MNI US OPEN - Chinese Inflation Ebbs, Russia Ups Ante on Ukraine

NEWS

ECB (BBG): ECB Will Do What’s Needed to Bring Down Inflation, Villeroy Says

Bank of France Governor Francois Villeroy de Galhau said French inflation should peak between now and June and the European Central Bank will do what’s needed to bring it back to its 2% goal. “The peak is close, but inflation remains too high today in France and in Europe,” Villeroy said on France Info television Thursday. “We will bring inflation toward 2% by the end of 2024 or beginning of 2025 — that’s a commitment, not just a forecast.”

RUSSIA/UKRAINE (MNI): Russia Launches Deadly Missile Barrage Across Ukrainian Cities Overnight

Russia fired missiles at Kyiv and other cities across Ukraine overnight, striking infrastructure facilities in one of the biggest barrages this year. Bloomberg report that at least five people have been killed and hundreds of thousands casted into blackouts. The new mix of weapons mostly evaded air defenses.

GERMANY (MNI): Economy Minister - No US Pressure to Reduce China Reliance

Speaking at a press conference, German Economy Minister and Vice-Chancellor Robert Habeck has stated that there is "no pressure from the US" to reduce Germany's reliance in high-tech areas on China. States that, "it is in our own well-understood interest to take a closer look" at Germany's supply chains in critical areas.

JAPAN (MNI): Japan's Lower House Approves Ueda as BOJ Governor

Japan’s Lower House of the Diet, which is controlled by the ruling coalition, approved economist and former Bank of Japan board member Kazuo Ueda as the BOJ’s next governor to replace Haruhiko Kuroda, whose term ends on April 8.

CHINA (MNI): China Can Grow Above 6% On Rising Investment

China is likely to deliver growth above 6% as robust investment compensates for lackluster consumption struggling to return to pre-pandemic levels, with the uncertain outlook for external demand requiring policymakers to remain flexible in adding stimulus, a prominent economic adviser told MNI.

CHINA (MNI): PBOC Tempted to Weaken Yuan if Rebound Falters

The People’s Bank of China could be “strongly tempted” to again use state-owned banks to weaken the yuan, disguising Beijing’s attempts to boost exports through a cheaper currency should the rebound in consumption and the property market falter, former U.S. Treasury economist Brad Setser told MNI.

CHINA (BBG): Chinese Chip Suppliers Soar After Reports of Japanese Curbs

Shares in Chinese suppliers of materials for semiconductors surged after unsubstantiated reports of impending Japanese export curbs circulated on social media, underscoring the nervousness surrounding US efforts to isolate Beijing’s chip industry.

MALAYSIA (BBG): Malaysia Extends Rate Pause as Inflation Cools, Growth Slows

Malaysia left its monetary settings unchanged for a second straight meeting on Thursday, as the central bank opted to weigh the impact of previous interest-rate increases on economic activity amid a challenging global outlook. Bank Negara Malaysia held its overnight policy rate at 2.75%, a decision seen by 11 of 20 economists in a Bloomberg survey, with the rest expecting a 25 basis-point increase.

DATA

CHINA DATA (MNI): China's Feb CPI Rises 1% As Demand Eases; PPI Falls

• CHINA FEB CPI +1.0% Y/Y VS MEDIAN +1.9%; JAN +2.1% Y/Y: NBS
• CHINA FEB CPI -0.5% M/M VS +0.8% M/M JAN
• CHINA FEB NON-FOOD CPI +0.6% Y/Y VS +1.2% Y/Y JAN
• CHINA FEB PPI -1.4% Y/Y VS MEDIAN -1.3% Y/Y; JAN -0.8% Y/Y: NBS
• CHINA FEB PPI 0.0% M/M VS -0.4% M/M JAN

China's Consumer Price Index rose 1.0% y/y in February, missing market expectations of a 1.9% y/y rise and lower than January's 2.1% y/y increase, data from the National Bureau of Statistics released on Thursday showed. Food costs rose 2.6% compared with year ago, sharply down from January's 6.2% y/y growth due to easing demand and sufficient market supply. Pork prices, the main CPI driver, rose 3.9% y/y, lower than the prior month's 11.8% y/y rise, and contributed 0.05 percentage points to CPI.

JAPAN DATA (MNI): Japan Q4 GDP Revised Lower on Weak Spending

• JAPAN Q4 GDP REV 0.0% Q/Q; PRELIM +0.2%; MEDIAN +0.2%
• JAPAN Q4 ANNUALIZED GDP REV +0.1%; PRELIM +0.6%; MEDIAN +0.8%
• JAPAN Q4 PRIVATE CONSUMPTION +0.3% VS. +0.5%; MEDIAN +0.5%
• JAPAN Q4 NET EXPORT CONTRIBUTION +0.4 PCT POINT VS +0.3 PP

Japan's economy grew at a slower pace than initially estimated in Q4 as private consumption was revised down slightly from its initial estimates, second preliminary GDP data released by the Cabinet Office on Thursday showed.

AUSTRALIA DATA (MNI): Job Ads Suggest Labour Demand Still Strong

NAB/SEEK job ads fell 1.6% m/m in February after rising 2.9% the previous month. While job ads are off of theirmid-2022 peak, they are still high and well above pre-pandemic levels. They seem to have stabilised here indicating that demand for labour remains strong, making an April rate rise more likely. A rebound is expected in the February employment data on March 16 given the January decline reflected many between jobs. This vacancy data also point to employment remaining solid.

FOREX: JPY Favoured, But USD/JPY Dips Deemed Corrective

• JPY is the firmest performer so far Thursday, rising against all others in G10 to drag USD/JPY away from 200-dma resistance at 137.47 and into negative territory ahead of the NY crossover. The Tuesday low at 135.55 marks next support and slippage through here opens 135.39 and below. For now, pullbacks are deemed corrective in nature, with the over-arching bull trend still intact.
• The greenback is edging lower, however dips are minor at this stage given the 1.7% rally off the lows on Tuesday.
• Elsewhere, the NOK continues to hold almost the entirety of the post-Powell losses against the USD, with the currency among the weakest across G10. USD/NOK's print yesterday at 10.7223 was the highest since mid-October last year, and comes despite continued re-pricing for the Norges Bank rate hike expectation, evident in the upside pressure across NOK FRAs over the past fortnight.
• The weekly US jobless claims release is the data highlight Thursday, providing the last glimpse at the labour market ahead of Friday's Nonfarm Payrolls release. The speaker slate is busier, however few appearances are expected to directly address monetary policy. Fed's Barr appears to talk Crypto, while ECB's Vujcic is set to speak on Croation inflation.

BONDS: Global Curves Mixed As Attention Shifts From Powell To Jobs

Global core FI curves are mixed in early Thursday trade, with Germany’s bear steepening, the UK’s bear flattening, and the US’s twist steepening.

• The US short-end is easily outperforming its global counterparts, with 2Y yields down 4bps. Fed hike prospects have softened slightly overnight as attention shifts away from Powell toward Friday’s nonfarm payrolls report (MNI’s preview will be out later today).
• Bund and Gilt yields gapped higher on the open despite no discernable headline drivers (ECB’s Villeroy revealed nothing new in saying the peak of inflation is likely to be seen in H1).
• European yields have traded largely sideways since the open, with the main discernable discrepancy being a pullback in Schatz yields vs the UK short end maintaining weakness.
• A quieter day for European data, but we get more US labor market indicators with Challenger job cuts and weekly jobless claims.
• The only scheduled FOMC speaker remaining before the blackout period starts this weekend is VC Barr today (topic is crypto). BOE’s Breeden and ECB’s Vujcic appear later in the session as well.
• $18B 30Y Bond features in US supply.

• Jun 10-Yr US futures (TY) down 1.5/32 at 110-28 (L: 110-23.5 / H: 110-31.5)
• Jun Bund futures (RX) down 75 ticks at 131.18 (L: 131.07 / H: 131.77)
• Jun Gilt futures (G) down 67 ticks at 100.25 (L: 100.06 / H: 100.5)
• Italy / German 10-Yr spread 0.9bps wider at 179.1bps

EQUITIES: E-Mini S&P Trading Within Range of Bear Trigger

Eurostoxx 50 futures continue to trade above key support - the base of a bull channel drawn from the Oct 13 low. The line intersects at 4239.90. While this channel support holds, the broader uptrend remains intact. Monday’s gains resulted in a test of 4323.00, the Feb 16 high and bull trigger. A clear break would resume the uptrend. On the downside, a breach of the channel base alters the picture. The S&P E-Minis trend condition is bearish and Tuesday's move lower signals the end of the recent corrective bounce. An extension of weakness would pave the way for a move towards the next key support at 3925.00, Mar 2 low. This level is a bear trigger and a break would confirm a resumption of the bear leg that started Feb 2. For bulls, clearance of 4082.50, the Mar 6 high, is required to reinstate a bullish theme.

• Japan's NIKKEI closed higher by 178.96 pts or +0.63% at 28623.15 and the TOPIX ended 19.88 pts higher or +0.97% at 2071.09.
• Elsewhere, in China the SHANGHAI closed lower by 7.154 pts or -0.22% at 3276.094 and the HANG SENG ended 125.51 pts lower or -0.63% at 19925.74.
• Across Europe, Germany's DAX trades lower by 26.4 pts or -0.17% at 15605.64, FTSE 100 lower by 54.75 pts or -0.69% at 7875.31, CAC 40 down 27.89 pts or -0.38% at 7296.87 and Euro Stoxx 50 down 15.01 pts or -0.35% at 4273.44.
• Dow Jones mini down 45 pts or -0.14% at 32769, S&P 500 mini down 11.5 pts or -0.29% at 3983.25, NASDAQ mini down 68.75 pts or -0.56% at 12158.25.

COMMODITIES: WTI Futures, Gold Remain Bearish Following Tuesday Sell Off

A sharp sell-off in WTI futures Tuesday has defined a key near-term resistance at $80.94, Feb 7 high. A break above this hurdle is required to reinstate the recent bullish theme that would open $82.89, the Jan 23 high and a key resistance. On the downside, support to watch lies at $75.83, the Mar 3 low. A continuation lower and a breach of this level would strengthen a bearish case and open $73.80, the Feb 22 low. Trend conditions in Gold remain bearish and Tuesday’s strong sell-off reinforces this theme. The move lower signals the end of the recent corrective bounce and attention is on support and the bear trigger, at $1804.9. A break of this level would confirm a resumption of the downtrend and open $1787.3, a Fibonacci retracement. The yellow metal needs to breach $1858.3, the Mar 6 high, to signal scope for a stronger reversal.

• WTI Crude down $0.29 or -0.38% at $76.38
• Natural Gas up $0.04 or +1.65% at $2.594
• Gold spot up $4.06 or +0.22% at $1817.28
• Copper down $0.15 or -0.04% at $402.55
• Silver up $0.09 or +0.44% at $20.1035
• Platinum up $3.91 or +0.42% at $943.58