EXECUTIVE SUMMARY
- TRUMP DECLINES TO RULE OUT RECESSION
- RUSSIA NOT PLANNING TALKS WITH US IN S. ARABIA THIS WEEK: TASS
- CARNEY WINS LIBERAL CONTEST TO REPLACE PM TRUDEAU
- CHINA FEB CPI TURNS NEGATIVE ON SEASONAL FACTORS
Figure 1: China annual CPI (Y/Y, %) turns negative for first time in 13-months
Source: MNI/Bloomberg
NEWS
US (WSJ): Trump Declines to Rule Out Recession
President Trump declined to rule out that the U.S. economy would contract this year and enter a recession, saying that his sweeping economic agenda could cause short-term turbulence that he believed would drive future prosperity. Asked in a “Sunday Morning Futures” interview on Fox News if he was expecting a recession this year, Trump replied: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”
US/RUSSIA (BBG): Russia Not Planning Talks With US in S.Arabia This Week: Tass
Russia is not planning a new round of talks with the US in Saudi Arabia this week, Foreign Ministry’s spokeswoman Maria Zakharova says, according to Tass. Russia hasn’t received any information from the US side, Tass also cites Zakharova as saying. CNN reported earlier today that top officials from Donald Trump’s administration would meet separately with Russian and Ukrainian officials in Saudi Arabia this week.
US/UKRAINE (FT): Ukraine Seeks to Persuade US to Resume Aid in High-Stakes Talks
Ukraine will try to persuade the US to resume intelligence and military support in high-stakes bilateral talks this week by convincing Donald Trump that Volodymyr Zelenskyy wants a swift end to the war with Russia. Officials briefed on preparations for the negotiations in Saudi Arabia said Kyiv was set to propose a partial ceasefire with Russia for long-range drone and missile strikes and combat operations in the Black Sea, in the hope that the talks’ progress would lead Washington to reverse its decision to freeze intelligence sharing and weaponry supplies.
US/UKRAINE (BBG): US Freeze on Ukraine Intel Sharing Just About Lifted, Trump Says
US President Donald Trump said he had largely lifted a freeze on US intelligence sharing with Ukraine as he looked to push both Kyiv and Moscow to the negotiating table in hopes of brokering a peace deal. “Well we just about have,” Trump said Sunday to reporters aboard Air Force One when he was asked if he would consider resuming intelligence sharing. “We want to do anything we can to get Ukraine serious about getting something done.”
US/CHINA (NYT): China’s Tariffs on U.S. Agricultural Products Take Effect
Beijing began imposing tariffs on Monday on many farm products from the United States, for which China is the largest overseas market. It is the latest escalation of a trade fight between the world’s two largest economies. The Chinese government announced the tariffs last week, shortly after President Trump raised tariffs on Chinese products for the second time since he took office in January. The Chinese tariffs will include a levy of 15 percent on U.S. products like chicken, wheat and corn, as well as 10 percent on products like soybeans, pork, beef and fruit.
CANADA (MNI): Carney Wins Liberal Contest to Replace PM Trudeau
Mark Carney won the contest to become Canada’s next Liberal Party leader and replace Justin Trudeau as prime minister, and the former BOE and BOC governor will soon be thrust into negotiations with Donald Trump and an election where polls show he's erasing a deficit with the Conservatives. Carney beat out candidates like former Finance Minister Chrystia Freeland, taking 86% of votes announced Sunday. He joins a long list of former Goldman Sachs bankers moving into political life, and former central bankers such as Janet Yellen and Mario Draghi.
ISRAEL/MIDEAST (BBG): Israel Cuts Its Power Supply to Gaza to Pressure Hamas
Israel halted its already limited supply of electricity to the Gaza Strip, a move the government called a response to the Hamas hostage crisis and which a liaison officer said would suspend production by a desalination plant in the war-wracked territory. A six-week Gaza truce, involving limited swaps of hostages for hundreds of Palestinians jailed by Israel, expired on March 2, with the sides divided on conditions for an open-ended suspension of hostilities.
CHINA (MNI INTERVIEW): PBOC to Spur Bond Issuance by Tech Startups
MNI speaks to a member of China’s top advisory body about a new bond platform.
CHINA (BBG): Mainland Chinese Investors Buy Record Amount of Hong Kong Stocks
Mainland Chinese investors bought an unprecedented HK$29.6 billion ($3.8 billion) worth of Hong Kong stocks on a net basis on Monday. That surpassed the previous record seen in early 2021, according to Bloomberg-compiled data going back to late 2016, when trading links with the financial hub began. The inflows from Chinese buyers came as the Hang Seng China Enterprises Index slid 2.1% on Monday. That followed a 5.9% rally in the previous week.
PORTUGAL (BBG): Portuguese Premier’s Coalition Leads in Poll, TVI Reports
Portuguese Prime Minister Luis Montenegro’s AD coalition led the opposition Socialists by a margin of 4.7 percentage points in an opinion poll, TVI reported on its website. Premier Montenegro leads a minority government that’s seeking a confidence vote in parliament on Tuesday afternoon, and currently doesn’t have enough support to win that vote. If the government loses the confidence vote, an early election may take place on May 11 or May 18 at the earliest, President Marcelo Rebelo de Sousa said on Wednesday. It would be Portugal’s third snap election in less than four years.
ROMANIA (MNI): Far-Right Georgescu Barred From Romanian Presidential Election
Romania's Central Electoral Bureau (BEC) yesterday invalidated the candidacy of Calin Georgescu, the unexpected winner of the first round of last year's annulled presidential election, ahead of the election re-run due to take place in May. The decision set the clock running for Georgescu to appeal to the Constitutional Court, but it is unlikely that the judicial body would overturn the verdict. The BEC argued that the fundamental aspects of the matter have "already been decided" by the Constitutional Court, when it blocked the presidential run-off at the eleventh hour in December last year over irregularities surrounding Georgescu's campaign. In the BEC's view, this testifies to the Georgescu's ineligibility to contest a presidential election again.
DATA
EUROZONE DATA (MNI): Stronger-Than-Expected Sentix Survey Incorporates Fiscal Announcement
The March Eurozone Sentix investor confidence survey was much stronger-than-expected at -2.9 (vs -9.3 cons, -12.7 prior). Survey data was collected between March 6 - March 8, so includes the fallout from last week's German fiscal announcement. From the press release: "The announcement of debt-financed armaments programmes (EU and Germany) and infrastructure investments (Germany) has investors positively euphoric about further economic development. The sentix economic index for the euro area rises by 9.8 points to -2.9 points."
GERMANY JAN INDUSTRIAL PRODUCTION 2.0% M/M (MNI)
GERMANY JAN TRADE BALANCE E16.0BLN (MNI)
GERMANY JAN EXPORTS -2.5 % M/M (MNI)
GERMANY JAN IMPORTS 1.2% M/M (MNI)
UK DATA (MNI): KPMG-REC Report on Jobs: Permanent Salary Growth at 4-Year Low
The KPMG-REC Report on Jobs for February continued to signal warning signs regarding the state of the UK labour market. Permanent salary growth posted its lowest seasonally-adjusted reading for four years according to the press release, with "weaker demand for staff, improved candidate numbers and tighter budgets" all cited as reasons. Hiring continued to decline, albeit at a slower pace than in January with the press release citing that "recruiters frequently commenting that redundancies had expanded the pool of available workers."
NORWAY DATA (MNI): Broad-Based Strength in February CPI Report; March Cut Now a Closer Call
- NORWAY FEB CPI +1.4% M/M, +3.6% Y/Y
- NORWAY FEB CORE CPI +1% M/M, +3.4% Y/Y
Norwegian CPI-ATE inflation momentum (3m/3m seasonally adjusted annualised rate using Stats Norway data) accelerated to 4.03% in February, up from 3.51% in January and 3.10% in December. It's the fourth consecutive acceleration, coming at a time when Norges Bank is gearing up to begin its easing cycle. Nordea have removed their call for a March cut following the data. Sequential SA CPI-ATE prices rose 0.61% M/M, the firmest reading since October 2023. On an NSA basis, prices rose 0.99% M/M (vs 0.5% cons). Annual CPI-ATE inflation was 3.43% Y/Y (vs 2.9% cons, 2.7% Norges, 2.82% prior).
CHINA DATA (MNI): China Feb CPI Turns Negative on Seasonal Factors
China's Consumer Price Index fell 0.7% y/y in February, marking the first contraction in 13 months, following January's 0.5% growth and missing the expected -0.4%, data from the National Bureau of Statistics showed on Sunday. The CPI rose by 0.1% y/y when accounting for this year’s Spring Festival disruption, which occurred earlier than in 2024. Food prices, which fell 3.3% due to high base effects and warmer weather boosting supply, contributed a 0.6 percentage point drag to the headline figure, the largest negative factor along with cuts to car prices.
JAPAN DATA (MNI): Japan Jan Real Wage Turns Negative
Japan’s inflation-adjusted real wages, a barometer of household purchasing power, declined 1.8% in January, following 0.3% growth in December and marking the first negative reading in three months, preliminary data released by the Ministry of Health, Labour and Welfare on Monday showed. The fall in real wages aligned with the Bank of Japan officials' expectations after they predicted the consumer price index would remain elevated from January through March. The year-on-year rise in total CPI minus imputed rents accelerated to 4.7% in January from 4.2% in December.
JAPAN DATA (MNI): Japan Feb Sentiment Drops, Govt Cuts View
Japan's sentiment index for the current economic climate stood at a seasonally adjusted 45.6 in February, down from 48.6 in January, the second consecutive month of decline, while the outlook index for two-three months ahead fell 1.4 points to 46.6 in February from 48.0 in January for the third straight drop, the Economy Watchers report released by the Cabinet Office showed Monday. The indexes linked to the households and businesses fell but the index linked to the labour market rose.
RATINGS: Greece Upgraded at DBRS, Affirmations Elsewhere
Sovereign rating reviews of note from after hours on Friday include:
- Fitch affirmed Malta at A+; Outlook Stable
- S&P affirmed Norway at AAA; Outlook Stable
- Morningstar DBRS upgraded Greece to BBB, Stable Trend
FOREX: Early USD Gains Reverse in Low Conviction Session
USD had traded firmer through the European open, but much of that progress is reversing here - putting USD toward the bottom end of the G10 table in recent trade. Headlines remain few and far between - leaving markets with little conviction and, quite clearly, subject to non-directional trade.
- GBP gains have slightly run out of steam, however GBP/USD remains either side of the 1.2900 handle as markets continue to parse reports of incoming budget and spending cuts in the UK ahead of the March 26th Spring Statement. GBP is nonetheless among the poorest performers on the session.
- A solid set of Norwegian inflation numbers this morning has underpinned a rally in NOK, which outstrips all others in G10. Outdoing the higher-than-expected Swedish inflation print last week, underlying CPI in Norway lurched to 3.4% vs. Exp. 2.9% - a data outturn that's likely to pressure those looking for Norges Bank rate cuts as soon as this month's decision.
- EUR/NOK has slipped toward the lower half of this year's range, but support at 11.5738 needs to be taken out before the February and YTD lows can be considered at 11.5413.
- Markets look ahead to the US CPI, PPI releases later this week, with NY Fed inflation expectations the sole US release. The Fed are now inside their pre-meeting media blackout period - meaning no monpol headlines are to cross for the next 10 days or so. ECB's Nagel is set to speak on German growth later today.
EGBS: Supported by Pullback in Risk Appetite, PGBs Underperform
A pullback in European equity futures has lent support to core EGBs this morning, though Friday’s high in Bund futures at 128.29 remains untested. Bunds are +12 ticks at 127.78 at typing, now off earlier session highs. The recovery from last Thursday’s lows in Bunds has allowed an oversold condition to unwind a little, though a bearish theme remains intact. Initial firm resistance to watch is 129.41, the Jan 14 low.
- We have highlighted several drivers for today’s risk off action: Continued US growth worry, signs of tension within German fiscal negotiated and a possible reignition of tensions between Israel and Hamas.
- German yields are 1.5-2.5bps lower, with the 10-year point underperforming a little.
- German January industrial production was stronger than expected at 2.0% M/M (vs 1.5% cons), but had little net impact. The March Eurozone Sentix investor confidence survey also exceeded forecasts at -2.9 (vs -9.3 cons, -12.7 prior). Survey data was collected between March 6 - March 8, so includes the fallout from last week's German fiscal announcement.
- 10-year EGB spreads to Bunds trade quite resiliently despite the equity selloff. PGBs underperform (10-year spread to Bunds ~1.5bps wider at ~52.5bps) amid signs the Socialists will oppose the minority government’s no-confidence vote tomorrow.
- ECB’s Nagel is scheduled to speak at 1300GMT.
GILTS: Off Highs, Lagging Bunds
Gilts stick within Friday’s ranges, with broader-risk-off flows helping underpin early today, although those moves have started to fade.
- Risk-off price action stemmed from German fiscal tensions, along with U.S. growth and Israeli-Palestine worries.
- Still, futures remain in a clear bear-mode technical condition and gains are - for now - considered corrective.
- First resistance at Friday’s high (92.63), followed by the Mar 4 low (93.06).
- Yields ~1bp lower across the curve.
- Gilts wider vs. German peers across the curve, highlighting the importance of German fiscal cues when it comes to cross-market moves at present.
- BoE-dated OIS little changed to 2bp more dovish on the day, pricing ~55bp of cuts through year-end
- ~80% odds of the next cut priced through May, with a cut fully discounted through June. We still look for the next cut to come in May.
- SONIA futures flat to +4.0.
- The latest KPMG-REC Report on Jobs provided the latest source of worry when it comes to the UK labour market.
- Friday’s monthly economic activity data headlines this week’s UK calendar, with the latest BoE/Ipsos inflation attitudes survey also due to be released on the same day.
- The long end will have to digest 10-Year supply on Wednesday. We also remain on the lookout for the launch of the new Sep-49 I/L syndication.
- Elsewhere, the DMO will both propose (Wednesday) and confirm (Friday) its issuance calendar for the first 3 weeks of FY25/26.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.455 | -0.0 |
May-25 | 4.259 | -19.6 |
Jun-25 | 4.192 | -26.3 |
Aug-25 | 4.051 | -40.5 |
Sep-25 | 4.012 | -44.3 |
Nov-25 | 3.923 | -53.3 |
Dec-25 | 3.900 | -55.6 |
EQUITIES: Trend in Eurostoxx 50 Futures Remains Unchanged and Bullish
The trend in the Eurostoxx 50 futures contract is unchanged, it remains bullish with price trading closer to its recent trend highs. Key short-term support has been defined at 5373.00, the Mar 4 low. A reversal lower and a break of this level would signal scope for a deeper retracement and expose the 50-day EMA at 5306.33. For bulls, a continuation higher would open the 5600.00 handle next. A bear threat in S&P E-Minis remains present following last week’s move lower that reinforced a short-term downtrend. The contract traded to a fresh short-term cycle low again, Friday, marking an extension of the current bear leg. This highlights a stronger reversal and a double top pattern on the daily scale. The focus is on 5658.00, the Sep 12 2024 low. Initial firm resistance to watch is 5993.68, the 50-day EMA.
- Japan's NIKKEI closed higher by 141.1 pts or +0.38% at 37028.27 and the TOPIX ended 7.83 pts lower or -0.29% at 2700.76.
- Elsewhere, in China the SHANGHAI closed lower by 6.383 pts or -0.19% at 3366.163 and the HANG SENG ended 447.81 pts lower or -1.85% at 23783.49.
- Across Europe, Germany's DAX trades lower by 20.57 pts or -0.09% at 22984.83, FTSE 100 lower by 17.86 pts or -0.21% at 8660.93, CAC 40 up 8.01 pts or +0.1% at 8128.81 and Euro Stoxx 50 down 12.06 pts or -0.22% at 5456.35.
- Dow Jones mini down 392 pts or -0.92% at 42450, S&P 500 mini down 63.5 pts or -1.1% at 5712.75, NASDAQ mini down 252.25 pts or -1.25% at 19979.
COMMODITIES: Last Week's Cycle Lows Reinforce Bearish WTI Future Trend
A bearish trend condition in WTI futures remains intact and last week’s fresh short-term cycle lows reinforce current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.54, the 50-day EMA. Gold is unchanged. The trend condition remains bullish and the recent pullback appears to have been a correction. A stronger rally would refocus attention on $2962.2, a Fibonacci projection. This would also open the $3000.0 handle. On the downside, a resumption of weakness would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2823.8. The 50-day average marks a key support.
- WTI Crude up $0.02 or +0.03% at $67.09
- Natural Gas up $0.21 or +4.73% at $4.61
- Gold spot down $9.6 or -0.33% at $2899.23
- Copper down $4.45 or -0.94% at $466.5
- Silver down $0.18 or -0.56% at $32.3488
- Platinum down $1.47 or -0.15% at $967.77
| Date | GMT/Local | Impact | Country | Event |
| 10/03/2025 | 1500/1100 | ** |  US | NY Fed Survey of Consumer Expectations |
| 10/03/2025 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 10/03/2025 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 11/03/2025 | 2330/0830 | ** |  JP | Household spending |
| 11/03/2025 | 2350/0850 | *** | JP | GDP |
| 11/03/2025 | 0001/0001 | * |  GB | BRC-KPMG Shop Sales Monitor |
| 11/03/2025 | 1000/0600 | ** | US | NFIB Small Business Optimism Index |
| 11/03/2025 | - | *** |  CN | New Loans |
| 11/03/2025 | - | *** | CN | Money Supply |
| 11/03/2025 | - | *** | CN | Social Financing |
| 11/03/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 11/03/2025 | 1600/1200 | *** | US | USDA Crop Estimates - WASDE |
| 11/03/2025 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |