Source: MNI - Market News/Bloomberg
UK
CONSUMER (MNI): UK GfK Consumer Confidence in February rose 2 points above consensus to -20 (vs -22 consensus and prior).
DEFENCE (BBG): “British military chiefs have advised Prime Minister Keir Starmer to accelerate plans to increase defense spending to 2.5% of economic output, according to people familiar with the matter, as urgency grows over the need to bolster European security with less American support.”
EU
ITALY (MNI): Italian Prime Minister Giorgia Melon has been caught off guard by U.S. President Donald Trump’s policies in areas such as Ukraine, leading some within her coalition to complain of sagging political momentum in areas such as planned reductions in income tax thresholds, government sources told MNI.
US/RUSSIA (BBG): “The US signaled that sanctions relief for Russia could be on the table in talks over the war in Ukraine as President Donald Trump rushes toward a deal to end the three-year conflict.”
UKRAINE (BBG): “ Ukrainian President Volodymyr Zelenskiy says in a post on X that Ukraine is ready for a “strong, effective investment and security agreement with the President of the United States.””
US
FED (MNI): The Federal Reserve is watching economic developments and shifts in policy out of Washington before considering any additional moves to interest rates, Fed Governor Adriana Kugler said Thursday.
FED (MNI): Federal Reserve Bank of St. Louis President Alberto Musalem warned Thursday the risk that inflation stalls above 2% or moves higher is skewed to the upside, though his baseline scenario is consumer price growth falls back to 2% and monetary policy moves back to neutral.
FED (MNI): Federal Reserve Bank of Atlanta President Raphael Bostic said Thursday he maintains a baseline view of two quarter-point interest rate cuts this year but that could increase or decrease in light of high uncertainty over Trump administration policy changes.
GOVERNMENT (RTRS): “ A tearful executive at the U.S. Internal Revenue Service told staffers on Thursday that about 6,000 employees would be fired, a person familiar with the matter said, in a move that would eliminate roughly 6% of the agency's workforce in the midst of the busy tax-filing season.”
DEBT (BBG): “ Treasury Secretary Scott Bessent said that any move to boost the share of longer-term Treasuries in government debt issuance is some ways off, given current hurdles that include elevated inflation and the Federal Reserve’s quantitative tightening program.”
OTHER
JAPAN (MNI BRIEF): The year-on-year rise of Japan's annual core consumer inflation rate accelerated to 3.2% in January from December’s 3.0%, 10 basis points higher than expected, due to higher energy and food costs excluding perishables, data released by the Ministry of Internal Affairs and Communications showed on Friday.
JAPAN (BBG): “Bank of Japan Governor Kazuo Ueda says in parliament that the central bank would buy government bonds in a nimble fashion if yields were to rise sharply, but it’s hard to determine when to conduct such operations in advance.”
AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia board needed to weigh risks around pausing or cutting the cash rate at this weeks meeting, despite the market accurately pricing in the 25 basis point cut to 4.10%, Governor Michele Bullock told the House of Representatives Standing Committee on Economics Friday.
CANADA (MNI): Canadian Prime Minister Justin Trudeau’s top civil service advisers have been studying the risk of persistent inflation and a higher-interest rate regime as companies rework global supply chains, according to a memo obtained by MNI.
CHINA
FISCAL (PEOPLE'S DAILY): "China’s finance ministry will implement more proactive fiscal policies this year to support economic development, Finance Minister Lan Fo’an wrote in an article published in the People’s Daily on Friday."
LOAN RATES (SECURITIES DAILY): "China’s loan prime rates still have room to go lower, although the People’s Bank of China has kept the rates steady for four consecutive months, according to a report in Securities Daily on Friday. "
CONSUMPTION (XINHUA NEWS): "China must promote service consumption by improving the supply in education, medical care, culture, sports, tourism, elderly care and housekeeping, said Premier Li Qiang at a State Council meeting Thursday. It is also necessary to quicken the promotion of artificial intelligence technology and boost spending on AI terminal products, he added."
FINANCE (SHANGHAI SECURITIES NEWS): "The People’s Bank of China will further smooth the financing channels of stocks, bonds and loans to address the difficulty and high cost of private enterprises' financing, according to a meeting chaired by PBOC Governor Pan Gongsheng Thursday."
CHINA MARKETS
MNI: PBOC Net Injects CNY84 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY182.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY84 billion after offsetting the maturity of CNY98.5 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8401% at 09:40 am local time from the close of 2.0622% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 58 on Thursday, compared with the close of 55 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1696 Fri; -0.88% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1696 on Friday, compared with 7.1712 set on Thursday. The fixing was estimated at 7.2460 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND JAN TRADE BALANCE NZD -486m; PRIOR 94mn
NEW ZEALAND JAN TRADE BALANCE 12MTH YTD NZD -7223m; PRIOR -7802mn
NEW ZEALAND JAN EXPORTS NZD 6.19bn; PRIOR 6.67bn
NEW ZEALAND JAN IMPORTS 6.68bn; PRIOR 6.58bn
AUSTRALIA FEB P S&P GLOBAL MANUFACTURING PMI 50.6; PRIOR 50.2
AUSTRALIA FEB P S&P GLOBAL SERVICES PMI 51.4; PRIOR 51.2
AUSTRALIA FEB P S&P GLOBAL COMPOSITE PMI 51.2; PRIOR 51.1
JAPAN JAN NATL CPI Y/Y 4.0%; MEDIAN 4.0%; PRIOR 3.6%
JAPAN JAN NATL CPI EX FRESH FOOD Y/Y 3.2%; MEDIAN 3.1%; PRIOR 3.0%
JAPAN JAN NATL CPI EX FRESH FOOD, ENERGY Y/Y 2.5%; MEDIAN 2.5%; PRIOR 2.4%
JAPAN FEB P JIBUN BANK MANUFACTURING PMI 48.9; PRIOR 48.7
JAPAN FEB P JIBUN BANK SERVICES PMI 53.1; PRIOR 53.0
JAPAN FEB P JIBUN BANK COMPOSITE PMI 51.6; PRIOR 51.1
SOUTH KOREA FEB MANUFACTURING SURVEY 90.1; PRIOR 89.0
SOUTH KOREA FEB NON-MANUFACTURING SURVEY 81.7; PRIOR 83.6
SOUTH KOREA FEB EXPORTS 20 DAYS Y/Y 16.0%; PRIOR -5.1%
SOUTH KOREA FEB IMPORTS 20 DAYS Y/Y 7.7%; PRIOR -1.7%
MARKETS
US TSYS: Tsys Futures Edges Higher, Belly Of Curve Outperforming
- The belly of the curve has outperformed throughout the session, there hasn't been too much in the way of headlines, with the moves largely a continuation from overnight, following easing tensions in Russia/Ukraine. In tsys futures TU is +00⅝ at 102-24⅝, while TY is trading +03 at 109-08+. There hasn't been anything of note to highlight in terms of flows, roll activity had picked up though.
- Cash tsys yields are 1.5 to 2.5bps richer today, with curves slightly flatter. The 2s10s is -0.5bps at 22.670 but trades just 0.5bps steeper over the past week, while the 2s20s is unchanged today but is 2.5bps steeper over the week.
- The 2yr yield is -1.9bps at 4.251% and about 5bps lower this week, the 7yr is outperforming today -2.4bps at 4.404% while the 10yr is -2bps at 4.484%. The 2s7s30s fly is -1bps and now trades -7bps over the past three sessions to trade at -18bps.
- OIS isn't pricing in a full cut until September, with a cumulative 39bps of cuts priced by year-end.
- Friday focus on S&P flash PMI data at 0945 followed by UofM sentiment and existing home sales data at 1000ET.
JGBS: Twist-Steepener, BoJ Ueda Says Will Intervene If Yields Rise Sharply
JGB futures are sharply higher, +40 compared to settlement levels, but sit in the middle of today’s range. Comments by BoJ Governor Ueda in parliament drove volatility.
- Governor Ueda acknowledged that the central bank's massive monetary easing, including YCC, was necessary to achieve its price target but has caused side effects. He noted that rising bond yields impact banks in various ways but, over the long term, higher interest rates will support financial institutions' profitability.
- While higher long-term rates may increase corporate funding costs, an improving economy could offset this impact. He emphasised that financial conditions remain supportive, firms' funding conditions are stable, and bond yields are market-driven, though the BoJ is prepared to intervene if yields rise sharply.
- PM Ishiba and Minister of Finance Kato expressed concerns about the potential impact of rising bond yields on Japan's finances, given the nation's high debt-to-GDP ratio.” (per BBG)
- The cash JGB curve has twist-steepened, pivoting at the 20-year, with yields 2-3bps lower out to the 10-year and 1bp higher for the 30-40-year zone. The benchmark 10-year yield is 1.9bps lower at 1.427% versus today’s fresh cycle high of 1.466%.
- Swaps rates are 1-3bps lower, with the 4-10-year zone leading.
- The local market is closed on Monday for the Emperor's Birthday holiday.
AUSSIE BONDS: RBA Gov. Bullock Continues To Push Against Mkt Expns For Cuts
ACGBs (YM +2.0 & XM +1.0) are slightly stronger despite RBA Governor Bullock emphasising in her parliamentary testimony today that strong employment growth, while positive, could indicate underlying economic strength that might delay or disrupt disinflation.
- ”We have not pre-committed to any particular course of action on interest rates. But in the forecasts published this week, the central projection suggests that if monetary policy is eased too quickly or by too much, disinflation could stall and inflation would settle above the midpoint of the target range. So the Board remains cautious about prospects for further policy easing."
- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +3bp.
- Swap rates are 1-2bps lower.
- The bills strip has bull-flattened, with pricing flat to +3.
- RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in April is given a 10% probability, with a cumulative 44bps of easing priced by year-end.
- On Monday, the local calendar is empty apart from the AOFM’s planned sale of A$300mn of the 4.25% 21 June 2034 bond. The AOFM also plans to sell A$800mn of the 3.75% 21 April 2037 bond on Wednesday and A$700mn of the 1.75% 21 November 2032bond on Friday.
BONDS: NZGBS: Closed Near Cheaps With A Bear-Flattener
NZGBs closed showing a bear-flatter, with benchmark yields 2-4bps higher.
- The NZGB 10-year underperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 3-4bps wider at +10bps and +7bps respectively.
- The RBNZ is welcoming a weaker exchange rate, saying it will help to revive economic growth this year. “The lower kiwi dollar is part of the reason we’re predicting growth to return over 2025 or from the end of 2024,” RBNZ Chief Economist Paul Conway said in an interview Friday in Wellington. It “is going to support export incomes along with good commodity prices for dairy and beef,” he said. The NZD has dropped 6.4% against its US counterpart over the past six months, the worst performance among the 10 most-traded currencies. (per BBG)
- Swap rates closed 2-4bps higher, with the 2s10s curve steeper.
- RBNZ-dated OIS pricing is slightly softer across meetings today. As a result, pricing is back close to Wednesday’s pre-RBNZ policy decision levels.
- On Monday, the local calendar will see Retail Sales Ex Inflation data for Q4.
FOREX: USD/JPY Back Above 150.00, As Ueda Warns On Yields, Steady Elsewhere
Yen volatility has been the main focus in G10 FX markets in the first part of Friday trade. The USD BBDXY index was last near 1283.3, little changed for the session. Outside of a yen fall, the rest of the G10 has moved less than 0.1% against the USD at this stage. The USD is still holding lower for the third straight week.
- USD/JPY was offered in the first part of the session, the pair getting to fresh lows of 149.29, which came not long after the Jan nationwide CPI data. This was close to expectations, but showed further positive y/y momentum. Still, services inflation slowed to 1.4%y/y from 1.6% In Dec, so this took away some of the hawkish impetus from the print.
- USD/JPY rebounded back through 150.00 as BoJ Governor Ueda appeared before parliament, where he stated the central bank would buy bonds if yields rose sharply. This sent JGB yields lower and weighed on yen. The Governor has reiterated this afternoon though if the economy evolves as expected further rate hikes will be delivered.
- After reaching highs of 150.74, yen is back at 150.20/25 in latest dealings. The 7 low of 150.93 may not act as an upside resistance point, while on the downside, the recent break sub the Dec 9 low from last year at 149.69 wasn't sustained.
- Elsewhere, AUD/USD been supported sub 0.6400. We are seeing strong gains for HK and China equities, although spill over hasn't been that strong so far. Earlier RBA Governor Bullock reiterated that the central bank will be cautious around further rate cuts. NZD/USD is a touch higher, last close to 0.5770.
- EUR/USD is holding just above 1.0500.
- US yields are tracking lower, the 10yr back to a 4.48% handle.
- Looking ahead, we have UK retail sales, along with preliminary PMI prints. EU PMIs are also due, along with those in the US. Fed speaks see Jefferson and Daly on tap.
ASIA STOCKS: China & HK Equities Surge Higher, Led By Tech & Alibaba
- The CSI 300 Index on the mainland rose 1.2%, and the Shanghai Composite Index also advanced 0.80%, reflecting renewed optimism in Chinese tech stocks amid the DeepSeek AI rally and positive signals from President Xi Jinping’s supportive stance toward private firms, including Alibaba co-founder Jack Ma’s recent meeting with Xi.
- Alibaba’s Stellar Earnings and AI Momentum is dirving most of the gains today. Alibaba’s Q4 results, surpassing estimates with strong growth in e-commerce (Taobao, Tmall) and cloud revenue—driven by an “explosion” in AI inference demand—have significantly boosted investor sentiment. The company’s 10% surge in Hong Kong and 8.1% jump in ADRs, alongside positive analyst upgrades from Citi, JPMorgan, Goldman Sachs, and Bloomberg Intelligence, have reignited the DeepSeek-fueled AI rally, pushing the Hang Seng Tech Index into a bull market and attracting foreign long-only funds back to Chinese equities.
- However, not all stocks performed well, with Netease shares falling as much as 2.8% in Hong Kong after missing Q4 expectations, and Lenovo shares, despite a 4.9% rise after strong revenue driven by AI infrastructure demand, had dropped 6.4% the previous day.
- Overall, the markets are on track for a sixth consecutive weekly advance, with Hong Kong leading regional gains, though some volatility persists amid valuation concerns and broader economic uncertainties.
ASIA STOCKS: Asian Equities Mixed, HK Equities Outperform
Asian equities are mixed today, with the majority of gains coming from HK listed equities driven by a strong rally in technology shares, particularly following Alibaba Group Holding Ltd.’s impressive Q4 earnings, which beat estimates and boosted optimism around China’s AI sector. The MSCI Asia Pacific Index climbed nearly 0.6%, on track for a sixth consecutive weekly gain of 1%, its longest winning streak in almost a year.
- Japanese stocks swung between gains and losses, with the Topix Index 0.15% lower, while the Nikkei up 0.1% as a stronger yen initially weighed on exporters, though BoJ's Gov Ueda’s comments on maintaining easy financial conditions weakened the yen, mitigating some losses.
- South Korea’s Kospi fell 0.2%, reflecting caution amid U.S. tariff threats, while Taiwan’s Taiex rose 0.95%, buoyed by tech strength with TSMC up 1% as a key driver in the semiconductor sector amid global AI demand.
- Australia’s ASX 200 slipped 0.3%, consumer discretionary stocks plunged 2% after RBA's Gov Bullock’s hawkish stance on interest rates, signaling no cuts amid persistent inflation. Guzman y Gomez shares fell as much as 12% after reporting a narrowed 1H restaurant margin, weighing on the consumer discretionary sector, while the ASX 20 Materials sector rose 1.3% due to higher iron ore prices, offsetting some losses.
The overall market uptrend is tempered by geopolitical worries, including U.S.-Ukraine tensions and Trump’s tariff plans, but Alibaba’s results and AI optimism have overshadowed these concerns, driving tech-led gains.
Oil Slips But Delivers Positive Week for Prices.
- Oil markets opened strongly in the Asian trading session with WTI climbing from US$72.58 to $72.77 before declining in the afternoon session to $72.48.
- Despite today’s price action, oil is set to deliver a strong week as uncertainty over OPEC+’s decision to increase supply and a weaker USD provide support.
- Brent declined also, having initially rallied to a high of $76.75, it retreated in the afternoon to $76.46.
- For the week, Brent has also delivered a strong week of gains up over 2.2%.
- Treasury Secretary Bessent signaled that the US is prepared to either ‘ramp up’ or ‘take-down’ sanctions on Russia in the context of talks over Ukraine.
- As sanctions impact Russia’s oil exports, Oil markets were left understanding how real these comments were and have back some of the intra-day rally.
- The Russian headline is significant in the context of the ongoing sage with OPEC+ who are considering a further delay to the additional supply expected in April to support prices.
- This comes at a time when President Trump continues to berate OPEC+ calling for lower prices.
- Crude inventories in the US rose by the most since May 2024 taking US stockpiles to the highest since November (per the EIA’s oil inventory report)
GOLD: Profit Taking as Gold Delivers Another Strong Week.
- Some evidence of profit taking today as gold moderated throughout the Asian trading session, whilst still delivering another week of gains.
- Opening at US$2,941.21 gold rallied early to reach $2,949.75, before retreating in the afternoon to $2,928.40
- Gold has delivered positive returns in every week in 2025 and this week was no exception with a gain of 1.5%.
- As strategists around financial markets adjust their forecasts, it seems likely that in the current environment, $3,000 could be breached sooner than expected.
- Whilst gold’s gains have been directly impacted by tariff headlines, the other key developing story has been the idea of revaluing the US gold reserves.
- Whilst it is unclear the overall impact of a re-valuation on gold prices, overnight US Treasury Secretary Bessent indicated that the idea was “not what I had in mind.”
- Whilst it is difficult to ascribe the gold price decline to Bessent’s comments, it seems more logical that in an environment of ongoing strong returns from the Gold price, the opportunity to book profits is more likely behind the modest decline.
- News that Switzerland is getting ahead of any potential tariffs saw the highest ever monthly shipment of gold in January, bound for the US.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 21/02/2025 | 0700/0700 | *** |  GB | Public Sector Finances |
| 21/02/2025 | 0700/0700 | *** | GB | Retail Sales |
| 21/02/2025 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 21/02/2025 | 0815/0915 | ** | FR | S&P Global Services PMI (p) |
| 21/02/2025 | 0815/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 21/02/2025 | 0830/0930 | ** |  DE | S&P Global Services PMI (p) |
| 21/02/2025 | 0830/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 21/02/2025 | 0900/1000 | *** |  IT | HICP (f) |
| 21/02/2025 | 0900/1000 | ** |  EU | S&P Global Services PMI (p) |
| 21/02/2025 | 0900/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 21/02/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (p) |
| 21/02/2025 | 0930/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 21/02/2025 | 0930/0930 | *** | GB | S&P Global Services PMI flash |
| 21/02/2025 | 0930/0930 | *** | GB | S&P Global Composite PMI flash |
| 21/02/2025 | 1330/0830 | ** |  CA | Retail Trade |
| 21/02/2025 | 1330/0830 | ** |  US | WASDE Weekly Import/Export |
| 21/02/2025 | 1330/0830 | ** | CA | Retail Trade |
| 21/02/2025 | 1430/1530 | EU | ECB's Lane Speech at FIW-Research Conference | |
| 21/02/2025 | 1445/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 21/02/2025 | 1445/0945 | *** | US | S&P Global Services Index (flash) |
| 21/02/2025 | 1500/1000 | *** | US | NAR existing home sales |
| 21/02/2025 | 1500/1000 | * | US | Services Revenues |
| 21/02/2025 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 21/02/2025 | 1630/1130 | US | Fed Vice Chair Philip Jefferson | |
| 21/02/2025 | 1630/1130 | US | San Francisco Fed's Mary Daly | |
| 21/02/2025 | 1730/1230 | CA | BOC Governor speech/press conference. |