MNI US OPEN - German State-Level CPI Data Suggests Soft National Print

NEWS

US (BBG): Trump Pays $175 Million Bond to Avert Asset Seizure

Donald Trump followed through on his vow to pay a $175 million bond to put a massive civil fraud verdict on hold while he appeals it, assuring New York state won’t start seizing the former president’s assets, at least for now. The bond, posted Monday with a Manhattan appeals court, prevents enforcement of a $454 million penalty levied by a judge against the real estate mogul in February for lying about his assets for years to get better loan terms. Trump, who is campaigning to return to the White House in the November election, is still on the hook for the full amount — plus millions in interest — if his appeal fails.

US (NYT): Person Infected With Bird Flu in Texas After Contact With Cattle

At least one person in Texas has been diagnosed with bird flu after having contact with dairy cows presumed to be infected, state officials said on Monday. The announcement adds a worrying dimension to an outbreak that has affected millions of birds and sea mammals worldwide and, most recently, cows in the United States. So far, there are no signs that the virus has evolved in ways that would help it spread more easily among people, federal officials have said.

MIDDLE EAST (BBG): Iran Vows Revenge on Israel For Strike on Consulate in Syria

Iran said it would take revenge on Israel for a deadly air strike on its embassy compound in Syria — a rare direct confrontation in the adversaries’ escalating proxy conflict over the war in Gaza. “The crime won’t remain unanswered,” Iranian President Ebrahim Raisi said, according to the semi-official Tasnim news agency. The strike in Damascus late Monday killed at least seven Iranian personnel including senior military commanders and destroyed the consulate building, according to Iranian state media. Israel hasn’t confirmed the attack, in keeping with its usual response to accusations of targeting Iran.

UK (BBG): UK House Prices Decline for the First Time in Three Months

UK house prices fell for the first time in three months, suggesting the market may be stagnating due to high mortgage rates and strained affordability. Nationwide Building Society said the average price of a home dropped 0.2% last month after 0.7% gains in each of the two previous months. Economists had expected a small increase on the month. Britain’s property market has defied expectations for a sharp drop in prices last year, delivering modest gains since September when the Bank of England brought to a halt its quickest series of interest rate increases in decades. But prices remain at levels that many buyers find difficult to finance, especially with the benchmark lending rate at a 16-year high.

CHINA (BBG): Some Swap Trades Blocked in China as Yuan Weakens, Traders Say

Investors were briefly blocked from some yuan swap transactions that implied the currency was outside the weak end of its fixed trading band against the dollar on Tuesday, according to traders. Any onshore yuan spot trades with T+0 and T+1 settlements that place the currency outside the band can’t be executed, they said. While traders more commonly use T+2 for USD/CNY, the shorter-dated contracts are popular among some corporate entities. The onshore yuan is allowed to trade 2% above or below the PBOC’s daily reference rate implying on Tuesday that CNY was not permitted weaker than 7.2376/USD.

RBA (MNI): Board Only Discussed Leaving Rates at 4.35%

The RBA minutes from the March meeting showed that the Board did not discuss a possible change in rates in either direction, as it was "appropriate to leave the cash rate target unchanged" and the data had been "broadly as expected". Both upside and downside risks to inflation were considered but seen as "a little more even". Given it is still going to take "some time" for the RBA to feel confident that inflation will return to target, rates are likely to be left at 4.35% for some months.

TURKEY (BBG): Erdogan Suffers Historic Loss in Turkey Municipal Elections

Turkey’s Recep Tayyip Erdogan suffered an unprecedented defeat at the ballot box against the main opposition party amid rampant inflation and the highest borrowing costs since the president swept to power more than two decades ago. Turkey’s lira weakened in early trading on Monday after Erdogan’s AK Party fell behind the main opposition Republican People’s Party, known as CHP, in Sunday’s municipal elections for the first time ever, according to early results published by state broadcaster TRT. Support for AKP stood at 35.5%, while CHP was leading the race with 37.7%, with about 99.8% of the ballots counted, TRT reported.

N.KOREA/S.KOREA (BBG): North Korea Fires Ballistic Missile Ahead of South’s Vote

North Korea fired at least one suspected intermediate-range ballistic missile in a show of force that came just days ahead of national elections in South Korea for parliamentary seats. North Korea launched what appeared to be an intermediate-range ballistic missile from Pyongyang at 6:53 a.m. on Tuesday, South Korea’s Joint Chiefs of Staff said in a message sent to reporters. The missile landed outside of Japan’s exclusive economic zone, Japan’s Ministry of Defense said in a statement.

INDONESIA (BBG): Rupiah at Four-Year Low Triggers Intervention, Rate Hike Talk

Bank Indonesia intervened in the currency market to steady the rupiah after it fell to a four-year low amid a broad dollar rebound and heavy bond outflows. The currency pared its losses to about 0.1% against the greenback as of 1:00 p.m. on Tuesday local time. It had slipped almost 0.5% in morning trading to 15,963 per dollar, the lowest since April 2020. Global funds withdrew some $1.7 billion from Indonesian bonds in the first quarter, the most since the three-months through September 2022.

DATA

GERMANY DATA (MNI): MNI Projects Soft National CPI M/M Print, But Core Disinflation Slow

From state-level data that equates to 89.1% weighting of the national March flash German CPI print (due at 13:00BST/14:00CET), MNI estimates that national CPI (non-HICP print) rose by 0.4% m/m and 2.2% y/y. Analyst consensus currently stands at 0.5% M/M and 2.2% Y/Y (which does not change when considering only those analysts who submitted both monthly and annual forecasts). Current tracking of core CPI (ex-energy and food, based on 50% of the national index) implies 3.3% Y/Y (vs 3.4% in February) and 0.6-0.7% M/M, per our calculations.

EUROZONE DATA (MNI): One-Year Eurozone Inflation Expectations Decline

• ECB 1-YEAR CONSUMER INFLATION EXPECTATIONS 3.1%
• ECB 3-YEAR CONSUMER INFLATION EXPECTATIONS 2.5%

Euro area inflation expectations for the next 12 months slowed in February, the latest ECB consumer survey showed, easing to 3.1% from 3.3% in the previous month, and now stand at the lowest level since the start of Russia’s war against Ukraine in February 2022.The median rate of perceived inflation over the previous 12 months also decreased, for a fifth consecutive month, slowing to 5.5% from 6.0% in January, the survey published Tuesday showed. Expectations for inflation three years ahead remained unchanged at 2.5%, the survey showed. Inflation expectations at the one-year and three-year horizons remained well below the perceived past inflation rate.

UK DATA (MNI): Shop Price Growth Lowest Since Dec 2021, With Both Non-Food and Food Softening

• UK MAR BRC SHOP PRICES -0.4% M/M, +1.3% Y/Y

BRC-NielsenIQ Shop Price inflation slowed to +1.3% Y/Y in March (vs +2.5% Y/Y prior), whilst Shop Price inflation fell on a monthly basis by 0.4% M/M (vs+0.4% M/M growth in February). There is a clear trend of disinflation continuing, driven by the Food component falling for the eleventh consecutive month to +3.7% Y/Y (vs +5.0% Y/Y prior) - the lowest rate since April 2022. In addition to this, despite concerns about the non-food inflation component stalling, the pace of disinflation has once again picked up to +0.2% Y/Y in March (vs +1.3% Y/Y prior), the lowest level since December 2021.

UK FEB M4 MONEY SUPPLY +0.5% M/M, -1.2% Y/Y (MNI)
UK BOE FEB MORTGAGE APPROVALS 60,383 (MNI)
UK BOE FEB CONSUMER CREDIT GBP1.38 BLN (MNI)
UK BOE FEB SECURED LENDING GBP1.51 BLN (MNI)

SPAIN DATA (MNI): March Manufacturing PMI Expansionary For Second Consecutive Month

• SPAIN MAR MANUFACTURING PMI 51.4 (FCST: 51.0); FEB 51.5

The Spanish March manufacturing PMI came in above expectations at 51.4 (vs 51.0 cons, 51.5 prior), with stronger demand evident in the survey, alongside mixed inflation developments. The Spanish PMI continues to outperform its Eurozone-wide equivalent, which saw a March flash release of 45.7. Bunds reacted negatively but the move was limited.

ITALY MAR MANUFACTURING PMI 50.4 (FCST: 48.8); FEB 48.7 (MNI)

EUROZONE FINAL MAR MANUFACTURING PMI 46.1 (FLASH 45.7); FEB 46.5 (MNI)
UK MAR MANUFACTURING PMI 50.3 (FLASH 49.9); FEB 47.5 (MNI)
GERMANY FINAL MAR MANUFACTURING PMI 41.9 (FLASH: 41.6); FEB 42.5 (MNI)
FRANCE FINAL MAR MANUFACTURING PMI 46.2 (FLASH: 45.8); FEB 47.1 (MNI)

SWISS FEB RETAIL SALES -0.1% M/M, -0.2% Y/Y (MNI)

FOREX: USD Index at YTD Highs, Squeezing Net Short Position

• The USD Index touched the best levels of the year so far this morning at 105.100 during Asia-Pac hours. The moves comes as an extension off the Monday strength and the better-than-expected ISM Manufacturing release, which tipped prices paid to the highest level in over a year - raising questions over the sustainability of the recent slowdown in inflation. Despite this, CFTC data covering positioning as of the Tuesday close shows markets swung their net USD position short for the first time since 2021, potentially exposing the currency to corrective recoveries on flatting US economic data.
• CHF is the poorest performer in G10 early Tuesday, prompting EUR/CHF to recover well off pullback lows printed late last week. This keeps the cycle high and bull trigger within range at 0.9820 in EUR/CHF, a level that could come into play should ECB rate cut pricing follow the lead of the Fed gyrations so far this week. OIS markets currently price ~93bps of rate cuts from the ECB for this year.
• NOK is the firmest currency so far Tuesday, moving in tandem with oil prices. Brent crude futures have extended the rally off last week's lows to 4.5%, but EUR/NOK holds within range of recent cycle highs. First resistance holds at 11.7914 - a mark tested, but not topped, across both the Monday and Friday sessions. Clearance of last week's highs in EUR/NOK would open levels last seen in December and the next major upside resistance of 11.8695.
• Preliminary German CPI numbers for March are due, JOLTs job openings take the focus for the US session ahead, with final durable goods orders also on the docket. Fed speakers are plentiful, with Fed's Bowman, Williams, Mester and Daly all on the docket.

BONDS: EGBS/Gilts Lower as Monday UST Selloff Sets Tone

Core/semi-core EGBs and Gilts opened sharply lower and are off intraday highs as markets digest this morning's manufacturing PMI and German state-level inflation data.

• Yesterday's sell-off in US Treasuries continues to set the tone, with today's highest levels still below Friday's close (note: US markets were open yesterday, while UK/EZ counterparts were closed).
• MNI's current tracking of the German headline CPI print from the state level data suggests downside risks to the current M/M consensus of 0.5% M/M, but core disinflation remains slow overall.
• Upward revisions to the March flash manufacturing PMI releases in Germany, France, the Eurozone and the UK, alongside stronger than expected prints from Italy and Spain have provided another source of pressure.
• Elsewhere, ECB 1-year ahead inflation expectations moderated to 3.1% Y/Y (vs 3.3% prior) while 3-year ahead expectations were steady at 2.5%.
• Bunds are -83 ticks at 132.55. The first support is the March 22 low at 132.28.
• The German and French cash curves have bear steepened, while 10-year peripheral spreads to Bunds are mixed (the BTP/Bund spread is 3.0bps wider today, but Spanish, Greek and Portuguese spreads are tighter).
• Gilts are -109 ticks at 98.85, operating below the 20-day EMA at 99.04. A clear break of this level would expose the key support at 98.05 (March 15 low).
• The remainder of today's regional calendar is headlined by the German flash national CPI release, at 1300BST/1400CET.

EQUITIES: Fresh Cycle High in E-Mini S&P Monday Reinforces Bullish Conditions

A bullish trend condition in Eurostoxx 50 futures remains intact and the contract traded to fresh cycle highs last week. The climb confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies remain in a bull-mode position, highlighting positive market sentiment. Sights are on 5074.7, a Fibonacci projection. Initial firm support is at 4947.20, the 20-day EMA. The trend condition in S&P E-Minis is unchanged and remains bullish. Monday’s high print reinforces current conditions, confirming a resumption of the uptrend. Note that moving average studies remain in a bull-mode position reflecting positive market sentiment. Sights are on 5400.00 and 5434.54, the top of a bull channel drawn from the Jan 17 low. Initial firm support is 5240.19, the 20-day EMA. A move lower is considered corrective.

• Japan's NIKKEI closed higher by 35.82 pts or +0.09% at 39838.91 and the TOPIX ended 6.77 pts lower or -0.25% at 2714.45.
• Elsewhere, in China the SHANGHAI closed lower by 2.421 pts or -0.08% at 3074.958 and the HANG SENG ended 390.1 pts higher or +2.36% at 16931.52.
• Across Europe, Germany's DAX trades higher by 14.17 pts or +0.08% at 18505.94, FTSE 100 higher by 44.01 pts or +0.55% at 7996.92, CAC 40 up 27.47 pts or +0.33% at 8233.28 and Euro Stoxx 50 up 28.54 pts or +0.56% at 5111.96.
• Dow Jones mini down 105 pts or -0.26% at 39791, S&P 500 mini down 1.75 pts or -0.03% at 5293.75, NASDAQ mini down 0 pts or 0% at 18499.5.

COMMODITIES: WTI Futures Hit New Multi-Month High at $85

A bull theme in WTI futures remains intact and yesterday’s move higher reinforces current condition and confirms a resumption of the uptrend. The contract has traded through resistance at $83.87, the Oct 20 high. This signals scope for a test of $84.87 next, the Sep 15 ‘23 high. A break would open the $90.00 handle further out. On the downside, initial firm support to watch lies at $80.60, the 20-day EMA. The trend condition in Gold remains bullish and the yellow metal has traded to fresh all-time highs once again this week. The move higher maintains the price sequence of higher highs and higher lows and note that moving average studies are in a bull-mode condition, reflecting positive market sentiment. This signals scope for a climb towards $2282.6, a Fibonacci projection. Key trend support has been defined at $2146.2, the Mar 18 low.

• WTI Crude up $1.22 or +1.46% at $84.91
• Natural Gas down $0 or -0.05% at $1.836
• Gold spot up $10.29 or +0.46% at $2261.36
• Copper up $3.1 or +0.77% at $407.9
• Silver up $0.54 or +2.13% at $25.6115
• Platinum up $8.21 or +0.91% at $913.75