Source: MNI - Market News/Bloomberg/Refinitiv.
UK
GEOPOLITICS (BBG): “Prime Minister Keir Starmer swept to power promising to raise living standards and grow the British economy. But now his premiership has an urgent and altogether different focus: preserving European security in a volatile world order upended by US President Donald Trump.”
POLITICS (BBC): “Sir Keir Starmer is preparing to travel to Washington to meet Donald Trump after setting out plans to increase defence spending to 2.5% of national income by 2027.”
BUSINESS (BBC): “BP is expected to announce it will slash its renewable energy investments and instead focus on increasing oil and gas production. The energy giant will outline its strategy later following pressure from some investors unhappy its profits and share price have been much lower than its rivals.”
EU
ECB (MNI BRIEF): The European Central Bank deposit rate will be at 2% by Autumn this year, Bank of Greece Governor Yannis Stournaras said in an interview with Politico published Tuesday.
ECB (MNI INTERVIEW): Neutral Not Key To ECB Policy - Patsalides
UKRAINE/US (RTRS): “The U.S. and Ukraine have agreed on the terms of a draft minerals deal central to Kyiv's push to win Washington's support as President Donald Trump seeks to rapidly end the war with Russia, two sources with knowledge of the matter said on Tuesday.”
DEFENCE (POLITICO): “The EU is unleashing efforts to boost defense spending, including a new so-called instrument aimed at key weapons programs, loosening fiscal rules to allow countries to spend more and prodding banks to boost lending, European Commission President Ursula von der Leyen said on Tuesday.”
POLITICS (ECONOMIST): “On Wednesday the European Commission will try to provide a boost in the form of two proposals—one on simplifying reporting requirements of firms on sustainability, the second on helping green industries to grow in Europe.”
EUROPE (POLITICO): “Polish President Andrzej Duda said Tuesday that if Germany doesn't want American troops on its soil, Poland would be happy to take them. Duda was responding to remarks by Germany’s election winner Friedrich Merz, who said that U.S. President Donald Trump doesn't care about Europe and that the continent urgently needs to strengthen its own defenses.”
UKRAINE (DW): “US President Donald Trump said he was expecting Ukrainian counterpart Volodymyr Zelenskyy to visit Washington on Friday to sign a "very big deal."”
GERMANY (ECONOMIST): “On Wednesday, GfK, a research firm, will release Germany’s consumer-confidence index for February. Consumer sentiment declined in January; both economic expectations and consumers’ willingness to spend were lower than in the previous month. Last weekend’s election, however, could lift their spirits.”
US
FISCAL (RTRS): "The Republican-controlled U.S. House of Representatives late on Tuesday advanced President Donald Trump's tax-cut and border security agenda, delivering a major boost to his 2025 priorities.
TARIFFS (BBG): “President Donald Trump signed an executive action directing the Commerce Department to examine possible copper tariffs, the latest in a string of measures aimed at imposing sector-specific levies that offer to reshape global supply chains.”
FED (MNI): The prospect of tariffs and other policy changes from Washington is clouding the outlook in a way that makes it best for Federal Reserve officials to take their time before making any further moves on interest rates, Richmond Fed President Thomas Barkin said Tuesday.
IMMIGRATION (WSJ): “President Trump said Tuesday that he would allow wealthy individuals to pay $5 million for a "gold card" that would grant them permanent U.S. residency, ending an existing program that offers green cards to people who invest in the country.”
GROWTH (MNI INTERVIEW): US Downside Worries Grow - Conference Board
OTHER
AUSTRALIA (MNI BRIEF): “Underlying inflation rose 10 basis points to 2.8% y/y over January, while headline inflation remained flat at 2.5%, 10bp better than expected, data from the Australian Bureau of Statistics showed Wednesday. “The CPI excluding volatile items and holiday travel measure rose 2.9% in the 12 months to January, compared to a 2.7% rise in the 12 months to December,” noted Michelle Marquardt, head of prices statistics at the ABS.”
CHINA
CHINA (BBG): "Chinese President Xi Jinping urged officials to stay composed amid domestic and global challenges, signaling Beijing will take a measured approach to the Trump administration’s new trade and investment restrictions."
BONDS (SECURITIES TIMES): “The bond market correction on Monday was mainly caused by tighter liquidity, a rebound in the domestic stock market and the fact that PBOC has not cut interest rates or reserve requirement ratio as previously expected, reports Securities Times in a front-page article.”
GROWTH TARGET (YICAI): "Authorities are expected to announce an annual GDP growth goal of about 5%, a deficit rate of about 4%, and a CPI target below 3% at next week's National People’s Congress, chief economists interviewed by Yicai have said. "
BANK MARGINS (SHANGHAI SECURITIES NEWS): "Private banks are expected to reduce deposit interest rates further to cut liability costs amid declining net interest margins, according to industry insiders cited by Shanghai Securities News."
CHINA MARKETS
MNI: PBOC Net injects CNY9.8 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY548.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY9.8 billion after offsetting the maturity of CNY538.9 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8511% at 09:39 am local time from the close of 2.2161% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 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 Higher At 7.1732 Weds; -0.90% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1732 on Wednesday, compared with 7.1726 set on Tuesday. The fixing was estimated at 7.2557 by Bloomberg survey today.
MARKET DATA
AUSTRALIA JAN. CONSUMER PRICES +2.5% Y/Y; EST. 2.6%; DEC. 2.5%
AUSTRALIA JAN. TRIMMED MEAN CPI +2.8% Y/Y; DEC. 2.7%
AUSTRALIA Q4 TOTAL CONSTRUCTION +0.5% Q/Q; EST. +1.0%; Q3 +2.0%
MARKETS
US TSYS: Tsys Futures Sell-Off On Budget Blueprint
- Tsys futures are seen a reversal following the chances of the tax cuts rising as the house passed budget targeting safety net. TU is last -01 3/8 at 103-00+, while TY is trading -05+ at 110-11.
- Cash tsys curves are trading mixed, the belly is slightly underperforming. The 2yr is +2.7bps at 4.121%, while the 10yr is trading +2.9bps at 4.323%. The 2s10s is trading little changed at 20bps.
- House Republicans narrowly passed a budget blueprint, enabling potential extension of Trump’s 2017 tax cuts with $4.5t in tax reductions and a $4t debt limit increase, despite adding to deficits. The plan, which overcame internal resistance with Trump’s last-minute support, proposes $2t in spending cuts, predominantly to safety-net programs like Medicaid, though it faces Senate revisions and Democratic opposition for favoring the wealthy while slashing aid for the poor.
- Projected rate cuts through mid-2025 have cooled vs Tuesday levels (*) as follows: Mar'25 steady at -0.7bp, May'25 at -5.6bp (-8.2bp), Jun'25 at -19.6bp (-20.7bp), Jul'25 at -27.1bp (-28.6bp).
- Atlanta Fed President Raphael Bostic is scheduled to speak later today, while we also have a 7yr note auction, this follows a 2yr & 5yr auction so far this week.
- Later today, New Home Sales and building permits, then focus will turn to Nvidia's earnings.
JGBS: Richer But Off Bests As US Tsys Weigh
JGB futures are stronger, +20 compared to the settlement levels, but well off the session’s best levels.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s solid gains. Earlier, the passage of the budget blueprint by the US House provided an upward backdrop for yields.
- "The House budget would pave the way for $4.5 trillion in tax cuts — about enough to pay for extending the expiring cuts but not enough to also cover Trump’s campaign promises for additional tax relief. The measure would add to the budget deficit despite calling for $2 trillion in overall spending cuts over ten years." (per BBG)
- "The Bank of Japan is likely to keep raising interest rates to 1% if the results of annual wage talks due mid-March come out as strong as last year, says Mizuho Securities economist Ryosuke Katagi." (per DJ via BBG)
- Cash JGBs are 1-3bps richer across benchmarks. The benchmark 10-year yield is 1.8bps lower at 1.355% versus the cycle high of 1.466% set last week.
- Swaps rates are ~1bp higher. Swap spreads are wider.
- Today, the local calendar will see Leading and Coincident Indices later.
- Tomorrow, the local calendar is empty apart from 2-year supply. Tokyo CPI is due on Friday alongside Retail Sales data.
AUSSIE BONDS: Richer But Off Bests, Tracking US Tsys
ACGBs (YM +3.0 & XM +4.0) are richer but off session bests.
- January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation.
- The move away from the session’s bests, however, can be traced back to cash US tsys, which are currently 2-3bps cheaper in today’s Asia-Pac session. Earlier, the passage of the budget blueprint by the US House provided an upward backdrop for yields.
- "The House budget would pave the way for $4.5 trillion in tax cuts — about enough to pay for extending the expiring cuts but not enough to also cover Trump’s campaign promises for additional tax relief. The measure would add to the budget deficit despite calling for $2 trillion in overall spending cuts over ten years." (per BBG)
- Cash ACGBs are 3-5bps richer with the AU-US 10-year yield differential +3bps.
- The bills strip has bull-flattened, with pricing flat to +4.
- Tomorrow, the local calendar will see Private Capital Expenditure data and Michael Plumb, Head of Economic Analysis Department, deliver a speech at the ABE Annual Forecasting Conference, titled ‘Why is productivity important?’
BONDS: NZGBS: Richer But Well Off Bests As US Tsys Cheapen On Budget Passage
NZGBs closed 1-2bps richer but well off the session’s best levels.
- With the local calendar light, today’s turnaround can be traced back to cash US tsys, which are currently 2-3bps cheaper in today’s Asia-Pac session. Earlier, the passage of the budget blueprint by the US House provided an upward backdrop for yields.
- "The House budget would pave the way for $4.5 trillion in tax cuts — about enough to pay for extending the expiring cuts but not enough to also cover Trump’s campaign promises for additional tax relief. The measure would add to the budget deficit despite calling for $2 trillion in overall spending cuts over ten years." (per BBG)
- Swap rates closed 2-4bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing is flat to 3bps softer. 26bps of easing is priced for April, with a cumulative 62bps by November 2025.
- Tomorrow, the local calendar will see ANZ Business Confidence.
- Tomorrow, 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 Recovers Some Ground, Aided By Higher Tsy Yields
The USD BBDXY index has tracked higher as the Wednesday Asia Pac session has unfolded but remains within recent ranges. The index was last 1286.8, up a little over 0.15% versus end Tuesday levels in US.
- There has been some focus on US Tsy yields, with moves of +2-3bps firmer across the benchmarks. We opened a little weaker, with the 10yr getting close to 4.28%, but it is now around 4.32%.
- Impetus for the yield move appeared to come from the passage of the budget blueprint by the US House. "The House budget would pave the way for $4.5 trillion in tax cuts — about enough to pay for extending the expiring cuts but not enough to also cover Trump’s campaign promises for additional tax relief." (per BBG).
- USD/JPY got to lows of 148.63 in early dealings, but now sits back in the 149.50/55 region, around 0.30% weaker in yen terms. EUR/USD is back close to 1.0500.
- AUD/USD has drifted down to be under 0.6330, off by a similar amount to yen. The Jan CPI came and went without much FX market impact. The headline eased, but core ticked up. We will get more information at the second month print of the quarter (for Feb), as this will include more services inflation updates. NZD/USD is off by a similar amount to AUD, last at 0.5710/15.
- US equity futures are higher, up by 0.30-0.40%. Hong Kong markets are also much higher, but this hasn't aided higher beta FX much. Note early tomorrow morning Asia Pac time get Nvidia earnings.
- Looking ahead, EU data is second tier, but we do have some ECB speak, including Lagarde. In the US, new homes data prints, along with Fed speak from Barkin and Bostic.
ASIA STOCKS: Asian Equities Mixed, HK Tech Surges
- Japan’s markets weakened, with the Nikkei and Topix indices each dropping 1%, dragged down by declines in major firms like Tokyo Electron and Mitsubishi UFJ Financial. This followed US economic data showing a sharp drop in consumer confidence, raising concerns about the global economic outlook, alongside a stronger yen tied to expectations of continued Bank of Japan rate hikes.
- South Korea’s KOSPI trading near flat, weighed by growth concerns despite gains in some sectors, while Taiwan’s Taiex edged up 0.2%. Australia’s S&P/ASX 200 fell 0.4%
- Sector-specific movements included gains in Chinese robotics stocks after Unitree’s showcase of its upgraded G1 robot, alongside rises in Hong Kong real estate and consumption stocks ahead of an annual budget announcement. Chinese telecom shares also advanced following calls from Premier Li Qiang for faster innovation.
- Japanese real estate and home construction stocks rose on hopes of US Fed rate cuts boosting housing demand.
- Overall, sentiment remained cautious as investors awaited key events like Nvidia’s earnings and further clarity on US trade policies
OIL: Crude Holding Onto Losses With Demand & Supply Outlooks Highly Uncertain
Oil prices are slightly higher today but have held onto the bulk of Tuesday’s sharp losses which were driven by global demand worries. Brent is 0.2% higher at $73.15/bbl after a low of $73.07, while WTI is up 0.3% to $69.11 after dipping below $69.00 briefly earlier. The USD index is 0.1% higher, which may be weighing on dollar-denominated crude.
- Concerns over the strength of China’s economy are ongoing but after weak US consumer confidence and other surveys, markets are worried that uncertainty and US trade policies are weighing on US sentiment and thus growth.
- The supply outlook is also highly uncertainty with it still not clear what the impact of sanctions will be on global exports. Russia and Iran have been able to avoid them by increased vessel-to-vessel transfers. OPEC and US production plans are also unknowns at this point.
- Bloomberg reported that US crude inventories fell 600k barrels last week after rising 3.3mn the week before, according to people familiar with the API data. Gasoline increased 500k, while distillate fell 1.1mn. The official EIA data is out later today. Inventories have been impacted by scheduled refinery maintenance and Canadian producers increasing flows to the US to beat tariff deadlines.
- Later the Fed’s Barkin and Bostic speak and January building permits/new home sales print. Also March German GfK consumer confidence is released.
GOLD: Early Rally Fails as Gold Falls.
- Having hit new highs of US$2,956.19 overnight gold opened at $2,914.76 in Asia trading and rallied.
- The rally quickly ran out of steam as gold was unable to reach last night’s highs and peaked at $2,930.09.
- It subsequently fell back below where it opened to $2,913.76.
- In the US overnight, risk off sentiment prevailed as equities trended lower as data showed the US consumer confidence was weaker and the Dallas Fed Services lower giving a bid to US Treasuries with futures back at mid -December highs.
- Weak data suggesting rate cuts usually drives gold higher but as bullion continues to hit new highs (up over 10% year to date) it is not surprising that some profits are being booked.
- The key drivers for gold remain positive with a deteriorating geopolitical environment due to the threat of tariffs, potential rate cuts and Central Banks resuming gold purchases.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 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 | |
| 26/02/2025 | 1500/1000 | *** | US | New Home Sales |
| 26/02/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 26/02/2025 | 1630/1630 |  GB | BOE's Dhingra lecture on Trade fragmentation and monetary policy | |
| 26/02/2025 | 1630/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/02/2025 | 1700/1200 | US | Atlanta Fed's Raphael Bostic | |
| 26/02/2025 | 1800/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/02/2025 | 0030/1130 | * |  AU | Private New Capex and Expected Expenditure |
| 27/02/2025 | 0745/0845 | ** | FR | PPI |
| 27/02/2025 | 0800/0900 | ** | SE | Economic Tendency Indicator |
| 27/02/2025 | 0800/0900 | *** | ES | HICP (p) |
| 27/02/2025 | 0800/0900 | *** |  CH | GDP |
| 27/02/2025 | 0900/1000 | ** | EU | M3 |
| 27/02/2025 | 0900/1000 | ** |  IT | ISTAT Consumer Confidence |
| 27/02/2025 | 0900/1000 | ** | IT | ISTAT Business Confidence |
| 27/02/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 27/02/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 27/02/2025 | 1230/1330 | EU | Publication of MonPol Meeting Account | |
| 27/02/2025 | 1330/0830 | * | CA | Current account |
| 27/02/2025 | 1330/0830 | * | CA | Payroll employment |
| 27/02/2025 | 1330/0830 | *** | US | Jobless Claims |
| 27/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 27/02/2025 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/02/2025 | 1330/0830 | *** | US | GDP |