- In the FX space, yen underperformance has continued. Trends elsewhere have been quite steady in the G10 and Asia FX space.
- US Tsys futures are trading slightly lower today, with all contracts trading below Tuesday's lows. JGB futures are weaker and near session cheaps, -21 compared to settlement levels.
- Hong Kong equities are higher, but elsewhere sentiment is mixed.
- Later Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1% (see MNI US CPI Preview). January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.
MARKETS
US TSYS: Tsys Yields Rise Following Trump Comments, Focus Turns To CPI Later
- Tsys futures are trading slightly lower today, with all contracts trading below Tuesday's lows. There hasn't been much in the way of headlines, however Trump did speak earlier, which saw tsys slip slightly. TU is -00 5/8 at 102-21 3/4, while TY is -03 at 108-27+, volumes have picked up over the past hour or so since Trump spoke, with a pick up in selling across the FV & TY contracts
- Key levels to watch for TY are initial support at 108-20+ (Feb 4 low), below here 108-06 (Jan 23 lows), while to the upside, initial resistance isn't until 110-00 (Feb 7 high)
- Cash tsys yields are trading 1bps to 1.5bps cheaper today, the 2yr is +1.3bps at 4.296%, while the 10yr is +1.2bps at 4.547%. The 2s01s is unchanged at 24.737, after briefly hitting ytd lows of 15.889 on Friday, vs ytd highs of 42.887.
- Trump spoke at the White House, emphasizing his desire to end the war in Ukraine and expressing appreciation for Russia’s release of hostage Marc Fogel. He declined to confirm if he spoke with Putin but hinted that another release is expected tomorrow. Trump also suggested there is "goodwill" regarding the war and, when asked about reciprocal tariffs on Wednesday, responded, "We'll see."
- MNI - US CPI Preview: Consensus sees core CPI inflation accelerating to a seasonally adjusted 0.3% M/M (unrounded 0.29%) in
January after what was, for now, seen as a slightly softer than expected 0.225% M/M in December ( Here ) Ahead of CPI later today, fed-dated OIS is pricing in about 35bps of cuts this year, with the first full 25bps cut priced for September.
GLOBAL MACRO: Protectionism Nothing New, Subsidies Usually Preferred Policy
Increasing tariffs on trading partners was a key election policy of Republican Trump and he has followed through since his inauguration on January 20. However, trade interventions have been part of the global landscape for some time with protective and harmful measures far exceeding liberalising ones for the last 15 years.
- According to data from Global Trade Alert, harmful trade interventions peaked in 2022 and have been trending lower since then. Most governments choose to use subsidies ex exports accounting for 54.3% of the total between 2009-2025 and only 8.6% were tariffs. This trend is unchanged in more recent years, except this year where tariffs to date have accounted for 23.4%.
Global new trade interventions/year
- 2024 looks like it may have the least number of harmful measures since data began in 2009, but this early in 2025, data may still be coming in to Global Trade Alert. But for the 1536 harmful interventions recorded, there were only 704 liberalising ones.
- In 2025 to date, there have been 280 interventions with 192 harmful and 88 liberalising. Unsurprising the US has introduced the most number of harmful measures but India and Brazil are not far behind. There has been a partial offset from India with some liberalising interventions.
- This year China then the US and Russia have been most exposed to harmful trade measures, while Ukraine is the biggest beneficiary of liberalising ones.
- Over 2009-2025, Germany, France and Italy have been most exposed to harmful interventions and China, US and Germany to liberalising ones. US, China and Brazil have contributed the most to harmful ones, while Australia, Brazil and India to the liberalising measures, according to Global Trade Alert.
- In terms of sectors, iron/steel products have been hit the hardest over 2009-2025 followed by autos and other fabricated metal products. The US will impose 25% tariffs on steel and aluminium imports from March and autos are currently being considered.
Global harmful trade policy instruments used % total 2024-2025
Source: MNI - Market News/Global Trade Alert
JGBS: Bear-Steepener, BoJ Ueda: Need To See Whole Picture Of Trump Measures
JGB futures are weaker and near session cheaps, -21 compared to settlement levels.
- “The BOJ is likely to raise the policy rate by 25 bps once more this year, PGIM Fixed Income says in a note. However, the central bank could accelerate rate hikes in the event Japanese consumers materially step up consumption, it says.” (per WSJ via BBG)
- “"We cannot understand the impact [of Trump's measures] on Japan unless we see the whole picture--such as how the overall package, instead of individual policies, would look like and what kinds of policy developments are causing currency fluctuations," Ueda told a parliamentary committee.” (per DJ via BBG)
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s modest sell-off. The focus is on key US CPI inflation data today at 0830ET.
- Cash JGBs are flat to 3bps cheaper across benchmarks, with the 10-year underperforming. The benchmark 10-year yield is 3.0bps higher at 1.347%, a fresh cycle high.
- The swaps cure has twist-steepened, with rates 1bp lower to 2bps higher. Swap spreads are mostly tighter.
- Tomorrow, the local calendar will see PPI data alongside BOJ Rinban Operations covering 1-3-year and 5-25-year+ JGBs.
AUSSIE BONDS: Cheaper & At Session’s Worst Levels Ahead Of US CPI Data
ACGBs (YM -6.0 & XM -8.0) are cheaper and near the Sydney session’s worst levels.
- “The Australian economy is slowly improving and millions of mortgage holders will finally feel their disposable incomes rise when the Reserve Bank cuts interest rates next week, as widely expected, the country’s largest bank said as it posted a bumper $5.13 billion half-year profit.” (per SMH via BBG)
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s modest sell-off. The focus is on key US CPI inflation data today at 0830ET.
- Cash ACGBs are 6-8bps cheaper with the AU-US 10-year yield differential at -9bps.
- Swap rates are 5-8bps higher, with the 3s10s curve steeper.
- The bills strip is -2 to -6 across contracts.
- Tomorrow, the local calendar will see Consumer Inflation Expectations. This is the last data release before the RBA policy Decision next Tuesday.
- RBA-dated OIS pricing is 1–6bps firmer across meetings today, led by late 2025 contracts. More notably, OIS pricing is now mixed compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting firming by 10bps over the past week.
- A 25bp rate cut in April remains fully priced (119%), while the probability of a February cut stands at 84% (based on an effective cash rate of 4.34%).
AUSTRALIA: Price Data Signal Return To Band, Services Remain Sticky Though
The RBA decision is February 18 including updated staff forecasts and the AUD OIS market has around an 80% chance of a 25bp rate cut and as MNI discussed last week, the RBA rarely doesn’t ease if the market expects it to. In terms of the data, Q4 inflation was lower than the RBA’s November forecasts but they will be key as to whether it has gained more “confidence that inflation is moving sustainably towards target” and here the core services outcome may be a problem.
- The RBA noted in the December minutes that “underlying inflation was still too high, underpinned by persistently high services price inflation”. Core services rose 1.1% q/q and 4.2% y/y in Q4 following 1.3% & 4.1%, signalling that they remain sticky as has been the case in other countries. December monthly services rose 3.7% y/y but down from 4.2%.
- Thus the domestically-driven services will be an important input into the February RBA decision and may make the tone around any easing sound very cautious.
- The S&P Global services PMI report for January is consistent with ongoing stickiness concerns. It noted that input costs increased sharply due to wages, AUD and higher supplier prices and as a result selling prices rose at their fastest in 6 months.
Australia services CPI y/y%
- January NAB business price/cost components were more neutral than the PMI but did signal a stalling in their moderation.
- Melbourne Institute inflation expectations and gauge for January are consistent with inflation returning to target.
- Our PCA CPI estimate, removes volatile components, eased 0.1pp to 2.7% in Q4, approaching the band mid-point.
- The AUD TWI is up 0.3% m/m in February to be down 1.6% y/y and with Q4 import prices rising only 0.2% q/q and still down 1.9% y/y, the currency is unlikely to be a concern. It is worth noting though that a 17.7% y/y drop in imported petrol prices has kept imported inflation subdued.
Australia monthly trimmed mean inflation y/y%
AUSTRALIA DATA: Home Loan Values Continue Rising
The new quarterly lending indicators that replace the monthly series were released today for Q4. The total number of home loans fell 0.4%, the first drop since Q1 2024, but the value rose 1.4% q/q, the third straight quarterly rise, to be up 16% y/y. In its December minutes, the RBA pointed out that while policy was restrictive, there were “indications that financial conditions were not restraining credit growth as much as had been expected”. This data is consistent with that view.
- The number of home loans fell 0.4% q/q but are still 7.2% higher than Q4 2023. In Q3 they rose 2.1% q/q and 15.5% y/y. The value didn’t slow as much and remained strong growing at 1.4% q/q & 16% y/y but down from 5.3% & 24.7% in Q3.
- The slowdown in both numbers and values of home loans was due to investors with them falling 4.5% q/q, the first quarterly decline since Q1 2023, and 2.9% q/q respectively, but this looks like payback for a run of strong increases.
- Lending to owner occupiers remained robust with the number of loans rising 2.2% q/q and 4.0% y/y and the value 4.2% q/q and 12.7% y/y. The value of lending to first home buyers rose 1.5% q/q & 5.5% y/y after -0.8% & 16.8% in Q3.
- The number of owner-occupier refis rose 12% q/q in Q4 after +4.9%.
Australia value of new loans for dwellings ex refi A$mn
STIR: RBA Dated OIS Pricing No Longer Uniformly Softer Than Pre-Q4 CPI Levels
RBA-dated OIS pricing is 1–5bps firmer across meetings today, led by late 2025 contracts.
- More notably, OIS pricing is now mixed compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting firming by 10bps over the past week.
- A 25bp rate cut in April remains fully priced (119%), while the probability of a February cut stands at 84% (based on an effective cash rate of 4.34%).
- Historically, it would be highly unusual for the RBA to diverge from market expectations, especially given its lack of official or unofficial efforts to push back against pricing—something it has actively done in the past.
Figure 1: RBA-Dated OIS – Today Vs. Pre-Q4 CPI
Source: MNI – Market News / Bloomberg
BONDS: NZGBS: Cheaper But In Middle Of Ranges, US CPI On Tap
NZGBs closed in the middle of today’s ranges, with benchmark yields 3-4bps higher.
- The NZGB 10-year outperformed its ACGB counterpart, with the AU-US yield differential 3bps tighter at +9bps. The NZ-US 10-year differential was unchanged at +1bp.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s modest sell-off. The focus is on key US CPI inflation data today at 0830ET.
- (MNI) Consensus sees core CPI inflation accelerating to a seasonally adjusted 0.3% M/M (unrounded 0.29%) in January after what was, for now, seen as a slightly softer-than-expected 0.225% M/M in December.
- The headline is expected only a touch stronger, at 0.32% M/M for a pullback from 0.39% owing to a sequential slowing in energy prices vs stronger food prices amidst a serious bird flu outbreak.
- There’s a good chance core CPI ‘surprises’ a tenth higher with 3.2% Y/Y owing to rounding, whilst headline CPI is widely expected to print 2.9% Y/Y.
- Swap rates closed 4-8bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing is unchanged. 49bps of easing is priced for February, with a cumulative 121bps by November 2025.
- Tomorrow, the local calendar will see Card Spending and 2Yr Inflation Expectations data.
FOREX: Yen Losses Further Ground, Steady Trends Elsewhere
Yen losses have dominated G10 trade so far in Wednesday trade. The yen losing nearly 0.80% against the dollar, USD/JPY last near 153.65/70. Other moves have been much more modest in the G10 space. Outside of some modest NZD gains, most pairs sit close to flat. The BBDXY has ticked up on account of yen weakness, the USD index last around 1301.50.
- Yen weakness has likely been driven by the firmer core yield backdrop. These trends have continued in Asia Pac markets today, although US Tsy yield gains are not much beyond 1bps at this stage. US-JP 10yr government bond yield differentials also haven't ticked higher so far today.
- Onshore Japan markets have returned today, so there may also be some catch USD demand in play. BoJ Governor Ueda appeared before parliament earlier, noting there is a risk that higher food inflation impacts inflation expectations more broadly. Ueda reiterated that further hikes will depend on the economy and price developments.
- Current USD/JPY post levels are close to option expiry levels for NY cut later on Wednesday (Y153.50-70($1.7bln). The 50-day EMA resistance point rests above 154.00.
- AUD/USD is little changed last near 0.6300, close to its 50-day EMA resistance zone. Hong Kong equities are higher, although trends elsewhere (including in China) are more mixed. NZD/USD is marginally higher at 0.5660. NZD/JPY has tested above 87.00, but hasn't been able to sustain such gains so far. AUD/JPY is already above this resistance point.
- Looking ahead, Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1%. January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.
ASIAN MARKETS: Equities Mostly Higher Ahead Of US CPI Later
Asian markets mostly rose, with Hong Kong leading gains as enthusiasm for AI developments, particularly DeepSeek and Alibaba’s reported collaboration with Apple, drove sentiment. The Hang Seng jumped 1.6%, while China’s CSI 300 edged down 0.1%, reflecting mixed sentiment amid ongoing Fed rate concerns. Japan’s Nikkei 225 rose 0.2%, but broader Japanese shares underperformed as the yen weakened for a third straight day on concerns over Trump’s tariff policies.
- South Korea’s Kospi gained 0.3%, supported by defense and shipbuilding stocks, Taiwan's TAIEX is 0.15% lower, while Australia’s ASX 200 added 0.3%. Indonesia’s JCI rebounded 0.9% from recent lows, while India’s Nifty 50 slipped 0.3% ahead of key inflation data.
- We saw some weakness across risk assets earlier following Trump speaking at the White house, he emphasized his desire to end the war in Ukraine and expressing appreciation for Russia’s release of hostage Marc Fogel. He declined to confirm if he spoke with Putin but hinted that another release is expected tomorrow. Trump also suggested there is "goodwill" regarding the war and, when asked about reciprocal tariffs on Wednesday, responded, "We'll see."
- Investors remain cautious ahead of US inflation data, with Fed Chair Powell reinforcing a “no rush” stance on rate cuts. Treasury yields edged higher, and money markets fully price in just one Fed rate cut in 2025. The yen continued to decline, while oil and gold traded lower.
ASIA: Hong Kong Listed Equities Rally, Mainland Equities Struggle
Chinese and Hong Kong equities saw mixed moves today, with AI-related stocks continuing their rally, while pressure mounted on consumer and healthcare sectors. DeepSeek's AI-driven surge remains a key bullish driver, with Morgan Stanley, JPMorgan, and UBS expressing optimism that the rally is far from over. The MSCI China Index has now gained 15% from its January low, supported by increased global investor interest in the nation’s tech sector.
- Medical equipment stocks surged after Citigroup turned constructive on the sector, citing market share gains from foreign brands and long-term fundamentals. MicroPort MedBot (+8.5%), MicroPort Scientific (+5.7%), and Inkon Life (+7.7%) led the advance, with Citi highlighting potential stimulus measures at next month’s Two Sessions as a further catalyst.
- Meituan tumbled as much as 6.1% after JD.com announced it would waive annual commissions for new restaurant partners, intensifying competition in the food delivery sector. JD.com shares rose 2%, while Alibaba share surged almost 7%. The HStech Index tracked Alibaba higher, however has since given back about half of the mornings gains to trade 1.30% higher at the break.
- Key equity benchmarks: HSI is +1.56%, HS Property Index +2.15%, HS China Enterprise Index +1.50% while China Mainland equities underperform with the CSI 300 -0.10%.
- Overall, sentiment remains strong for AI and tech stocks, while consumer and platform businesses face increasing pressure from competition and regulatory concerns.
ASIA STOCKS: Equity Flows Muted On Tuesday, India Continues To See Selling
Muted flows on Tuesday, with small inflows into most regions, however India continues to see outflows with a total outflow ytd of $9.5b.
- South Korea: Recorded +$84m in inflows yesterday, bringing the 5-day total to -$40m. YTD flows remain negative at -$1.40b. The 5-day average is -$8m, better than the 20-day average of -$87m but worse than the 100-day average of -$137m.
- Taiwan: Posted +$186m in inflows yesterday, bringing the 5-day total to +$1.39b. YTD flows remain negative at -$2.49b. The 5-day average is +$279m, better than the 20-day average of -$95m and the 100-day average of -$71m.
- India: Recorded -$262m in outflows yesterday, bringing the 5-day total to -$740m. YTD outflows remain significant at -$9.58b. The 5-day average is -$148m, better than the 20-day average of -$348m but worse than the 100-day average of -$186m.
- Indonesia: Posted -$29m in outflows yesterday, bringing the 5-day total to -$290m. YTD flows are negative at -$547m. The 5-day average is -$58m, worse than the 20-day average of -$19m and the 100-day average of -$15m.
- Thailand: Saw +$30m in inflows yesterday, bringing the 5-day total to +$74m. YTD flows remain negative at -$256m. The 5-day average is +$15m, better than the 20-day average of -$10m and the 100-day average of -$16m.
- Malaysia: Registered +$21m in inflows yesterday, bringing the 5-day total to -$38m. YTD flows are negative at -$740m. The 5-day average is -$8m, better than the 20-day average of -$33m but worse than the 100-day average of -$26m.
- Philippines: Recorded -$11m in outflows yesterday, bringing the 5-day total to -$3m. YTD flows remain negative at -$104m. The 5-day average is -$1m, in line with the 20-day average of -$3m and the 100-day average of -$3m.
Table 1: EM Asia Equity Flows
OIL: Crude Lower; US CPI, EIA US Inventory Data & OPEC Report Out Later
Oil prices are moderately lower today following data showing another large US inventory build. They rose over Monday and Tuesday on supply concerns. WTI is down 0.4% to $73.05/bbl after a low of $72.93 and Brent is 0.3% lower at $76.74/bbl. The USD index is 0.1% higher, which is also likely weighing on dollar-denominated crude.
- Bloomberg reported that there was a US oil stock build of another 9mn barrels last week, according to people familiar with the API data. Flows from Canada have been ramped up in recent weeks to beat tariffs. Product inventories were lower with gasoline down 2.5mn and distillate 600k. The official EIA data is out later today.
- Despite tighter US sanctions on Russia appearing to impact its output and stricter enforcement of those against Iran have been announced, the US’ EIA increased its expectations of excess supply in 2025 and 2026. The market has been concerned about the impact of protectionism on global demand. OPEC’s monthly report is published today and the IEA’s on Thursday, which tends to be less optimistic regarding the outlook than OPEC.
- Later Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1% (see MNI US CPI Preview). January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.
MNI BSP Preview - February 2025: BSP to Cut, Bias to Neutral.
- January's decline in CPI (month-on-month) supportive of a cut in the base rate.
- Central Bank has done a good job in stabilising the currency.
- Unemployment declining for December provides opportunity to cut to offset weaker exports and moderately softer GDP.
- We expect however the BSP to move to a more neutral bias going forward.
CB Preview - BSP February 2025.pdf
ASIA FX: USD/CNH Drifts Higher But Remains Within Weekly Ranges
In North East Asia, the trend has been for some USD gains, but moves are very modest at this stage. We have the US CPI print later, and further comments from the Fed's Powell. Hong Kong equities are higher, but mixed trends elsewhere, with mainland shares slightly weaker.
- USD/CNH is back close to highs for the week, the pair last near 7.3160. This is less than a 0.10% gain at this stage though. Feb 4 highs were at 7.3365, in terms of a potential upside target. Spot USD/CNY is little changed, last near 7.3085. The CNY fixing edged down slightly but remained above 7.1700.
- Spot USD/KRW has drifted a little higher, but is well within recent ranges, last 1453, but remains comfortably within recent ranges.
- USD/TWD remains very steady, last near 32.85.
ASIA FX: SEA FX Trends Steady, USD/INR Volatility Continues
In South East Asian FX markets trends have been relatively steady. We did see some USD weakness early, but there was no follow through ahead of the US CPI print later. The uptick in US yields, while modest may have also tempered USD/Asia downside. In India, USD/INR opened sharply lower, but follow through has been limited, the pair supported on dips and back near 86.80/85, close to end Tuesday levels.
- INR has seen a notable pick up in volatility since last Friday, when the pair almost hit 88.00, fresh record lows for the rupee. Since then, reports of strong RBI intervention have emerged, as the central bank looks to slow the pace of the USD/INR rise. This appears to have wrong footed the market somewhat, as the new RBI Governor appeared to have a more hands off approach to FX from late 2024.
- USD/PHP is little changed last near 58.15/20. We have the BSP decision late tomorrow, with expectations for a 25bps cut quite firm. We see risks of a more neutral rate outlook though.
- USD/IDR is little changed, holding under 16400 for now.
- USD/MYR got to lows of 4.4540 in the first part of trade, but sits back above 4.4700 in latest dealings, little changed for the session. We expect any moves above 4.5000 to increase intervention risks.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 12/02/2025 | 0900/1000 | * |  IT | Industrial Production |
| 12/02/2025 | 1000/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 12/02/2025 | 1000/1100 |  EU | ECB's Elderson in roundtable at the MNI Connect event | |
| 12/02/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 12/02/2025 | - | *** |  CN | Money Supply |
| 12/02/2025 | - | *** | CN | New Loans |
| 12/02/2025 | - | *** | CN | Social Financing |
| 12/02/2025 | 1330/0830 | *** | US | CPI |
| 12/02/2025 | 1500/1000 | US | Fed Chair Jerome Powell | |
| 12/02/2025 | 1500/1500 | GB | BOE's Greene speech at Institute of Directors | |
| 12/02/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 12/02/2025 | 1700/1200 | US | Atlanta Fed's Raphael Bostic | |
| 12/02/2025 | 1800/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 12/02/2025 | 1830/1330 |  CA | BOC Meeting Minutes | |
| 12/02/2025 | 1900/1400 | ** | US | Treasury Budget |
| 12/02/2025 | 2205/1705 | US | Fed Governor Christopher Waller | |
| 13/02/2025 | 0700/0700 | ** | GB | UK Monthly GDP |
| 13/02/2025 | 0700/0700 | ** | GB | Trade Balance |
| 13/02/2025 | 0700/0700 | ** | GB | Index of Services |
| 13/02/2025 | 0700/0700 | *** | GB | Index of Production |
| 13/02/2025 | 0700/0800 | *** |  DE | HICP (f) |
| 13/02/2025 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 13/02/2025 | 0700/0700 | *** | GB | GDP First Estimate |
| 13/02/2025 | 0730/0830 | *** |  CH | CPI |
| 13/02/2025 | 0840/0940 | EU | ECB's Cipollone pre-recorded interview at Frankfurt Digital Finance conference | |
| 13/02/2025 | 1000/1100 | ** | EU | Industrial Production |
| 13/02/2025 | 1330/0830 | *** | US | Jobless Claims |
| 13/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 13/02/2025 | 1330/0830 | *** | US | PPI |