MNI EUROPEAN OPEN: On The Verge Of A New Brexit Deal

EXECUTIVE SUMMARY

• FED'S COLLINS ANTICIPATES FURTHER HIKING AND LONG HOLD (MNI)
• FED'S MESTER SAYS HOT INFLATION DATA AFFIRMS CASE FOR MORE RATE HIKES (RTRS)
• YELLEN NOTES INFLATION PROBLEM BUT STILL SEES SOFT LANDING PATH (BBG)
• RISHI SUNAK AND URSULA VON DER LEYEN TO FINISH BREXIT DEAL ON MONDAY (THE TIMES)
• LAGARDE: ECB MUST MAKE SURE INFLATION RETURNS TO 2% (BBG)
• LAGARDE:MORE TIGHTENING WILL BE REQUIRED IF FISCAL COOPERATION IS ABSENT (ECONOMIC TIMES)
• ECB POLICY WILL BE AS RESTRICTIVE AS NEEDED, ITALY’S VISCO SAYS (BBG)
• G20 MEETING ENDS IN DISCORD AS RUSSIA AND CHINA REFUSE TO CONDEMN UKRAINE WAR (FT)
• POLAND SAYS RUSSIA STOPS OIL FLOWS VIA KEY DRUZHBA PIPELINE (BBG)

Fig. 1: AUD/USD Vs. SGX Iron Ore Futures

Source: MNI - Market News/Bloomberg

UK

BREXIT: Rishi Sunak will meet the president of the European Commission on Monday to sign off on their Brexit deal for Northern Ireland. (Sunday Times)

BREXIT: Rishi Sunak is poised to formally unveil his Brexit deal with the EU today, claiming that he has won big concessions from Brussels. (The Times)

BREXIT: The European Commission president will fly to London on Monday to finalise a new Brexit deal with Rishi Sunak, despite warnings from Tory MPs that they will revolt if European judges retain a say over Northern Ireland. (Telegraph)

BREXIT: Key pro-Brexit Tory MPs suggested on Saturday night they would be prepared to back Rishi Sunak over any “sensible” deal on the Northern Ireland protocol as the prime minister battled to limit any rebellion by Conservative backbenchers. (Guardian)

FISCAL: Government departments are due to spend £24 billion less than the Treasury budgeted for last October, new figures show, increasing pressure on Jeremy Hunt before next month’s budget. (The Times)

POLITICS: Labour is on course for a Tony Blair-style landslide victory at the next general election as a new poll for i shows the party is preferred to the Conservatives on practically every policy area. (The i)

BOE: The UK is at greater risk of having been overly aggressive in hiking rates than having not done enough to offset higher inflation, Bank of England Monetary Policy Committee member Silvana Tenreyro told a New York Federal Reserve event on Friday. (MNI)

ECONOMY: Only a fifth of UK businesses plan to cut jobs this year even though the vast majority expect a recession, a survey from Boston Consulting Group found. (BBG)

EUROPE

ECB: The European Central Bank has to do what’s needed to get inflation back to its 2% goal, President Christine Lagarde told Finland’s Helsingin Sanomat. “I’m not going to predict our monetary policy decisions,” she said. “I am waiting for the new forecast from our economists, after which we will go through it carefully and draw the necessary conclusions, which also take into account the latest information.” (BBG)

ECB: The European Central Bank (ECB) will do whatever is needed to return inflation to 2%, its president, Christine Lagarde, told ET in an interview. India is on the path of progress and the WTO is alive and kicking. The rule based global order is essential and the designs of Russian President Vladimir Putin have failed, she said. (Economic Times)

ECB: The European Central Bank will raise interest rates as high as necessary to bring inflation back down to 2%, said Governing Council member Ignazio Visco. It’s impossible for now to say what level borrowing costs will have to reach to achieve that target, Visco, who also heads Italy’s central bank, said in a Bloomberg TV interview on Saturday. (BBG)

BELGIUM: Belgium is looking to raise more cash from ordinary citizens, after years of subzero rates in the euro-area brought its retail program to a standstill. (BBG)

RATINGS: Sovereign rating reviews of note from after hours on Friday include:

• Fitch affirmed the Netherlands at AAA; Outlook Stable
• Moody's affirmed Austria at Aa1; Outlook Stable
• DBRS Morningstar downgraded Slovakia to A, Trend Changed to Stable

U.S.

FED: Boston Fed President Susan Collins said Friday she sees the need for more rate increases amid high inflation and then likely holding there for an extended period of time. (MNI)

FED: St. Louis Federal Reserve Bank President James Bullard on Friday said he believes that the U.S. central bank's commitment to its 2% inflation target is "credible," increasing the chance of averting a recession as it works to bring down inflation. (RTRS)

FED: Federal Reserve Bank of Cleveland leader Loretta Mester said Friday she wasn’t surprised by the latest round of strong U.S. inflation data, which she saw as another reminder the central bank still needs to raise rates further to reduce the pressures that are pushing prices higher. (RTRS)

FED: China's reopening risks an inflationary impulse through commodity and raw material prices that could keep interest rates in the U.S. elevated for longer or keep the Federal Reserve raising rates higher than previously thought, National Association for Business Economics' Jack Kleinhenz told MNI. (MNI)

ECONOMY: US Treasury Secretary Janet Yellen said inflation continues to be a problem even as she reiterated her conviction that there is a path for it to come down while maintaining a strong labor market. (BBG)

INFLATION: The Trimmed Mean PCE inflation rate over the 12 months ending in January was 4.6 percent. According to the BEA, the overall PCE inflation rate was 5.4 percent on a 12-month basis, and the inflation rate for PCE excluding food and energy was 4.7 percent on a 12-month basis. (Dallas Fed)

INFLATION: It will likely take U.S. inflation many more years than central bankers and financial markets expect to close in on 2% without a deep recession, though this slower path may be optimal for Federal Reserve officials pursuing a dual mandate, Cleveland Fed economists Randal Verbrugge and Saeed Zaman told MNI. (MNI)

EQUITIES: Pfizer Inc. is in talks to acquire biotech Seagen Inc., according to people familiar with the matter, the latest potential deal for a big drug company aimed at adding a promising class of targeted cancer therapies. (WSJ)

OTHER

CENTRAL BANKS: A breakfast table at G20's final day saw the likes of RBI's Shaktikanta Das, US Fed Chair Jerome Powell, Brazil’s Roberto Campos Neto, Canada's Tiff Macklem, Italy's Ignazio Visco and BOE's Andrew John Bailey get together for an informal chat. (CNBC 18)

G20: A gathering of G20 finance ministers in Bengaluru has ended in discord after Russia and China refused to endorse a statement condemning Moscow’s invasion of Ukraine and rejecting the use of nuclear weapons. (FT)

GLOBAL TRADE: The U.S.-led "Fab 4" semiconductor alliance of Taiwan, the United States, Japan and South Korea held its first video meeting of senior officials last week focused on supply chain resilience, Taiwan's Foreign Ministry said on Saturday. (RTRS)

GLOBAL TRADE: Europe’s initial anger at President Joe Biden’s massive green subsidy plan has waned in light of assessments that rank EU incentives to boost clean technology as equal to or surpassing some of the benefits offered in the US law. (BBG)

GLOBAL TRADE: China has stepped up lobbying of European Union decision-makers to revive a planned investment deal in its latest effort to improve ties with the Brussels-based bloc. (Nikkei)

U.S./CHINA: In an encounter that added to growing tensions between the US and China, the crew aboard a Chinese fighter jet warned a US Navy surveillance pilot to move away from Chinese airspace Friday. (New York Post)

U.S./CHINA/TAIWAN: A US Navy P-8A Poseidon transited the Taiwan Strait in international airspace on Monday local time, according to a statement from the US 7th Fleet. (BBG)

BOJ: Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said on Monday it was appropriate for the central bank to maintain ultra-loose policy while coming up with ideas to mitigate the side-effects of prolonged monetary easing. (RTRS)

BOJ: Bank of Japan officials are worried about the sustainability of wage hikes as major firms will offer large wage rises this year and then endure considerably higher ongoing staffing costs, MNI understands. (MNI)

JAPAN: Japanese Prime Minister Fumio Kishida on Sunday rallied fellow members of his ruling Liberal Democratic Party to push for victory in nationwide local elections in April, in remarks made at a party congress in Tokyo. (Kyodo)

RBA: The Treasurer also said a decision on whether Philip Lowe will be renewed as Reserve Bank Governor in September will be announced mid-year and will depend on the direction the government wants for the bank going forward. (Sky News Australia)

RBA: Treasurer Jim Chalmers has revealed there will be an opportunity to refresh the Reserve Bank board after two members announced their departures, says Sky News Political Editor Andrew Clennell. (Sky)

AUSTRALIA: Reserve Bank of Australia chief Philip Lowe’s expectation of further interest-rate rises ahead has prompted economists and money markets to narrow the odds of a recession in the $1.5 trillion economy. (BBG)

AUSTRALIA: Australian Treasurer Jim Chalmers promised the government would deliver a “responsible” budget to avoid stoking further inflationary pressures in the economy. (BBG)

AUSTRALIA: The Australian Prudential Regulation Authority said the current serviceability buffer for home loans was appropriate given the potential for a deterioration in domestic and global economic conditions. (MNI)

RBNZ: Reserve Bank of New Zealand chief economist Paul Conway speaks on Financial Services Council NZ webinar. Says inflation is “far too high,” labor market is “incredibly tight.” (BBG)

MEXICO: Mexicans marched Sunday against President Andres Manuel Lopez Obrador’s overhaul of the electoral system, with demonstrators nationwide criticizing the reforms ahead of next year’s elections. (BBG)

BRAZIL: Former Brazil central bank directors Luiz Awazu Pereira da Silva and Tony Volpon are among the Luiz Inácio Lula da Silva administration’s options to replace Bruno Serra as monetary policy director at the institution, Folha de S.Paulo newspaper said citing people familiar to the matter. (BBG)

BRAZIL: A debate has broken out among senior aides to Brazilian President Luiz Inacio Lula da Silva over fuel taxes, underlining the competing views within his circle over the future path of his nascent leftist administration. (RTRS)

RUSSIA: Russian President Vladimir Putin said in an interview broadcast Sunday that after Russia suspended its participation in the last arms control agreement with Washington, it would “take into account” the nuclear weapons capabilities not only of the United States but of other NATO countries such as France and Britain. (AP)

RUSSIA: Germany, France and Britain see stronger ties between NATO and Ukraine as a way to encourage Kyiv to start peace talks with Russia later this year, officials from the three governments said, as some of Kyiv’s Western partners have growing doubts over its ability to reconquer all its territory. (WSJ)

RUSSIA: Ukrainian President Volodymyr Zelensky said on Friday he plans to meet Chinese President Xi Jinping but did not say when such a meeting might take place. (RTRS)

RUSSIA: President Biden in a new interview said he is ruling out providing F-16 fighter jets to Ukraine “for now,” despite pleas from Ukrainian leadership for the planes in their war against Russia.(The Hill)

RUSSIA: Joe Biden has said he did not think China would send weapons to Russia to help its military campaign in Ukraine, in comments that appeared to undercut claims from his top officials that Beijing was considering the idea. (FT)

RUSSIA: China has not moved toward providing lethal aid that would help Russia in its invasion of Ukraine and the United States has made clear behind closed doors that such a move would have serious consequences, White House national security adviser Jake Sullivan said on Sunday. (RTRS)

RUSSIA: U.S. officials say China is considering delivering artillery and drones to Russian forces that could prolong the war, even as Beijing called for peace talks to end the fighting on the first anniversary of the Russian invasion of Ukraine. (WSJ)

RUSSIA: German Defence Minister Boris Pistorius on Sunday reacted with scepticism to a Chinese ceasefire proposal for the war in Ukraine. (RTRS)

RUSSIA: Ukrainian authorities see signs of support from Saudi Arabia after the kingdom’s foreign minister, Prince Faisal bin Farhan, visited Kyiv on Sunday for talks with top officials. (BBG)

RUSSIA: The US will apply a 200% ad valorem tariff on imports of aluminum and derivative aluminum articles from Russia beginning on March 10 as it continues to increase pressure on Russia's economy in response to its continued invasion of Ukraine, the White House said Feb. 24. ()

RUSSIA: Russian companies got far more money from selling the country’s oil than previously thought in the weeks that followed the imposition of a price cap on the nation’s exports, a group of academics said. (BBG)

SOUTH AFRICA: South Africa’s state power utility eased electricity cuts after repairing broken generating units at five of its plants. (BBG)

IRAN: Iran has developed a cruise missile with a range of 1,650 km (1,025 miles) a top Revolutionary Guards commander said on Friday, in a move likely to raise Western concerns after Russia's use of Iranian drones in the Ukraine war. (RTRS)

ARGENTINA: Argentina's government is in final talks with International Monetary Fund officials to ease foreign exchange reserves targets for 2023 under the country's $44 billion program, two sources close to the matter told Reuters. (RTRS)

IMF: Central banks globally must remain vigilant until inflation is firmly under control, according to International Monetary Fund Managing Director Kristalina Georgieva. (BBG)

WORLD BANK: The World Bank will "provide as much concessionality to the debt treatment" for distressed economies as possible, its president told a meeting with the International Monetary Fund, India and other creditor nations on Saturday. (RTRS)

WORLD BANK: The World Bank will "provide as much concessionality to the debt treatment" for distressed economies as possible, its president told a meeting with the International Monetary Fund, India and other creditor nations on Saturday. (RTRS)

WORLD BANK: Widening the World Bank’s mandate risks shifting the multilateral lender’s focus away from helping poor nations reduce poverty and accelerate development, South African Finance Minister Enoch Godongwana said. (BBG)

METALS: The city of Tangshan, a steelmaking hub in north China, has started production restrictions to try to clear its skies ahead of some major political meetings in the country. (BBG)

OIL: Poland’s largest oil company PKN Orlen SA stopped receiving oil via the Druzhba pipeline from Russia, Chief Executive Officer Daniel Obajtek said in a tweet. (BBG)

CHINA

ECONOMY: China’s economy rebounded in February after the long holiday, although early indicators point to an uneven recovery with strong consumption following the scrapping of Covid rules but lagging industrial activity. (BBG)

YUAN: The yuan should stabilize at a reasonable level as China’s economy recovers, China Securities Journal reported, citing analysts. (BBG)

EQUITIES: Regulators have told major Chinese tech companies not to offer ChatGPT services to the public amid growing alarm in Beijing over the AI-powered chatbot's uncensored replies to user queries. (Nikkei)

EQUITIES: China Renaissance said its missing founder Bao Fan was “co-operating in an investigation” with Chinese authorities, more than a week after the investment bank disclosed it had been unable to contact him. (FT)

EQUITIES: China's top securities watchdog and related departments have revised the regulation on secret protection and archive management in the overseas listing for domestic companies. (China.org)

PENSIONS: China’s pension coverage faces tough challenges due to inadequate coverage for its large and aging population, Zhou Xiaochuan, Former People’s Bank of China (PBOC) governor, said in a recent speech. (MNI)

PROPERTY: Financing channels for real estate leasing companies will be widened to increase the amount of bonds being issued, according to draft proposals released by the People's Bank of China and the China Banking and Insurance Regulatory Commission. (MNI)

LGFVS/RATINGS: Ongoing fiscal support, in addition to subdued land concession revenue, may strain the finances of some Chinese local and regional governments (LRGs), reducing their ability to support local government financial vehicles (LGFVs), says Fitch Ratings. (Fitch)

CHINA MARKETS

PBOC NET INJECTS CNY66 BILLION VIA OMOS MONDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
27/02/2023	0700/0800	**		SE	Retail Sales
27/02/2023	0900/1000	**		IT	ISTAT Business Confidence
27/02/2023	0900/1000	**		IT	ISTAT Consumer Confidence
27/02/2023	0900/1000	**		EU	M3
27/02/2023	0900/0900			UK	BOE Broadbent Opens BEAR Research Conference
27/02/2023	1000/1100	**		EU	EZ Economic Sentiment Indicator
27/02/2023	1330/0830	*		CA	Current account
27/02/2023	1330/0830	**		US	Durable Goods New Orders
27/02/2023	1500/1000	**		US	NAR Pending Home Sales
27/02/2023	1530/1030	**		US	Dallas Fed manufacturing survey
27/02/2023	1530/1030			US	Fed Governor Philip Jefferson
27/02/2023	1630/1130	*		US	US Treasury Auction Result for 13 Week Bill
27/02/2023	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
27/02/2023	1700/1800			EU	ECB Lane Lecture at Goethe University Frankfurt