MNI US OPEN - RBA Hints at Possibility For a Pause

NEWS

ECB (MNI): Lower Inflation Expectations Bright Spot For ECB

Expectations for euro area inflation over the next 12 month and 3-year horizons have fallen, according the European Central Bank's latest Consumer Expectations Survey, while expectations for nominal income growth over the next year continued to rise. Consumers' median expectations for inflation over the next 12 months edged down to 4.9% from 5.0% in January, the survey showed while median expectations for inflation three years ahead declined significantly to 2.5%, from 3.0% in the previous month.

ECB (MNI): Growth Up, Inflation Lower In March Forecast - De Cos

The Bank of Spain's March forecast will revise its inflation projection lower and growth outlook higher for 2023 compared to December, when growth was seen at 1.3% and inflation at 4.9%, Governor Pablo Hernandez de Cos said in an event in Madrid Tuesday. In mid February, a national official said that growth would reach 1.6% and inflation 4.75% in 2023, numbers that could yet be revised further.

BOE (BBG): BOE’s Catherine Mann Says the UK Pound Could Weaken Further

Bank of England policy maker Catherine Mann said the pound could weaken further as investors absorb the implication of plans by the US Federal Reserve and European Central Bank to raise interest rates. “There has been a quite a hawkish tone coming from the Federal Reserve and ECB,” Mann said in an interview on Bloomberg TV on Tuesday. “An important question in regards to the pound is how much of that existing hawkish tone is already priced into the pound. If Fed hawkishness is not priced in, the pound could fall further.”

US (WaPo): Biden to Unveil Plan Averting Medicare Funding Crisis, Challenging GOP

The White House on Tuesday will propose raising taxes on Americans earning more than $400,000 and reducing what Medicare pays for prescription drugs in an attempt to ensure that the health-care program for seniors is funded for the next two decades, challenging Republicans over an imminent funding crisis, according to a copy of the plan reviewed by The Washington Post.

FRANCE (NYT): Unions Vow to Bring France to a ‘Standstill’ Over Macron’s Retirement Plan

Idle trains, closed ports, empty schools, canceled flights, uncollected trash, shuttered refineries. That is what France was bracing for on Tuesday as labor unions vowed to bring the country “to a standstill” and send more than a million people into the streets to protest President Emmanuel Macron’s plans to raise the legal age of retirement to 64 from 62.

CHINA (MNI): Foreign Min Talks US, EU, Russia & Taiwan In Two Sessions Presser

Chinese Foreign Minister Qin Gang has outlined the Chinese government's major foreign policy views in a press conference in front of domestic and international reporters, held on the sidelines of the 14th National People's Congress, one of the 'Two Sessions' (Lianghui) taking place in Beijing currently. During the course of the presser, he spoke on China's relations with the US, EU, and Russia, as well as the war in Ukraine and Beijing's stance on Taiwan.

SWEDEN (MNI): No Downturn In Core Inflation - Riksbank's Thedeen

Sweden's core inflation was too high and yet to begin its descent, Riksbank Governor Erik Thedeen said Tuesday, while noting the central bank's planned gilt sales would only have a marginal impact on prices with the policy rate the key tool for combatting inflation. In response to questions from MNI, Thedeen said that "the big picture (is that)... underlying inflation has not turned and is still too high."

JAPAN (MNI): BOJ Expected On Hold As Kuroda Era Ends; Ueda To Go Slowly

Bank of Japan officials will not risk any policy changes to address ongoing bond market distortions at the last meeting under Governor Haruhiko Kuroda, though they are vigilant against the threat of bond market volatility amid the change of leadership in April, MNI understands. Haruhiko, whose decade-long tenure comes to an end on April 8, is not expected to unveil new tweaks to yield curve control on Friday to avoid being seen as pre-empting any policy shifts under Governor-elect Kazuo Ueda.

JAPAN (MNI): Japan Lower House to Vote on BOJ Nominees Thursday

A plenary session of the House of Representatives will vote on the Bank of Japan governor and deputy governor nominees on Thursday and a vote in the House of Councillors will be on Friday, Diet officials said.

JAPAN/SOUTH KOREA (MNI): S. Korean Leader To Visit Japan Next Week In Further Push To Mend Ties

South Korean President Yoon Suk-yeol is expected to visit Japan at some pointnext week, with his office "closely looking at options" for the possible date of the summit, the Korea Herald reports. Yoon's trip will be the first visit to Japan by a South Korean leader since 2019, albeit it was on the occasion of a G20 summit in Osaka. The leaders of South Korea and Japan used to exchange visits once a year, but the practice was discontinued in 2011.

RBA (MNI): Hikes 25bp, Dovish Tweak Hints Pause Is Close

The Reserve Bank of Australia opened the door to a pause as soon as April, unveiling a dovish tweak to guidance after hiking rates 25bp to 3.6% on Tuesday. The statement accompanying the 10th consecutive hike to an 11-year high sparked a repricing of peak rate expectations after declaring "further tightening of monetary policy will be needed", a toning down of February's hawkish - and time dependent - reference to more rates rises "over the coming months".

CORPORATE (BBG): Meta Is Said to Cut Thousands More Jobs as Soon as This Week

Meta Platforms Inc., the owner of Facebook and Instagram, is planning a fresh round of layoffs and will cut thousands of employees as soon as this week, according to people familiar with the matter. The world’s largest social networking company is eliminating more jobs, on top of a 13% reduction in November, in a bid to become a more efficient organization. In its earlier round of cuts, Meta slashed 11,000 workers in what was its first-ever major layoff.

DATA

GERMANY DATA (MNI): Feb German Services Job Losses Overtake Industry

Insolvencies in Germany rose by 7% in February compared with January’s figure, new research by the Leibniz Institute for Economic Research Halle (IWH) shows, with more to come. Some 11,600 jobs were lost at the top 10% of the 833 partnerships and corporations that went bust last month, up 19% on the previous year’s figure and the highest level since June 2021, the research shows.

GERMANY FACTORY ORDERS +1.0%M/M, -10.9%Y/Y (MNI)

SWISS FEB UNEMPLOYMENT -2.3% M/M, -16.5% Y/Y (MNI)

UK BRC FEB BY VALUE SHOP SALES LFL +4.9% YY, TOTAL +5.2% YY (MNI)

CHINA DATA (MNI): China's Exports Fall 6.8% Y/Y Over Jan-Feb

• CHINA JAN-FEB TRADE SURPLUS +$116.88 BLN; MEDIAN +$82.5 BLN
• CHINA JAN-FEB IMPORTS -10.2% Y/Y; MEDIAN -5.5% Y/Y: CUSTOMS
• CHINA JAN-FEB EXPORTS -6.8% Y/Y; MEDIAN -9.0% Y/Y

China's exports dropped 6.8% in the first two months compared with the same period last year, beating the consensus forecast of a 9.0% decrease, while imports fell 10.2%, China Customs released the data on Tuesday.

Exports in the first two months totalled to USD506.3 billion. The decline in exports was led by top trade partners including the U.S., E.U. and Japan, reflecting slower external demand as interest rates rise. Exports to the United States fell 21.8% y/y and those to the European Union dropped 12.2% y/y.

JAPAN DATA (MNI): Japan's Jan Wages Rise; Real Pay Stays Negative

Real wages stayed in negative territory for the 10th straight month in January amid higher inflation, stoking concerns over slower consumer spending in the coming months, according to data released Tuesday by the Ministry of Health, Labour and Welfare. Average wages rose 0.8% y/y in January after rising 1.4% in December, with total monthly average cash earnings per regular employee increasing 0.8% y/y in January compared to 4.1% y/y growth in December.

JAPAN DATA (MNI): BOJ Jan Consumption Index Up; First Rise Since Sept

The Bank of Japan's Consumption Activity Index posted the first month-on-month rise in three months, up 1.2% in January following a 1.1% decline in December, supporting the view that private consumption had increased moderately despite being affected by Covid-19, data released on Tuesday showed.

AUSTRALIA JAN TRADE BALANCE A$+11688 (MNI)

FOREX: AUD Hits YTD Lows as RBA Statement Opens Possibility of Pause

• The Reserve Bank of Australia hiked the policy rate by 25bps to 3.60% overnight, alongside expectatons. Markets took more interest in the accompanying policy statement, however, which raised the likelihood of a pause to the policy tightening cycle at the upcoming meetings. As a result, AUD trades markedly weaker, with the currency softer against all others in G10.
• AUD/USD has plumbed fresh YTD lows in recent trade at 0.6674, with the pullback in prices accelerating on the break below last week's lows of 0.6695 and the Jan 3 low of 0.6688. This bearish break opens mid-Dec lows at 0.6629 for direction.
• JPY is at the other end of the table, sitting firmer amid a general risk-off backdrop. Equities hold well below yesterday's highs, with European markets similarly lower. The US yield curve sits lower and modestly flatter, with 10y off 2.5bps, while 20y drops 3.5bps ahead of NY hours.
• The USD has gained in tandem with the JPY, helping drag most major pairs off overnight highs. EUR/USD and GBP/USD have both ebbed lower through the European morning in price action to mimic profit-taking ahead of Powell's appearance later today.
• Focus ahead turns to the appearance of Fed's Powell in front of the Senate as he presents his semi-annual testimony later today. He appears in front of the lawmakers at 1500GMT/1000ET, however a release of text is possible ahead of time. There are no notable data releases for the duration of the Tuesday session.

BONDS: Softer Inflation Expectations Boost Bunds, With Powell Awaited

Treasuries, Bunds and Gilts have strengthened in early Tuesday trade, though within Monday's ranges. The focus of the session is Fed Chair Powell's semi-annual testimony before the Senate Banking Committee (1000ET/1500GMT).

• Bunds are outperforming despite stronger-than-expected German factory orders, pushing to session highs after the ECB's monthly Consumer Expectations survey showed a sharp pullback in inflation expectations.
• ECB terminal hike pricing briefly ticked to a fresh cycle high above 4.10% before pulling back sharply after the ECB survey release (last 4.05%).
• Comments by BoE hawk Mann brought little new; Gilt reaction was limited.
• A fairly quiet US data slate, with Wholesale Inventories and the Fed's Consumer Credit release.
• The month's coupon issuance begins with $40B 3Y Note sale at 1300ET.

Latest levels:

• Jun 10-Yr US Tsy futures (TY) up 10.5/32 at 111-10 (L: 111-00 / H: 111-12)
• Jun Bund futures (RX) up 57 ticks at 131.48 (L: 130.61 / H: 131.78)
• Jun Gilt futures (G) up 45 ticks at 100.42 (L: 99.77 / H: 100.62)
• Italy / German 10-Yr spread 3.2bps tighter at 179.4bps

EQUITIES: Eurostoxx Futures Test 4323.0 Bull Trigger, Clear Break Needed to Resume Uptrend

Eurostoxx 50 futures have recovered from recent lows and importantly, this has left a key support intact - the base of a bull channel drawn from the Oct 13 low. The line intersects 4221.20. While channel support holds, the broader uptrend remains intact. Monday’s gains resulted in a test of 4323.00, the Feb 16 high and bull trigger. A clear break would resume the uptrend. On the downside, a breach of the channel base alters the picture. S&P E-Minis trend conditions are bearish, however, the strong bounce late last week has eased bearish pressure. Note that the contract has traded above both the 20- and 50-day EMAs. An ability to hold on to its latest gains would signal scope for a recovery towards 4100.20, a Fibonacci retracement. On the downside, key support has been defined at 3925.00, the Mar 2 low. A break of this level would reinstate the recent bearish theme.

• Japan's NIKKEI closed higher by 71.38 pts or +0.25% at 28309.16 and the TOPIX ended 8.49 pts higher or +0.42% at 2044.98.
• Elsewhere, in China the SHANGHAI closed lower by 36.927 pts or -1.11% at 3285.099 and the HANG SENG ended 68.71 pts lower or -0.33% at 20534.48.
• Across Europe, Germany's DAX trades higher by 43.4 pts or +0.28% at 15676.75, FTSE 100 higher by 13.54 pts or +0.17% at 7937.39, CAC 40 up 13.87 pts or +0.19% at 7377.96 and Euro Stoxx 50 up 1.88 pts or +0.04% at 4313.73.
• Dow Jones mini up 48 pts or +0.14% at 33475, S&P 500 mini up 8.75 pts or +0.22% at 4059, NASDAQ mini up 38.75 pts or +0.31% at 12353.75.

COMMODITIES: WTI Future Trend Conditions Bullish Ahead of Key $82.89 Resistance

WTI futures remain bullish following last week’s appreciation and the contract started this week on a positive note. Price is through resistance at the 50-day EMA which intersects at $78.09 today. The breach reinforces short-term bullish conditions and paves the way for a climb towards $82.89, the Jan 23 high and a key resistance. On the downside, a breach of support at $73.80 is required to reinstate the recent bearish theme. First support is at $75.83. Trend conditions in Gold remain bearish, however, the metal traded higher last week and breached resistance at $1846.4, the 50-day EMA. A clear break of this hurdle would strengthen short-term bullish conditions and signal scope for an extension higher - this would open $1870.5, the Feb 14 high. On the downside, key short-term support has been defined at $1804.9, the Feb 28 low. A break would resume recent bearish activity.

• WTI Crude down $0.11 or -0.14% at $80.32
• Natural Gas down $0 or -0.16% at $2.561
• Gold spot down $1.75 or -0.09% at $1846.43
• Copper down $4.45 or -1.09% at $405.2
• Silver down $0.06 or -0.29% at $21.0595
• Platinum down $6.38 or -0.65% at $975.05