Source: MNI - Market News/Bloomberg/Refinitiv.
UK
BOE (MNI BRIEF): Domestic inflationary pressures are "still stubborn" and the job of getting inflation back sustainably to target is not yet done with disinflation continuing but at a slower pace than expected, entailing that restrictive monetary policy is still needed, Bank of England Chief Economist Huw Pill said at a Bank agents event.
BUSINESS (BBC): “UK retailers are being "raided like a piggy bank", the boss of Marks & Spencer has said. Writing in the Sunday Times, Stuart Machin said retailers were facing a series of headwinds, including the increase in National Insurance Contributions (NICs) paid by firms and higher packaging levies. He called for a number of changes from the government, including staggering the NIC changes over time.”
HOUSING (BBC): “Deputy Prime Minister Angela Rayner has said there are "no excuses" to not build the 1.5 million new homes Labour promised in its election manifesto. The government has said it will meet the house-building target in England by 2029, before the next general election.”
EU
EU (BBC): “The Baltic states of Estonia, Latvia, and Lithuania are now unplugged from Russia's electricity grid and have joined the European Union's network. Plans for the move - which have been in the works since 2007 - were seen as essential for European security and had been brought forward after Russia's full-scale invasion of Ukraine in 2022.”
POLITICS (POLITICO): “Boasting about a new era of conservative governments in Europe under the motto “Make Europe Great Again,” the Patriots for Europe party, the third-largest EU political family, held its first rally since its inception after last summer’s EU election.”
GERMANY (BBG): “Chancellor Olaf Scholz struggled to land the decisive blow he urgently needs on conservative frontrunner Friedrich Merz in the first of two televised debates ahead of Germany’s snap election in two weeks.”
GERMANY (POLITICO): “With just two weeks until Germany heads to the polls, German Chancellor Olaf Scholz and conservative frontrunner Friedrich Merz tore into each other over migration, the economy and how to handle U.S. President Donald Trump in a combative debate on national television Sunday night.”
GERMANY (DW): “The chancellor candidate for the conservative Christian Democrats (CDU), Friedrich Merz, and Markus Söder, the leader of their Bavarian sister party the Christian Social Union (CSU), told supporters in Nuremberg on Saturday that an election win on February 23 would prove the best way to contain the rise of the far-right Alternative for Germany (AfD). Both party leaders also vowed not to cooperate or ally in any way with the anti-immigration AfD.”
GERMANY (POLITICO): “The German military is investigating suspected Russian espionage after six drone sightings over an airbase in the northern town of Schwesing, where Ukrainian soldiers are trained on Patriot missile defense systems, Süddeutsche Zeitung reported.”
FRANCE (BBG): “France is set to announce a total of €109 billion ($113 billion) in investment in artificial intelligence projects in the country by companies, funds and other sources over the coming years, President Emmanuel Macron said on the eve of a two-day AI summit in Paris.”
RUSSIA (POLITICO): “U.S. President Donald Trump reportedly said that he has spoken with Russian President Vladimir Putin in an attempt to negotiate an end to the war in Ukraine. Putin "wants to see people stop dying," Trump told the New York Post in an interview aboard Air Force One.”
UKRAINE (POLITICO): “Ukrainian President Volodymyr Zelenskyy is making a diplomatic push to win over Donald Trump's White House ahead of any negotiations with Russia, using Ukraine's mineral wealth as leverage. “The coming weeks could be very busy in diplomacy,” said Zelenskyy in a post on Telegram late Saturday, adding that he valued “cooperation with President Trump.””
US
TARIFFS (RTRS): “U.S. President Donald Trump said on Sunday he will introduce new 25% tariffs on all steel and aluminum imports into the U.S., on top of existing metals duties, in another major escalation of his trade policy overhaul.”
TREASURY (BBG): “President Donald Trump suggested that Elon Musk’s government efficiency team has found irregularities while examining data at the US Treasury Department, and intimated that may lead the US to disregard some payments.”
FED (MNI BRIEF): Federal Reserve Governor Adriana Kugler said Friday it makes sense for the central bank to hold interest rates for some time, given that the economy is holding up, inflation is sticky above the Fed's target, and there are new policies in America adding uncertainty.
JOBS (MNI BRIEF): U.S. businesses created fewer jobs in January than the previous month and market forecasts, but the unemployment rate unexpectedly dipped a tenth to 4.011%, reinforcing the Federal Reserve's propensity to keep rates on hold for now. Payrolls rose by 143,000 last month, compared to median estimates for a 180,000 gain, but the previous two months were revised up by 100,000.
OTHER
AUSTRALIA/NEW ZEALAND (MNI): Former central bankers discuss how monetary policy will react to a potential trade war. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
AUSTRALIA/US (BBG): "Albanese said he will make the case that Australia should be exempt from steel and aluminum tariffs."
CHINA
INFLATION (MNI BRIEF): China's Consumer Price Index rose 0.5% y/y in January, growing at the fastest pace in five months from December's 0.1% and beating an expectation of 0.4%, though weakness in factory-gate inflation persisted, data from the National Bureau of Statistics showed Sunday.
EXPORTS (MOFCOM): “China’s customs department is likely to support export firms this year through favourable tax policies and by expanding the scope of cross-border e-commerce retail sales, according to Song Siyuan, associate researcher at the Ministry of Commerce.”
SUPPLY (BBG): "Fast fashion giant Shein is asking some of its top apparel suppliers in China to set up new production capacity in Vietnam with incentives including higher procurement prices of as much as 30%, people familiar with the matter said."
CHINA MARKETS
MNI: PBOC Net Drains CNY234 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY215 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY234 billion after offsetting the maturity of CNY449 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6187% at 09:30 am local time from the close of 1.7304% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 46 on Saturday, compared with the close of 45 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1707 Mon; -1.31% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1707 on Monday, compared with 7.1699 set on Friday. The fixing was estimated at 7.3017 by Bloomberg survey today.
MARKET DATA
CHINA JAN. CPI +0.5% Y/Y; EST. +0.4%; PRIOR +0.1%
CHINA JAN. PPI -2.3% Y/Y; EST. -2.2%; PRIOR -2.3%
JAPAN BOP CURRENT ACCOUNT DEC. +Y1077.3B; EST. +Y1374.2B; PRIOR +Y3352.5B
JAPAN BOP CURRENT ACCOUNT ADJ. DEC. +72731.6B; EST. +Y2721.0B; PRIOR +Y3033.4B
JAPAN BOP TRADE BALANCE DEC. +Y62.3B; EST. +227.7B; PRIOR +Y97.9B
JAPAN BANK LENDING INC TRUSTS JAN. +3.0% Y/Y; PRIOR +3.0%
JAPAN BANK LENDING EXC TRUSTS JAN. +3.3% Y/Y; PRIOR +3.3%
MARKETS
US TSYS: Tsys Yields Richer Following Trumps 25% Tariffs On Steel
- There was little reaction to headlines out earlier this morning surrounding a 25% tariff on steel and aluminum imports to the US. TU is -00 3/8 at 102-22 3/4, while TY is 00+ at 109-08.
- A bull phase in Treasury futures remains in play and the contract is holding on to its latest gains. TY Price has traded through the 50-day EMA of 109-11. This highlights potential for a stronger reversal and sights are on 109.30, a Fibonacci retracement. On the downside, initial support to watch is unchanged at 108-20+, Tuesday’s low. Clearance of it would signal a reversal and the end of a corrective cycle.
- In cash tsys today, the belly of the curve is outperforming, with the 2s5s20s -1.5bps at -36.170. The 2yr is -0..8bps at 4.281%, while the 10yr is -1.4bps at 4.481%
- Hedge funds increased their net short position in 5yr note futures to over 3m contracts, the most bearish stance since November, per CFTC data for the week ending Feb. 4. Leveraged funds added $12.8m/DV01 in shorts on 5yr notes and extended net shorts in 10-year and ultra 10yr notes by $7.7m/DV01 combined. Meanwhile, asset managers aggressively unwound net long positions in 10yr note futures by $9.1m/DV01 but increased net longs across most other tenors, including ultra 10yr to ultra-long bonds, by a combined $9.1m/DV01.
- Fed-dated OIS was pricing in approximately 35bp of rate cuts for the year vs. 42bp priced at Thursday close with the first full 25bp of easing moving out to the September policy meeting from July prior
- Projected rate cuts through mid-2025 consolidate vs. Friday (*) as follows: Mar'25 at -2.5bp (-3.9bp), May'25 at -7.3bp (-10.7bp), Jun'25 at -15.8bp (-19.6bp), Jul'25 at -20.6bp (-25.1bp).
- There is little on the calendar today, focus this week is on Powell's testimony to Congress, on Tuesday CPI and Wednesday PPI inflation measures.
JGBS: Cheaper, Fresh 10YY Cycle High, Market Closed Tomorrow
JGB futures are weaker, -6 compared to the settlement levels, after dealing in a relatively narrow range.
- According to MNI’s technicals team, a clear downtrend in JGB futures remains intact and the latest fresh cycle lows reinforce this condition.
- Outside of the previously outlined Current Account Balance and Bank Lending data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s heavy post-payrolls session. Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday. Trump didn't announce a time when these tariffs will take effect.
- That aside, the focus this week is on Chairman Powell's mon-pol testimony to Congress on Tuesday-Wednesday, and CPI and PPI inflation measures on Wednesday and Thursday respectively.
- Cash JGBs are flat to 2bps cheaper across benchmarks, with the belly underperforming. The benchmark 10-year yield is up 1.9bps at 1.321%, after hitting a new cycle high of 1.328%.
- Swap rates are 1bp lower to 1bp higher. Swap spreads are tighter.
- Tomorrow, the local market is closed for the National Foundation Day holiday.
AUSSIE BONDS: Cheaper, Tariff In Focus, Cons & Bus Confidence
ACGBs (YM -3.0 & XM -3.0) are slightly cheaper but around Sydney session highs on a data-light day.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after Friday’s heavy post-payrolls session. Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday. Trump didn't announce a time when these tariffs will take effect.
- The Australian government is still trying to secure exemptions to new 25% tariffs that Donald Trump says will be imposed on all steel and aluminium imported into the United States, making the case for “free and fair trade” with America. (per Guardian)
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at -10bps.
- Swap rates are 1-2bps higher.
- The bills strip -1 to -3.
- RBA-dated OIS pricing is flat to 2bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (129%), with the probability of a February cut at 89% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see Westpac Consumer and NAB Business Confidence.
- This week, the AOFM plans to sell A$400mn of the 2.75% 21 May 2041 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.
BONDS: NZGBS: Closed Cheaper But At Session Bests, Light Local Calendar Today
NZGBs closed cheaper but at session bests, with benchmark yields 1-4bps higher.
- The local calendar was empty today. The next event is a State of the Economy presentation by Treasury Chief Economic Adviser Dominick Stephens on Wednesday. The next data release is Card Spending on Thursday.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after Friday’s heavy post-payrolls session. Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday. Trump didn't announce a time when these tariffs will take effect.
- That aside, the focus this week is on Chairman Powell's mon-pol testimony to Congress on Tuesday-Wednesday, and CPI and PPI inflation measures on Wednesday and Thursday respectively.
- Swap rates closed 1bp lower to 5bps higher, with the 2s10s curve steeper.
- Markets are pricing in 48bps of easing for February, with a total of 120bps expected by November 2025.
FOREX: USD Indices Holding Higher Amid Fresh Tariff Proposal On Steel
USD indices are holding higher in the first part of Monday trade, the BBDXY index last above 1303, aided by the latest Trump tariff threats.
- In early trade, headlines crossed from Trump that steel and aluminium tariffs would be announced US Monday time (although no timing on when they come into effect). These headlines drove USD gains across the board, but we now sit away from best levels.
- AUD/USD got to lows of 0.6231, but sits higher now at 0.6270, only down slightly on end Friday levels. Australian PM Albanese is looking to speak to Trump re the latest tariff news, no doubt seeking an exemption from the proposed Monday announcement. Metal prices have also been firmer, albeit at the margin Iron ore was last around $106.50n/ton. NZD/USD was last near 0.5655, also up from earlier lows.
- USD/CAD is holding higher, last near 1.0445, off around 0.35% in CAD terms. Earlier highs were at 1.4380. Canada is exposed via both steel and aluminium exports to the US.
- Some negative spill over may be evident for JPY as well, given its steel exports to the US, although meetings at the end of last week between Japan PM Ishiba and Trump didn't suggest Japan was in Trump's trade crosshairs.
- US equity futures quickly reversed earlier losses from the tariff headlines as well, a likely yen headwind. USD/JPY did get to highs of 152.21, but sits back at 151.90/95 in latest dealings, around 0.30% weaker in yen terms.
- US yields are down slightly in the first part of Monday trade.
- Looking ahead, Later US January NY Fed 1-year inflation expectations print and ECB President Lagarde speaks.
ASIA STOCKS: Asian Equities Mixed On Trump's Tariffs
Asian equities traded mixed as investors reacted to U.S. President Donald Trump’s plan to impose 25% tariffs on all steel and aluminum imports. Steel and aluminum stocks across Japan, South Korea, India, and Australia fell sharply, with Nippon Steel (-2.6%), Posco (-4.8%), Tata Steel (-3%), and South32 (-2%) among the major decliners.
- Despite broader trade concerns, Hong Kong outperformed, with the Hang Seng Tech Index rising 1.5%, driven by optimism over Chinese AI and telecom stocks. China Telecom surged 10% on expectations of increased AI-related investment. Elsewhere the HSI is 1.40% higher, while the CSI 300 is little changed
- In Japan, stocks fluctuated as Trump’s tariffs pressured steelmakers, but optimism around PM Ishiba’s first meeting with Trump, which avoided any direct trade disputes helped limit losses. The Nikkei 225 is 0.1% higher while the Topix trades unchanged.
- Taiwan equities have struggled with TSMC falling 2.20%, this follows a 1.60% drop in the Philadelphia SE Semiconductor Index on Friday.
- South Korea's KOSPI is slightly higher today, with Samsung up 0.75%.
- Australia's ASX200 and New Zealand NZX50 are both about 0.24% lower today with steel and aluminum stocks weighing on the market.
- Meanwhile, Indian equities fell, with the Nifty 50 down 0.5% as metal stocks weighed on the index.
OIL: Latest Tariff News Drives Moderate Rise In Crude
More US tariff news has provided support to oil prices during trading today. The market seems to alternate between concerns about the impact of protectionism on global demand and the inflationary effect of tariffs. WTI is up 0.6% to $71.44/bbl following an intraday high of $71.58, while Brent is also 0.7% higher at $75.16/bbl after reaching $75.27. The USD index is up 0.2%.
- US President Trump said that 25% tariffs on all steel and aluminium imports would be announced on Monday. These could impact investment in the US energy sector particularly drillers who require a certain type of steel, according to Bloomberg.
- China’s retaliatory measures for the US’ universal 10% tariff on all imports from China come into effect today. They include 10-15% tariffs on imports of US oil and gas.
- Bloomberg reports that WTI net longs fell again last week and that Brent was also down after rising the previous five weeks, as significant uncertainty regarding the outlook for crude drives caution.
- Later US January NY Fed 1-year inflation expectations print and ECB President Lagarde speaks.
Gold Heads Higher Again on Tariff News.
- If Friday’s moves for gold was all about US data giving mixed messages about the US economy and the potential for rate rises; today it was more about news that Trump is to levy tariffs on steel and aluminum imports.
- The mixed data result from Friday was quickly forgotten as gold’s safe haven bid re-asserted itself as the tariff news broke.
- Opening $$2,861.07 in Asian trade gold has trended higher throughout reaching highs of $2,878.87.
- To add to the tariff headlines coming from Trump on aluminum and steel are claims that Elon Musk has found ‘irregularities’ at treasury.
- Gold’s ascent through all key technical levels continued last week as bullion moved further away from the 20-day EMA of $2,785.85 pulling all major technicals higher in signs that the bullish momentum is likely to continue.
- The coming fortnight sees major gold producers report earnings, and likely to provide insight into gold’s outlook.
- Safe haven demand remains a key determinant of gold’s fortunes and yet as US data provides mixed results for the outlook for rates, the strength of the USD in the face of tariff threats remains a key factor that determines gold’s fortunes in the near term.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 10/02/2025 | 0500/1400 |  JP | Economy Watcher's Survey | |
| 10/02/2025 | 0700/0800 | *** |  NO | CPI Norway |
| 10/02/2025 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/02/2025 | 1400/1500 |  EU | ECB's Lagarde participates in plenary debate on ECB 2023 Report | |
| 10/02/2025 | 1530/1030 |  CA | BOC market participants survey | |
| 10/02/2025 | 1600/1100 | ** |  US | NY Fed Survey of Consumer Expectations |
| 10/02/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 10/02/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 11/02/2025 | 0001/0001 | * |  GB | BRC-KPMG Shop Sales Monitor |
| 11/02/2025 | 0700/0800 | NO | GDP | |
| 11/02/2025 | 0845/0845 | GB | BOE's Mann lecture on Economic Prospects | |
| 11/02/2025 | 1100/0600 | ** | US | NFIB Small Business Optimism Index |
| 11/02/2025 | 1215/1215 | GB | BOE Bailey's speech on changes in financial markets | |
| 11/02/2025 | - | *** |  CN | Money Supply |
| 11/02/2025 | - | *** | CN | New Loans |
| 11/02/2025 | - | *** | CN | Social Financing |
| 11/02/2025 | 1330/0830 | * | CA | Building Permits |
| 11/02/2025 | 1350/0850 | US | Cleveland Fed's Beth Hammack | |
| 11/02/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |