Source: MNI - Market News/Bloomberg
UK
UKRAINE (POLITICO): “MPs from across the main parties told POLITICO they think parliament should be involved in any decision to deploy peacekeeping troops on the ground in Ukraine — after the prime minister made clear he is "ready and willing" to put personnel from the United Kingdom in harm's way.”
EU
GERMANY (MNI INTERVIEW): Germany Needs More Than Just Tax Cuts -Wambach
GERMANY (BBG): “German Chancellor Olaf Scholz and conservative frontrunner Friedrich Merz effectively ruled out serving together in the same cabinet, whatever the outcome of Sunday’s election.”
DEFENCE (RTRS): “European leaders meeting in Paris for emergency talks on Monday called for higher spending to ramp up the continent's defence capabilities but remained split on the idea of deploying peacekeepers to Ukraine to back up any peace deal.”
UKRAINE (POLITICO): “A French-led effort by European leaders to present a united front on Ukraine in the face of rising fear over U.S. President Donald Trump's intentions fizzled Monday as they failed to agree on sending troops to police a possible peace deal.”
UKRAINE (BBC): “Sir Keir Starmer has said any Ukraine peace deal would require a "US backstop" to deter Russia from attacking its neighbour again. Speaking after a hastily convened meeting with European leaders in Paris, the prime minister repeated that he would consider deploying UK troops to Ukraine in the event of a lasting peace agreement.”
UKRAINE (POLITICO): “Scholz said he was "annoyed" by the debate around sending peacekeeping forces to Ukraine after the war is over, arguing that it is "highly inappropriate" to discuss it before a peace plan is decided upon.”
US
FED (MNI): Federal Reserve officials can afford to keep interest rates on hold while they wait to see if price pressures will continue to abate following a recent leveling off of inflation above the central bank's target, Fed Governor Chris Waller said Monday.
FED (MNI): Federal Reserve Bank of Philadelphia President Patrick Harker signaled comfort Monday with holding interest rates steady for now, citing upside risks to inflation and downside risks to employment as well as a number of uncertainties on the horizon.
MIDDLE EAST (BBG): "“US forces conducted a precision airstrike against a member of al-Qaeda in Syria this weekend,” President Trump says in Truth Social post."
OTHER
AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia Board lowered the cash rate 25 basis points to 4.10% on Tuesday, its first move lower since November 2020. In a statement following the decision, the Board said underlying inflation had fallen faster than expected following Q4’s 3.2% y/y result. “There has also been continued subdued growth in private demand and wage pressures have eased,” the Board noted. “These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3% target range.”
GOLD (BBG): “ Goldman Sachs Group Inc. raised its year-end gold target to $3,100 an ounce on central-bank buying and inflows into bullion-backed exchange-traded funds, highlighting Wall Street’s enthusiasm for the metal.”
COMMODITIES (BBG): "BHP Group Ltd. said first-half profit slumped 23% as China’s faltering economy dampened demand for iron ore, prompting the miner to trim its interim dividend to an eight-year low."
CHINA
YUAN (CSJ): “The yuan is expected to remain around 7.3 against the U.S. dollar in the short-term, according to analysts from CITIC Securities. Market sentiment has improved amid capital inflows to the Chinese stock market driven by DeepSeek, while pressure on China-U.S. interest spreads have eased as the dollar weakened, said Li Liuyang, chief FX analyst at China International Capital Corporation.”
TECH (BBG): “Chinese stocks in Hong Kong gained after a meeting between President Xi Jinping and prominent entrepreneurs signaled Beijing’s endorsement of the private sector.”
PRIVATE SECTOR (MNI BRIEF): Chinese officials will introduce a new version of the market access negative list soon to open infrastructure and major national scientific research infrastructure to private enterprises, Zheng Bei, the NDRC's deputy director, told state China Central Television on Tuesday.
CHINA MARKETS
MNI: PBOC Net Drains CNY484.1 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY48.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY484.1 billion after offsetting the maturity of CNY33 billion 7-day reverse repos and CNY500 billion 1-year MLF today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5452% at 09:44 am local time from the close of 2.0567% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 68 on Monday, compared with the close of 50 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1697 Tues; -1.01% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1697 on Tuesday, compared with 7.1702 set on Monday. The fixing was estimated at 7.2570 by Bloomberg survey today.
MARKET DATA
AUSTRALIA RBA CASH RATE TARGET 4.10%; MEDIAN 4.10%; PRIOR 4.35%
SOUTH KOREA Q4 HOUSEHOLD CREDIT KR 1927.3TR; PRIOR 1914.3TR
MARKETS
US TSYS: Tsys Curve Bear-Steepen, 10yr Yield Back Above 4.50%
- Tsys futures have continued to slowly sell-off throughout the session, we trade just off lows atm. Yields and the USD are pushing higher following the Fed's Waller saying recent economic data support keeping interest rates on hold, fed funds futures are still pricing in a single cut this year in September.
- TU is -00⅞ at 102-23+, while TY is -08 at 109-02+, a continuation lower would open 108-00, the Jan 16 low, and expose 107-06, the Jan 13 low and bear trigger. Key resistance and the bull trigger is 110-00, Feb 7 high.
- Cash tsys curves have bear-steepened today, yields are 1-4.5bps cheaper. The 2yr is +1.1bps at 4.270%, while the 10yr is back above 4.50%, last +3.7bps at 4.513%. The 2s10s is +2.5bps at 23.954, while the 2s30s is +3bps at 46.413.
- It is a rather quiet week for US data, fed fund futures are little changed so far this week, with the first cut pricing fully priced for the September meeting, with a cumulative 40bps of cuts priced by year end.
- Locally in Asia today, Australia's RBA cut rates by 25bps as expected, however the statement from Bullock has been somewhat hawkish, ACGBs yields are 4.5 to 5bps cheaper today.
- Later today we have Empire Manufacturing and the NAHB Housing Market Index
JGBS: Bear Steepener After Poor 20Y Auction
JGB futures are sharply weaker and at session lows, -28 compared to settlement levels.
- “The Bank of Japan should continue raising interest rates if data allows to maintain room for policy adjustments later, according to former Bank of Japan Deputy Governor Hiroshi Nakaso” (per BBG)
- The market remained steady through to the lunch break but dropped sharply after today’s 20-year auction revealed weak demand across key metrics.
- First, the auction low price fell well short of dealer forecasts. Secondly, the cover ratio declined to 3.06x from 3.79x in the previous auction. Lastly, the auction tail widened significantly to 0.55 from 0.04, signalling a notable deterioration in demand.
- Cash US tsys flat to 4bps cheaper in today’s Asia-Pac session, with a steepening bias following yesterday’s holiday, intensifying the sell-off at the long end of the JGB curve.
- Cash JGBs are flat to 5bps cheaper across benchmarks, with the benchmark 20-year leading the way.
- Swap rates are flat to 2bps higher, with swap spreads mixed.
- Tomorrow, the local calendar will see Trade Balance, Core machine Orders and Tokyo Condominiums for Sale data alongside BoJ Rinban Operations 1-10-year and 25-year+ JGBs.
AUSSIE BONDS: RBA Governor’s Hawkish Presser Drives Market Cheaper
ACGBs (YM -5.0 & XM -4.0) have weakened since RBA Governor Bullock’s press conference, which followed the RBA’s decision to cut the cash rate by 25bps to 4.10%.
- RBA Governor Bullock emphasised that while high interest rates have been effective, inflation is not yet fully under control. She noted the labour market’s unexpected strength and cautioned that market expectations for further rate cuts are not guaranteed.
- Future rate decisions will depend on inflation data, wage pressures, and supply-side recovery. Bullock also stated that the market's projected rate path may be unrealistic if the RBA aims for its 2.5% inflation target.
- Additionally, she clarified that rates will not return to pandemic-era lows. The board carefully weighed multiple factors before making its latest decision.
- Cash US tsys are 1-4bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s holiday.
- Cash ACGBs are 4-5bps cheaper on the day with the AU-US 10-year yield differential at -2bps.
- Swap rates are 4-5bps higher on the day.
- The bills strip has bear-steepened, with pricing flat to -6.
- RBA-dated OIS pricing is flat to 7bps firmer after the RBA Decision across meetings, with December leading.
BONDS: NZGBS: Closed With Twist-Steepener, RBNZ Policy Decision Tomorrow
NZGBs closed showing a twist-steepener, with benchmark yields 2bps lower to 1bp higher.
- With the local market closed at the time of the RBA’s 25bp rate cut, any spillover effects will have to wait until tomorrow morning. However, the initial reaction has been minimal so far.
- Swap rates also closed mixed, with rates 2bps lower to 3bps higher. The 2s10s curve closed steeper.
- Cash US tsys are 1-4bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s holiday.
- Tomorrow, the local calendar will see the RBNZ Policy Decision. The RBNZ decision is widely expected to cut rates 50bp again to 3.75%. Revised staff forecasts will also be published.
- All 22 analysts surveyed by Bloomberg are forecasting a 50bp rate cut and the RBNZ shadow board is recommending 50bp of easing.
- RBNZ dated OIS pricing closed slightly softer. 49bps of easing is priced for February, with a cumulative 113bps by November 2025.
- Notably, OIS pricing is 2–17bps firmer than pre-Q4 Labour Market data levels from February 4.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% Apr-27 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 1.75% May-41 bond.
FOREX: USD Rebounds On Firmer Yields, But A$ Outperforms On Hawkish RBA Cut
The USD has mostly recovered ground through the first part of Tuesday trade. The BBDXY index is up over 1290, +0.25% firmer versus end Monday levels. The A$ is the clear outlier, close to unchanged, after the RBA delivered a hawkish 25bps cut.
- AUD/USD tracks near 0.6350/55 in latest dealings, close to post RBA highs, 0.6368. As widely expected the central bank cut rates by 25bps, but pushed against current market pricing for further cuts over the next 12 months. RBA Governor Bullock stated that the central bank won't hit the mid point of its 2-3% target band given current market pricing (which is an input into its inflation outlook).
- The AUD/NZD cross has pushed back into the 1.1130/40 region, close to recent highs (1.1149). Late 2024 highs were at 1.1180, in terms of upside targets. AU-NZ 2yr swap spreads have edged up. Note we have the RBNZ decision tomorrow.
- NZD/USD is back down close to 0.5700, off around 0.50%. To the downside, a hold above the 50-Day EMA at 0.5700 is important, a break here would open a move to 0.5668 (20-day EMA). 0.5763 is upside resistance the Dec 18 high.
- USD/JPY has pushed back above 152.00, earlier lows were at 151.24. Earlier positive remarks on the economy only provided brief support for the yen.
- US cash Tsy has resumed after Monday's holiday, with yields pushing higher, the 10yr back above 4.51%. The Fed's Waller saying recent economic data support keeping interest rates on hold in earlier remarks.
- Elsewhere, US equity futures are up a touch, while Hong Kong markets continue to rally, but this hasn't spilled over more broadly.
- Later the Fed’s Daly and Barr speak and February US Empire manufacturing and NAHB housing print. There are also UK labour market data, February euro area ZEW and January Canadian CPIs. The ECB’s Cipollone participates in an MNI Connect event.
ASIA STOCKS: China & Hong Kong Equities Rise, Tech Again Leads The Way
Chinese and Hong Kong equities extended their rally, driven by optimism following President Xi Jinping’s meeting with private sector leaders, including Alibaba's Jack Ma and DeepSeek’s Liang Wenfeng. The HSI climbed 2%, with the Hang Seng China Enterprises Index is 2.25% higher today and has risen over 23% since its January low. Tech stocks led the gains, with Alibaba, Xiaomi, and Tencent among the top performers.
- DeepSeek’s AI advancements have fueled bullish move, with Wall Street banks upgrading Chinese stocks on expectations of AI-driven earnings growth. However, there still remains some concerns surrounding structural issues like the property crisis and weak consumer confidence. Attention now shifts to China’s annual legislative meeting in March for potential policy update.
- Major benchmarks are mostly higher today with CSI 300 +0.40%, HSI +2%, HSTech +3%, although there is weakness in property names with Mainland Property Index & BBG China Property Developer Gauge both down 0.50%, small cap stocks are also struggling somewhat with the CSI 1000 down 0.40%, while the CSI 2000 is -0.60%.
- Elsewhere, Chinese 10yr bond yields rose as investors rotated into equities, signaling tightening liquidity, while the 1yr yield rose 8bps to it's highest level since August.
ASIA STOCKS: Asian Equities Edge Higher, HK Tech Leads The Way, RBA Cuts Rates
Asian equities are mostly higher today. Hong Kong stocks are leading gains, with the Hang Seng China Enterprises Index rising 2.40% driven by tech stocks like Alibaba and Xiaomi. Optimism grew following President Xi Jinping’s meeting with business leaders, signaling a more supportive stance toward the private sector. Australia's RBA lowered rates for the first time in 4 years, the ASX200 hasn't liked the hawkish comments from Gov Bullock.
- Japan’s markets advanced, with the Nikkei rising 0.65%, supported by gains in defense stocks after European Union leaders discussed increasing military spending. The Nikkei is testing last weeks highs, with a break here likely to see the Index look to retest the 40,000 area. Tech shares are trading well following positive headlines out of China with expectations that they may ease regulatory pressure on the sector, Tokyo Electron is 2.40% higher.
- Hong Kong listed equities continue to outperform their mainland peers, with the HSI up 2.20%, while the CSI 300 trading just 0.40% higher. Tech stocks are the best performing sector with the HSTech Index +3.50%, while property stocks are underperforming with the Mainland Property Index 0.40% lower.
- Taiwan's TAIEX is 0.40%, while South Korea's KOSPI is 0.50% higher
- Australia’s ASX200 has slipped 0.65% although most of this came prior to the RBA hawkish cut. The AUD is holding near a two-month high. Meanwhile, BHP’s first half profit fell 23%, with weak Chinese demand for iron ore and copper, hurting results
OIL: Crude Continues To Find Support From News Of Supply Risks
Oil prices are higher today with WTI up 0.8% to $71.31/bbl after a low of $71.13 and Brent steadfy around $75.25/bbl following a trough of $75.05. They rose on Monday driven by news of private talks amongst OPEC members to possibly delay the start of output normalisation again. The USD index is up 0.2%.
- An attack by Ukrainian drones on Russian oil infrastructure has also supported prices. It has resulted in flows from Kazakhstan having to slow. They had been scheduled to run at 1.6mbd this month and next.
- If OPEC again delays its gradual reduction in output cuts due to begin in April, it would be the fourth such postponement. The group had planned to increase production by 120kbd but excess global supply appears to be disrupting the schedule. Bloomberg is saying that Russia’s Deputy PM is denying that talks are underway.
- Market participants are more bearish on oil with prompt spreads narrowing and bullish positions being decreased.
- Later the Fed’s Daly and Barr speak and February US Empire manufacturing and NAHB housing print. There are also UK labour market data, February euro area ZEW and January Canadian CPIs. The ECB’s Cipollone participates in an MNI Connect event.
GOLD: Back to Normality as Gold Rallies Again.
- As Friday’s sell off fades into the background and the rally resumes, the biggest sell off of the year appears to be nothing more than profit taking, a view supported by holdings data showing money managers have reduced positions.
- Overnight, gold resumed its rally up +.49% to US2,896.56 in US trading and despite a slow start in the Asian trading day, suddenly jumped higher to bust through $2,900 to reach $2,909.80.
- Gold has benefited from concerns over tariffs and overnight the President spoke again about tariffs saying, “On Trade, I have decided, for purposes of Fairness, that whatever Countries charge the United States of America, we will charge them - No more, no less!" He continued saying "I have instructed my Secretary of State, Secretary of Commerce, Secretary of the Treasury, and United States Trade Representative (USTR) to do all work necessary to deliver reciprocity to our System of Trade!"
- The technicals for gold remain the same, with the uptrend still intact and with the risks of an all-out trade war coupled with an signs that inflation isn’t gone in the US, the near term demand dynamic for gold could see it push through the $3,000 barrier sooner than expected.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 18/02/2025 | 0700/0700 | *** |  GB | Labour Market Survey |
| 18/02/2025 | 0700/0800 | *** |  SE | Inflation Report |
| 18/02/2025 | 0745/0845 | *** |  FR | HICP (f) |
| 18/02/2025 | 0930/0930 | GB | BOE's Bailey fireside chat on open financial markets | |
| 18/02/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 18/02/2025 | 1000/1100 | *** |  DE | ZEW Current Expectations Index |
| 18/02/2025 | - |  EU | ECB's De Guindos in ECOFIN meeting | |
| 18/02/2025 | 1330/0830 | *** |  CA | CPI |
| 18/02/2025 | 1330/0830 | ** |  US | Empire State Manufacturing Survey |
| 18/02/2025 | 1400/0900 | * | CA | CREA Existing Home Sales |
| 18/02/2025 | 1400/1500 | EU | ECB's Cipollone in MNI Connect conference on Balance Sheet | |
| 18/02/2025 | 1500/1000 | ** | US | NAHB Home Builder Index |
| 18/02/2025 | 1520/1020 | US | San Francisco Fed's Mary Daly | |
| 18/02/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 18/02/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 18/02/2025 | 1800/1300 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 18/02/2025 | 1800/1300 | US | Fed Governor Michael Barr | |
| 18/02/2025 | 2100/1600 | ** | US | TICS |
| 19/02/2025 | 2350/0850 | ** |  JP | Trade |
| 19/02/2025 | 2350/0850 | * | JP | Machinery orders |
| 19/02/2025 | - |  NZ | Reserve Bank of New Zealand Meeting | |
| 19/02/2025 | 0001/0001 | * | GB | Brightmine pay deals for whole economy |
| 19/02/2025 | 0030/1130 | *** |  AU | Quarterly wage price index |
| 19/02/2025 | 0100/1400 | *** | NZ | RBNZ official cash rate decision |
| 19/02/2025 | 0700/0700 | *** | GB | Consumer inflation report |
| 19/02/2025 | 0700/0700 | *** | GB | Producer Prices |
| 19/02/2025 | 0900/1000 | ** | EU | EZ Current Account |
| 19/02/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 19/02/2025 | 1000/1100 | * | EU | labour costs |
| 19/02/2025 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 19/02/2025 | 1330/0830 | *** | US | Housing Starts |
| 19/02/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |