MNI US OPEN: Markets Look Through Fresh Euro-Era High for Core HICP

NEWS

ECB (MNI): Lagarde Says ECB Rate Hikes May Need to Continue Past March

European Central Bank President Christine Lagarde said interest-rate increases may need to persist beyond a planned half-point move in two weeks’ time. “At this point in time, it’s possible that we continue on that path,” Lagarde told Spanish television show Espejo Publico on Thursday. “By which amount in each and every meeting is impossible to say at this point.”

G20 (MNI): US & Russian Foreign Ministers Launch Into Major Criticism Of Other Nation

Both Russian Foreign Minister Sergey Lavrov and US Secretary of State Anthony Blinken have been speaking at the G20 foreign ministers' meeting in New Delhi, India. Major criticism from each for the actions of the other, with no sign of any attempt to shift to a footing that could allow for diplomacy or talks. Lavrov: "A number of Western delegations turned the work on the G20 agenda into a farce.

G20 (BBG): Consensus Emerging on Wording on Russia’s War

China emphasized the need for Group of 20 diplomats to build off a consensus reached by leaders in Bali in November, signaling an effort to move beyond divisions over the war in Ukraine that has hampered cooperation on other pressing global issues. “The outcomes of the Bali Summit must be delivered,” Chinese Foreign Minister Qin Gang said Thursday at the meeting, according to remarks released by his delegation. “We should build on our good work in Bali, and press ahead for greater progress.”

G20 (BBG): Scholz Warns China Not to Supply Russia With Weapons

German Chancellor Olaf Scholz warned China not to arm Russia in its war on Ukraine and expressed disappointment that the government in Beijing has dialed down its condemnation of the Kremlin’s aggression. In a speech to the lower house of parliament in Berlin on Thursday, Scholz said he’s frustrated that at the recent Group of 20 meeting of finance minsters, China was no longer willing to join in “a clear condemnation of the Russian attack” agreed by the G-20 leaders in Bali last year.

CHINA/US (BBG): China Sends Fighter Jets Near Taiwan as US Approves Arms Sale

China sent the most warplanes near Taiwan in nearly two months, a move that comes as the US approved the sale of $619 million worth of arms to the democratically run island. Some 17 J-10 and four J-16 fighter jets were detected in the southwestern part of the island’s air-defense identification zone in the 24 hours to early Thursday, the Defense Ministry in Taipei said in a statement posted on Twitter.

CHINA/US (MNI): China Vice Commerce Min Talks Up Discussions On Trade w/US

Wires carrying comments from the Chinese Vice Commerce Minister seeking to talk up the prospect of talks on improving trade and economic links with the US. Comes as relations remain frosty following the 'spy balloon' incident in Feb. Minister: "China is willing to conduct candid consultations with the US to reduce restrictions on bilateral trade and investment."

CHINA (MNI): China’s NPC to Target Growth Above 5% With Help From PBOC

China’s National People’s Congress is expected to unveil a growth target of over 5% powered by more fiscal spending and higher government debt, likely prompting the People’s Bank of China to commit to cooperating with the push to revive growth through ample liquidity supply and targeted tools, policy advisers and economists told MNI.

CHINA (BBG): Beijing Elevates Key Body Overseeing Hong Kong, SCMP Reports

Beijing’s top office overseeing Hong Kong is expected to report directly to the Communist Party’s Central Committee, a move seen as giving the Party greater oversight over the city, the South China Morning Post reported. The impending change was approved on Tuesday and will be submitted to the National People’s Congress, China’s top legislative body, on Sunday, the SCMP reported, citing people it didn’t name. The change will take effect after the country’s two key annual political gatherings finish this month, it said.

JAPAN (BBG): BOJ Is Said to Prefer Watching Impact of Earlier Tweaks for Now

The Bank of Japan is leaning toward monitoring the impact of recent tweaks to its stimulus program rather than making another adjustment at Governor Haruhiko Kuroda’s final policy meeting next week, according to people familiar with the matter. While BOJ officials continue to see distortion in the shape of Japan’s yield curve, the central bank still needs time to look at the impact of various measures since December that adjust its control of yields, the people said.

JAPAN (MNI): BOJ's Takata Says Easy Policy Should Be Maintained

Bank of Japan board member Hajime Takata said on Thursday that the BOJ should patiently maintain easy policy, while paying attention to the impact of powerful easy policy on market functioning. “The latest Outlook Report showed that the 2% price target will not be achieved in the projection period,” Takata told business leaders in Yokohama City.

JAPAN (MNI): BOJ Takata Wary of Weak Wage Hikes Amid Uncertainty

Bank of Japan board member Hajime Takata warned on Thursday that a sustainable level of inflation may not be achieved if wage hikes don't rise sufficiently due to a cautious outlook among companies. “Wage hikes are important factor to achieve a virtuous cycle for the economy and prices and the starting point of corporate profits,” Takata told business leaders in Yokohama.

JAPAN (MNI): JGB Survey Results Increase Pressure on BOJ to Act

The results of Japanese government bond market survey conducted by the Bank of Japan show a deterioration in bond market functioning, increasing pressure on the bank to take policy action to restore market functioning at the March 9-10 policy meeting. However, the view among board members is more time is needed to assess the decisions to mitigate the side-effects of easy policy and it may not be appropriate to act ahead of March 31, the end of fiscal year in Japan.

CORPORATE (BBG): Tesla Says It Isn’t Worried US-China Tensions Will Impact Plant

Tesla Inc. isn’t worried about political and trade tensions between the US and China, with the automaker’s Chinese-born head of global production Tom Zhu saying its Shanghai operations should be fine as long as the company keeps providing a good product and creating jobs.

DATA

EUROZONE DATA (MNI): Core HICP Jumps 0.3pp to Fresh Euro-High

• EUROZONE FEB FLASH HICP +0.8% M/M (FCST +0.5); JAN -0.2% M/M
• EUROZONE FEB FLASH HICP +8.5% Y/Y (FCST +8.3%); JAN +8.6%Y/Y
• EUROZONE FEB FLASH CORE HICP +5.6% Y/Y (FCST +5.3%); JAN +5.3%Y/Y
• EUROZONE JAN UNEMPLOYMENT 6.7%; DEC 6.7%r

Eurozone HICP surprised to the upside in the flash February data, whereby the 0.3pp acceleration in core HICP to +5.6% y/y will strongly underline hawkish sentiment at the ECB. HICP for the bloc accelerated by +0.8% m/m, slowing a modest 0.1pp to +8.5% y/y. Only energy eased in the main inflation categories. The 0.4pp increase in services inflation to +4.8% y/y will have been a key upwards driver to annualised core. The aggregate print follows higher-than-anticipated French, German and Spanish data in the past days.

ITALY FEB FLASH HICP +0.2% M/M, +9.9% Y/Y (MNI)

AUSTRALIA FEB BUILDING APPROVALS -27.6% M/M, -8.4% Y/Y (MNI)

JAPAN DATA (MNI): Japan's Feb Consumer Confidence Up For Third Month

Japan's consumer confidence index posted the third straight rise in February as most components improved from the previous month, but Bank of Japan officials are worried about weaker spending as consumption by low-income household weakens, data released by the Cabinet Office on Thursday showed.

JAPAN DATA (MNI): Japan Q4 Capex Up Q/Q But GDP Seen Revised Lower

Combined capital investment by non-financial Japanese companies excluding software rose 0.3% q/q in the fourth quarter of 2022, slowing from 2.6% in Q3, a quarterly survey released by the Ministry of Finance Thursday showed. The MOF survey, based on the demand side, is the key to calculating Q4 GDP revisions (due March 9) and indicated that capex will be revised down from preliminary estimate of -0.5%.

FOREX: Greenback Recoups Small Part of Recent Losses

• The dollar trades to the better early Thursday, recouping a small part of the Wednesday losses through the first half of the session. The USD Index, however, remains shy of yesterday's highs at 105.087 - a break above which opens the multi-month high at 105.359.
• ECB's Lagarde spoke to the Spanish public, but stuck to the recent comms of the central bank, clearly earmarking a further 50bps in rate hikes for the March meeting, before a switch to data dependency. The EUR trades to the middle of the table, with NZD the weakest performer having rallied substantially yesterday.
• Higher than expected Eurozone CPI prompted little sustained response in the EUR. While inflation was ahead of expectations, the higher than expected German, French and Dutch releases this week provided a decent opportunity for markets to price in a hotter CPI print today.
• JPY has been a focal point, with a Bloomberg sources report that Kuroda's final meeting at the helm of the Bank of Japan will result in a wait-and-see approach rather than any broader policy tweaks. The headlines prompted a swift, but brief, rally for USD/JPY to 136.76, before the day's trends resumed and the uptick fully reversed.
• The data highlight Thursday is the weekly jobless claims releases from the US, while the central bank focus in on the Bank of England, with both Tenreyro and Pill of the MPC scheduled to speak.

BONDS: Under Further Pressure This Morning​​​

• EGBs have seen further downside momentum in Futures markets, pushing Yield through yesterday's highs.
• German 10yr Yield made new 2011 high, but fell short of the 2.80% level, printed a 2.773% for the session so far.
• EU CPI came above expectation, keeping Bonds heavy but off their lows at the time of typing.
• Peripheral spread are close to flat against the German 10yr, besides Greece that trades 2.9bps tighter at the time of typing.
• Eurex rolls dominate volumes this morning, with spreads seeing a pace around 30% completed.
• Gilt trades close to inline with Europe, and remains in a limited range in the early session, with a 99.43/99.91, low/high range.
• Gilt/Bund spread sits 2bps tighter at 110.2bps.
• Treasuries have traded in line with Europe and especially Germany, which translate to a flat Tnote/Bund spread for the early session.
• Looking ahead, US IJC is the only notable data out of the US, but unlikely to move the needle.

EQUITIES: Recent Gains in Gold Considered Technically Corrective

WTI futures remain above last week’s lows and key short-term support has been defined at $73.80, the Feb 22 low. Moving average studies are in a bear-mode position and for now, this continues to highlight a downtrend. A break of the $73.80, would open $72.64, the Feb 6 low. Initial resistance to watch is at $77.91, the 50-day EMA. A clear break of this EMA would be a bullish development and signal scope for a stronger recovery. Trend conditions in Gold remain bearish and price is trading below the 50-day EMA, at $1846.4 - recent gains are considered corrective. The break of the 50-day EMA, in mid-February, strengthened the case for bears. Sights are on $1800.0 and $1787.3, the 50.0% retracement of the uptrend between Sep 28 and Feb 2. On the upside, the 50-day EMA marks the first key short-term resistance. A clear breach of this average would ease bearish pressure.

• WTI Crude up $0.38 or +0.49% at $77.32
• Natural Gas down $0.04 or -1.28% at $2.753
• Gold spot down $4.23 or -0.23% at $1831.57
• Copper down $3.8 or -0.91% at $414.35
• Silver down $0.19 or -0.92% at $21.037
• Platinum up $0.05 or +0.01% at $963.95

COMMODITIES: Recent Gains in Gold Considered Technically Corrective

WTI futures remain above last week’s lows and key short-term support has been defined at $73.80, the Feb 22 low. Moving average studies are in a bear-mode position and for now, this continues to highlight a downtrend. A break of the $73.80, would open $72.64, the Feb 6 low. Initial resistance to watch is at $77.91, the 50-day EMA. A clear break of this EMA would be a bullish development and signal scope for a stronger recovery. Trend conditions in Gold remain bearish and price is trading below the 50-day EMA, at $1846.4 - recent gains are considered corrective. The break of the 50-day EMA, in mid-February, strengthened the case for bears. Sights are on $1800.0 and $1787.3, the 50.0% retracement of the uptrend between Sep 28 and Feb 2. On the upside, the 50-day EMA marks the first key short-term resistance. A clear breach of this average would ease bearish pressure.

• WTI Crude up $0.38 or +0.49% at $77.32
• Natural Gas down $0.04 or -1.28% at $2.753
• Gold spot down $4.23 or -0.23% at $1831.57
• Copper down $3.8 or -0.91% at $414.35
• Silver down $0.19 or -0.92% at $21.037
• Platinum up $0.05 or +0.01% at $963.95