MNI US OPEN: Stubborn Core CPI Should Still Concern ECB

NEWS

US (MNI): Grand Jury Votes to Indict Donald Trump in New York (New York Times)

The New York Times writes "a Manhattan grand jury voted to indict Donald J. Trump on Thursday for his role in paying hush money to a porn star, according to five people with knowledge of the matter, a historic development that will shake up the 2024 presidential race and forever mark him as the nation's first former president to face criminal charges."

US (BBG): Biden-GOP Tensions Dim Hopes for Bipartisan Social Security Fix

A bipartisan Senate effort to shore up Social Security is hitting a political roadblock. Some members of the ad hoc group of lawmakers who’ve been trying to fashion a deal say the prospects have been diminished by President Joe Biden’s accusations that Republicans want to cut benefits, and former President Donald Trump’s campaign promise to leave entitlement programs alone.

US (BBG): House Passes Sweeping GOP Energy Policy Bill - WSJ

The House on Thursday voted 225 to 204 to pass Republicans' wide-ranging energy agenda, a collection of proposals designed to boost oil and gas production and accelerate new projects while striking a contrast with the Biden administration's emphasis on shifting to greener sources. The bill represents Republicans' opening wish list as members of both parties seek a way forward on energy policy, amid concerns over high prices, climate change and overseas threats.

US/CHINA (BBG): White House Tries to Keep China Calm as Taiwan’s Tsai Visits US

The Biden administration is going to unprecedented lengths to play down the importance of Taiwan President Tsai Ing-wen’s visit to the US this week, as officials try to keep an already soured relationship with China from getting any worse. Although China already has protested the visit, several people familiar with the matter say they believe China’s response may be more muted than earlier feared. The people, who asked not to be identified discussing private deliberations, said Tsai scrapped some events and limited her press engagements, which were seen as most likely to draw Beijing’s ire.

ECB (BBG): ECB’s Kazaks Says Rates Still Need to Rise to Fight Inflation

European Central Bank Governing Council member Martins Kazaks said borrowing costs will still need to rise to battle high consumer price growth. “Inflation still remains high and continued rate increases will be necessary in order to bring inflation down,” Kazaks said in an interview with Latvian TV on Friday. The comments affirm Kazak's remarks to MNI in an exclusive piece published yesterday (MNI Exclusive).

CEE (MNI): Lukashenko - West Planning to Invade Belarus; Return of Nukes a Safeguard

Delivering his annual address to the Belarusian Parliament, President Alexander Lukashenko issues inflammatory comments regarding the war in Ukraine and the alleged aims of Western nations. Claims that the West is planning to invade Belarus with the intention of destroying it, and that the placing of Russian tactical nuclear weapons in Belarus 'is not blackmail, but a chance to safeguard Belarus.'

NATO (MNI): Path Clear for Finland Accession After Turkish Parliament Approves Bid

The final obstacle in Finland's accession process for NATO was cleared on 30 March after the Turkish Grand National Assembly ratified the Nordic nation's bid. The country will officially be accepted into the defensive alliance at the next NATO Summit in Vilnius, Lithuania on 11-12 July. Following the vote NATO Sec-Gen Jens Stoltenberg stated that it was his aim to have Sweden's bid also fully ratified before the summit. Turkey remains at loggerheads with the Swedish gov't over the issue of the extradition of Kurdish dissidents it says are terrorists.

RUSSIA (BBG): Russia’s Lavrov to Visit New York April 24 for UN Meeting: Tass

Russian Foreign Minister Sergei Lavrov intends to visit New York April 24 to hold a discussion on the new world order, replacing the unipolar one, within the framework of the Russian presidency of the UN Security Council, Russia’s envoy to United Nations Vasily Nebenzya says, according to Tass.

JAPAN (BBG): BOJ Widens Band of JGB Buying Operations in Q2

The Bank of Japan on Friday said it would widen the band of its Japanese government bond buying operations in the second quarter, flagging the option of buying up to JPY875 billion of 5-10-year bonds per auction, according to a quarterly schedule released by the central bank.

JAPAN (BBG): Japan Tightens Chip Gear Exports as US Seeks to Contain China

Japan said it will expand restrictions on exports of 23 types of leading-edge chipmaking technology, as the US ratchets up efforts to limit China’s access to key semiconductor knowhow. About 10 Japanese companies including leading gearmaker Tokyo Electron Ltd. would need to get licenses to ship a broader-than-expected array of equipment used to transform silicon into chips, spanning cleaning, deposition, annealing, lithography, etching and testing.

ITALY (MNI): BOI Sees 2022 Profit, But Possible Losses '23-'24

The Bank of Italy made EUR 2.1 Billion of net profit in 2022, a reduction of EUR3.9 billion compared to 2021, but the expectations for losses in 2023 and 2024 are growing as interest rates rise, Governor Ignazio Visco said during the central bank's annual presentation Friday.

MNI RBA WATCH: Pause Priced In Despite Persistent Inflation

The Reserve Bank of Australia is expected to pause its tightening cycle at its April 4 board meeting, but a 25bp hike is not out of the question as it continues to battle inflation persistently well in excess of its 2-3% target. Another 25bps would be the sixth consecutive quarter-point increase and 11th cumulative hike since the Reserve began tightening from a record low 0.1% in May 2022 and would push the official cash rate to an 11-year high of 3.85%. A pause would mean the RBA slips further behind its international peers.

RBA (MNI): Panel Reviewing RBA Tables Report

The panel reviewing the Reserve Bank of Australia (RBA) filed its report with Australia’s Treasurer Jim Chalmers Friday. Chalmers intends to publish the report sometime before the May 2023 budget. The review – the first external examination of the RBA in its 40-year history – is set to make a raft of recommendations, which could include shifting interest-rate decision making power from the reserve's board to a committee of economic specialists. The review is unlikely to recommend changes to the RBA’s 2-3% inflation target.

CHINA/TESLA (RTRS): Elon Musk Plans China Visit, Seeks Meeting with Premier

Tesla Chief Executive Elon Musk is making plans to visit China as early as April and is seeking a meeting with China's Premier Li Qiang, two people with knowledge of planning for the trip told Reuters. The exact timing of the visit is subject to Li Qiang's availability, one of the sources said. Tesla and China's State Council Information Office did not immediately reply to requests for comment on Friday.

DATA

EUROZONE DATA (MNI): EZ Headline Inflation Slumps; Core An Issue For ECB

• EUROZONE MAR FLASH HICP +6.9% Y/Y
• EUROZONE MAR FLASH CORE HICP +5.7% Y/Y

Eurozone headline inflation fell sharply in March, data from Eurostat showed, but there was little cheer for ECB policymakers as the core annual reading edged higher again. The headline reading fell to 6.9% y/y, down from 8.5% in February. However, the core reading rose to 5.7% from 5.6% last month, underlining the task ahead for the Governing Council.

EUROZONE FEB UNEMPLOYMENT RATE 6.6% (MNI)

UK DATA (BBG): UK House Prices Fall at Sharpest Annual Pace Since 2009

UK house prices fell at the sharpest annual pace since 2009 after surging interest rates increased the cost of borrowing, one of the biggest mortgage lenders said. The average cost of a home fell 3.1% from a year ago in March, steeper than the 2.2% drop expected by economists, Nationwide Building Society said Friday. Prices have fallen 4.6% from their peak in August, bringing the average value to £257,122 ($318,320).

UK DATA (MNI): Q4 Final GDP Revised Up to +0.1%

• UK FINAL Q4 GDP +0.1% Q/Q (PRELIM 0.0%); Q3 -0.1% Q/Q

Services output grew by +0.1% Q/Q, construction by +1.3% Q/Q, whilst production was flat in Q4. Upwards revisions from services and construction largely lifted the print from a flat reading. An ONS spokesperson said "The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter."

FRANCE DATA (MNI): Flash HICP Slows From February High

• FRANCE MAR FLASH HICP +0.9% M/M (FCST +0.8%); FEB +1.1% M/M
• FRANCE MAR FLASH HICP +6.6% Y/Y (FCST +6.5%); FEB +7.3% Y/Y

French HICP was 0.1pp stronger than consensus estimates in March across m/m and y/y headline prints, at +0.9% m/m and +6.6% y/y. Nonetheless, the annualised rate is 0.7pp lower than the French euro-era high of +7.3% y/y reached in February. Slowing energy prices and base effects will have largely accounted for the deceleration in annualised HICP, whilst the m/m growth implies that short-term price pressures remain acute.

FRANCE FEB PPI -0.9% M/M, +15.7% Y/Y (MNI)

GERMANY FEB RETAIL SALES -1.3% M/M (FCST +0.5%); -7.1% Y/Y (MNI)

ITALY MAR FLASH HICP +0.8% M/M, +8.2% Y/Y (MNI)

SWISS FEB RETAIL SALES +1.1% M/M, +0.3% Y/Y (MNI

JAPAN DATA (MNI): Japan Mar Tokyo CPI 3.2% Vs. Feb 3.3%

• JAPAN MAR TOKYO CORE CPI +3.2% Y/Y; FEB +3.3%
• JAPAN MAR TOKYO CORE-CORE CPI +3.4% Y/Y; FEB +3.1%
• JAPAN MAR TOKYO CPI ENERGY COSTS +0.3% Y/Y; FEB +5.3%
• JAPAN MAR TOKYO CPI FOOD EX-PERISHABLES +8.1% Y/Y; FEB +7.8%

The Tokyo core inflation rate slowed as expected to 3.2% y/y in March from February's 3.3%, suggesting that the nationwide core CPI will continue to decelerate due to government gas and electricity subsidies that run to October, data from the Ministry of Internal Affairs and Communications showed Friday. The Tokyo core CPI remained above the BOJ's 2% target for 10th straight month in March, a sign that rising raw material costs were steadily pushing up a broad range of prices for daily necessities.

JAPAN DATA (MNI): BOJ Vigilant on Output Outlook Despite Feb Rebound

• JAPAN FEB INDUSTRIAL OUTPUT +4.5% M/M; JAN -5.3%

Bank of Japan officials remain vigilant against weak industrial production in the first quarter of 2023 despite a rebound in February, as both exports and production are pressured by the slowing global economy and shortage of semiconductors. The higher output was driven by increased assembly of motor vehicles, production machinery and electronic parts and devices.

JAPAN DATA (MNI): Japan Feb Retail Sales +6.6% Y/Y; 12th Monthly Rise

• JAPAN FEB RETAIL SALES +6.6% Y/Y; JAN +5.0%
• JAPAN FEB RETAIL SALES +1.4% M/M; JAN +0.8%

Japanese retail sales rose 6.6% y/y in February, following the 5.0% y/y growth reported last month, marking the twelfth monthly rise. On a monthly basis, retail sales rose 1.4%, lower from last 1.9% growth in January. General merchandise sales picked up 10.3% y/y, faster than the 8.4% y/y increase last month, while sales of fabric apparels and accessories rose 9.9% y/y, expanding from the increase of 4.1% y/y in January.

JAPAN FEB JOBLESS RATE RISES TO 2.6% VS. JAN 2.4% (MNI)

CHINA DATA (MNI): China's PMI Shows Expansion for Third Month

• CHINA MAR MANUFACTURING PMI 51.9 VS 52.6 IN FEB

China's Purchasing Managers' Index (PMI) registered 51.9 in March, recording expansion for the third consecutive month despite falling from February's 52.6 level, data from the National Bureau of Statistics (NBS) showed Friday. The production sub-index marked 54.6 in March, slower than February's 56.7 reading. The new orders sub-index – a gauge of demand – stood at 53.6, sliding from last month's 54.1.

FOREX: USD/JPY Pushes to Fresh High as BoJ Broadens Bond Buying

• USD/JPY pressed to a fresh weekly high in late Asia / early European hours as the BoJ outlined their bond-buying schedule for Q2, expanding the maturity range of purchases to incorporate the super-long end of the curve. The tweaked schedule outlines the ability of the BoJ to remain flexible amid global pressures - most notably the recent banking fallout that send global yields lower.
• USD/JPY showed above Y133.50 for the first time since March 17th in response, opening next resistance at the 133.89 100-dma. Progress through here would mark a 50% retracement for the March downleg, but further strength in the pair is needed to reverse the current medium-term bearish signals.
• NOK/SEK has turned lower to reflect the moderation in Brent oil prices so far Friday, but the cross remains well off the nearest notable support at the Mar20 low of 0.9725.
• The USD is generally firmer, but remains within the March downtrend channel drawn off the March 8th high. Data releases pick up into the US crossover, with February PCE, personal income & spending, the final UMich sentiment reading as well as the March MNI Chicago PMI. Markets look for the PMI to deteriorate slightly to 43.0 from 43.6.
• A number of central bank speakers are also on the docket, with ECB's Lagarde & Vujcic as well as Fed's Williams and Cook set to speak.

BONDS: BTPs Outperform As Soft Euro Inflation Data Brings Bunds Off Lows

For the second consecutive session, Eurozone inflation data has been the main market driver in the European morning, with US PCE and Chicago PMI eyed later.

• An early upside surprise in the French prelim March inflation report saw Bunds sell off and ECB hike pricing pick up further, but the move was partially reversed as Italian CPI came in well below expectations, leading to a downside miss in overall Eurozone inflation.
• Bunds went from session lows to near session highs and BTPs rallied strongly on the Italian CPI miss, with the overall impact being 10Y spreads compressing 4.2bp.
• ECB depo hike pricing pulled back about 8bp as well (terminal still up 1.2bp on the day to 3.61%), with BoE peak Bank Rate retreating around 4bp (last 4.69%).
• ECB's Lagarde and Vujcic have scheduled appearances later.
• The US curve remains bear flattened, with Fed May hike pricing remaining slightly firmer (1bp) overnight at 15bp (60% implied probability of a 25bp raise).
• We get several key data points to close out the week/month/quarter: Feb PCE release, MNI Chicago Business Barometer, and final UMichigan sentiment.Late Friday, Fed's Williams and Cook make appearances (Waller speaks over the weekend).

Latest levels:

• Jun US 10Y futures (TY) down 2.5/32 at 114-16 (L: 114-09 / H: 114-20)
• Jun Bund futures (RX) up 20 ticks at 135.42 (L: 134.7 / H: 135.64)
• Jun Gilt futures (G) down 6 ticks at 103.33 (L: 102.8 / H: 103.42)
• Italy / German 10-Yr spread 4.2bps tighter at 181.9bps

EQUITIES: Week's E-mini S&P Rally Shifts Targets to 4119.50 Mar 6 High

Eurostoxx 50 futures traded higher Thursday. The contract has cleared resistance at 4164.00, the Mar 22 high. This cancels a recent bearish threat and confirms a resumption of the bull cycle that started Mar 20. A continuation higher would open key resistance at 4268.00, the Mar 6 high. Moving average studies are in a bull-mode set-up and this suggests the broader uptrend is intact. Initial firm support lies at 4034.00, the Mar 24 low. S&P E-Minis are trading higher. Price has breached resistance at 4073.75, Mar 22 high. The contract is also once again trading above the 50-day EMA - the average intersects at 4023.39. The break of 4073.75 strengthens bullish conditions and signals scope for a climb towards 4119.50, the Mar 6 high. Key short-term support lies at 3937.00, the Mar 24 low. A break of this support would be bearish. Initial support lies at 4012.49, the 20-day EMA.

• Japan's NIKKEI closed higher by 258.55 pts or +0.93% at 28041.48 and the TOPIX ended 20.18 pts higher or +1.02% at 2003.5.
• Elsewhere, in China the SHANGHAI closed higher by 11.611 pts or +0.36% at 3272.86 and the HANG SENG ended 119.95 pts higher or +0.59% at 20429.08.
• Across Europe, Germany's DAX trades lower by 2.79 pts or -0.02% at 15519.98, FTSE 100 higher by 0.97 pts or +0.01% at 7621.44, CAC 40 up 7.76 pts or +0.11% at 7271.13 and Euro Stoxx 50 down 1.58 pts or -0.04% at 4283.84.
• Dow Jones mini down 18 pts or -0.05% at 33024, S&P 500 mini up 1.75 pts or +0.04% at 4081.5, NASDAQ mini up 8.75 pts or +0.07% at 13090.25.

COMMODITIES: WTI Futures Breach 20-Day EMA, 50-Day EMA Marks Next Key Resistance

WTI futures continue to trade at this week’s highs. Price has breached resistance at the 20-day EMA which intersects at $72.80. The break is a short-term bullish development and a continuation higher would expose the 50-day EMA, at $74.94. This average represents the next key resistance point. On the downside, initial firm support lies at $66.82, the Mar 24 low. A break of this level would be bearish. Trend conditions in Gold remain bullish and the recent short-term pullback is considered corrective. Note that price action since Mar 20 appears to be a pennant - a continuation pattern. This reinforces bullish conditions and signals scope for an extension higher near-term. The recent test above $2000.0 opens $2034.0 next, a Fibonacci projection. $1918.3 marks a firm support, the Mar 17 low - a break would signal scope for a deeper pullback.

• WTI Crude down $0.37 or -0.5% at $73.97
• Natural Gas up $0.02 or +0.86% at $2.119
• Gold spot down $3.81 or -0.19% at $1976.6
• Copper down $5.1 or -1.25% at $403.9
• Silver down $0.12 or -0.49% at $23.7846
• Platinum down $4.71 or -0.48% at $986.19