MNI US OPEN - Mann Argues For Further BoE Tightening

NEWS

BOE (MNI): BOE Mann Says More Tightening Needed

Bank of England Monetary Policy Committee member Catherine Mann said that the policy stance was still loose and that further tightening financial conditions that are now looser than what likely will be needed to moderate the embedding of on-going inflation was needed.

G20 (MNI): US' Yellen - Additional USD10bn to Ukraine; Will Call For More G20 Support

Wires carrying comments from US Treasury Secretary Janet Yellen, speaking ahead of the G20 finance ministers and central bank governors meeting in Bangalore, India. Yellen states that the US will provide USD10bn in new economic aid to Ukraine in the coming months. On US-China relations, Yellen said the two nations will resume discussions on economic issues 'at an appropriate time', but that at present she does not have a specific time frame in mind to resume dialogue with China.

US (BBG): Biden Targets Mortgage Fee Overhaul to Narrow Homeownership Gap

The Biden Administration is seeking to widen access to homeownership for first-time and low-income buyers, aiming to reduce some mortgage-related fees as the US contends with its worst housing affordability crisis in decades. The federal government has been rolling out changes that would alleviate some costs for those borrowers.

BOK (MNI): Flags More Hikes but Wary on Growth

The Bank of Korea on Thursday flagged the possibility of additional hikes to tame inflation running well above target as it kept its Base Rate steady at 3.5% on concerns about weaker growth following seven consecutive rate increases.

MNI RBNZ REVIEW: OCR Peak Still 5.5% But Softer Tone

The RBNZ unanimously agreed to hike rates 50bp to 4.75% at its February meeting as was widely expected. It looked through the short-term impacts of recent extreme weather events to its medium-term expectations. Governor Orr noted that the economy had developed in line with its November projections and as a result there was little change to the RBNZ’s forecasts, including the OCR peaking at 5.5%.

NEW ZEALAND (MNI): RBNZ Warns Mortgages to Sap 22% of Disposable Income

Reserve Bank of New Zealand Assistant Governor Karen Silk warned on Thursday that borrowers could be spending up to 22% of their disposable income on servicing mortgages as they are repriced higher. Speaking before a parliamentary committee, Silk said the average mortgage rate on the outstanding stock of mortgages was roughly 4.5%, but with around 50% of loans to be repriced over the next 12 months that would take the average rate to around 6.5%.

CHINA (MNI): Feb High Frequency Data Shows Recovery - Shanghai Securities News

The flow of people and logistics since the Spring Festival has rebounded rapidly, indicating the rebound in domestic demand is gathering pace, according Shanghai Securities News. The average number of express delivery collections was up 20% m/m, according to data released by the State Council.

RUSSIA (MNI): Russia, China Ministers Did Not Discuss Peace Plan Wednesday

The Wall Street Journal reported recently that Chinese President Xi was preparing to visit Moscow in the coming months to push for multiparty peace talks and allow China to reiterate its calls that nuclear weapons not be used. However, Russia's Foreign Ministry spokesperson Maria Zakharova said in a statement that Russian Foreign Minister Lavrov and China's top diplomat Wang Yi did not discuss a "Chinese peace plan" in talks in Moscow yesterday.

DATA

EUROZONE DATA (MNI): Jan HICP Revised Up, Core at Fresh Euro-Era High

• EZ HICP JAN FINAL -0.2% M/M (FLASH -0.4%); DEC -0.4% Y/Y
• EZ HICP JAN FINAL +8.6% Y/Y (FLASH +8.5%); DEC +9.2% Y/Y
• EZ HICP JAN FINAL CORE CPI -0.8% M/M, +5.3% Y/Y (FLASH +5.2% Y/Y)

Eurozone HICP was revised upwards by 0.1pp to the to +8.6% y/y in the final January print. This confirms a 0.6pp deceleration in headline HICP for the bloc, implying a third consecutive month of easing annualised price pressures. Slowing energy prices accounted for the bulk of downwards pressure. On the month, prices fell by -0.2% m/m, 0.2pp less sharp than flash estimates. Revisions to headline Y/Y and M/M HICP were in line with consensus expectations.

FOREX: EUR/USD Downtrend Persists, With YTD Lows in Range

• The modest downtrend in EUR/USD persists through the European morning, with EUR/USD printing a fresh pullback low at 1.0587. This marks the fourth consecutive session of lower lows for the pair, and opens next support at 1.0484 (YTD low) and the 100-dma at 1.0443.
• USD strength following the Wednesday FOMC minutes release remains the key driver, prompting the USD Index to narrow the gap with key resistance crossing at 104.667.
• GBP continues to trade heavy and is among the poorest performers in G10. GBP/JPY is continuing to backtrack the gains posted earlier this week to narrow in on first support of 161.44. Moves come ahead of the nomination hearing for the next likely BoJ governor Ueda, who appears in front of the Japanese lower house at 0030GMT (0930 Tokyo time) on Friday.
• Antipodean currencies are trading well, with AUD and NZD close to the top of the pile. This has paused the February CHF/AUD rally, with the pair oscillating either side of the 100-dma at 1.5727.
• Weekly US jobless claims are the data highlights Thursday, with Q4 GDP revisions also due. Speeches are scheduled from ECB's de Cos, Fed's Bostic & Daly.

BONDS: Gilts Underperform Core FI as Mann Remains Hawkish

• Core fixed income has drifted lower in European hours, but Bunds, Treasuries and gilts all still remain some way above yesterday's lows.
• The biggest moves this morning have been seen in gilts with a a largely shift in the curve following a hawkish speech from MPC member Catherine Mann. She was already known to be the hawk on the MPC but she seems a long was off from voting for rates to be unchanged. She has made no reference to the magnitude of future rate hikes but she notes that "more tightening is needed, and caution that a pivot is not imminent."
• Looking ahead we have the second print of Q4 US GDP (and core PCE) as well as speeches from Fed's Bostic and Daly and ECB's de Cos and some US regional manufacturing surveys.
• TY1 futures are down -0-5+ today at 111-01 with 10y UST yields up 2.5bp at 3.944% and 2y yields up 1.0bp at 4.705%.
• Bund futures are down -0.35 today at 133.97 with 10y Bund yields up 2.2bp at 2.540% and Schatz yields up 0.2bp at 2.914%.
• Gilt futures are down -0.48 today at 101.36 with 10y yields up 4.2bp at 3.640% and 2y yields up 4.2bp at 3.927%.

EQUITIES: Eurostoxx Futures Touch 4280.0 Following Wednesday Dip Buying

Dip buyers emerged in EUROSTOXX 50 futures again Wednesday, with prices rapidly bouncing off the 4211.00 lows. Nonetheless, prices remain just below first resistance at 4303.20, the 2.382 proj of the Sep 29 - Oct 4 rise from Dec 20 low, but still above 4265.00, the Feb 3 high. Note that the trend is overbought. A pullback would represent a healthy correction. Key support lies at 4097.00, the Jan 19 low. Initial support is at 4228.4, the 20-day EMA. Further slippage Wednesday put the S&P E-Minis to fresh February lows, with weakness extending through the close. This puts prices below first support at the 50-day EMA at 4031.50 and tilts the near-term view lower. 3901.75 marks next support, the Jan 19 low.

• In China the SHANGHAI closed lower by 3.671 pts or -0.11% at 3287.477 and the HANG SENG ended 72.49 pts lower or -0.35% at 20351.35.
• Across Europe, Germany's DAX trades higher by 79.06 pts or +0.51% at 15479.84, FTSE 100 lower by 21.83 pts or -0.28% at 7909.54, CAC 40 up 18.68 pts or +0.26% at 7318.17 and Euro Stoxx 50 up 19.12 pts or +0.45% at 4261.92.
• Dow Jones mini up 93 pts or +0.28% at 33171, S&P 500 mini up 20 pts or +0.5% at 4019, NASDAQ mini up 111 pts or +0.92% at 12207.5.

COMMODITIES: WTI Futures Drift Lower Wednesday, Sitting Below 50-Day EMA

WTI futures drifted lower into the Wednesday close, returning the outlook to neutral for now. Prices now sit back below the 50-day EMA, at $78.34, however the medium-term view remains unchanged. Key resistance remains at $82.66, the Jan 18 high. On the downside, initial firm support has been defined at $72.25, the Feb 6 low for the continuation contract. Trend conditions in Gold are bearish for now, despite the late recovery into last Friday’s close. This follows the strong sell-off on Feb 2 / 3 as well as the break of support at the 50-day EMA early Wednesday. A clear break here would strengthen a bearish case and suggest scope for a deeper pullback. Vol band support (the 2.0% 10-dma envelope), successfully contained prices Friday, keeping the focus on the level this week.

• WTI Crude up $0.27 or +0.37% at $74.23
• Natural Gas up $0.02 or +0.87% at $2.202
• Gold spot up $1.07 or +0.06% at $1827.12
• Copper down $4.2 or -1% at $414.5
• Silver up $0.03 or +0.16% at $21.5559
• Platinum up $1.29 or +0.14% at $955.2