EXECUTIVE SUMMARY
- MNI BOE PREVIEW - AGENTS PAY SURVEY IN FOCUS
- JEFFERSON SAYS FED CAN BE PATIENT ON TARIFF EFFECTS
- TAMURA SAYS BOJ NEEDS TO LIFT RATE TO 1% BY 2H FY2025
- CHINA WANTS DIALOGUE OVER U.S. TRADE DISPUTE
Figure 1: Analyst Forecasts of End-year BoE Bank Rate
Source: MNI
NEWS
MNI BOE PREVIEW - FEBRUARY 2025: Agents Pay Survey in Focus
It would be a huge surprise to the market if this week’s MPC meeting delivered anything other than a 25bp cut to bring Bank Rate to 4.50%. The bar is also high for forward guidance to be meaningfully tweaked. We would be surprised if the vote split wasn’t 8-1 (also the base case for 18/22 sellside previews we read), although there are risks around the vote, particularly from the Agents’ Pay Survey.
MNI US PAYROLLS PREVIEW: Revisions and Seasonality in Focus
January’s employment report will receive almost as much attention for comprehensive revisions as for the monthly nonfarm payroll gains, which are expected to slow to 170-180k from December’s strong 256k. January is typically a difficult month to forecast payrolls (estimates range from 135k-225k), with a pronounced seasonal pattern that includes large post-holiday layoffs. Wildfires in Southern California could act as a small drag this month – we have seen some estimates on the order of circa 20k – although extremely cold weather didn’t fall in the payrolls reference period.
FED (MNI): Can Be Patient on Tariff Effects - Jefferson
The Federal Reserve can take its time to gauge the impact of any new policies coming from the Trump administration, including tariffs, before reacting because monetary policy is still exerting a drag on economic activity, Fed vice chair Philip Jefferson said Wednesday. "Policy is still restrictive with respect to its impact on the economy. The reason that’s important is that means there’s policy space for us to continue the fight against inflation," he told an event at Swarthmore College.
US (BBG): Bessent Says Trump Wants Lower 10-Year Yields, Not Fed Cuts
Treasury Secretary Scott Bessent said the Trump administration’s focus with regard to bringing down borrowing costs is 10-year Treasury yields, rather than the Federal Reserve’s benchmark short-term interest rate. “He and I are focused on the 10-year Treasury,” Bessent said in an interview with Fox Business Wednesday when asked about whether President Donald Trump wants lower interest rates. “He is not calling for the Fed to lower rates.”
US/CHINA (WSJ): Lawmakers Push to Ban DeepSeek App From U.S. Government Devices
Lawmakers plan to introduce a bill Thursday that would ban DeepSeek’s chatbot application from government-owned devices, over new security concerns that the app could provide user information to the Chinese government. The legislation written by Reps. Darin LaHood, an Illinois Republican, and Josh Gottheimer, a New Jersey Democrat, is echoing a strategy that Congress used to ban Chinese-controlled TikTok from government devices, which marked the beginning of the effort to block the company from operating in the U.S.
ECB (MNI): Kazaks Gets Second Term at Latvian Central Bank
Martins Kazaks will serve a second five-year term as Governor of the Latvian national bank following a confirmation vote in the parliament. The appointment comes after nearly two months of political infighting accroos the national assembly, which saw one deputy governor serve as a stand-in governor for six weeks and the other deputy at first nominated as the new governor only to pull out when support in the governing coalition splintered.
GERMANY (BBG): Germany’s CEOs See Urgent Need to Tackle Economic Deficiencies
German corporate leaders urged the next government to move quickly to unlock investment and get Europe’s largest economy growing again. The heads of Commerzbank AG, RWE AG and Bilfinger SE pointed to structural issues such as high energy costs and red tape that will need to be addressed after the Feb. 23 election. “There’s hope if we have a stable government after the election, we will quickly see a shift in sentiment and we will also see investments,” Commerzbank Chief Executive Officer Bettina Orlopp said Thursday at a Bloomberg panel discussion in Frankfurt.
UK (MNI): Daily Express - Starmer Wants to Remove Chancellor Reeves in Reshuffle
The Daily Express reports that Prime Minister Sir Keir Starmer wants to remove Chancellor of the Exchequer Rachel Reeves from her position as part of a major cabinet reshuffle in an effort to boost his gov'ts flagging popularity. The report claims that the PM could move Home Secretary Yvette Cooper to the Treasury.
UK (FT): Starmer Promises to ‘End’ UK Planning Rules Holding Back Nuclear Power
Sir Keir Starmer will on Thursday announce changes to the planning system designed to speed up the delivery of new nuclear power stations in the UK. The British prime minister will claim that the planning reforms will “clear a path” for the introduction of small modular reactors, which are faster to build than existing larger reactors.
UK (FT): Starmer Wants Contentious North Sea Oil and Gas Fields to Go Ahead
Sir Keir Starmer and Rachel Reeves want two new controversial oilfields in the North Sea to go ahead despite concerns among Labour MPs and environmentalists about the huge carbon emissions from the projects. Last week Scotland’s top civil court revoked consents for Shell’s Jackdaw gasfield and the £3bn Rosebank project being developed by Norway’s Equinor and the UK’s Ithaca Energy.
BOJ (MNI): BOJ Needs to Lift Rate to 1% by 2H FY2025 - Tamura
Bank of Japan board member Naoki Tamura said on Thursday that the BOJ needs to raise the policy interest rate to at least 1% by the second half of fiscal 2025, not only to contain upside risk to prices, but to achieve the 2% price target in a stable and sustainable manner. “I would like to judge the timing of raising the policy rate to 0.75% appropriately. I think even if the policy rate is raised to 0.75%, it is far from the level that will restrict the economy as real interest rates stay at significantly negative zone,” Tamura, a hawkish board member, told business leaders in Matsumoto City.
CHINA (MNI EXCLUSIVE): Advisors Discuss China's Approach to US Tariffs
Advisors discuss Beijing's approach to U.S. tariffs. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CHINA (MNI): China Wants Dialogue Over U.S. Trade Dispute
MNI (Beijing) China is willing to resolve trade disputes through consultation and dialogue, according to He Yadong, spokesperson for the Ministry of Commerce on Thursday, when responding to reporters' questions on recent U.S. tariffs. However, He warned China would take necessary steps to defend its interests when facing unilateral bullying.
S. KOREA (BBG): Bank of Korea Rate Cut Not a Done Deal This Month, Rhee Warns
Bank of Korea Governor Rhee Chang-yong pushed back against mounting speculation of an interest-rate cut later this month as he called for swift fiscal stimulus to shore up a sputtering economy threatened by Donald Trump’s tariffs. “That is why I’m emphasizing more fiscal stimulus is necessary,” Rhee said in an interview Thursday with Bloomberg TV’s Shery Ahn in Tokyo. “Definitely we think monetary policy and fiscal policy both have room for more accommodative policies.”
INDIA (MNI): Exit Polls Point Towards Modi's BJP Winning Delhi Election
Most exit polls released following the 5 February election to the Legislative Assembly of the National Capital Territory of Delhi shows Prime Minister Narendra Modi's right-wing Hindu nationalist Bharatiya Janata Party (BJP) and its allies in the National Democratic Alliance winning a majority. Despite garnering strong support in the capital in general elections, the BJP has not governed Delhi since being ousted by the centre-left Indian National Congress (INC) in 1998.
MNI RBI PREVIEW - FEBRUARY 2025: New Regime to Cut
The newly appointed Governor Sanjay Malhotra convenes his first meeting and it will be closely watched to understand the intent of the new regime whose policy changes thus far, have been focused on market liquidity. Saturday's budget delivered welcome tax cuts to the middle class, but largely was viewed as focusing on economic resilience. Following October's food price surge, inflation has showed signs of moderating.
MNI BANXICO PREVIEW - FEBRUARY 2025: Board Set to Step Up Easing Pace
Consensus has been building towards Banxico accelerating the easing pace in February, with the committee expected to cut the key rate by 50bp to 9.50%. This would be in line with prior dovish rhetoric in the December statement, which indicated that larger downward adjustments could be considered in some meetings. Supporting a bolder cut is the continued progress lower for headline inflation, weaker-than-expected domestic GDP data and the loss of one of the most hawkish voices of the committee.
DATA
GERMANY DATA (MNI): Dec 'Core' Factory Orders Improve But Remain Around 2013 Levels
- GERMANY DEC FACTORY ORDERS +6.9% M/M
German factory orders rose in December by 6.9% M/M (vs +2.0% cons). November's print saw a small upward revision of 0.2pp to -5.2%. Regardless of the uptick, the overall picture in German manufacturing remains bleak - the 'core' index now stands around 2013 levels. The Y/Y comparison also came in above expectations at -6.3% (vs -10.5% cons; -1.4% prior, revised from -1.7%). For 2024 as a whole, this brought in factory orders at -3.0% vs 2023.
UK DATA (MNI): Construction PMI Data Adds to UK Output Concerns
- UK JAN CONSTRUCTION PMI 48.1 (FCAST 53.5, PRIOR 53.3)
The UK construction PMI saw a notable downside miss, coming in at 48.5 (against expectations of a 0.2 point rise from 53.3 in December). This isn't normally a datapoint we pay a huge amount of attention to, and it doesn't always correlate that well with the ONS's official UK construction data. The data was impacted by the weather, but outside that there were other concerning details noted in the press release: cost inflation was at its highest for 21-months and "Construction companies cited delayed decision-making by clients on major projects and general economic uncertainty had weighed on business activity at the start of 2025."
SWEDEN DATA (MNI): Notable Upside Surprise to January Flash Inflation
- SWEDEN FLASH JAN CPIF +2.2% Y/Y
No details are provided in the Swedish flash CPI release, so its difficult to ascertain the driver of the stronger-than-expected readings. Both CPIF (2.2% Y/Y vs 1.6% cons, 1.5% prior) and CPIF ex-energy (2.7% Y/Y vs 2.1% cons, 2.0% prior) surprised significantly to the upside. The Riksbank had projected CPIF ex-energy at 2.4% Y/Y in the December MPR.
NORWAY DATA (MNI): Q4 Wages Steady, But Deceleration Expected Through 2025
Norwegian average monthly basic earnings (i.e. excluding one-off payments) growth was 5.2% Y/Y in Q4, steady from the prior quarter. This is in line with the 2024 wage norm struck by industrial unions last year, and thus is consistent with Norges Bank's December MPR projections and the Q4 Regional Network Survey. Including one-off payments, earnings growth was 5.3% Y/Y (vs 5.2% prior).
EUROZONE JAN CONSTRUCTION PMI 45.4; DEC 42.9 (MNI)
AUSTRALIA DATA (MNI): Strong Rise in Imports In Line With Better Demand Outlook
- AUSTRALIA DEC TRADE BALANCE A$+5085
Australia's merchandise trade surplus narrowed more than expected in December, but still in the recent range, printing at $5.08bn down from $6.79bn due to a strong rise in imports signalling recovering domestic demand and possibly an increase in inventories. Goods imports rose 5.9% m/m, the third straight monthly increase, to be up 9.2% y/y after 6.0% y/y in November. All major components rose in December but capex goods were particularly strong up 10.6% m/m & 11.9% y/y.
FOREX: Construction PMI Underscores Weak S/T UK Growth Concerns
- GBP is the poorest performer in G10 ahead of the BoE decision at 1200GMT/0700ET, with a particularly soft UK Construction PMI (48.1 vs. Exp. 53.5) adding extra weight. The response to the data sees GBP/USD narrow the gap with both 1.24 handle support and 1.2380, the Tuesday low. GBP/JPY and GBP/CAD possibly more eyecatching as they break to new weekly lows - opening support in GBP/JPY at 189.34, the mid-January low and S/T bear trigger.
- Interestingly, Construction PMI is not usually a market mover, even if it diverges from expectations - but this price action underpins how sensitive prices are becoming to growth and the near-term trajectory of the UK economy after last Autumn's budget (and ahead of the Spring fiscal statement...)
- The BoE are expected to cut the bank rate by a further 25bps in an 8-1 vote, and we highlight the particular importance of the Agents' Pay Survey as a factor in the thinking of the MPC.
- The greenback is the firmest performer in G10, aided by the bounce off lows for US yields after they hit a pullback low of 4.4001% yesterday. The USD bounce has helped USD/JPY edge off a new YTD low at 151.82 posted overnight, but price action looks largely corrective at these levels.
- Outside of the BoE, today's weekly jobless claims provides the last look at the US labour market ahead of Friday's NFP print, while the central bank speaker slate see ECB's Vujcic & Escriva, Fed's Waller & Logan and BoE's Bailey at a dinner event.
BONDS: EGBs Off Lows on Strong Demand at Auctions, Gilts Outperform Ahead of BoE
Supply-related pressure and an equity rally weighed on European paper early today, with a recovery from lows seen since the smooth passage/strong demand for SPGB & OAT auctions.
- Bund futures last -17 at 133.38 vs. lows of 133.13. Initial support and resistance levels unchallenged, leaving the bullish technical cycle intact.
- German yields 0.5-1.5bp higher across the curve.
- 10-Year EGB spreads to Bunds now little changed to ~0.5bp tighter on the day given the demand seen at both the French and Spanish auctions, reversing early widening.
- Gilts remain resilient in cross-market terms, outperforming both EGBs & Tsys.
- Expectations for an impending BoE rate cut provided some insulation during the early bond sell off. The lack of DMO supply today was another factor.
- A big downside surprise in the UK construction PMI also provided modest support for UK paper (the data isn’t usually a market mover).
- Gilt futures now trade through yesterday’s high, aided by the recovery from lows in EGBs. Bulls now eye resistance at 94.00.
- UK yields 2-3bp lower, 10s ~2bp tighter to Bunds at ~205bp.
- BoE-dated OIS discounts 24bp of easing for today’s decision, with 87bp of cuts showing through year end.
- Our full preview of today’s decision can be found here.
EQUITIES: Bearish Threat in Eurostoxx 50 Futures Remains Despite Recovery
Eurostoxx 50 futures have recovered from Monday’s low. However, the sharp reversal lower earlier this week does highlight a potential bearish threat that would signal the start of a corrective cycle. Price has traded through the 20-day EMA, at 5180.60. A resumption of the bear leg would pave the way for a move towards the 50-day EMA, at 5073.75. Key resistance and the bull trigger is at 5327.00, the Jan 31 high. A break resumes the primary uptrend. Monday’s initial sell-off in the S&P E-Minis contract and breach of support at 5948.00, the Jan 27 low, continues to highlight a possible short-term reversal threat. If correct, it suggests that the latest bounce is a correction. A resumption of weakness would open 5892.37, a Fibonacci retracement point. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 high.
- Japan's NIKKEI closed higher by 235.05 pts or +0.61% at 39066.53 and the TOPIX ended 6.79 pts higher or +0.25% at 2752.2.
- Elsewhere, in China the SHANGHAI closed higher by 41.171 pts or +1.27% at 3270.659 and the HANG SENG ended 294.53 pts higher or +1.43% at 20891.62.
- Across Europe, Germany's DAX trades higher by 174.34 pts or +0.81% at 21754.59, FTSE 100 higher by 94.45 pts or +1.1% at 8718.1, CAC 40 up 57.14 pts or +0.72% at 7947.42 and Euro Stoxx 50 up 37.18 pts or +0.71% at 5307.54.
- Dow Jones mini up 84 pts or +0.19% at 45110, S&P 500 mini up 12.25 pts or +0.2% at 6104.25, NASDAQ mini up 36.25 pts or +0.17% at 21827.
Time: 09:55 GMT
COMMODITIES: Recent Weakness in WTI Futures Marks Extension of Corrective Cycle
Recent weakness in WTI futures marks an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.27 (pierced). A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a clear reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. A bull cycle in Gold remains in play. This week’s appreciation confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2889.9 next, a Fibonacci projection. The first key support to watch is $2705.1, the 50-day EMA. The 20-day EMA is at $2758.0.
- WTI Crude up $0.44 or +0.62% at $71.46
- Natural Gas down $0 or 0% at $3.358
- Gold spot down $9.18 or -0.32% at $2856.6
- Copper up $4.25 or +0.96% at $449.95
- Silver down $0.28 or -0.87% at $32.098
- Platinum up $3.59 or +0.36% at $985.76
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 06/02/2025 | 1200/1200 | *** |  GB | Bank Of England Interest Rate |
| 06/02/2025 | 1230/1230 | GB | BOE MPR press conference | |
| 06/02/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 06/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 06/02/2025 | 1330/0830 | ** | US | Preliminary Non-Farm Productivity |
| 06/02/2025 | 1400/1400 | GB | Decision Maker Panel data | |
| 06/02/2025 | 1500/1000 | * |  CA | Ivey PMI |
| 06/02/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 06/02/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 06/02/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 06/02/2025 | 1900/1400 | *** |  MX | Mexico Interest Rate |
| 06/02/2025 | 1930/1430 | US | Fed Governor Christopher Waller | |
| 06/02/2025 | 2200/1700 | CA | BOC Governor speech at BIS conference | |
| 06/02/2025 | 2210/1710 | US | Dallas Fed's Lorie Logan | |
| 07/02/2025 | 2330/0830 | ** |  JP | Household spending |
| 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 | 1215/1215 | GB | BOE's Pill at National MPC Agency briefing | |
| 07/02/2025 | - | EU | ECB to publish report on R* | |
| 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 |