Source: MNI - Market News/Bloomberg/Refinitiv.
UK
ECONOMY (BBC): “Tariffs could hit growth and pose "substantial" risks to the UK and world economies, the Bank's governor Andrew Bailey has said. His colleagues added trade frictions could hurt companies in the UK and elsewhere.”
EU
ECB (MNI PREVIEW): “The ECB is fully expected to cut its three key rates by 25bp on Thursday, taking its deposit rate to 2.5%. It’s another step closer to neutral rates, which President Lagarde and ECB staff see in a 1.75-2.25% range. That should make future decisions more contentious.”
EU (DW): “European leaders are expected to endorse measures to boost defense spending and pledge continued support for Kyiv in a summit on Thursday in Brussels. Delegations at the summit are slated to discuss EU Commission President Ursula von der Leyen's €800 billion ($864 billion) "ReArm Europe" plan. Leaders of the European Union's 27 member-states are due to be joined by Ukrainian President Volodymyr Zelenskyy..”
UKRAINE (POLITICO): “The senior Trump allies held talks with Ukrainian opposition leader Yulia Tymoshenko, a remorselessly ambitious former prime minister, and senior members of the party of Petro Poroshenko, Zelenskyy’s immediate predecessor as president, according to three Ukrainian parliamentarians and a U.S. Republican foreign policy expert.”
FRANCE (POLITICO): “"The Russian threat is here and is affecting European countries, affecting us," Macron said in a nationally televised speech on Wednesday. "I want to believe that the U.S. will stay by our side, but we have to be ready if they don't."”
US
FED (MNI): “The longer U.S. lawmakers take to lift or suspend the debt ceiling while the Fed presses on with QT, the greater the risk that money markets see high volatility after the issue is resolved, Roberto Perli, head of the New York Fed's markets desk, warned Wednesday.”
FED (MNI): “The Federal Reserve's regional business contacts said in the latest Beige Book report U.S. tariffs will likely lead them to raise prices, according to a report released Wednesday.”
TRADE (MNI INTERVIEW): “U.S. services activity expanded briskly in February despite some drag from recent federal government cutbacks, the outlook is clouded by the Trump administration's tariff policies, ISM Services survey chief Steve Miller told MNI Wednesday.”
TRADE (BBG): “The White House is exempting automakers from newly imposed tariffs on Mexico and Canada for one month, following pleas from industry leaders.”
INFLATION (BBG): “Ben Bernanke said the recent inflation spike may make it harder for central banks to control prices in the future because firms may find it easier to raise prices and consumers may become more sensitive to inflation.”
FED (BBG): “The current debt-ceiling impasse could threaten the Federal Reserve's ongoing balance-sheet runoff, causing volatility in money-market rates.”
POLITICS (BBG): “Elon Musk met with House and Senate Republicans to discuss his efforts to reshape the federal government, including controversial spending cuts that could affect jobs and programs in their districts.”
ISRAEL (BBC): “"I am sending Israel everything it needs to finish the job, not a single Hamas member will be safe if you don't do as I say," Trump said in a lengthy post on his Truth Social platform.”
OTHER
CANADA (BBG): “Prime Minister Justin Trudeau is not open to lifting Canada's full package of retaliatory tariffs if US President Donald Trump leaves any tariffs on Canada in place.”
CANADA (BBG): “Alberta is halting purchases of US alcohol and changing its procurement rules in response to President Donald Trump's tariffs. The province is focusing on exporting more oil and gas to other markets, including building pipelines to Canada's coasts to increase shipments to Asia and Europe.”
CHINA
STEEL (MNI EXCLUSIVE): “A China commodity expert expects Beijing's stronger fiscal policy will support steel demand this year.”
FINANCE (21ST CENTURY): “China should establish a stock market stabilisation fund to provide liquidity during periods of intense volatility, given the economy faces external shocks and domestic pressures this year, said Tian Xuan, delegate at the National People’s Congress.”
POLICY (QSTHEORY): “Officials need to consider expanding the national trade-in scheme to include a wider range of products with broad market demand, as well as relax subsidy conditions.”
POLICY (CHINA FINANCE 40): “Officials need to consider expanding the national trade-in scheme to include a wider range of products with broad market demand, as well as relax subsidy conditions.”
FINANCE (BBG): “Alibaba's stock surged after the company open-sourced a model that performs as well as DeepSeek with a fraction of the data required.”
CHINA MARKETS
MNI: PBOC Net Drains CNY195.5 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY353.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY195.5 billion after offsetting the maturity of CNY548.7 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7497% at 10:32 am local time from the close of 1.7659% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 42 on Tuesday, the same as the close on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1714 Weds; -1.20% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1714 on Wednesday, compared with 7.1739 set on Tuesday. The fixing was estimated at 7.2635 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND CORELOGIC HOME VALUE FEB +0.3% M/M; JAN. 0.0%
NEW ZEALAND Q4 CONSTRUCTION WORK VOLUMES -4.4% Q/Q; EST. -1.4%; Q3 -3.0%
AUSTRALIA JAN. TRADE SURPLUS A$5.620B; EST. A$5.900B; DEC. A$4.924B
AUSTRALIA JAN. EXPORTS +1.3% M/M; DEC. +1.2%
AUSTRALIA JAN. IMPORTS -0.3% M/M; DEC. +5.9%
AUSTRALIA JAN. BUILDING APPROVALS +6.3% M/M; EST. 0.0%; DEC. +1.7%
AUSTRALIA JAN. PRIVATE-SECTOR HOME APPROVALS +1.1% M/M; DEC. -2.8%
SOUTH KOREA FEB. FOREIGN EXCHANGE RESERVES $409.21B; JAN $411.01B
SOUTH KOREA FEB. CONSUMER PRICES +2.0% Y/Y; EST. +2.1%; JAN. 2.2%
SOUTH KOREA FEB. CONSUMER PRICES +0.3% M/M; EST. +0.4%; JAN. +0.7%
SOUTH KOREA FEB. CPI EX FOOD & ENERGY +1.8% Y/Y; EST. +1.9%; JAN. +1.9%
MARKETS
US TSYS: Yields Cheaper, 10yr Above 4.30%, Trade Balance & Jobless Claims later
- Cash tsys have continued the moves made during the overnight session, trading 3-5bps cheaper, with the belly underperforming. Uncertainty surrounding the US fiscal situation is adding to market anxiety as the March 14 deadline approaches. The political standoff leading up to it is likely to keep bond investors on edge. However, the immediate focus will be on the upcoming labor market report.
- Tsys futures are all trading below Wednesday's lows, TU is -03 5/8 at 103-12+, while TY is -13 at 110-15
- ADP employment came in at just 77k vs 140k expected overnight, with Non-farms on Friday the market is likely see heightened volatility.
- The 10yr is now back above 4.30% rising 4.2bps this morning, after hitting a low of 4.10% on Tuesday. The 2s10s curve has steepened over the past two weeks after hitting a low of 16bps, we now trade at 27.758 up almost 1bps today.
- Trump is considering exempting certain agricultural products from tariffs imposed on Canada and Mexico. The administration has delayed tariffs on automotive imports from Mexico and Canada for one month, following pleas from industry executives.
- Projected rate cuts through mid-2025 recede from morning levels (*) as follows: Mar'25 at -2.2bp, May'25 at -10.6bp (-12.2bp), Jun'25 at -27bp (-29.2bp), Jul'25 at -36.2bp (-39.8bp).
- Later today we have weekly claims, trade balance and regional Fed data, focus turns to Friday's headline employment data for February.
JGBS: Still Cheaper But Less So After 30Y Auction
JGB futures are sharply weaker and near session lows, -69 compared to settlement levels.
- Local market movements in the morning session were likely driven by offshore developments. Key drivers included President Trump’s decision to delay auto tariffs on Canada and Mexico by a month and a dramatic shift in Germany’s spending plans for defence and infrastructure.
- Cash US tsys are 3-4bps cheaper in today’s Asia-Pac session after yesterday’s heavy session. After today's weekly claims trade balance and regional Fed data, focus turns to Friday's headline employment data for February.
- However, that changed after the results of today's 30-year auction. Cash JGBs are 2-7bps cheaper across benchmarks, with a steeper curve.
- The benchmark 30-year yield is 4.8bps higher at 2.464%, but 4bps lower than pre-auction levels. This move came despite the 30-year bond auction delivering mixed results. The low price exceeded dealer expectations according to the Bloomberg poll. However, the cover ratio slipped to 3.4997x from 3.7422x—the highest since 2020—while the auction tail widened to 0.12 from 0.07, signaling softer demand.
- The 10-year benchmark yield is 5.8bps higher at 1.506% after hitting 1.523% earlier, the highest since 2009.
- Swap rates are 1bp lower to 2bps higher, with a steepening bias. Swap spreads are tighter.
- Tomorrow, the local calendar will be empty.
AUSSIE BONDS: Sharply Weaker As Global Bonds Weigh
ACGBs (YM -10.0 & XM -13.5) are sharply cheaper and near Sydney session lows.
- While the domestic calendar featured building approvals, today's local market movements were likely driven by offshore developments. Key drivers included President Trump’s decision to delay auto tariffs on Canada and Mexico by a month and a dramatic shift in Germany’s spending plans for defence and infrastructure. German bunds experienced their worst day since 1990, with yields surging by as much as 30bps.
- Cash US tsys are 3-4bps cheaper in today’s Asia-Pac session after yesterday’s heavy session. After today's weekly claims trade balance and regional Fed data, focus turns to Friday's headline employment data for February.
- Cash ACGBs are 9-13bps cheaper with the AU-US 10-year yield differential at +16bps.
- Swap rates are 7-11bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing -1 to -8.
- RBA-dated OIS pricing is flat to 5bps firmer across meetings today. A 25bp rate cut in April is given an 8% probability, with a cumulative 56 bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow, the local calendar will see Household Spending and Foreign Reserves data.
- The AOFM also plans to sell A$700mn of the 1.00% 21 December 2030 bond tomorrow.
NZGBS: Bear-Steepening Driven By Global Factors
NZGBs closed showing a bear-steepener, with benchmark yields 6-9bps higher. The NZGB 10-year underperformed the US, with the yield differential 3bps wider at +28bps.
- Today’s supply showed mixed results with the cover ratios for the May-28 and May-41 lines showing above 4.0x. However, the NZ$200mn sale of the May-36 bond drew a more lacklustre 2.75x cover.
- While the domestic calendar featured government financial statements and construction work data, today's local market movements were likely driven by offshore developments. Key drivers included President Trump’s decision to delay auto tariffs on Canada and Mexico by a month and a dramatic shift in Germany’s spending plans for defence and infrastructure. German bunds experienced their worst day since 1990, with yields surging by as much as 30bps.
- Cash US tsys are 3-4bps cheaper in today’s Asia-Pac session after yesterday’s heavy session. After today's weekly claims trade balance and regional Fed data, focus turns to Friday's headline employment data for February.
- Swap rates closed 3-12bps higher, with the 2s10s curve steeper.
- Tomorrow, the local calendar is empty.
ASIA STOCKS: Wider Asian Equities Mixed On Tariff & German Fiscal News
- South Korean stocks extended gains, with the KOSPI rising 0.70%. Auto and IT sectors led the rally, driven by the U.S. suspension of new auto tariffs on Mexico and Canada and a strong U.S. market rebound. Hyundai Motor rose 1.28%, Kia jumped 2.19%, Naver surged 5.06%, and Kakao climbed 4.06% on AI optimism. Steel stocks also soared, with Hyundai Steel up 10%, its highest since July 16, POSCO Holdings is also up 6.7%, fueled by China’s output cut pledge and global steel sentiment.
- Taiwan's TAIEX is trading 0.40% lower today, with TSMC down 1%.
- Japanese stocks advanced, with the Topix Index up 1.3% and the Nikkei rising 1%. Exporters led gains, buoyed by Germany’s fiscal overhaul and the U.S. delay on auto tariffs from Mexico and Canada. Sony rose 4.3%, significantly contributing to the TOPIX climb. Carmakers and tech shares rallied after a strong Nasdaq recovery, while defense and machinery stocks tied to Europe made up over half of the Nikkei 225’s top gainers. Rising bond yields, with Japan’s 10-year hitting 1.5%, also supported bank stocks.
- The ASX 200 is 0.70%, diverging from Wall Street’s overnight rally. Tariff concerns, particularly on Canadian and Mexican oil imports, pushed Brent crude below $US70 dragging energy stocks down over 2%. Woodside, the worst performer, shed 4.4% to $23.07. Mining giants BHP (-0.3%) and Rio Tinto (-1.3%) slipped despite iron ore holding near $US100, while utilities like APA Group and AGL lost over 1.5%. New Zealand’s NZX 50 index remaining nearly unchanged
- Indian automakers faced potential declines after Reuters reported U.S. demands for zero import tariffs as part of a bilateral trade deal. India’s hesitation to eliminate car duties immediately, though open to further cuts, created uncertainty. The Indian market has seen significant outflows, as foreign investors dump nearly $15b since the start of Jan, the Nifty 50 has found some support today, up 1.15%.
- Malaysia’s equity market saw gains in its semiconductor-related stocks following a decade-long pact with Arm Holdings Plc to advance chip design and technology. This deal aims to shift the nation from assembly to advanced production, supporting integrated circuit design, equipment manufacturing, and outsourced semiconductor services. However, the broader market struggles with the KLCI down 0.30% and 2.80% lower over the past week.
ASIA STOCKS: China & Hong Kong Equities Surge Ahead Of NPC
- In Hong Kong, the Hang Seng Index climbed 2.4%, erasing losses triggered earlier in the week by a 10% US tariff hike announced on Tuesday. The index is on track for its highest close since February 21, 2022. The HS Tech Index outperformed, rising as much as 4.20%. On the mainland, the CSI 300 Index gained up to 1.1%, while the Shanghai Composite Index advanced 0.8%.
- Alibaba Group Holding led gains, soaring 7.5% after unveiling its latest open-source reasoning model, QwQ-32B, which boasts performance comparable to DeepSeek’s R1 model despite having far fewer parameters (32 billion vs. 671 billion). Alibaba’s shares have now rallied over 70% from their January low, driven by optimism around its AI potential. While other AI-related stocks also saw significant gains: Kingdee International Software soared 14%, SenseTime added 4.8%, and Lenovo climbed 5.4%.
- Chinese education stocks also gained traction after the NPC vowed to expand high school capacity and promote vocational-academic integration. New Oriental Education & Technology rose as much as 5.3% with Citi analysts noting its strong position in senior high school credentials. China New Higher Education advanced 2.7%, and Doushen Beijing Education gained 5.1%. The report’s mild language on the "Double Reduction" policy signaled a shift from crackdowns to stabilization, further supporting the sector.
- Morgan Stanley strategists, remain positive on offshore Chinese equities, citing China’s improved preparedness for trade escalations compared to Trump’s first term and earlier pessimistic tariff expectations. The 10% US tariff hike is seen as a temporary disruption unlikely to derail the rally.
OIL: Crude Higher On Better Risk Appetite But Still Worried About Trade Policy
Oil prices are off their intraday high but still up moderately during APAC trading aided by better risk appetite. WTI is up 0.5% to $66.66/bbl after a high of $66.86, and Brent is 0.5% higher at $69.67/bbl after rising to $69.85. Both benchmarks broke through key support levels yesterday. The negative impact of increased trade protectionism has driven crude significantly lower over recent weeks and markets remain nervous. OPEC sticking with its plan to increase output in April has added to this downward pressure.
- The US trade picture remains unclear with some US automakers being exempted from the latest tariffs and some agricultural products also being considered. At this stage, reciprocal taxes scheduled for April 2 will go ahead but the situation is constantly changing.
- Canadian oil producers are making alternative plans with Alberta now intending to build a pipeline to the coast so that it can export crude outside North America. Mexico is scheduled to announce its retaliatory measures on March 9.
- Morgan Stanley revised down its Brent forecast for Q2 by $5 to $70/bbl. Whereas Citigroup expects it to fall to $60/bbl, according to Bloomberg.
- Later the Fed’s Waller and Harker speak and US jobless claims and final Q4 productivity/ULC print. The oil market will watch Friday’s February payroll data closely given current uncertainty.
- The ECB is expected to cut rates 25bp today with President Lagarde appearing afterwards and euro area January retail sales are released. Canada’s February Ivey PMI is also out.
LNG: European Gas Prices Continue Correction On Demand Outlook
European natural gas prices sank on Wednesday falling 5.7% to EUR 41.00 off the intraday trough of EUR 40.83, the lowest since December. They are down 7.5% this week. Concerns that increased trade protectionism will weigh on global growth and reduce demand for energy plus speculation that sanctions on Russia will be eased are driving a reduction in net-long positions. Europe’s industrial sector has been struggling for some time and the February manufacturing PMI remained in contractionary territory.
- With European storage at under 40%, the challenges of refilling ahead of next winter remain significant. There have been hopes the European Commission would introduce some flexibility around its refilling targets. Unplanned outages plus negative developments regarding a deal on Ukraine could cause volatility in Europe’s natural gas market.
- The EC delayed a March 26 report on plans to phase out Russian energy use. Meanwhile, Ukraine’s DTEK, a private energy company, is negotiating to increase US LNG imports. The Ukraine is a major storage site for supplies used in Europe.
- US gas prices rose 2.8% yesterday to $4.47 to be up 16.6% this week. They have been supported by forecasts of colder weather.
- US President Trump approved an extension of Texas’ Golden Pass LNG project which will allow it to start before 2029 rather than November 2026. He wants to boost US LNG exports and rescinded former President Biden’s pause on new export permits. He also spoke of investment in a “gigantic” gas pipeline in Alaska.
- Bloomberg is reporting that Asian natural gas demand was at its lowest for eight years for this time of year. Moderate growth, a milder winter and elevated inventories have seen China’s consumption fall to its lowest since 2020. This helps Europe who has been competing with Asia for global supplies since Russia’s invasion of Ukraine in 2022.
- Demand from India is likely to increase over time though with Indian Oil looking for three LNG deliveries this year increasing to six per annum over 2026-2029, according to Bloomberg.
FOREX: Moderate FX Moves During APAC Session, Yen Underperforming
The BBDXY USD index fell 0.1% earlier but has rebounded off that low to be 0.1% higher during APAC today supported by higher Treasury yields. There also has been little new information during the session. The yen is underperforming in light of stronger risk appetite with USDJPY 0.3% higher at 149.28 after a high of 149.33. EURJPY continues to climb with the pair up 0.3% to 161.12 off today’s high of 161.28.
- EURUSD is little changed currently at 1.0791 off its intraday peak of 1.082 with it unable to hold the break above 1.0800. With the Swiss franc also pressured by the improvement in risk sentiment, EURCHF is 0.1% higher at 0.9625.
- GBPUSD is down slightly to 1.2890 leaving EURGBP slightly higher at 0.8372 but off the intraday high of 0.8383.
- AUDUSD reached 0.6357 when the greenback was weakening but has moderated since to be up around 0.1% to 0.6340. NZDUSD is 0.1% higher at 0.5733 leaving AUDNZD moderately lower at 1.1059. The pair has range traded through the session.
- AUDEUR has been declining on increased trade protectionism but today is up slightly to 0.5875, close to the intraday high.
- Equities are mixed with the Hang Seng up 2.6%, CSI 300 +1.3% and Nikkei +0.9% but ASX down 0.5% and Nifty 50 -0.1% and the S&P e-mini is flat. Oil prices are moderately higher with WTI +0.6% to $66.70/bbl. Copper is 0.3% higher and iron ore $101-102/t.
- Later the Fed’s Waller and Harker speak and US jobless claims and final Q4 productivity/ULC print. The ECB is expected to cut rates 25bp with President Lagarde appearing afterwards and euro area January retail sales are released. Canada’s February Ivey PMI is also out.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 06/03/2025 | 0645/0745 | ** |  CH | Unemployment |
| 06/03/2025 | 0700/0800 |  SE | Flash CPI | |
| 06/03/2025 | 0830/0930 | ** |  EU | S&P Global Final Eurozone Construction PMI |
| 06/03/2025 | 0930/0930 |  GB | Decision Maker Panel data | |
| 06/03/2025 | 0930/0930 | ** | GB | S&P Global/CIPS Construction PMI |
| 06/03/2025 | 1000/1100 | ** | EU | Retail Sales |
| 06/03/2025 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 06/03/2025 | 1315/1415 | *** | EU | ECB Deposit Rate |
| 06/03/2025 | 1315/1415 | *** | EU | ECB Main Refi Rate |
| 06/03/2025 | 1315/1415 | *** | EU | ECB Marginal Lending Rate |
| 06/03/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 06/03/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 06/03/2025 | 1330/0830 | ** |  CA | International Merchandise Trade (Trade Balance) |
| 06/03/2025 | 1330/0830 | ** | CA | International Merchandise Trade (Trade Balance) |
| 06/03/2025 | 1330/0830 | ** | US | Trade Balance |
| 06/03/2025 | 1330/0830 | ** | US | Non-Farm Productivity (f) |
| 06/03/2025 | 1345/1445 | EU | ECB Press conference post Governing council meeting | |
| 06/03/2025 | 1345/0845 | US | Philly Fed's Pat Harker | |
| 06/03/2025 | 1445/1545 | EU | Publication of ECB Staff macroeconomic projections | |
| 06/03/2025 | 1500/1000 | * | CA | Ivey PMI |
| 06/03/2025 | 1500/1000 | ** | US | Wholesale Trade |
| 06/03/2025 | 1515/1615 | EU | ECB Podcast: Lagarde presents latest MonPol decision | |
| 06/03/2025 | 1515/1615 | EU | Lagarde video message at Women's Forum event | |
| 06/03/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 06/03/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 06/03/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 06/03/2025 | 1700/1200 | US | Treasury Secretary Scott Bessent | |
| 06/03/2025 | 2030/1530 | US | Fed Governor Christopher Waller | |
| 06/03/2025 | 0000/1900 | US | Atlanta Fed's Raphael Bostic | |
| 07/03/2025 | 0700/0800 | ** |  DE | Manufacturing Orders |
| 07/03/2025 | 0745/0845 | * |  FR | Foreign Trade |
| 07/03/2025 | 0800/0900 | ** |  ES | Industrial Production |
| 07/03/2025 | 0930/1030 | EU | Lagarde Address at ECB International Women's Day 2025 conf | |
| 07/03/2025 | 0940/1040 | EU | ECB International Women's Day conf. incl. Lagarde, Nagel, Panetta | |
| 07/03/2025 | 1000/1100 | *** | EU | GDP (final) |
| 07/03/2025 | 1000/1100 | * | EU | Employment |