markets ramp up expectations for the decision due on May 1, from its current stance of July. It is also noteworthy that the BoJ raised interest rates last year shortly after Rengo (the largest Japanese trade union) published its initial count of wage rises. Due at 4:15pm local time. (BBG)
- Cash JGBs are 1bp richer to 3bps cheaper across benchmarks, with a steepening bias. The benchmark 10-year yield is 1bp higher at 1.557% versus the cycle high of 1.58%.
- Swap rates are flat to 3bps higher, with a steeper curve.
- On Monday, the local calendar will be empty apart from BoJ Rinban Operations covering 1-25-year JGBs.
AUSSIE BONDS: Little Changed On A Data-Light Session
ACGBs (YM +1.0 & XM +0.5) little changed on a data-light session.
- “AUD/USD has further downside because ‘peak tariff’ has not been reached. Further wide-ranging tariffs are likely to be announced on April 2 when President Trump receives options for more duties from officials which “could be the catalyst to eventually pull AUD/USD down below 0.6000 in coming months” writes Joseph Capurso, head of international economics at CBA. (per BBG)
- Cash ACGBs are flat with the AU-US 10-year yield differential at +12bps.
- Swap rates are slightly lower, with the 3s10s curve flatter.
- The bills strip is +1 to +2 across contracts.
- RBA-dated OIS pricing is flat to 3bps softer across meetings today. A 25bp rate cut in April is given an 8% probability, with a cumulative 66bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- The local calendar will be empty on Monday. The next event on the local calendar is Sarah Hunter's, Assistant Governor (Economic) speech at the AFR Banking Summit on Tuesday.
- Next week, the AOFM plans to sell A$800mn of the 4.25% 21 December 2035 bond on Wednesday and A$700mn of the 2.75% 21 November 2029 bond on Friday.
BONDS: NZGBS: Bear-Flattener, RBNZ Repo Of Sep-25 Linker
NZGBs closed a subdued session near the worst levels, with benchmark yields flat to 2bps cheaper.
- “New Zealand's monthly price indicators suggest inflation risks have cooled, with prices reversing course in February after a pickup in December and January. The pullback in prices through February suggests downside risk to the RBNZ's inflation outlook, adding to the case for further easing at its next meeting on April 9.” (per BBG Economics)
- Cash US tsys are 1-2bps cheaper in the Asia-Pac session after yesterday’s modest rally. US equity futures are higher today with US Government shutdown odds seemingly falling. Rtrs noted: "Top U.S. Senate Democrat Chuck Schumer told colleagues behind closed doors on Thursday that he would vote to advance a stopgap funding bill.”
- Swap rates closed showing a bear-flattener, with rates flat to 2bps higher.
- RBNZ dated OIS pricing closed flat to 4bps firmer, with February 2026 leading. 25bps of easing is priced for April, with a cumulative 68bps by November 2025.
- On Monday, the local calendar will see the Performance Services Index. Later today will see U of Mich Sentiment data in the US.
- The RBNZ will start the repurchase program of the Sep-25 inflation-indexed bond on March 21. The operation is being undertaken to manage liquidity and has no implications for monetary policy stance.
NEW ZEALAND: PMI Suggests Better Growth Ahead, Food, Petrol & Airfare Prices Dip
The earlier BusinessNZ manufacturing PMI rose to 53.9 in Feb, from a revised 51.7 print in Jan, see the chart below (plotted against GDP growth). This is the highest reading since August 2022 and continues to point to an underlying recovery in NZ's business cycle. Other data showed food prices dipping 0.5%m/m, after a 1.9% gain in Jan.
- On the PMI, all 5 sub indices are above 50 (per BBG), with the production gauge up to 52.4, employment at 54.
- BNZ stated: 'It is one of several indicators that suggests the broader economy is turning for the better. Indeed, it indicates the pickup may be a bit faster than we are currently forecasting. Still that stressed: "It is important to remember that any improvement in activity is coming from a weak base. Recent official data confirmed weak manufacturing sales in 4q last year". (via BBG).
- On food prices, the Feb drop was the largest since Oct last year. Still in y/y terms we edged up to 2.4%, from 2.3% in Jan.
- In terms of the other details, were saw petrol prices down 0.2% (after rising 4.0% in Jan), domestic and international air travel fell for the second straight month as well. Accommodation services were up 3.2% though in m/m terms.
- All of these segments, except for domestic air travel, are negative in y/y terms though.
Fig 1: NZ Business NZ PMI Versus GDP Growth
Source: BNZ-Business NZ/Market News- MNI/Bloomberg
FOREX: Yen Falters With Higher US Equity Futures, A$ & NZD Nudge Higher
The USD BBDXY index has edged higher today, last near 1269.15, largely thanks to yen weakness. The USD index is up only a touch for the past week though.
- The yen has unwound some of Thursday's outperformance so far in Friday trade. USD/JPY was last near 148.45/50, up around 0.45%. The move higher in USD/JPY has coincided a meaningful rebound in US equity futures. Eminis are up 0.70%, Nasdaq futures are +1% higher.
- Sentiment has been aided by reduced US government shut down odds, as Senate Democrat Chuck Schumer stated he would support the Stopgap bill from the Republicans (which was better than the alternative of a government shutdown in Schumer's words). US yields have also recovered some ground, the 10yr yield up 2bps to 4.29%.
- For USD/JPY we are still sub highs for the week (above 149.00), while the 20-day EMA is back at 149.72.
- AUD and NZD have ticked higher, particularly against the yen. AUD/USD is still sub 0.6300, lagging NZD modestly. NZD/USD is back around 0.5710. Earlier PMI data suggested a further cyclical recovery, although price data reversed some of the gains seen in Jan.
- The A$ and NZD are also seeing some benefit from surging China and Hong Kong stocks. The rebound is reflective of stimulus hopes for the consumer sector, with a joint press conference scheduled for next Monday in China (3pm local time). Officials from the finance ministry and PBoC will be there, along with other agencies, with efforts to boost consumption the focus point.
- Looking ahead, note we should have Rengo's (the largest Japanese trade union) initial pay tally later for 2025 wage outcomes. BBG states results may come out at 4:15pm local time.
- In the UK we have GDP data, while in France final Feb CPI is due. In the US, the March U. of Mich. sentiment report is out.
ASIA STOCKS: Friday Afternoon Boost on China Press Conference.
- Markets turned around on Friday on the news that a press conference is to be held on Monday by Chinese authorities with the subject boosting consumption.
- Markets have extrapolated a fiscal stimulus from this, boosting markets across the region.
- Having trended weaker in early trade, China’s Hang Seng got a boost from the news surging to be +2.50% up for the day, with the CSI 300 +2.37%, Shanghai +1.64% and Shenzhen +1.60%. Despite the rally, the Hang Seng is on track for a decline of around -0.70% on the week.
- Korea’s KOSPI was the outlier in the region, not able to jump into the green and remains -0.10% lower on the day and on track to finish the week with a marginal gain of +0.23%.
- Malaysia’s FTSE Bursa KLCI has had a poor week and despite being higher by +0.12%, is on track to fall over -2.2% for the week.
- Indonesia’s Jakarta Composite wasn’t too concerned about the news and is down -1.58% and on track for decline of -1.3% for the week.
- India’s NIFTY 50 is opening weaker and is lower by -0.33% following yesterday’s moderate losses.
- Other bourses ignored the news with the Singapore FTSE Straits Times down -0.08%, whilst the Philippines jumped +0.60%
ASIA STOCKS: Large Outflow Thematic Remains for Asia.
Large outflows for Taiwan, South Korea and India dominate flows as general risk aversion in markets is on the increase given rapid falls in equities continue and Asian currencies are under pressure.
- South Korea: Recorded outflows of -$389m yesterday, bringing the 5-day total to -$1,380m. 2025 to date flows are -$5,488m. The 5-day average is -$276m, the 20-day average is -$213m and the 100-day average of -$131m.
- Taiwan: Had outflows of -$751m yesterday, with total outflows of -$4,502m over the past 5 days. YTD flows are negative at -$13,422m. The 5-day average is -$900m, the 20-day average of -$551m and the 100-day average of -$184m.
- India: Saw outflows of -$162m as of the 12th, with a total outflow of -$907m over the previous 5 days. YTD outflows stand at -$15,834m. The 5-day average is -$181m, the 20-day average of -$313m and the 100-day average of -$203m.
- Indonesia: Posted outflows of -$55m yesterday, bringing the 5-day total to -$166m. YTD flows are negative at -$1,485m. The 5-day average is -$33m, the 20-day average is -$44m the 100-day average of -$32m.
- Thailand: Recorded outflows of -$28m yesterday, totaling -$203m over the past 5 days. YTD flows are negative at -$900m. The 5-day average is -$41m, the 20-day average of -$29m the 100-day average of -$20m.
- Malaysia: Experienced outflows of -$31m yesterday, contributing to a 5-day outflow of -$309m. YTD flows stand at -$1,635m. The 5-day average is -$62m, the 20-day average of -$44m the 100-day average of -$31m.
- Philippines: Saw inflows of +$8m yesterday, with net inflows of +$29m over the past 5 days. YTD flows are negative at -$226m. The 5-day average is +$6m, the 20-day average of -$5m the 100-day average of -$7m.
OIL: China Press Conference Gives Oil a Boost Despite Softer Week.
- Oil had done very little in morning trading until the announcement of a press conference in China next Monday on boosting consumption got markets excited.
- This gave oil a boost, paring back losses from earlier in the week.
- The news comes following the International Energy Agency (“IEA”) latest reports pose a potentially bearish outlook for oil in the near term.
- The IEA has reduced its forecasts for consumption of oil as the impact of US tariffs plays havoc with supply chains.
- IEA surprised markets last week by suggesting a 400,000 bbl/d increase in supply despite their forecasts for 2025 suggesting a potential surplus.
- The IEA notes that “the macroeconomic conditions that underpin our oil demand projections deteriorated over the past month as trade tensions escalated between the US and several other countries.”
- This report has the potential to be further drag on oil prices, which have been pressured since early January when the Trump administration began to enact their trade policies.
- WTI had opened the Asian session at $66.77 and was on track for weekly decline before jumping to $67.02 on the China news.
- If able to maintain these levels, this could see oil finish flat on the week following eight successive weeks of declines.
- Brent had opened in the Asian trading session at $69.88, doing very little prior to the announcement of the press conference at which point it jumped back through $70/bbl to reach $70.34 and If Brent was able to maintain these levels, this could see it finish flat on the week following four successive weeks of declines.
- State Owned Saudi Oil giant Saudi Aramco is seeing a material decline in oil demand in China according to data supplied by BBG.
- In further escalation of the pressure on Iran, the US Treasury Department has included the Iranian oil minister on the list of ‘specially designated nationals’ thereby imposing sanctions on him.
- The US has imposed further sanctions on companies and cargo ships specifically used by Iran in the transport of oil.
- According to reports the US has let a 60-day exemption that has allowed specific energy transactions involving Russian sanctioned banks to continue to transact via a US payment system, lapse in a sign that US could be altering its approach with Russia.
Gold Delivers Another Strong Week of Gains
- Gold’s ‘safe haven’ status was on display this week as equity markets stumbled, early before rebounding Friday on potential fiscal stimulus in China.
- Despite a slow start to the week with a decline on Monday, Gold has surged each day since and set to finish up over +2.7%
- This despite data out shows that money managers have been reducing their bullish bets on gold in recent weeks, a sign that some of the price activity was likely driven by profit taking.
- Overnight, gold got a new boost with weaker than expected US PPI data giving gold a boost before opening at $2,981.75.
- This followed into the Asian trading session with Gold touching new highs of $2,993.50 before backing off to $2,992.35
- The rally has seen gold hit fresh highs, causing market commentators to refresh their 2025 forecasts with some predicting US$3,500 by third quarter.
- In further signs as to the strength of the demand dynamics for gold, Bolivia’s new state gold trading firm EPCORO announced plans to quadruple its purchase of gold this year for the nation’s reserves, aiming to sell up to US$1bn of gold to the Central Bank.
CHINA: Press Conference Announced on Boosting Consumption.
- The State Council will hold a press conference next Monday at 3.00pm on the topic of boosting consumption.
- Speakers announced are from the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the Ministry of Human Resources and Social Security and the PBOC.
- The announcement of the press conference gave stocks a boost with the CSI 300 up by +1.85%, following a slow start to the morning’s trading and coming after two days of losses.
- All major bourses are up with the Hang Seng +1.5%, Shanghai +1.15% and Shenzhen +0.90%.
- Markets have eagerly awaited output from the NPC with expectations that policy action in both the fiscal and monetary space could be announced.
- Consumption/household spending is seen as potential key source of growth for the China economy, particularly given external trade headwinds and still depressed housing construction activity. The chart below plots retail sales and industrial production growth in y/y terms.
Fig 1: China Retail Sales & Industrial Production Y/Y
Source: MNI - Market News/Bloomberg
SOUTH KOREA: Export and Import Prices Continue to Decline.
- As South Korea’s import prices decline in February, could this be a broader theme playing out in the region given China’s PPI has been negative since late 2022.
- Korea’s import prices y/y have declined for three successive months, with the month-on-month number turning negative.
- Given China's share of exports in the region, raises concerns about "exporting deflation" to Asia, as falling export prices in China could lead to regional deflationary pressures due to factors like industrial overcapacity and strong Asian demand.
- Whilst still early, assessing the correlation of price movement between the two data sources sees an approximate 10% increase in correlation over the last 12 months.
- Korea’s export prices too have declined again in February, marking a third successive month of decline.
- With only 9bps of rate cuts priced in over three months by the bond market, if the risks are skewed to the downside on prices, this possibly suggests that bond yields could have similar downward pressures in the mid-part of this year.
ASIA FX: CNH Only Modestly Higher, Despite Onshore Equity Surge
In North East Asia FX markets, trends are closed to unchanged in the first part of Friday dealings. CNH is a little higher, as onshore equities surge amid consumption stimulus hopes. USD/KRW is little changed, while USD/TWD is steady, near 33.00. Some offset has come from the weaker yen, with US equities rising on reduced US government shut down odds.
- For USD/CNH, we are back near the low 7.2400 region. Earlier highs in the pair were at 7.2543. The CSI 300 has surged over 2.3%, with the index breaking above 4000 and trading at fresh highs for the year. The main impetus is a briefing to be held on Monday from major government departments and regulators, with the aim of boosting consumption. This comes after the recent conclusion of the NP. Equity outperformance should, all else equal, benefit the yuan. For USD/CNH earlier lows this week were sub the simple 200-day (7.2220), which is likely to be a downside focus point.
- Spot USD/KRW is little changed, last just under 1455. Local South Korea equities have struggled for positive traction, while earlier data showed import and export prices falling in m/m terms. Equity outflows have still been significant this past week (near $1.5bn). Spot USD/KRW has drifted up into the upper half of its recent ranges, with upside focus likely to rest on a move back above 1460. South Korean political parties will discuss the extra budget next week, while focus is also on any protests with former President Yoon's impeachment ruling expected soon.
- Spot USD/TWD was last near 33.00, with an earlier move above this figure level drawing selling interest. Taiwan has seen very large equity outflows this past week, of over $3bn.
ASIA FX: MYR & IDR Underperform Past Week, PHP Outperforms
In South East Asia markets, FX trends are mixed as the end of the week approaches. In the past week, the bias has been for lower Asian FX levels against the USD, particularly for the likes of MYR and IDR. Global equity jitters haven't helped, while broader USD indices and US yields have formed somewhat of a base for now. Tariff concerns continue to dominant headlines.
- USD/MYR continues to climb, recovering from early March lows near the 4.4000 level. We were last at 4.4450, down close to 0.20% so far today and over 0.70% for the week. Upside focus could rest on the 200-day EMA, which is at 4.4775. Current spot levels are close to all the other key EMAs. MYR is underperforming the steadier yuan trends, while equity outflows this past week have been a headwind. Local stocks are recovering from recent lows.
- USD/IDR is holding above 16400 at this stage. Highs this week have been around 16460. Like elsewhere equity outflows from offshore investors have been a headwind. Local equities are struggling to hold above 6600 for the JCI. The FinMin stated earlier this week, the fiscal deficit target of just beyond -2.5% of GDP is unchanged, as the authorities look to dampen fiscal slippage fears. Government revenues have softened with lower commodity prices.
- USD/PHP has been a relative outperformer, little changed versus the USD over the past week. The BSP remains focused on PHP stability, while less equity outflows have also been evident. The pair was last near 57.20, with recent lows at 57.10.
- USD/THB was last just under 33.70, up around 0.25% in baht terms so far today. The higher gold price is likely helping at the margin. Consumer confidence edged down for Feb, which comes after the recent rate, suggesting more work needs to be done to boost domestic demand.
INDIA: Country Wrap: RBI Policies Boosting FX Reserves
- India’s FX reserves have had a significant boost from the recent RBI policy shift to rise to nearly US$654bn. The RBI switched to the use of FX swaps instead of outright purchases, a move that has stabilized the currency and stopped the decline in FX reserves. The RBI has been steadily adding also to its gold stockpile, growing 1.4% up to March 07. (source: MNI – Market News).
- As the trade war intensifies, Indian Commerce Secretary Goyal has told exporters that they need to ‘come out of their protectionist mindset’ despite the government seeking to agree trade arrangements with the US. (source: BGG).
- India’s NIFTY 50 is opening weaker and is lower by -0.33% following yesterday’s moderate losses.
- The rupee is having a good start to Friday’s trading, trending up by +0.23% to 87.00.
- Bonds: another lackluster week of Indian yields with the IGB 10Yr +1bp higher at 6.698%.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 14/03/2025 | 0700/0700 | ** |  GB | UK Monthly GDP |
| 14/03/2025 | 0700/0800 | ** |  SE | Unemployment |
| 14/03/2025 | 0700/0700 | ** | GB | Index of Services |
| 14/03/2025 | 0700/0700 | *** | GB | Index of Production |
| 14/03/2025 | 0700/0800 | *** |  DE | HICP (f) |
| 14/03/2025 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 14/03/2025 | 0730/0730 | GB | DMO calendar for first 3 weeks of FY 25/26 confirmed | |
| 14/03/2025 | 0745/0845 | *** |  FR | HICP (f) |
| 14/03/2025 | 0800/0900 | *** |  ES | HICP (f) |
| 14/03/2025 | 0900/1000 | * |  IT | Industrial Production |
| 14/03/2025 | 0930/0930 | GB | BoE/Ipsos Inflation Attitudes Survey | |
| 14/03/2025 | - | *** |  CN | New Loans |
| 14/03/2025 | - | *** | CN | Money Supply |
| 14/03/2025 | - | *** | CN | Social Financing |
| 14/03/2025 | 1230/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 14/03/2025 | 1230/0830 | ** | CA | Wholesale Trade |
| 14/03/2025 | 1315/1415 |  EU | Cipollone in panel discussion at "Fifty years of Consob: present and future - Reflections in Bocconi" Milan | |
| 14/03/2025 | 1400/1000 | *** |  US | U. Mich. Survey of Consumers |
| 14/03/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 14/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 14/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
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