Source: MNI - Market News/Bloomberg/Refinitiv.
UK
TRADE (POLITICO): “Britain’s economy will be hit by President Donald Trump’s trade war with its allies even if the U.K. strikes a trade deal with the White House, Chancellor Rachel Reeves said Tuesday.
EU
UKRAINE (BBC): “Volodymyr Zelensky said he was ready to work under Donald Trump's "strong leadership" to achieve a lasting peace days after their explosive Oval Office meeting. The Ukrainian president described the White House showdown as "regrettable" in a lengthy social media post in the wake of the US announcing a pause in military aid to Kyiv.”
GERMANY (BBG): “Germany will unlock hundreds of billions of euros for defense and infrastructure investments in a dramatic shift that upends its ironclad controls on government borrowing.”
RUSSIA (ECONOMIST): “A slew of data released on Wednesday will help answer a crucial question: how is Russia’s economy truly faring? In the three years since the country invaded Ukraine, its economy has held up better than most observers had expected.”
IRELAND (BBC): “Ireland is in a "serious period of reform" when it comes to defence and security, the tánaiste (Irish deputy prime minister) has said. Earlier on Tuesday, the Irish Cabinet approved draft legislation to change the rules that govern how its military can be used abroad.”
US
TARIFFS (BBG): “ The Trump administration could announce a pathway for tariff relief on Mexican and Canadian goods covered by North America’s free trade agreement as soon as Wednesday, Commerce Secretary Howard Lutnick said.”
TARIFFS (BBG): “President Donald Trump acknowledged that there may be an “adjustment period” as his sweeping tariffs take effect but sought to defend his push to remake the US economy in a primetime address to a joint session of Congress on Tuesday night, arguing that despite economic headwinds the nation’s “momentum is back.”
FED (MNI BRIEF): New U.S. tariffs will likely push prices higher later this year but also raise concerns about the ongoing strength of business investment and consumer spending, and the Federal Reserve should take its time before making any further cuts to interest rates, New York Fed President John Williams said Tuesday.
FED (MNI INTERVIEW): Fed To Focus On Growth Drag From Tariffs - Sahm
BUSINESS (BBC): “A Hong Kong-based company has agreed to sell most of its stake in two key ports on the Panama Canal to a group led by US investment company BlackRock.”
OTHER
JAPAN (MNI BRIEF): The Bank of Japan will continue to raise the policy interest rate and adjust the degree of monetary accommodation, Deputy Governor Shinichi Uchida said on Wednesday, failing to offer a timeline.
JAPAN (MNI BRIEF): Japan's economy in the October-December period largely expanded at the same pace of initial estimates, although capital investment will be revised down, economists predicted in the wake of a key government survey.
AUSTRALIA (MNI BRIEF): Global trade uncertainty could lift trimmed mean inflation over the mid-term and stabilise slightly above the Reserve Bank of Australia’s 2.5% midpoint target, Deputy Governor Andrew Hauser noted in a industry presentation Wednesday, tempering expectations of further easing.
AUSTRALIA (MNI BRIEF): The Australian economy grew 0.6% q/q in Q4, up from Q3’s 0.3% and in line with expectations, data from the Australian Bureau of Statistics showed Wednesday. The economy grew 1.3% on a year-ended basis, up 50 basis points over Q3, the National Accounts showed.
NEW ZEALAND (MNI BRIEF): Governor Adrian Orr has resigned and will finish in the role on March 31, the Reserve Bank of New Zealand said in a statement Wednesday. Orr was first appointed as Governor in March 2018 and has worked at the Reserve since 1997.
CANADA (MNI INTERVIEW): BOC To Drop Rates In Trade War: Homebuilders
CHINA
GDP TARGET (MNI BRIEF): China will target 5% GDP growth for 2025 with proactive fiscal expansion for domestic demand as the economy faces increasing external challenges, according to the Government Work Report released during the opening ceremony of the annual National People’s Congress on Wednesday.
CPI TARGET (MNI BRIEF): China has reduced its CPI target to around 2%, the lowest level since 2003 while repeating its moderately loss monetary stance, according to the Government Work Report released during the opening ceremony of the annual National People’s Congress on Wednesday.
CONSUMER (MNI BRIEF): China will increase support for the consumer trade-in programme via an additional CNY300 billion in special treasury bonds this year, as the government puts consumption at the top of its priorities, according to the Government Work Report released during the opening ceremony of the annual National People’s Congress on Wednesday.
REAL ESTATE (MNI BRIEF): China will continue efforts to stabilise the real-estate market by reducing restrictive measures, renovating urban villages, and giving local governments greater autonomy in buying up unsold housing, according to the Government Work Report released during the opening ceremony of the annual National People’s Congress on Wednesday.
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
AUSTRALIA Q4 GDP +0.6% Q/Q; EST. 0.6%; Q3 +0.3%
AUSTRALIA Q4 GDP +1.3% Y/Y; EST. 1.3%; Q3 +0.8%
AUSTRALIA S&P GLOBAL FEB F COMPOSITE PMI 50.6; PRE. 51.2; JAN. 51.1
AUSTRALIA S&P GLOBAL FEB F SERVICES PMI 50.8; PRE. 51.4; JAN. 51.2
NEW ZEALAND FEB. ANZ COMMODITY EXPORT PRICES +3.0% M/M; JAN. +1.8%
JAPAN JIBUN BANK FEB. SERVICES PMI 53.7; PRE. 53.1; JAN 53.0
JAPAN JIBUN BANK FEB. COMPOSITE PMI 52; PRE. 51.36; JAN.51.1
CHINA FEB. CAIXIN COMPOSITE PMI 51.5; JAN. 51.1
CHINA FEB. CAIXIN SERVICES PMI 51.4; JAN. 51.0
SOUTH KOREA GDP Q4 P +0.1% Q/Q; EST. +0.1%; Q3 +0.1%
SOUTH KOREA GDP Q4 P +1.2% Y/Y; EST. 1.2%; Q3 +1.2%
SOUTH KOREA GDP 2024 P +2.0%; EST. +2.0%; 2023 +1.4%
MARKETS
US TSYS: Tsys Curve Twist Steepen, 10yr Hovers At 4.25%, Trump Speaks
- Tsys curves have twist-steepened throughout the session, yields are -2bps to +2.5bps. The long-end is underperforming today, with the US & WN contracts trading below Tuesday's lows. TU is -01¼ at 103-16+, while TY is trading -10 at 110-30.
- The 2yr is -1.5bps at 3.976%, while the 10yr is +1.1bps at 4.256%. The 2s10s is +2.5bps at 27.5bps, and are now steepened ~9bps since Monday.
- Concerns over US tariffs' economic impact have fueled bullish Treasury bets, with JPMorgan’s client survey showing the most bullish positioning in 15 years. Large block trades and surging call option activity suggest traders are targeting 10yr yields falling below 4%, with some positioning for as low as 3.85%.
- Trump has been speaking to a joint session of congress, He has spoken about cutting federal bureaucracy, fraud, and waste—highlighting DOGE. He justified the tariffs enacted today (20% on China, 25% on Mexico and Canada), framing them as tools to protect American workers, despite market turmoil, and proposed making car loan interest tax-deductible for US-made vehicles.
- On foreign policy, Trump doubled down on border security, announcing a government-wide immigration crackdown, and addressed his recent pause on Ukraine aid, shifting focus to domestic priorities. He also pushed for expanded executive authority and briefly touched on cryptocurrencies, reiterating his Sunday call for a strategic reserve, though without new details.
- Projected rate cuts through mid-2025 gaining vs. late Monday levels (*) as follows: Mar'25 at -1.4bp (-3.1bp), May'25 at -11.8bp (-14bp), Jun'25 at -27.9bp (-31.0bp), Jul'25 at -37.7bp (-42.6bp).
- Later today we have MBA Mortgage Applications, ADP Employment Change, S&P Global US Services PMI, Factory/Durable Goods Orders & ISM Services Index
AUSSIE BONDS: Cheaper, Q4 GDP In Line, Trump Pledges Balanced Budget
ACGBs (YM -6.0 & XM -10.0) are sharply cheaper but off Sydney session cheaps.
- Q4 GDP printed exactly in line with consensus at +0.6% q/q & 1.3% y/y up from 0.3% & 0.8% in Q3.
- Cash US tsys have twist-steepened, with yields 2bps lower to 2bps higher, in today’s Asia-Pac session after yesterday’s heavy session.
- Trump, in his address to Congress, praised the drop in interest rates and pledged to balance the federal budget. He urged Congress to pass tax cuts and mentioned discussions with major US car companies. He reiterated his stance on tariffs, stating that products not made in the US will face tariffs, in some cases “rather large ones.”
- Cash ACGBs are 6-10bps cheaper with the AU-US 10-year yield differential at +11bps.
- Swap rates are 5-8bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing -1 to -7.
- RBA-dated OIS pricing is 1-5bps firmer across meetings today. A 25bp rate cut in April is given an 11% probability, with a cumulative 59 bps of easing priced by year-end.
- Tomorrow, the local calendar will see Building Approvals, Private Sector Houses and Trade Balance data.
- The AOFM plans to sell A$700mn of the 1.00% 21 December 2030 bond on Friday.
NZGBS: Bear-Steepener, RBNZ Gov. Orr Resigns
NZGBs closed showing a bear-steepener, with benchmark yields 6-11bps higher.
- “Governor Adrian Orr unexpectedly resigned without giving a reason for his sudden departure. Orr will officially leave the bank on March 31, and Deputy Governor Christian Hawkesby will be Acting Governor until then. Finance Minister Nicola Willis will appoint a temporary governor from April 1 for a period of up to six months, following a recommendation from the RBNZ Board.” (per BBG)
- The ANZ World Commodity Price Index rose 3% month-over-month in February.
- Cash US tsys have twist-steepened, with yields 2bps lower to 2bps higher, in today’s Asia-Pac session after yesterday’s heavy session.
- Trump, in his address to Congress, praised the drop in interest rates and pledged to balance the federal budget. He urged Congress to pass tax cuts and mentioned discussions with major US car companies.
- Swap rates closed 5-9bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing is 1-6bps firmer across meetings today.
- Tomorrow, the local calendar will see CoreLogic Home Values, Volume of All Buildings data and Government 7-Month Financial Statements.
- The NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond tomorrow.
ASIA STOCKS: Equities Edge Higher, HK Equities Lead, Sign Of Tariff Relief
Asian equities broadly rose on Wednesday, buoyed by optimism over China’s economic policy direction and signs of potential tariff relief from the U.S. administration. The MSCI Asia Pacific Index climbed 0.7%, with major gains in Hong Kong, Taiwan, and South Korea. Chinese markets rallied as the government reaffirmed its 5% growth target and announced increased fiscal spending, raising hopes for more stimulus. India rebounded after a historic 10-day losing streak, while Japan and South Korea gained on optimism surrounding trade. Australia was a notable laggard, with its market declining.
- Chinese stocks rose as Beijing maintained its 5% GDP growth target for 2025 and set its highest fiscal deficit in over three decades, signaling increased government support. Investors welcomed pledges to boost AI, 6G, and quantum computing, leading to strong gains in technology and semiconductor stocks. The Hang Seng Index jumped 1.7%, with the technology sector leading gains, while the CSI 300 index edged up 0.3%.
- Japan’s Nikkei Index rose 0.7%, while the broader Topix Index gained 0.6%. The market benefited from improving global sentiment following the Trump administration’s indication of potential tariff rollbacks. The weaker yen supported exporters, while investors also rotated into stocks that had underperformed in recent sessions.
- South Korea's KOSPI Index added 1%, driven by gains in semiconductors and heavy industries. SK hynix rose 1.34%, while steel giant POSCO Holdings gained 2.24%. However, defense stocks declined, with Hanwha Aerospace down 3.57% and Hanwha Ocean tumbling 7.17% after a prior-day surge. Investors responded positively to hopes that U.S. tariffs on Canada and Mexico might be reversed. The Korean won appreciated slightly against the dollar.
- Taiwan’s Taiex Index jumped 1.5%, bolstered by strong performance in semiconductor stocks, particularly TSMC. The global AI boom and expectations of more tech-friendly policies from China lifted sentiment.
- Australia's ASX 200 is 0.90% lower as Q4 GDP grew 0.6%, in line with expectations, reinforcing the RBA’s cautious stance on rate cuts. Weak risk sentiment and global trade concerns weighed on the market. The NZX 50 index fell 0.45% erasing early gains following RBNZ Governor Adrian Orr’s surprise resignation. Investors are now watching for signals on future monetary policy direction.
- The NSE Nifty 50 Index rose 0.6%, breaking a 10-day losing streak, as technology and consumer discretionary stocks rebounded. Infosys led gains with a 1.9% rise, while the Nifty India Consumption Index climbed 0.9%. The recovery comes after heavy foreign outflows of $14 billion year-to-date amid concerns over slowing economic growth and corporate earnings.
- Southeast Asian markets saw broad gains, with Indonesia’s Jakarta Composite Index surging 2.5% amid continued volatility, while Thailand’s SET Index rose 1.4% on improved risk sentiment. Vietnam’s VN Index edged up 0.1%, supported by S&P’s positive outlook on loan growth in the banking sector. Malaysia’s KLCI Index and Singapore’s Straits Times Index posted moderate gains of 0.6% and 0.3%, respectively, while the Philippines’ PSEi Index climbed 0.7% as investor sentiment improved.
OIL: Demand & Supply Concerns Drive Prices Below Initial Support
Oil prices have continued falling with both benchmarks trading below initial support today. WTI is down 1.0% to $67.60/bbl off the $67.50 low, breaching support at $67.75. Brent is down 0.5% to $70.73/bbl after a trough of $70.61, and is trading below support at $70.96 and opening key support at $69.59. The USD index is down slightly.
- The market remains pressured by concerns of oversupply following reports that OPEC would continue with plans to increase output from April but also by expected weaker global demand due to increased protectionism.
- Crude has been worried about demand strength from China for some time. Today it set its 2025 growth target at 5% which could result in more policy stimulus especially in the face of US tariffs.
- Today in his speech to Congress President Trump confirmed his commitment to increase US oil production. He also stuck with his plans to impose tariffs after Commerce Secretary Lutnick said that there could be a compromise with Canada and Mexico.
- A 10% tax was imposed yesterday on energy imports from Canada. In retaliation Ontario has introduced a 25% export tax on electricity going to Michigan, Minnesota and New York.
- Bloomberg reported that US oil inventories fell 1.455mn barrels last week after 640k the week before, according to people familiar with the API data. Gasoline was down 1.25mm, while distillate rose 1.1mn. The official EIA data is released today.
- Later US February ADP employment, services ISM/PMIs, final January orders and the Fed’s Beige book are released. European February services/composite PMIs and Q4 Italian GDP (2nd estimate) also print.
FOREX: USD Firms Against AUD, NZD But Away From Best Levels, Yen Outperforms
The USD is up against most of the majors, albeit away from best levels. USD/JPY is relatively steady, while higher beta plays like AUD and NZD have lost some ground.
- The session started with the USD on the backfoot and risk appetite supported, as US Commerce Secretary Lutnick stated that there may be tariff relief tomorrow for Canada and Mexico. CAD and MXN firm, although sit away from best levels now. USD/CAD was holding close to 1.4430, USD/MXN near 20.62.
- AUD/USD got to lows of 0.6234, but sits back around 0.6250/55 now. Earlier highs were at 0.6280. We had Trump address Congress earlier, where he confirmed that 25% tariffs on aluminium, copper and steel as well reciprocal tariffs will be implemented. This weighed on the A$ but follow through has been limited. Earlier data showed Australian GDP printing in line with expectations at 0.60%q/q.
- NZD/USD is down by a similar amount, last near 0.5650. We had surprising headlines that, RBNZ Governor was resigning. The Chair of The RBNZ board has since stated that this is for personal reasons. The RBNZ stated that Deputy Governor Christian Hawkesby will be Acting Governor until 31 March. From 1 April the Minister of Finance, on recommendation from the RBNZ Board, will appoint a temporary Governor for a period of up to six months.
- USD/JPY is little changed, last near 149.80, leaving the yen modestly outperforming. Deputy Governor Uchida stated rate hikes will continue, but didn't commit to any timeline.
- In the cross asset space, US equity futures are holding higher. Trump urged Congress to pass tax cuts, but also reiterated tariff plans. In the cash Tsy space, yields are lower at the front, but steady at the back end. The 10yr was last close to 4.24%.
- Looking ahead, the US February ADP employment, services ISM/PMIs, final January orders and the Fed’s Beige book are released. European February services/composite PMIs and Q4 Italian GDP (2nd estimate) also print.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 05/03/2025 | 0730/0830 | *** |  CH | CPI |
| 05/03/2025 | 0745/0845 | * |  FR | Industrial Production |
| 05/03/2025 | 0815/0915 | ** |  ES | S&P Global Services PMI (f) |
| 05/03/2025 | 0815/0915 | ** | ES | S&P Global Composite PMI (final) |
| 05/03/2025 | 0845/0945 | ** |  IT | S&P Global Services PMI (f) |
| 05/03/2025 | 0845/0945 | ** | IT | S&P Global Composite PMI (final) |
| 05/03/2025 | 0850/0950 | ** | FR | S&P Global Services PMI (f) |
| 05/03/2025 | 0850/0950 | ** | FR | S&P Global Composite PMI (final) |
| 05/03/2025 | 0855/0955 | ** |  DE | S&P Global Services PMI (f) |
| 05/03/2025 | 0855/0955 | ** | DE | S&P Global Composite PMI (final) |
| 05/03/2025 | 0900/1000 | *** | IT | GDP (f) |
| 05/03/2025 | 0900/1000 | ** |  EU | S&P Global Services PMI (f) |
| 05/03/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (final) |
| 05/03/2025 | 0930/0930 | ** |  GB | S&P Global Services PMI (Final) |
| 05/03/2025 | 0930/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 05/03/2025 | 1000/1100 | ** | EU | PPI |
| 05/03/2025 | 1000/1100 | * | IT | Retail Sales |
| 05/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 05/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 05/03/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 05/03/2025 | 1315/0815 | *** | US | ADP Employment Report |
| 05/03/2025 | 1430/1430 | GB | TSC: Bailey/Pill/Taylor/Greene | |
| 05/03/2025 | 1430/1430 | GB | Greene annual report | |
| 05/03/2025 | 1445/0945 | *** | US | S&P Global Services Index (final) |
| 05/03/2025 | 1445/0945 | *** | US | S&P Global US Final Composite PMI |
| 05/03/2025 | 1500/1000 | *** | US | ISM Non-Manufacturing Index |
| 05/03/2025 | 1500/1000 | ** | US | Factory New Orders |
| 05/03/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 05/03/2025 | 1900/1400 | US | Fed Beige Book | |
| 05/03/2025 | 2315/1815 | US | New York Fed's Roberto Perli | |
| 06/03/2025 | - | EU | European Central Bank Meeting | |
| 06/03/2025 | 0030/1130 | * |  AU | Building Approvals |
| 06/03/2025 | 0030/1130 | ** | AU | Trade Balance |
| 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 |