Source: MNI - Market News/Bloomberg/Refinitiv.
UK
UK BUDGET (BBG): “ The Bank of England has halved its growth forecast for this year to 0.75% and estimates a shallow contraction at the end of last year, giving the economy a 2-in-5 chance of already being in a technical recession. The bank forecasts that inflation will be much stronger than expected, peaking at 3.7% later this year, and that living standards will take a hit, with real post-tax take-home income practically flatlining in 2026 and 2027.”
BOE (MNI BOE WATCH): The Bank of England delivered its anticipated 25-basis-point cut to 4.5% at its February meeting but predicted that inflation would rise sharply in the near-term, while a slight increase in its estimate of the neutral rate of interest offset a dovish surprise in the vote.
EU
EU INFLATION (BBG): “European Central Bank Governing Council member Boris Vujcic warns that the reversal of globalization could accelerate increases in consumer prices in the coming years. Vujcic lists factors contributing to inflation, including trade tariffs, higher energy prices, increased production costs, more expensive labor, and reduced external demand for domestic products and services.”
US
USD (MNI BRIEF): Treasury Secretary Scott Bessent said Thursday America's strong dollar policy remains intact, while also commenting that he is happy to see that the trajectory of U.S. government borrowing is on the decline but doesn't expect any changes in borrowing plans that were issued earlier in the week.
US DOLLAR (MNI BRIEF): The U.S. dollar will likely keep its status as the world’s reserve currency, Federal Reserve Governor Christopher Waller said Thursday, adding that stablecoins could enhance the dollar's preeminent global status in remarks to the Atlantic Council in Washington, DC.
FED (MNI BRIEF): Federal Reserve Bank of Dallas President Lorie Logan said Thursday the central bank might need to keep interest rates on hold for a while if inflation proves stubborn, and how much lower rates can go will be limited by a neutral rate that is likely higher.
FED (MNI): Uncertainties on trade and fiscal policy plus geopolitical and weather disruptions make it more difficult to judge how the U.S. economy is evolving and warrant a patient stance on monetary policy, Federal Reserve Bank of Chicago President Austan Goolsbee said Thursday.
OTHER
CANADA (MNI BRIEF): Bank of Canada Governor Tiff Macklem on Thursday retained his view a major trade war will do significant damage to exports while a weaker dollar creates some upward inflation pressure, and the risk to growth will increase as the longer trade uncertainty persists.
CANADA (MNI BRIEF): Canadian leaders are revisiting past strong opposition to building east-west energy pipelines citing the threat of economic domination from U.S. President Donald Trump, including Quebec's government that had been a main stumbling block.
JAPAN (BBG): “Japan’s households boosted consumption at the fastest pace since August 2022, as strong wage gains led by bonuses helped loosen consumers’ purse strings.”
JAPAN ECONOMY: (BBG): “Japan must act immediately to improve its fiscal health as the risks of natural disasters mount and social security costs continue to increase, according to the International Monetary Fund’s mission chief for the nation.”
CHINA
TARIFFS (YICAI): “Certain Chinese firms can export goods to the U.S. via South-East Asian factories to avoid tariffs, Yicai.com has reported, citing interviews with traders.”
CONSUMPTION (SECURITIES DAILY): China’s consumer market is expected to grow steadily in Q1, as the government expands its trade-in policy, according to He Yongqian, spokesperson at the Ministry of Commerce.
CHINA/ US TRADE WAR : (BBG): “ Apple Inc., which counts China as its biggest manufacturing hub and the US as its largest market, is now at the center of an escalating geopolitical fight that threatens to span tariffs and regulatory probes. “
CHINA MARKETS
MNI: PBOC Net Drains CNY100.3 Bln via OMO Friday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY183.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY100.3 billion after offsetting the maturity of CNY284 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6930% at 09:32 am local time from the close of 1.8115% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Thursday, the same as the close on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1699 Fri; -1.35% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1699 on Friday, compared with 7.1691 set on Thursday. The fixing was estimated at 7.2801 by Bloomberg survey today.
MARKET DATA
JAPAN HOUSEHOLD SPENDING DECEMBER YoY 2.7%: MEDIAN 0.5%, PRIOR -0.4%
JAPAN LEADING INDEX CI DECEMBER (P) 108.9: MEDIAN 108.3, PRIOR 107.5.
JAPAN COINCIDENT INDEX DECEMBER (P) 116.8: MEDIAN116.6, PRIOR 115.4
MARKETS
US TSYS: Tsys Yields Steady Ahead Of Nonfarm Payrolls Later
- There has been very little to mention in tsys today, ranges have been narrow as investors await the U.S. jobs report for clues on Fed policy. TU is trading below the overnight lows -01¼ at 102-26⅜, while TY is -02 at 109-16+
- A bull phase in futures remains in play and Wednesday’s rally reinforces current conditions. TY Price has traded through the 50-day EMA of 109-10+. This highlights potential for a stronger reversal and sights are on 109.30, a Fibonacci retracement. On the downside, initial support to watch is 108-20+, Tuesday’s low. Clearance of it would signal a reversal and the end of a corrective cycle.
- The 10-year yield edged up 2bps to 4.43% on Thursday and has risen another 1bp today, to trade at 4.444%. The 2s10s has done little today but remains trading at ytd lows of 21.788.
- Markets expect payrolls to rise by 175K, though a whisper number of 200K suggests a small beat may not move Treasuries significantly.
- Projected rate cuts through mid-2025 consolidate vs. Thursday levels (*) as follows: Mar'25 at -3.9bp (-4.2bp), May'25 at -10.7bp (-11.9bp), Jun'25 at -20.2bp (-22.7bp), Jul'25 at -25.6bp (-29.1bp)
- Meanwhile, Dallas Fed’s Logan suggested rates may already be near neutral, with Fed Governor Kugler set to speak later Friday.
JGBS: Short-End Heavy After Rinban Showed Heavy Selling Ahead Of US Payrolls
In afternoon dealings, JGB futures are weaker and at session lows, --36 compared to the settlement levels.
- BoJ-dated OIS pricing has firmed over the past week driven by signs that the BoJ will raise interest rates again.
- Japan’s economic data, including wage growth and household spending, have shown unexpected strength this week, fuelling speculation that the BoJ may accelerate and extend its rate hikes beyond previous market expectations.
- Currently, markets assign a 2% probability to a 25bp hike in March, with a full 25bp increase now priced in by September—compared to last Friday when a hike wasn’t fully priced in until October.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session ahead of today’s headline employment data for January, which is expected to slow to 170-180k from December’s strong 256k.
- Cash JGBs are flat to 3bps cheaper, with a flattening bias, across benchmarks. The benchmark 10-year yield is 2.3bps higher at 1.30% versus the cycle high of 1.301%.
- Details of today’s BoJ Rinban Operations showed that investors were big sellers of three-to-five-year bonds. The amount offered to the central bank was more than four times the amount bid by the BoJ.
- Swap rates are 1bp higher to 1bp lower. Swap spreads are mostly tighter.
AUSSIE BONDS: Drifted Cheaper Ahead Of US Payrolls
ACGBs (YM -5.0 & XM -4.0) are cheaper and near session lows during a typical pre-US payrolls Friday.
- Today, the local calendar will see Foreign Reserves data later.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session ahead of today’s headline employment data for January, which is expected to slow to 170-180k from December’s strong 256k.
- Cash ACGBs are 4bps cheaper with the AU-US 10-year yield differential at -9bps.
- Swap rates are 3-4bps higher.
- The bills strip has bear-steepened, with pricing -2 to -6.
- RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (131%), with the probability of a February cut at 89%.
- Based on historical patterns, it would be highly unusual for the RBA not to follow through on market expectations, especially since it has made no attempt—officially or unofficially—to steer expectations away from a cut, as it has done in the past.
- On Monday, the local calendar is empty, with Tuesday’s Westpac Consumer and NAB Business Confidence as the next data.
- Next 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: Sharply Cheaper As Market Plays Catch-Up After Holiday
NZGBs closed weaker, with benchmark yields rising 2-8bps in a session lacking local data.
- Today's movements largely reflect a catch-up after yesterday’s holiday, with NZ-US and NZ-AU 10-year yield differentials tightening by 1-2bps from Wednesday’s close.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session ahead of today’s headline employment data for January, which is expected to slow to 170-180k from December’s strong 256k.
- NZ’s Foreign Minister Winston Peters suggests that the country needs to create an attractive economy and rules to draw in wealthy overseas investors, which could include allowing them to purchase homes.
- Swap rates closed flat to 9bps higher, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed 1-5bps firmer. 49bps of easing is priced for February, with a cumulative 120bps by November 2025.
- On Monday, the local calendar is empty. The next event is a State of the Economy presentation by Treasury Chief Economic Adviser Dominick Stephens next Wednesday. The next data release is Card Spending on Thursday.
FOREX: USD/JPY Supported On Dips, Yen Pares Weekly Gain, US NFP Later
Aggregate G10 FX moves have been modest so far in Friday Asia Pac trade. The BBDXY index was last around 1298. So far this week, dips in the index sub the 50-day EMA have been supported. This zone is around 1296.85, so close by to current levels, as US NFP approaches later.
- Early doors saw USD/JPY pressure to the downside. We tested just under 151.00. Yen gains were aided by stronger than expected household spending data. We rebounded from this level and pushed back above 151.70. We sit close to these levels in latest dealings.
- Outside of proximity to US NFP, a steadier yen backdrop has likely reflected some stability in US-JP government yield differentials. A Japanese government official also played down the earlier household spending beat, staying one-off year end demand was a factor. The USD/JPY RSI (14) is also close to oversold conditions.
- Elsewhere we did see a brief blip higher in AUD and NZD, but there hasn't been any follow through. China and HK equities are higher but trends elsewhere in the region are mixed from an equity standpoint. AUD/USD was last 0.6280/85, unchanged, while NZD was close to 0.5675/80.
- US equity futures are down slightly, while US yields are up slightly, last around 1bps firmer across the Tsy benchmarks.
- Looking ahead the main focus will be on the US NFP. We have some minor EU data and ECB speak before hand. Also note Canadian jobs data is due.
ASIA STOCKS: Hong Kong & China Equities Higher As Tech Leads The Way
- Chinese stocks gained on Friday, showing resilience despite potential tariff risks. ETF inflows have supported onshore markets, while DeepSeek's AI momentum continues to drive sentiment. Gains were broad-based, spanning CSI 300 to CSI 2,000, with even property stocks rising on stable January sales data.
- Major benchmarks in Hong Kong & China are all higher today, small-cap is outperforming large cap with the CSI 1000 & 2000 both up about 1.80%, while the CSI 300 trade 1.15% higher, while Hong Kong's HSI is 1.20% higher.
- Chinese property stocks climbed as January sales data showed signs of stabilization. HSBC noted that home sales in 30 cities were largely flat y/y, with some gains in major cities during Lunar New Year. The Bloomberg Intelligence gauge of developers rose 2.5%, with Shimao (+7.1%), China Vanke (+5.9%), and Sunac (+7.6%) leading gains. Shenzhen’s housing market saw a 60% y/y jump in sales.
- Chinese tech stocks in Hong Kong are nearing a bull market, fueled by AI enthusiasm after startup DeepSeek launched a low-cost AI model. The Hang Seng Tech Index is 2.25% higher today and up 20% from its January low, with Xiaomi, Li Auto, and Kingdee leading gains. Relief over smaller-than-expected US tariffs helped sentiment, though Morgan Stanley remains cautious on China’s semiconductor sector. Southbound flows into Hong Kong tech stocks increased in January, supported by AI momentum.
ASIA STOCKS: Asian Equities Mixed, Chinese Tech Stocks Rally, NFP Later
- Asian equities are trading mixed today, with Chinese tech stocks leading gains, while Japan and South Korea faced selling pressure. The Hang Seng Tech Index surged 2.8%, entering a technical bull market, as optimism over DeepSeek’s AI advancements fueled buying in China’s internet firms. The CSI 300 rose 1.6%, and the Hang Seng gained 1.3%, supported by ETF inflows and hopes for further stimulus.
- Japan’s Nikkei is 0.4% lower, while the TOPIX is 0.50% lower, pressured by a stronger yen following hawkish Bank of Japan comments on interest rates. South Korea’s Kospi declined 0.55%, with Samsung & SK Hynix both trading lower. Taiwan’s Taiex (+0.4%) and Australia’s ASX 200 remained stable, while Indonesia’s JCI is 2.1% lower to be the worst performing market.
- Market sentiment remains cautious ahead of US nonfarm payrolls, expected to show 175,000 new jobs. A strong reading could dampen Fed rate-cut hopes, while a weak print may raise concerns about US economic momentum. Treasuries were steady, while gold and oil edged higher.
OIL: A Down Week for Oil as Trump Pledges to Lower Prices.
- President Trump turned his attention to OPEC+ overnight pledged to increase production, driving down prices.
- Trump said, “We are going to have more liquid gold coming out of the ground than anybody’s ever seen before,” he said at a breakfast in Washington (source: BBG).
- These remarks overshadowed news that the US Treasury secretary sanctioned an international network known to facilitate shipments of Iranian oil into China.
- The sanctions capture individuals, specific vessels and companies operating in China, UAE and India.
- Unsurprisingly Oil headed lower throughout the trading session for and is looking to have one of the softest weeks of 2025 thus far.
- WTI finished opened at $70.61in the Asian trading session, rising gradually throughout the day to $70.84.
- WTI for the week is on track to fall by -3.85% for the week, one of the biggest falls for 2025.
- Brent opened at $74.31 and tracked gradually higher throughout the day to reach $74.57.
- For the week, Brent is on track to be down almost 2.8%.
- Sales of Russia’s flagship oil product, the URAL, has seen prices collapse amid signs that US measures are hurting Russia.
- Canadian oil pipeline company Trans Mountain is the country’s key in the tariff war as it’s pipeline feeds the Pacific coast, rather than the US.
- Trans Mountain said yesterday in a business development update that the potential diversion of oil from the US to their pipeline bound for Asia, could have hugely positive impacts for the company.
Gold's Rise Resumes in Asian Trading.
- Gold’s six days of gains came to an end overnight as prices moderated ahead of a big Friday for economic data in the US.
- Opening at $2,856.45 in the Asian trading day, gold bucked overnight trends to rally most of the day, reaching $2,868.40.
- For the week, gold is on track to deliver a 2.50% gain.
- Citibank analysts released research suggesting that global tensions triggered by Trump’s desire to levy tariffs, will drive investors to the ‘safe haven’ of gold.
- Citibank suggests that gold prices could hit US$3,000 in the first half of the year which would add to an already strong year for bullion.
- UBS’s strategists hold a similar view forecast $3,000 over the next 12 months..
- Several key Central Bank’s restarted their buying programs last year in a sign that the demand cycle for gold is set to continue.
- Gold’s fortunes in Friday’s trading are likely to hinge on the raft of significant economic data expected overnight in the US, and the insight it will give for the direction of interest rates.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 07/02/2025 | 0700/0800 | ** |  DE | Trade Balance |
| 07/02/2025 | 0700/0800 | ** | DE | Industrial Production |
| 07/02/2025 | 0745/0845 | * |  FR | Foreign Trade |
| 07/02/2025 | 0745/0845 | FR | Wages Data for Q4 | |
| 07/02/2025 | 0800/0900 | ** |  ES | Industrial Production |
| 07/02/2025 | 0845/0945 |  EU | ECB's De Guindos remarks in 'VI Encuentro Economico-Asegurador' conference | |
| 07/02/2025 | 1200/1300 | EU | ECB to publish report on R* | |
| 07/02/2025 | 1215/1215 |  GB | BOE's Pill at National MPC Agency briefing | |
| 07/02/2025 | 1330/0830 | *** |  CA | Labour Force Survey |
| 07/02/2025 | 1330/0830 | *** |  US | Employment Report |
| 07/02/2025 | 1425/0925 | US | Fed Governor Michelle Bowman | |
| 07/02/2025 | 1500/1000 | ** | US | Wholesale Trade |
| 07/02/2025 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 07/02/2025 | 1700/1200 | US | Fed Governor Adriana Kugler | |
| 07/02/2025 | 2000/1500 | * | US | Consumer Credit |