Source: MNI - Market News/Bloomberg/Refinitiv.
UK
BOE (BBG): “Bank of England policymaker Swati Dhingra has elaborated on her decision to call for interest rates to be slashed, saying taking a “gradual” approach would still leave monetary policy as a drag on the economy this year.”
EU
TRADE (MNI): The European Commission will "sharpen" its trade tools to make sure the European Union does not become a "backfilling destination" for excess global capacity in an era of increased “global geo-economic competition,” it said in an early draft of its Clean Industrial Deal seen by MNI.
GERMANY (BBG): “Germany’s chancellor-in-waiting Friedrich Merz has opened talks with the Social Democrats to quickly approve as much as €200 billion ($210 billion) in special defense spending, according to a person familiar with those discussions.”
US/FRANCE (RTRS): “U.S. President Donald Trump and French President Emmanuel Macron displayed stark differences on Monday in their approach to Ukraine, exposing a divide between the United States and Europe over Trump's bid for a quick ceasefire deal with Russia”
CHINA/RUSSIA (BBG): "Chinese President Xi Jinping reaffirmed his relationship with Vladimir Putin on the third anniversary of Russia’s invasion of Ukraine, signaling that Moscow’s detente with Washington wouldn’t deter ties."
US
TARIFFS (BBG): “ President Donald Trump said tariffs scheduled to hit Canada and Mexico next month were “on time” and “moving along very rapidly” following an initial delay, even as a US official cautioned the schedule could be less certain.”
US/CHINA (BBG): “ Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under Joe Biden to limit Beijing’s technological prowess.”
GEOPOLITICS (BBG): “President Donald Trump deepened Washington’s split with allies over Ukraine, withdrawing US condemnation of Russia’s 2022 invasion at the United Nations and among Group of Seven countries as he aims to end the war on terms agreeable to Moscow.”
FISCAL (MNI BRIEF): Congressional Budget Office Director Phillip Swagel told an MNI Livestreamed Connect event Monday the economy continues to grow, the labor market remains in pretty good shape, and inflation is still above target, which is likely to delay further interest rate easing from the Federal Reserve, adding additional near-term pressure on the fiscal deficit.
GOVERNMENT (RTRS): "The U.S. government's human resources agency is rushing to shut down and drastically shrink entire departments in what sources familiar with the actions say will serve as a template for a second wave of mass layoffs in the federal bureaucracy."
OTHER
JAPAN (MNI BRIEF): Japan’s services producer price index rose 3.1% y/y in January, accelerating from December’s revised 3.0%, showing that corporate pass-through of cost increases remained solid, preliminary data released by the Bank of Japan on Tuesday showed.
JAPAN (BBG): " A trading room about an hour’s train ride from Tokyo is on the radar of Japanese government bond investors waiting to see whether domestic banks will resume buying the nation’s debt in earnest.
JAPAN (BBG): "Japan’s minority government is set to finalize a budget deal with an opposition party on Tuesday, according to the Nikkei newspaper, securing the votes on paper that it needs to pass the budget for the fiscal year starting in April."
SOUTH KOREA (MNI BRIEF): The Bank of Korea on Tuesday decided to lower its policy interest rate 25 basis points to 2.75% to support fragile the economy hit by domestic political turmoil and U.S. tariffs, Yonhap News Agency reported.
CHINA
RRR (SECURITIES TIMES): China’s reserve requirement ratio system may be further adjusted and the implicit lower limit of 5% of deposits held in reserves by banks may be relaxed, reports Securities Times, citing analysts.
YIELDS (CSJ): "Yields on China’s negotiable certificates of deposits have gone up because of tighter liquidity and an imbalance between supply and demand in the market, reports China Securities Journal."
CHINA MARKETS
MNI: PBOC Net drains CNY170.7 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY318.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY170.7 billion after offsetting the maturity of CNY489.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8148% at 09:26 am local time from the close of 2.0550% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Monday, compared with the close of 44 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1726 Tues; -0.76% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1726 on Tuesday, compared with 7.1717 set on Monday. The fixing was estimated at 7.2530 by Bloomberg survey today.
MARKET DATA
JAPAN JAN PPI SERVICES 3.1%; MEDIAN 3.1%; PRIOR 3.0%
SOUTH KOREA FEB 25 BOK BASE RATE 2.7%; MEDIAN 2.75%; PRIOR 3.0%
SOUTH JAN KOREA RETAIL SALES Y/Y 11.7%; PRIOR 8.9%
CHINA 1YR MLF RATE 2.00%; MEDIAN 2.00%; PRIOR 2.00%
MARKETS
US TSYS: Tsys Futures Edge Higher, 10yr Yield At ytd Lows Ahead Of Fed Speak
- All tsys futures contracts are trading above Monday's highs, trading volumes being largely linked to rolls. TU +00⅜ at 102-30¼, while TY is +03+ at 109-31+, we trade just below 110-00 (High Feb 7 and the bull trigger) a break here would strengthen a bullish theme and open 110-19, a Fibonacci retracement. On the downside, a break back below 108-21+ (Feb 19 lows) would open a move to key short-term support at 108-04 (Feb 12 low) with clearance of this support reinstating a bearish theme.
- Overnight, Tsys options were skewed towards upside protection, matching the risk-off bid in early US session. Key flows included a short-term play targeting a the 10yr to hit 4.2% within a couple of weeks
- Cash tsys are 2-3bps richer today, having traded in a narrow range post the open. The 2yr is -2.1bps at 4.153% while the 10yr yield is trading at ytd lows of 4.377%. The 2s10s continues to flatten, last -1bps at 21.504, however still off the ytd lows of 16bps, set Feb 7th
- The 5yr is -2.3bps at 4.216% ahead of the $70b 5yr auction later tonight, last night the 2yr auction drew record indirect bidders.
- Projected rate cuts through mid-2025 steady to firmer vs. this morning levels (*) as follows: Mar'25 steady at -0.5bp, May'25 steady at -7.1bp, Jun'25 at -18.0bp (-17.3bp), Jul'25 at -25.6bp (-23.6bp).
- The Fed's Barr, Logan & Barkin are scheduled to speak later today
- Later today we have FHFA House Price Index, Conf. Board Consumer Confidence & Richmond Fed Manufact. Index
JGBS: Cash Bonds Richer Led By 7Y, Light Local Calendar Tomorrow
JGB futures are stronger, +44 compared to the settlement levels, but well off the session’s best level.
- Outside of the previously outlined services PPI, there hasn't been much by way of domestic drivers to flag.
- Later today, department store sales print, along with machine tool orders (both for Jan).
- “JGB futures quickly erased the pop higher earlier today as bond traders start focusing on Tokyo CPI this week and next month’s Bank of Japan decision. Although the BOJ is expected to leave interest rates unchanged in three weeks, it is likely to be a hawkish hold to set up a hike for April or May.” (per BBG)
- Cash US tsys are 2-3bps richer in today’s Asia-Pac session after yesterday’s modest gains.
- Beyond the 1-year, cash JGBs are 2-5bps richer across benchmarks, with the 7-year leading. The benchmark 10-year yield is 3.9bps lower at 1.391% versus the cycle high of 1.466%, set last week.
- BoJ accepts JPY399.9bn for Enhanced Liquidity Auction for 15.5-39-year JGBs.
- Swap rates are 1-2bps lower. Swap spreads are generally wider.
- Tomorrow, the local calendar will see Leading and Coincident Indices alongside BoJ Rinban Operations covering 3-25-year JGBs.
AUSSIE BONDS: Richer & At Session Highs Ahead Of CPI Monthly Tomorrow
ACGBs (YM +4.0 & XM +3.5) are stronger and at Sydney session highs.
- Today, the local calendar has been light.
- Australian consumer confidence strengthened last week to mark its highest level since May 2022 as households cheered the RBA's first rate cut since the pandemic, according to ANZ and Roy Morgan Research.
- Cash US tsys are 2-3bps richer in today’s Asia-Pac session after yesterday’s gains.
- Cash ACGBs are 4bps richer with the AU-US 10-year yield differential at +2bps.
- Swap rates are 4bps lower.
- The bills strip has bull-flattened, with pricing flat to +5.
- Tomorrow, the local calendar will see January's CPI Monthly and Q4 Construction Work Done. The market expects Headline CPI to increase from 2.5% y/y to 2.6% y/y.
- The AOFM plans to sell A$800mn of the 3.75% 21 April 2037 bond tomorrow and A$700mn of the 1.75% 21 November 2032 bond on Friday.
BONDS: NZGBS: Closed Richer But Underperformed US Tsys
NZGBs closed at session bests, with benchmark yields 3-4bps lower.
- With the local calendar light, today’s strength appears tied to cash US tsys, which are 2-3bps richer in today’s Asia-Pac session after yesterday’s gains.
- Nevertheless, NZGBs have underperformed US tsys, with the NZ-US 10-year yield differential ~2bps wider versus yesterday’s close.
- Swap rates closed 3-4bps lower, with implied swap spreads little changed.
- RBNZ-dated OIS pricing is slightly firmer across meetings today, holding 1bp softer to 7bps firmer than last Wednesday’s pre-RBNZ policy decision levels. Currently, 26bps of easing is priced for April, with a total of 58bps expected by November 2025.
- Tomorrow, the local calendar will see NZ Treasury Chief Economic Adviser Dominick Stephens deliver a presentation on the State of the Economy.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$225mn of the 3.50% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.
FOREX: USD Can't Sustain Early Gains, As Yields Continue To Fall
The USD BBDXY index was firmer in the first part of Asia Pac Tuesday dealings, getting close to 1288.50. Carry over from Trump remarks late on Monday (progressing towards tariffs on Canada and Mexico) likely aided early USD demand, but the move has run out steam. We were last near 1286.5, just up from session lows.
- US yields have continued to track lower in the Tsy space. We sit off a further 2-3bps, with the 10yr yield back to 4.375%. This is fresh lows back to mid Dec last year.
- The chart below shows the relative CITI economic activity surprise indices. The US (the orange line on the chart) is only above China at this stage, Japan (pink line), EU, the green line and the UK all sit higher than the US.
- Waning US yield momentum is helping curb upside USD from tariff threats. USD/JPY got to highs of 150.30 earlier, as onshore markets returned from yesterday's holiday. We sit back at 149.50 now, up around 0.15% in yen terms for the session. Levels wise, yesterday's low at 148.85 will be watched on the downside. Earlier data showed the services PPI rising in line with market estimates of 3.1% y/y.
- AUD and NZD haven't shifted much. AUD/USD was last near 0.6350, while NZD tracked around the 0.5735 region. Both currencies are up from earlier lows, but weakness in China and Hong Kong equities may be tempering the upside. Trump trade/investment risks remain in focus.
- USD/CAD got to 1.4279 earlier but is now back to 1.4245/50. EUR/USD has edged higher to 1.0470/75.
- Regional equities mostly track lower, while US futures sit marginally in positive territory for equities.
- Looking ahead, we have BoE and ECB speak. In the US, the Richmond Fed survey and house price data are releases among a busy data day. Fed speak also includes Barr and Barkin.
Fig 1: Relative EASIs, US Data Outcomes Underwhelm In February
Source: Citi/MNI - Market News/Bloomberg
ASIA STOCKS: Asian Equities Lower As Tech Stocks Struggle, BOK Cuts Rates
Asian equities broadly declined, led by losses in technology and semiconductor stocks amid fresh US restrictions on Chinese investments. The Hang Seng Tech Index fell on the open before paring loses as investors looked to buy the dip, while TSMC and Samsung Electronics weighed on Taiwan and South Korea. The BOK cut rates, but the Kospi still ended lower. Australia saw weakness in consumer stocks following disappointing results from a number of companies.
- China & Hong Kong equities plunged on the open with the HS Tech Index down over 4% at one stage, however we have seen a strong reversal with the index now trading flat for the session. Investors seem to largely ignoring both the slump in the SOX and Nasdaq overnight and the headlines out about Trump tightening chip controls. The CSI 300 is 0.40% lower, while the HSI is -0.60%, property and consumer staples are the worst performing sectors with both sectors trading roughly 1% lower.
- Japan's Nikkei 225 is 1% lower, with tech stocks leading declines due to concerns over US semiconductor restrictions on China. However, trading houses like Mitsubishi Corp. and Marubeni gained after Berkshire Hathaway reaffirmed confidence in the sector. The broader TOPIX is trading better, although still down 0.20% for the session.
- South Korea's Kospi declined 0.4%, even as the BOK cut rates to 2.75%, as expected. Semiconductor stocks weakened amid US-China chip tensions, with Samsung Electronics and SK Hynix underperforming.
- Taiwan's TAIEX is 0.8% lower, with TSMC among the biggest drags on worsening US-China chip restrictions. Investors turned cautious following Trump’s latest executive order targeting Chinese investments.
- Australia's ASX 200 is 0.60% lower as corporate earnings drove stock-specific volatility, with consumer stocks the worst performing. Viva Energy and Johns Lyng plunged after weak earnings, Adairs tumbled 12%, extending Monday’s losses after reporting 1H25 EBITDA of A$39.1M, well below the A$61.5M consensus estimate, Domino’s fell 11% after reiterating a 1H loss, citing ongoing weakness in France and Japan, while Zip surged 16% after providing strong full-year revenue guidance, posting record cash earnings, and reporting a 40.3% YoY increase in US TTV, reinforcing confidence in its FY25 two-year targets. In New Zealand, Ryman Healthcare tumbled 23% after resuming trade post NZ$1 billion capital raise.
Oil Steadily Gains Throughout the Asian Trading Day.
- Despite OPEC+ intending to limit supply to support prices, Iraq seems determined to kick start exports from its semi-autonomous region of Kurdistan.
- The resumption of supply will see up to 185,000 barrels a day delivered via a pipeline to Turkey that has been dormant for almost two years.
- The Iraqi oil minister claimed Monday that the exports could start as early as this week and that the volume will still stay within the OPEC+ limits currently capping supply.
- President Trump (when asked) indicated that planned tariffs on Mexico and Canada, which could impact oil supply, are on time and ‘moving along rapidly.’
- The US has announced a new range of sanctions on Iran’s ships linked to the transport of oil, a breach of global sanctions against the country.
- As pressure on Russia shows signs of working, India’s Bharat Petroleum is set to launch a global tender for the supply of one year’s supply of WTI from March, in a bid to remove their reliance on Russian oil.
- WTI had opened at US$70.92, heading to a low of $70.71, before rallying into the afternoon session in Asia to reach $71.19.
- Brent opened at $74.74 and was strong all day, reaching $75.21.
- A potential catalyst for Oil’s next moves could be the ongoing discussions between US and Russia on Ukraine in a bid to stop the war.
- An agreement with Russia could result in an easing of sanctions, allowing the flow of Russian oil into global market
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 25/02/2025 | 0700/0800 | *** |  DE | GDP (f) |
| 25/02/2025 | 0920/0420 |  US | Dallas Fed's Lorie Logan | |
| 25/02/2025 | 1000/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 25/02/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 25/02/2025 | 1300/1400 |  EU | ECB's Schnabel at BOE's Annual Conference on Balance Sheet | |
| 25/02/2025 | 1330/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 25/02/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 25/02/2025 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 25/02/2025 | 1400/1400 | GB | BOE's Pill remarks at BEAR Conference | |
| 25/02/2025 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 25/02/2025 | 1500/1000 | ** | US | Richmond Fed Survey |
| 25/02/2025 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 25/02/2025 | 1645/1145 | US | Fed Governor Michael Barr | |
| 25/02/2025 | 1800/1300 | US | Richmond Fed's Tom Barkin | |
| 25/02/2025 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/02/2025 | 0030/1130 | *** |  AU | CPI Inflation Monthly |
| 26/02/2025 | 0030/1130 | *** | AU | Quarterly construction work done |
| 26/02/2025 | 0700/0800 | ** |  SE | PPI |
| 26/02/2025 | 0700/0800 | * | DE | GFK Consumer Climate |
| 26/02/2025 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 26/02/2025 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 26/02/2025 | 0800/0900 | ** |  ES | PPI |
| 26/02/2025 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 26/02/2025 | - | EU | ECB's Lagarde and Cipollone in G20 FMs and CB Governors meeting | |
| 26/02/2025 | 1330/0830 | * |  CA | Capital and repair expenditure survey |
| 26/02/2025 | 1330/0830 | US | Richmond Fed's Tom Barkin |