EXECUTIVE SUMMARY
- NATO DEF MINS MEET AS UKRAINE & EUROPE ASSESS TRUMP'S PUSH FOR TALKS
- BANK OF ENGLAND'S PILL 'CAUTIOUS' ABOUT FURTHER RATE CUTS – RTRS
- UK GDP ENDS 2024 WITH UPSIDE SURPRISE
- JAPAN JAN CGPI RISES 4.2% Y/Y, HIGHER IMPORT PRICES
Figure 1: UK GDP records surpsising, but moderate expansion in Q4-2024
Source: ONS
NEWS
UKRAINE (MNI): NATO Def Mins Meet as Ukraine & Europe Assess Trump's Push for Talks
NATO defence ministers are meeting in Brussels as they grapple with a day that may represent the most significant shift in European geopolitics since Russia's full-scale invasion of Ukraine in Feb 2022. On 12 Feb US Secretary of Defense Pete Hegseth laid out in stark terms the future of European security, which will see a much less involved US and no NATO membership for Ukraine. This was followed by confirmation from US President Donald Trump that he had spoken to Russian President Vladimir Putin, and that the first stages of negotiations to end the conflict would begin at the Munich Security Conference on 14 Feb.
UKRAINE (MNI): Foreign Minister Cautious on Talks; Kremlin 'Impressed' by Trump Position
Speaking to France's Le Monde, Ukrainian Foreign Minister Andrii Sybiha says, in reaction to US President Donald Trump's announcement of talks with Russia on ending the war in Ukraine, that 'Nothing can be discussed on Ukraine without Ukraine or on Europe without Europe.' Says that 'As far as Ukraine is aware, the Americans have not yet finalised their plan'. Following US Secretary of Defense Pete Hegseth's comments on 12 Feb, Sybiha says 'NATO membership remains a strategic objective of Ukraine, all allies said its path was irreversible'.
UKRAINE (WSJ): China Tries to Play the Role of Peacemaker in Ukraine
As President Trump and Russian President Vladimir Putin signal they are prepared to start negotiations to end the war in Ukraine, China is pushing to play a role. Chinese officials in recent weeks have floated a proposal to the Trump team through intermediaries to hold a summit between the two leaders and to facilitate peacekeeping efforts after an eventual truce, according to people in Beijing and Washington familiar with the matter.
ISRAEL/MIDEAST (WSJ): Israel Sees Opening for Strikes on Iranian Nuclear Sites, U.S. Intelligence Finds
U.S. intelligence agencies concluded during the final days of the Biden administration that Israel is considering significant strikes on Iranian nuclear sites this year, aiming to take advantage of Iran’s weakness, officials familiar with the report said. The finding was included in an analytical assessment produced around the new year as the Biden administration wound down. The analysis highlighted the risks of further high-stakes military activity in the Middle East after the degradation of Iran’s capabilities over the past year.
ISRAEL/MIDEAST (MNI): Hamas to Release 3 Hostages on 15 Feb, Risk of Truce Ending Reduced
Hamas has confirmed in a statement that it intends to continue with the process of releasing Israeli hostages according to the schedule set out in the phase one ceasefire agreement with Israel. This would see a further three hostages freed on Saturday 15 Feb. Egypt's Al-Qahira Al-Akhbariya reports the Egyptian and Qatari gov'ts as saying that their mediators have 'succeded in bridging the gaps to continue implementing the Gaza ceasefire deal' adding that the 'parties in the deal are committed to continuing implementing it.'
BOE (RTRS): Bank of England's Pill 'Cautious' About Further Rate Cuts
The Bank of England needs to move cautiously with cutting interest rates because the long process of wrestling down inflation is not yet complete, BoE Chief Economist Huw Pill told Reuters. A week after the central bank cut rates for only the third time since raising them to a 14-year high in 2023, Pill said the big picture was one of inflation falling towards the BoE's 2% target. However, underlying price pressures remain, Pill said in an interview on Wednesday, explaining his call for caution on further reductions in borrowing costs even as Britain's economy is struggling to grow.
RIKSBANK (MNI): Riksbank's Jansson Makes Case for Steadier Policy
Riksbank Deputy Govenor Per Jansson said that if the credibility of the inflation target has been enhanced by the central bank's episodes of rapid tightening and easing to keep inflation on track, it could now switch to steadier policy and be less responsive to temporary deviations from target. Jansson said that rapid changes in the policy rate, as they fed through to sharp swings in the cost of financing for firms and households, had negative effects on the real economy which smoother policy setting could avoid.
CHINA (MNI EXCLUSIVE): Firm China Copper Demand to Support Prices
Local Chinese analysts provide insight into China copper demand. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
CHINA (MNI): PBOC Pledges to Keep Liquidity Ample
MNI (London) The People’s Bank of China will strengthen counter-cyclical efforts and keep liquidity ample through available tools including interest rates and reserve requirement ratio reductions, according to the latest Monetary Policy Report posted on the Bank’s website on Thursday. The Bank will closely monitor changes in monetary policies of major overseas counterparts and optimize policy in a timely manner based on domestic and international economic and financial conditions, the Report stated.
CHINA (BBG): Alibaba Wins Prized Role Powering AI on Apple’s iPhone in China
Apple Inc.’s iPhones will use Alibaba Group Holding Ltd.’s AI technology, the Chinese firm’s chairman said, affirming reports the e-commerce pioneer had scored a coveted role in helping power the iPhone in the world’s top mobile arena. Joseph Tsai’s comments came after his company’s shares rose to a 2022 high in Hong Kong following a report about the partnership between the two leading tech firms. The stock, which had risen as much as 9.2% on Thursday, pared much of its gains after Tsai’s comments.
RBA (MNI EXCLUSIVE): RBA Forward Guidance Unlikely as Uncertainty Rises
Former staff doubt the RBA will shift its communication strategy following next week's decision. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
PHILIPPINES (BBG): Philippines Pauses Easing Cycle, Signals Jumbo RRR Cut Soon
The Philippine central bank suspended its easing cycle on Thursday on heightened global uncertainties, with Governor Eli Remolona assuring that policymakers are merely on a prudent pause and that borrowing costs will continue to decline. In fact, Bangko Sentral ng Pilipinas plans to slash lenders’ reserve requirement ratio in the first half by 200 basis points to 5%, Remolona said on Thursday after announcing that the benchmark interest rate was kept at 5.75% after three consecutive cuts last year.
CORPORATE (BBG): Honda, Nissan Drop Talks to Combine, Pledge to Collaborate
Honda Motor Co. and Nissan Motor Co. formally ended negotiations to combine, bringing to a swift end a partnership that in theory would have created one of the world’s biggest automakers. Although plans to unite both brands under a holding company are dead, the two said Thursday that they will continue their strategic partnership with Mitsubishi Motors Corp. and collaborate on the in-house development of batteries, autonomous driving, software and electric vehicle technology.
DATA
EUROZONE DATA (MNI): IP In-Line With MNI Tracking but Notably Below Consensus
- EUROZONE DEC IP -1.1% M/M, -2% Y/Y
Eurozone December industrial production was in-line with our tracking estimate at -1.1% M/M, though it was significantly below consensus of -0.6% (although note that consensus was not updated for the large downside surprise to Italian IP yesterday). We estimate IP excluding Ireland fell more steeply by 1.9% M/M. The November reading was revised up to 0.4% M/M from 0.2% (in-line with our estimate). Four of the five subcomponents were lower than the November reading, with three out of four of these printing falls in production. Non-durable consumer goods on the other hand rose firmly.
UK DATA (MNI): UK GDP Ends 2024 With Upside Surprise
- UK Q4 GDP +0.1% Q/Q, +1.4% Y/Y
- UK DEC SERVICES INDEX +0.4% M/M, +0.2% 3MM
- UK DEC IND PROD +0.5% M/M, -1.9% Y/Y
- UK DEC MANUF OUTPUT +0.7% M/M, -1.4% Y/Y
- UK DEC TRADE BALANCE GBP -2.82BN
The UK economy eeked out modest growth in Q4 2024, defying expectations of a contraction, data released by the Office for National Statistics showed Thursday. The economy grew 0.1% in the 3 months to December, rising 1.4% compared to the same quarter in 2023. Month-on-month, December GDP rose 0.4%, the highest monthly growth since March, the stats office said. Growth was ahead of estimates of both City consensus and the Bank of England's Monetary Policy Committee, where expectations were for a decline of 0.1%.
UK DATA (FT): New UK Property Listings Bounce Back as Mortgage Rates Fall
UK estate agents reported the most widespread increase in property coming to the market since the pandemic, according to a survey, suggesting lower interest rates are boosting sales activity. The Royal Institution of Chartered Surveyors said on Thursday its index of new sales instructions rose to 25 in January, the ninth consecutive positive reading and the highest level since September 2020. The index tracks the difference between the proportion of agents reporting an increase in new residential listings and those reporting a decrease.
SWITZERLAND DATA (MNI): January CPI Dragged Lower by Energy
- SWISS JAN CPI -0.1% M/M, +0.4% Y/Y
Swiss CPI inflation printed in line with consensus at 0.4% Y/Y in January (vs 0.6% prior), and -0.1% M/M (vs -0.1% prior). Core CPI printed meaningfully above consensus, at 0.9% Y/Y (vs 0.6% cons; 0.7% prior) and 0.1% M/M (although bear in mind that the Bloomberg consensus for core only had 5 analyst estimates). As we noted in our preview, a print of 0.4%Y/Y is not necessarily inconsistent with the SNB's 0.3% Y/Y inflation forecast for Q1 average inflation. It remains very possible CPI will come in lower in Feb/Mar, and indeed the SNB indeed expects CPI to be on a downtrend - shown by its expectation for further deceleration in Q2.
JAPAN DATA (MNI): Japan Jan CGPI Rises 4.2% Y/Y, Higher Import Prices
- JAPAN JAN CORP GOODS PRICE INDEX +4.2% Y/Y; DEC REV +3.9%
- JAPAN JAN CORP GOODS PRICE INDEX +0.3% M/M; DEC REV +0.4%
Japan's corporate goods price index rose 4.2% y/y in January, accelerating from December’s 3.9%, while import prices on a yen basis rose 2.3%, their second straight rise and up from December's 1.4%, data released by the Bank of Japan showed on Thursday. The January index was the highest level since June 2023 when it rose 4.5%, boosted by higher agriculture, forestry and fishery products (+36.2% vs. +32.9%), and beverages and foods (+2.9% vs. +2.2%).
FOREX: CHF Stands Out as Core CPI Works Against SNB Base Case
- CHF stands out among G10 FX early Thursday, rallying against all others on the back of the January inflation release. While headline CPI was inline with market expectations, the core figure outstripped forecast to hit 0.9% vs. Exp. 0.6%, dragging USD/CHF with it and narrowing the gap with tried-and-tested support at the 50-dma of 0.9039.
- We note trendline support also comes in just above 0.9040, but it is the 50-day exponential moving average that remains key on the downside, having underpinned the significant rally in the aftermath of the US election. Despite multiple attempts in recent weeks, USDCHF has continually failed to close below this average, which currently intersects at 0.9024. Below here, the January low is at 0.8965.
- AUD sits at the bottom-end of the G10 table, led lower by deteriorating risk sentiment into the Asia-Pac close. Hong Kong's Hang Seng Index started the session well, but a turn lower for equities has worked against AUD/USD and pressed the rate back to the 50-dma of 0.6260.
- The USD Index is softer, edging lower as markets extend the reaction to Trump's opening of Ukraine negotiations with Russia's Putin late yesterday. The USD Index is toward the February lows, but a further 0.5% decline would be needed before any test of 107.296 and 106.969 support.
- The US PPI print and weekly claims data are the datapoints of focus ahead, while the central bank speaker slate is much quieter - just ECB's Nagel is on the docket, appearing in Glasgow at 1700GMT/1200ET.
EGBS: Commodity Pullback Provides Light Support to Major Futures
Bund futures have traded in a tight 21 tick range this morning, lightly supported by a pullback in crude oil and natural gas futures following yesterday’s Trump/Putin call and developments between Israel/Hamas.
- Bunds are +24 ticks at 132.39, still well below Monday’s high of 133.61. Key resistance and the bull trigger has been defined at 133.71, the Feb 5 high. A break of it would resume the recent bull cycle.
- Eurozone December industrial production was in-line with MNI’s tracking estimate at -1.1% M/M, though it was significantly below consensus of -0.6%. The data wasn’t a market mover.
- EGB curves have lightly bull flattened, with the presence of today’s 3/7-year BTP supply helping to keep short-end yields underpinned.
- The Italian auction was digested smoothly, with bid-to-covers broadly in line with recent norms.
- 10-year EGB spreads are 1-2bps tighter, with European equities up 1% on the prospect of Ukraine peace talks.
- Focus turns to US PPI, with markets also watchful of reciprocal tariff announcements from US President Trump.
GILTS: Recovery From GDP-Driven Lows Extends as Energy Prices Soften
Gilts consolidate their recovery from opening lows.
- Lower crude oil prices (linked to Trump’s desire for a resolution surrounding the Ukraine-Russia conflict and Hamas seemingly agreeing to stick to the agreed hostage release schedule) helped bonds recover.
- This came after hawkish leaning comments from BoE chief economist Pill and firmer-than-expected UK GDP data weighed. Neither of those were gamechangers for the BoE, at least in our opinions.
- Futures +29 at 92.74 (92.36-78 range).
- Yesterday’s low (92.31) went untested during the early weakness and provides initial minor support. The recent bullish technical cycle in the contract remains in play.
- Yields within 1bp of yesterday’s closing level, curve twist flattens.
- 10s spreads vs. Bunds 1bp wider at ~207.5bp.
- GBP STIRs also unwound some of the initial hawkish reaction as gilts recovered.
- BoE-dated OIS prices 56.5bp of cuts through year-end vs. ~52.5bp at one stage following the GDP data and ~60bp at yesterday’s close.
- 3.5bp of cuts priced for March, 23bp through May and 30.5bp through June (we still look for the next cut to come in May).
- SONIA futures -1.5 to +0.5.
- U.S. data and geopolitical matters should dominate for the remainder of the day, with little of note left on the UK calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.420 | -3.5 |
May-25 | 4.222 | -23.2 |
Jun-25 | 4.150 | -30.4 |
Aug-25 | 4.003 | -45.2 |
Sep-25 | 3.972 | -48.2 |
Nov-25 | 3.902 | -55.2 |
Dec-25 | 3.889 | -56.5 |
EQUITIES: Eurostoxx 50 Futures Rally to Fresh Cycle Highs
The Eurostoxx 50 futures contract continues to appreciate. The move higher confirms once again, a resumption of the uptrend that started on Nov 21 ‘24. Moving average studies are in a bull mode set-up too, highlighting a dominant uptrend. Sights are on a major resistance at 5525.00, the March 2000 all-time high. Clearance of this level would highlight a key bullish break. Initial firm support to watch lies at 5243.32, the 20-day EMA. Price action on Feb 3 in the S&P E-Minis contract 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 ‘24 high. Clearance of this hurdle would resume the primary uptrend.
- Japan's NIKKEI closed higher by 497.77 pts or +1.28% at 39461.47 and the TOPIX ended 32.26 pts higher or +1.18% at 2765.59.
- Elsewhere, in China the SHANGHAI closed lower by 13.902 pts or -0.42% at 3332.483 and the HANG SENG ended 43.55 pts lower or -0.2% at 21814.37.
- Across Europe, Germany's DAX trades higher by 225.23 pts or +1.02% at 22376.04, FTSE 100 lower by 72.75 pts or -0.83% at 8733.9, CAC 40 up 71.44 pts or +0.89% at 8113.18 and Euro Stoxx 50 up 47.49 pts or +0.88% at 5453.04.
- Dow Jones mini down 32 pts or -0.07% at 44430, S&P 500 mini down 3.25 pts or -0.05% at 6069.25, NASDAQ mini up 25.5 pts or +0.12% at 21829.75.
Time: 09:50 GMT
COMMODITIES: WTI Futures Erase This Week's Earlier Gains, Back Below 50-Day EMA
WTI futures have pulled back from Tuesday high and price is again trading below the 50-day EMA - at $72.17. Attention is on $70.43, the Feb 6 low. A clear break of this support would undermine a bullish theme and confirm a clear breach of the 50-day EMA. This would strengthen a bearish threat and open $68.05, the Dec 20 ‘24 low. Key short-term resistance has been defined at $75.18. A move above this level is required to reinstate a bull theme. A bull cycle in Gold remains in play and the yellow metal is trading closer to its recent highs. Recent gains once again confirm a resumption of the uptrend and maintain 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 the $2962.2, a Fibonacci projection. The first key support to watch is $2809.2, the 20-day EMA.
- WTI Crude down $0.71 or -0.99% at $70.65
- Natural Gas up $0.09 or +2.61% at $3.66
- Gold spot up $11.26 or +0.39% at $2916.01
- Copper down $0 or 0% at $470.4
- Silver up $0.04 or +0.13% at $32.29
- Platinum up $7.02 or +0.7% at $1003.17
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 13/02/2025 | - | *** |  CN | Money Supply |
| 13/02/2025 | - | *** | CN | New Loans |
| 13/02/2025 | - | *** | CN | Social Financing |
| 13/02/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 13/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 13/02/2025 | 1330/0830 | *** | US | PPI |
| 13/02/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 13/02/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 13/02/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 13/02/2025 | 1800/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 14/02/2025 | 0800/0900 | *** |  ES | HICP (f) |
| 14/02/2025 | 1000/1100 | *** |  EU | GDP (p) |
| 14/02/2025 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 14/02/2025 | 1330/0830 | ** | CA | Wholesale Trade |
| 14/02/2025 | 1330/0830 | *** | US | Retail Sales |
| 14/02/2025 | 1330/0830 | ** | US | Import/Export Price Index |
| 14/02/2025 | 1415/0915 | *** | US | Industrial Production |
| 14/02/2025 | 1500/1000 | * | US | Business Inventories |
| 14/02/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 14/02/2025 | 2000/1500 | US | Dallas Fed's Lorie Logan |