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Figure 1: UK median basic pay awards vs. ONS AWE ex-bonus


MNI: Livestreamed MNI Connect VC with BoE Dhingra Today 1400GMT

You are invited to listen to a Livestreamed MNI Connect Video Conference with External Member of the Bank of England Monetary Policy Committee, Dr. Swati Dhingra.
  • Dr. Swati Dhingra joins us to discuss 'Recent BOE Projections - Key Factors/Judgements'.
  • Date: Wednesday 21 February
  • Time: 14:00 - 15:30 GMT
  • This event is on the record and will run as a Zoom Webinar

US (BBG): Biden Begins California Fundraising Swing After $42 Million Haul

President Joe Biden raised $42 million for his reelection campaign and the Democratic Party in January and is now on the West Coast for events with deep-pocketed donors, including billionaire Haim Saban and entertainment mogul Casey Wasserman. Biden ended January with a $130 million war chest for his reelection effort, according a statement released by the campaign. That’s a record amount for a Democratic candidate at this point in the calendar.

UK (MNI): Failure of Trident Missile Test Comes at Critical Moment

The test firing of a Trident missile from a Royal Navy submarine has failed for the second time in a row, raising significant concerns about the efficacy of the UK's nuclear deterrent following a similar failure in the last test in 2016. Fired off the coast of the US in Jan, the booster rockets on the missile failed according to reports first published in The Sun.

CHINA (BBG): China Tightens Grip on Stocks With Net Sale Ban at Open, Close

China has banned major institutional investors from reducing equity holdings at the open and close of each trading day, part of the government’s most forceful attempt yet to prop up the nation’s $8.6 trillion stock market. The order from China’s securities watchdog was recently delivered to major asset managers and the proprietary trading desks of brokerages, according to people familiar with the matter, who asked not to be named because they weren’t authorized to speak publicly. The China Securities Regulatory Commission, led by newly appointed Chairman Wu Qing, has also created a task force with the nation’s stock exchanges to monitor short selling and issue warnings to firms that profit from the wagers, the people said.

CHINA (BBG): Quant Hedge Funds Face China Clampdown After Rare Account Freeze

China’s two main stock exchanges vowed to tighten supervision of quantitative trading after freezing the accounts of a major fund for three days in an unusually harsh punishment. The Shanghai and Shenzhen bourses will enhance monitoring of quant trading, especially leveraged products, according to statements late Tuesday. They will expand the scope of required reporting of such trades to offshore investors via the northbound mainland-to-Hong Kong stock connect and treat foreign and domestic funds the same.

CHINA (BBG): Foreign Investors Flee Chinese Shares, Long-Delayed Data Shows

The amount of Chinese shares owned by foreign investors fell in 2023 for a second straight year as the market slump cut the value of shareholdings and investors left for higher returns elsewhere. Foreign entities owned 2.8 trillion yuan ($390 billion) of onshore Chinese equities at the end of last year, according to data released Wednesday by the People’s Bank of China. That was down 13% from 12 months earlier, and marked a drop of almost 30% from the peak at the end of 2021. The value of bonds held by overseas entities rose almost 8% last year, the data showed.

JAPAN (MNI): Japan Govt Cuts Economic View; First Time Since Nov 2023

The Japanese government has updated its view on the economy, noting it seems "to be pausing" despite the recovery continued at a moderate pace. It also said private consumption “appears to be pausing for picking up. ”Industrial production, meanwhile, “was on the way to picking up, but manufacturing activities have declined recently due to the effects of suspension of production and shipment by some automobile manufacturers,” the government added. The previous view held “industrial production shows signs of picking up.”

INDONESIA (BBG): Indonesia Will Keep Rate on Hold ‘For a While’ as Fed Stalls

Indonesia’s central bank left its benchmark interest rate unchanged for a fourth straight month and reiterated that it would be on an extended pause to support a still vulnerable currency. Bank Indonesia’s decision to keep the BI-Rate at 6% on Wednesday was predicted by all 30 economists surveyed by Bloomberg. Governor Perry Warjiyo and his board have left the rate steady since November as they approach monetary easing with caution, given implications for the rupiah.

THAILAND (BBG): Bank of Thailand Resists Calls for Special Rate Meeting: Nikkei

Bank of Thailand resisted calls to hold an emergency meeting to cut rates, Nikkei Asia reports, citing Governor Sethaput Suthiwartnarueput. Central bank is not dogmatic about the decade-high interest rate but urged a look behind recent data that show weak growth and negative headline inflation, Nikkei says

CORPORATE (BBG): Nvidia Report Will Show Whether Rally Was Justified

Nvidia Corp. will announce fiscal fourth-quarter results on Wednesday and give a forecast for the current period, showing whether one of the biggest stock run-ups in history was justified. The chipmaker faces sky-high expectations, with investors betting that it will remain the key beneficiary of booming artificial intelligence spending. Nvidia became the world’s third-most-valuable tech company this year as its market capitalization climbed by half a trillion dollars.

CORPORATE (BBG): Hedge Funds Cut Magnificent Seven in Last Quarter, Goldman Says

Hedge funds pared exposure to the Magnificent Seven megacap tech stocks in the fourth quarter amid signs of extremes in the market, according to Goldman Sachs Group Inc. “Funds were net sellers of most of the Magnificent Seven stocks,” as their weights rose to records, strategists including Ben Snider and Jenny Ma wrote in a note dated Tuesday that analyzed 722 hedge funds with $2.6 trillion of gross equity positions. All seven except Amazon Inc. saw a decrease in exposure, they added.

CORPORATE (BBG): HSBC’s Profit Sinks on $3 Billion Charge at Chinese Bank

HSBC Holdings Plc reported fourth-quarter profit fell 80% after taking unexpected charges on holdings in a Chinese bank and from selling its French retail operations. Shares slid in London. Pretax profit fell to $1 billion in the final three months of last year from $5.05 billion in the year-earlier period, the London-headquartered bank said in a statement. The lender took a $3 billion charge on its holding in Bank of Communications Co. and $2 billion on its French sale.

COMMODITIES (BBG): Aluminum Surges as White House Plans Fresh Sanctions on Russia

Aluminum and nickel surged on speculation that a fresh wave of US sanctions against Russia may target the metal and potentially disrupt supplies.US President Joe Biden said the US plans to unveil a “major” sanctions package against Moscow on Friday, although he wasn’t specific about which industries would be affected. Traders have been on the lookout for new restrictions on Russian metals, which had escaped broad sanctions until the UK announced its own curbs in December.


UK DATA (MNI): UK Pay Deals Slow From Three-Decade Highs


UK pay increases slowed markedly in the three months to January as early 2024 deals come in below recent levels, the head of a leading pay survey said, reporting findings which will boost hopes earnings growth will soon moderate to a pace that will make the Bank of England more comfortable in cutting Bank Rate this year. “There are signs that the 6% headline pay award recorded during 2023 will not be matched in 2024 pay reviews," Sheila Attwood of XpertHR told MNI, although she noted that there were still some inflation-busting settlements.

UK DATA (MNI): Public Finance Data Suggests Budget Fiscal Headroom is c.GBP10bln

  • UK JAN PSNB-X GBP-16.69 BN
  • UK JAN PSNB GBP-17.61 BN

At first glance surplus on PSNBex is smaller than expected (i.e. worse) but there was a small downward revision to last month's borrowing number. Income tax plus capital gains tax receipts were down GBP1.8bln from last year - which appears to account for the surprise to consensus. Recall that we really need to look at both Jan+Feb to get a better idea of the tax take, though, as some people pay late. At first glance it looks as though YTD borrowing is still around GBP10bln better than the OBR's November forecast.

JAPAN DATA (MNI): Japan January Exports Hit Second Straight Rise

  • JAPAN JAN EXPORTS +11.9% Y/Y; DEC -9.7%
  • JAPAN JAN IMPORTS -9.6% Y/Y; DEC -6.9%

Japan's exports posted the second straight y/y rise in January, thanks to solid exports of automobiles and auto parts, up 11.9% in January, data released by the Ministry of Finance showed on Wednesday. Exports of automobiles rose 31.6% in January following December's 35.9% gain, while car-part exports rose 22.1% from the previous month's 13.6%.The data printed largely within the Bank of Japan's forecasts.

AUSTRALIA DATA (MNI): Aussie Wages Grow 0.9% Q/Q

Australian wages grew 0.9% q/q over Q4 2023 in line with expectations, and 4.2% y/y, up 10bp over estimates, according to the Australian Bureau of Statistics. “For both the public and private sector, wages growth was driven by organisation-wide annual wage and salary reviews,” noted Michelle Marquardt, head of prices statistics at the ABS, noting Q4 growth saw a higher contribution from jobs covered by enterprise agreements than typical.

FOREX: NZD/NOK Divergence Puts Cross Within Range of YTD Highs

  • Equity market sentiment is a touch softer headed into the NY crossover, putting the three major US equity indices into negative territory a few hours out from the opening bell. Resultingly, haven currencies are very modestly bid - aiding CHF higher. The USD is rangebound, however, keeping the USD Index within range of the 100-dma - a level that's proved definitive for prices across February so far.
  • NOK is the session's poorest performer so far, with softer equity market sentiment and a pullback in the oil price working against commodity- and high beta currencies. EUR/NOK is trading just above the 50-dma at typing - a level that markets have struggled to maintain momentum above - with the level pierced, but not meaningfully broken since October last year.
  • NZD is bucking the trend, however, likely thanks to strong demand at the latest long end NZGB syndication (which is usually dominated by offshore investors). NZD saw support, tipping AUD/NZD toward the YTD lows of 1.0586.
  • EUR/AUD saw a brief spell of downside on headlines confirming that France's Saint-Gobain were to place a cash offer for Australia's CSR, valuing the company at A$4.3bln - but the impact has faded slightly headed into the NY crossover.
  • Focus for the Wednesday session rests on the Fed minutes release, with markets on watch for any further details on the FOMC's deliberations over the easing cycle and any fresh approach to quantitative tightening.

EGBS: Softer in Spite of Crude Weakness

Core/semi-core EGBs have recovered from the day's weakest levels but remain softer on the day. This morning's oil market weakness will have eased pressure on the space, but did little to reverse the course of price action.

  • Bunds are -16 at 133.10, trading within well-defined technical parameters that have contained price action through this week.
  • The German and French cash curves have bear steepened, with the impending 10-year Bund supply also weighing on the wider space.
  • Periphery spreads to Bunds are generally a touch tighter, with European equity markets having pared this morning's losses. The 10-year BTP/Bund spread remains below 150bps, currently -1.2bps at 147.5bps.
  • Flash February consumer confidence headlines today's Eurozone data docket at 1500GMT/1600CET, expected at -15.5 (vs -16.1 prior).
  • Tomorrow sees the release of February flash PMIs, with the usual focus on inflation dynamics.

GILTS: Off Lows, Ranges Still Tight

As noted earlier, gilts have stuck to relatively tight ranges.

  • Initial weakness came from feedthrough surrounding broader core global FI markets.
  • Modest downticks in both equity futures and crude oil provided some brief counter, but those impulses have faded.
  • Futures last +1 at 97.92, in a 97.69-93 range.
  • Cash gilt yields sit 1-2bp higher with the curve bear flattening at the margin.
  • Major technical parameters remain untouched, with bulls not able to push futures too far above 98.00 yesterday and 10-Year yields operating above 4.00%.
  • The GBP4bn round of 4.50% Jun-28 gilt supply saw average demand, as covered earlier, but the smooth enough passage and removal of related hedging pressure has helped bulls.
  • SONIA futures are flat to -2.5 through the blues.
  • BoE-dated OIS shows ~73bp of cuts for ’24, with little willingness to push meaningfully beyond pricing 75bp of cuts at present.
  • Softer XpertHR wage data and fiscal speculation dominate local headline flow, but neither have had a meaningful impact.
  • Looking ahead, the MNI event with BoE dove Dhingra highlights the domestic docket today, with lower tier data (CBI trends) also due.

EQUITIES: Eurostoxx 50 Futures Remain Close to Recent Cycle Highs

Eurostoxx 50 futures remain in a bull cycle. The contract has resumed its uptrend and traded to a fresh cycle high on the last upleg. This reinforces current conditions and the importance of the recent break of resistance at 4634.00, the Dec 14 high. Moving average studies are in a bull-mode position, highlighting positive market sentiment. Sights are on 4800.00 and 4848.00, a Fibonacci projection. Initial firm support lies at 4701.60, the 20-day EMA. The trend condition in S&P E-Minis is unchanged and remains bullish, despite the pullback off last week’s highs. The weakness off 5066.50 is considered corrective and support to watch lies at 4967.25, the 20-day EMA. A clear break of this average would suggest potential for a deeper retracement, possibly towards the 4866.00 key support, the Jan 31 low. The trigger for a resumption of gains is 5066.50, the Feb 12 high.

  • Japan's NIKKEI closed lower by 101.45 pts or -0.26% at 38262.16 and the TOPIX ended 5 pts lower or -0.19% at 2627.3.
  • Elsewhere, in China the SHANGHAI closed higher by 28.226 pts or +0.97% at 2950.956 and the HANG SENG ended 255.59 pts higher or +1.57% at 16503.1.
  • Across Europe, Germany's DAX trades higher by 27.14 pts or +0.16% at 17096.16, FTSE 100 lower by 59.52 pts or -0.77% at 7659.65, CAC 40 up 11.87 pts or +0.15% at 7805.91 and Euro Stoxx 50 up 7.56 pts or +0.16% at 4767.37.
  • Dow Jones mini down 72 pts or -0.19% at 38570, S&P 500 mini down 11.5 pts or -0.23% at 4980, NASDAQ mini down 76.5 pts or -0.43% at 17530.

COMMODITIES: Gold Extends Bounce Off Last Week's Lows

Recent gains in WTI futures, since Feb 5, still appear to be a correction. Key short-term resistance has been defined at $79.75, the Feb 16 high. Clearance of this level would be a bullish development. On the downside, support to watch lies at $71.41, the Feb 5 low. A break of this level would reinstate the recent bearish theme and pave the way for a move towards $69.56, the Jan 3 low. Gold traded lower early last week and the sell-off resulted in a break of $2001.9, the Jan 17 low and a key short-term support. The breach highlights a resumption of the bear leg that started Dec 28. A continuation lower would open $1973.2, the Dec 13 low and the next key support. On the upside, the yellow metal needs to clear resistance at $2065.5, the Feb 1 high, to reinstate a bullish theme.

  • WTI Crude down $0.53 or -0.69% at $76.54
  • Natural Gas up $0.11 or +6.66% at $1.681
  • Gold spot up $3.86 or +0.19% at $2028.47
  • Copper up $0.55 or +0.14% at $388
  • Silver up $0.08 or +0.34% at $23.0815
  • Platinum down $2.53 or -0.28% at $903.65

21/02/20241100/1100**UK CBI Industrial Trends
21/02/20241200/0700**US MBA Weekly Applications Index
21/02/20241300/0800US Atlanta Fed's Raphael Bostic
21/02/20241355/0855**US Redbook Retail Sales Index
21/02/20241400/1400UK BOE's Dhingra MNI Connect Event on BoE projections
21/02/20241500/1600**EU Consumer Confidence Indicator (p)
21/02/20241630/1130**US US Treasury Auction Result for 2 Year Floating Rate Note
21/02/20241800/1300**US US Treasury Auction Result for 20 Year Bond
21/02/20241800/1300US Fed Governor Michelle Bowman
21/02/20241900/1400***US FOMC Rate Decision
22/02/20242200/0900***AU Judo Bank Flash Australia PMI
22/02/20240030/0930**JP Jibun Bank Flash Japan PMI
22/02/20240630/0630UK BOE's Greene, Kroll South Africa breakfast
22/02/20240745/0845**FR Manufacturing Sentiment
22/02/20240815/0915**FR S&P Global Services PMI (p)
22/02/20240815/0915**FR S&P Global Manufacturing PMI (p)
22/02/20240830/0930**DE S&P Global Services PMI (p)
22/02/20240830/0930**DE S&P Global Manufacturing PMI (p)
22/02/20240900/1000**IT Italy Final HICP
22/02/20240900/1000**EU S&P Global Services PMI (p)
22/02/20240900/1000**EU S&P Global Manufacturing PMI (p)
22/02/20240900/1000**EU S&P Global Composite PMI (p)
22/02/20240930/0930***UK S&P Global Manufacturing PMI flash
22/02/20240930/0930***UK S&P Global Services PMI flash
22/02/20240930/0930***UK S&P Global Composite PMI flash
22/02/20241000/1100***EU HICP (f)
22/02/20241100/0600***TR Turkey Benchmark Rate
22/02/20241330/0830***US Jobless Claims
22/02/20241330/0830**CA Retail Trade
22/02/20241445/0945***US IHS Markit Manufacturing Index (flash)
22/02/20241445/0945***US S&P Global Services Index (flash)
22/02/20241500/1000***US NAR existing home sales
22/02/20241500/1000*US Services Revenues
22/02/20241500/1000US Fed Vice Chair Philip Jefferson
22/02/20241530/1030**US Natural Gas Stocks
22/02/20241600/1100**US DOE Weekly Crude Oil Stocks
22/02/20241600/1100**US Kansas City Fed Manufacturing Index
22/02/20241800/1300**US US Treasury Auction Result for TIPS 30 Year Bond
22/02/20242015/1515US Philly Fed's Pat Harker
22/02/20242200/1700US Minneapolis Fed's Neel Kashkari
22/02/20242200/1700US Fed Governor Lisa Cook

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