EXECUTIVE SUMMARY
- TRUMP’S TARIFF ONSLAUGHT IS COMING FASTER THAN HIS TEAM CAN CARRY IT OUT
- TRUMP SOFTENS TONE AHEAD OF ZELENSKYY MEETING
- BOE’S RAMSDEN SAYS INFLATION RISKS NO LONGER TO DOWNSIDE
- CHINA'S POLITBURO EYES MORE PROACTIVE MACRO POLICIES
Figure 1: NZD/USD re-approaching year-to-date lows following close below 50-DMA
Source: MNI/Bloomberg
NEWS
US (WSJ): Trump’s Tariff Onslaught Is Coming Faster Than His Team Can Carry It Out
The Trump administration is moving at warp speed to announce new tariffs. Implementing them is another story. The president has peppered his first weeks in office with a litany of far-reaching trade actions, such as imposing tariffs on China, threatening duties on Canada, Mexico and the European Union, and announcing duties for a handful of major industrial sectors. All those announcements are creating a bottleneck at the Office of the U.S. Trade Representative and the Commerce Department, which are in charge of implementing the tariffs, according to people familiar with the dynamics, prompting a race among staff to implement the president’s orders on an accelerated timeline.
US/UKRAINE (MNI): Trump Softens Tone Ahead of Zelenskyy Meeting
US President Donald Trump softened his tone towards Ukrainian President Volodymyr Zelenskyy ahead of a bilateral meeting at the White House today, where the pair are expected to sign a deal to share in Ukraine's mineral resources. Trump rolled back his characterisation of Zelenskyy as a 'dictator' and later, speaking alongside UK Prime Minister Keir Starmer, said: "I think I have a very good relationship with President Zelenskyy..." adding Ukrainians had “fought very bravely
US/CHINA (BBG): China’s Navy Drills Near US Allies Seen as Test for Trump
A spate of drills by China’s military in the Indo-Pacific is testing the Trump administration’s commitment to regional security soon after its actions raised doubts about its alliances with European nations. The People’s Liberation Army has conducted shooting drills off the coasts of Australia, Vietnam and Taiwan over the past week. While the Chinese actions took place in international waters off Australia and Taiwan, they raised concerns over Beijing’s intentions — and whether the US will respond.
US/UK (FT): US and UK in Talks on Trade Deal That Could Spare Britain From Tariffs
Donald Trump said he is working on a trade deal with the UK and suggested that Britain could escape tariffs if the countries secure one, but the allies failed to agree on US security guarantees for Ukraine. During a warm joint press conference at the White House on Thursday, the US president said his UK counterpart Sir Keir Starmer was “working very hard” to persuade him not to impose tariffs on Britain.
ISRAEL/MIDDLE EAST (AP): Israel and Hamas Have Begun Negotiating Next Phase of Gaza Ceasefire, Egypt Says
Negotiations between Israel and Hamas on the next phase of the Gaza ceasefire began Thursday, Egypt said, averting a collapse ahead of Saturday's expiration of the agreement's first phase. Officials from Israel, Qatar and the United States started “intensive discussions” on the ceasefire's second phase in Cairo, Egypt‘s state information service said. “The mediators are also discussing ways to enhance the delivery of humanitarian aid to the Gaza Strip, as part of efforts to alleviate the suffering of the population and support stability in the region,” its statement said.
BOE (MNI): Inflation Risks No Longer to Downside - Ramsden
Bank of England Deputy Governor Dave Ramsden on Friday backed a cautious approach to policy easing, saying that he no longer thought the risks to hitting the 2% inflation target were to the downside, while leaving the door open to a faster pace of cutting if justified. Ramsden, speaking in South Africa, said that although headline inflation was expected to peak around 3.7% later this year the MPC had made the key judgement that the rise in headline inflation would not feed through to additional second round effects on domestic price pressures, in part because of the relative loosenss of the labour market but uncertainty around the labour market was high.
BOE (MNI): Tariffs to Hit Growth, Awaiting Detail - Ramsden
Productivity growth in the UK has been slower than expected and that and there is less spare capacity in the economy, Bank of England Deputy Governor said Friday, adding that US tariffs would push down on global growth. In a Q and A following his speech at Stellenbosch University Ramsden said that in light of the weak productivity for 2024 "I do give as much weight to the kind of weak supply scenario as I was to the weak demand scenario," with the former scenario pointing to more persistent inflation.
EU (MNI EXCLUSIVE): EU Seeks to Avoid Stigma From Fiscal Opt Outs for Defence
MNI speaks to EU officials working on ways to boost defence spending - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
EU/INDIA (BBG): India, EU to Push for a Trade Deal This Year, Says Von der Leyen
India and the European Union will try to seal a trade deal during this year, European Commission President Ursula von der Leyen said on Friday. “A free trade agreement between the EU and India would be the largest deal of this kind anywhere in the world,” Von der Leyen said at an event in New Delhi. “You can count on my full commitment to make sure we can deliver,” she said, adding that the EU and Prime Minister Narendra Modi have agreed to “push to get it done during this year.”
CHINA (MNI): China to Fight Against Extra U.S. Tariffs - MOFCOM
MNI (Beijing) China will take necessary countermeasures should the U.S impose another 10% tariff on Chinese exports on March 4, China Ministry of Commerce told reporters on Friday. The spokesperson noted the U.S. had based its tariff threat on fantasy that “shifted blame," and was counterproductive. The duties would instead increase the burden on U.S. businesses and consumers and undermine the stability of global supply chains, the spokesperson added.
CHINA (MNI): China's Politburo Eyes More Proactive Macro Policies
MNI (Beijing) China will implement more proactive macroeconomic policies to expand domestic demand and promote technological innovation, Xinhua News Agency reported Friday following a meeting held by the Politburo, the country's top decision-making body. China will stabilise the property and stock markets, prevent and resolve risks and external shocks while securing expectations, and promoting continued economic recovery, the Politburo said.
CHINA (MNI): Xi Calls for Greater Consumption to Boost Demand
MNI (Beijing) China will further boost consumption to expand domestic demand as the external environment deteriorates, according to President Xi Jinping in his latest article published by Qiushi magazine. The country will accelerate the process of addressing the shortfalls in domestic demand, especially in consumption, so that it becomes the main driving force for economic growth and a stabilising anchor, Xi added.
BOJ (MNI): BOJ's Uchida Sees Strong JGB Stock Effect
Bank of Japan Deputy Governor Shinichi Uchida said on Friday that the BOJ’s large JGB holdings continue to have a strong easing effect. Uchida told lawmakers that underlying inflation is moving toward the bank’s 2% price target and the Japanese economy is recovering moderately. The bank cannot guide the unsecured overnight call loan rate without imposing an interest rate on excess reserves, he added. He did not mention the outlook for monetary policy.
JAPAN (BBG): Ishiba Trims Japan Budget Plan After Adding Opposition Requests
Japanese Prime Minister Shigeru Ishiba’s minority government has put together a revised budget that trims the overall size a tad while including enough opposition demands to largely ensure its passage. The budget for the fiscal year starting in April will total around ¥115.2 trillion ($770 billion), slightly lower than an earlier ¥115.5 trillion plan approved by the cabinet at the end of last year, a revised budget plan submitted Friday to parliament by the ruling parties showed. This marks the first time in 29 years that a budget was revised after cabinet approval.
INDIA (MNI): Rupee Weakens Following $10bln FX Swap Auction
According to Reuters, the RBI intervened on Friday when the rupee dropped to 87.40/USD - a level that bankers said was a key support for the rupee - but the currency has since weakened past this level as the results from the $10bln FX swap auction are announced. Reuters said yesterday significant interest from companies seeking to hedge long-duration dollar liabilities and from lenders looking to raise rupee funds was expected. The RBI received around $16bln of bids.
INDONESIA (BBG): Indonesia to Strongly Intervene as Rupiah Drops to Five-Year Low
Indonesia’s central bank pledged to intervene strongly in markets Friday after the rupiah plunged to its lowest level in almost five years. Stocks are poised to enter a technical bear market. “We will boldly enter the market to maintain the balance of foreign-exchange supply and demand so that market confidence is maintained,” Edi Susianto, executive director for monetary management at Bank Indonesia, said in a text message. Authorities also intervened on Thursday.
DATA
ECB DATA (MNI): 12-month Ahead Inflation Expectations Reverse December Increase
- ECB 1-YEAR CONSUMER INFLATION EXPECTATIONS 2.6%
- ECB 3-YEAR CONSUMER INFLATION EXPECTATIONS 2.4%
Median inflation expectations in the Eurozone for the next 12-months in January fell back by 0.2ppt to 2.6%. This reverses the increase seen in December and returns the index to November levels. Median expectations for the 1-3 year period remained at 2.4% for the third consecutive month (after having fallen to 2.1% in both September and October). The survey doesn't have pre-pandemic readings but this three-year measure remains above the 1.9-2.1% readings mostly seen through mid-2020 to early 2022.
GERMANY DATA (MNI): German State CPIs Broadly in Line With Exp at First Glance
So far the M/Ms are coming in between 0.3-0.6%. The Y/Ys are a bit more mixed showing decelerations from -0.2ppt vs last month to +0.2ppt accelleration. National CPI (non-HICP) expectations were for a 0.4%M/M increase and for the Y/Y print to remain at 2.3%. So there isn't a clear signal from the first few states that are reporting here. This looks broadly in line with expectations. For HICP (which doesn't always follow surprises in the national CPI), the consensus made ahead of these releases was for 0.5%M/M and a 0.1ppt deceleration to 2.7%Y/Y.
GERMANY FEB UE RATE (SA) 6.2% (FCST 6.2%); JAN 6.2% (MNI)
FRANCE DATA (MNI): France Downside CPI Surprise Looks Driven by Services
- FRANCE FEB CPI +0% M/M, +0.8% Y/Y
- FRANCE FEB HICP +0% M/M, +0.9% Y/Y
Looking at the drivers of the national CPI (non-HICP) surprise, it appears as though the main surprise was in services, with the energy contribution largely factored into forecasts. As noted earlier, the national CPI (non-HICP) surprised to the downside by just over 2 tenths at 0.75% - which rounded up to 0.8% to 1dp (1.0% Y/Y consensus, 1.65% Y/Y). M/M this was -0.02% (0.2% M/M consensus, 0.16% Y/Y). Energy was the biggest driver as expected, falling 5.73% Y/Y after a 2.75% Y/Y increase in January. This was flagged in our preview - there was a 15% decline in French regulated electricity prices. This saw a fall of 4.51% M/M for energy overall.
FRANCE GDP Q4 2ND EST -0.1% Q/Q (MNI)
FRANCE GDP Q4 2ND EST +0.6% Y/Y (MNI)
FRANCE JAN CONSUMER SPENDING -0.5% M/M, +0.4% Y/Y (MNI)
FRANCE JAN CONSUMER MANUF SPENDING -0.6% M/M, +0.2% Y/Y (MNI)
ITALY FEB FLASH HICP +0.1% M/M, +1.7% Y/Y (MNI)
SWEDEN FLASH Q4 GDP +2.4% Y/Y (MNI)
SWEDEN JAN RETAIL SALES +3.2% Y/Y (MNI)
SWITZERLAND DATA (MNI): February KOF Suggests "Robust Outlook" for Swiss Economy
The Swiss KOF Economic Barometer fell in February to 101.7 vs the revised January print of 103.0. This was below the consensus expectation of 102.0 and today's 101.7 reading was only just above the January print before its revision (it was previously reported at 101.6). "While faced with headwinds, the Swiss Economy shows a robust outlook", the KOF institute concludes.
JAPAN DATA (MNI): Japan Feb Tokyo Core CPI Rises 2.2% vs. Jan's 2.5%
- JAPAN FEB TOKYO CORE-CORE CPI +1.9% Y/Y; JAN 1.9%
- JAPAN FEB TOKYO CORE CPI +2.2% Y/Y; JAN 2.5%
- JAPAN FEB SERVICES PRICES +0.6% Y/Y; JAN +0.6%
The year-on-year rise in the Tokyo core inflation rate decelerated to 2.2% in February, from January’s 2.5% but remained above the Bank of Japan's 2% target for the fourth straight month, data from the Ministry of Internal Affairs and Communications showed on Friday. Lower energy (+6.9% vs. +13.3%) and households’ durable goods (+5.5% vs. +8.0%) weighed on the index, although food excluding perishables rose 5.5% in February vs. 4.7% in January.
JAPAN DATA (MNI): Japan Jan Factory Output Posts 3rd Straight Drop
- JAPAN JAN FACTORY OUTPUT -1.1% M/M; DEC -0.2%
Japan's industrial output fell 1.1% m/m in January for the third straight drop following December's 0.2% decline due to lower manufacturing of production machinery and electronic parts and devices, although automobile output rose, data released by the Ministry of Economy, Trade and Industry showed on Friday. Production of automobiles rose 6.9% m/m in January for the first rise in three months following -1.7% in December, despite slowing overseas demand. Production machinery fell 12.3% in January for the first drop in two months following +2.8% in December.
JAPAN JAN RETAIL SALES +3.9% Y/Y; DEC +3.5% (MNI)
JAPAN JAN RETAIL SALES +0.5% M/M; DEC -0.8% (MNI)
RATINGS: Portugal & France Present Most Interesting Scheduled Updates Tonight
Sovereign rating reviews of note scheduled for after hours on Friday include:
- Fitch on Germany (current rating: AAA; Outlook Stable) & the United Kingdom (current rating: AA-; Outlook Stable)
- Moody’s on the Netherlands (current rating: Aaa; Outlook Stable)
- S&P on France (current rating: AA-; Outlook Stable) & Portugal (current rating: A-; Outlook Positive)
- Morningstar DBRS on the Netherlands (current rating: AAA, Stable Trend)
- Scope Ratings on Japan (current rating: A; Outlook Stable), Norway (current rating: AAA; Outlook Stable) & South Africa (current rating: BB; Outlook Stable)
Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025. Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.
FOREX: NZD/USD Circling YTD Lows as Trump Unnerves Risk
- The recovery off lows for USD/JPY continues early Friday, with the pair showing above the mid-week high at Y150.30, narrowing the gap with Y150.95 resistance - the 38.2% retracement for the downleg posted off the mid-February high of Y154.80.
- The greenback trades well, helping EUR/USD and GBP/USD remain well off the week's best levels (and in the case of GBP/USD, the YTD high). NZD/USD is extending losses following the close below the 50-dma yesterday, with Trump's resolute approach to tariffs yesterday adding extra weight to risk sentiment.
- While NZD may have been able to shrug off Canadian and Mexican tariff pressures, the uncertainty surrounding a doubling of tariffs on China (from 10% to 20%) as soon as next week has unnerved markets, and will keep markets pondering a revisit to the YTD lows of 0.5516 in the near-term.
- MNI Chicago PMI is the calendar highlight Friday - which may take on greater importance given the particularly interesting regional Fed activity indices we've had this week, which are flagging heightened business uncertainty around both prices and international trade in the light of tariff threats.
- Personal income/spending and PCE price indices for January are also due - with the inflation gauge expected to come in broadly unchanged from the December print - keeping the Fed on track for two further 25bps rate cuts in 2025.
BONDS: Underpinned Following French CPI & Risk-Off Trade in Asia
Core global FI markets consolidate most of the gains driven by increased tariff risks and softer-than-expected French CPI data.
- Roughly in line German regional CPI data helped limit the rally, but a second-round bid has become apparent in recent trade.
- Elsewhere, downticks in oil provide some background support for bonds, although TTF prices continue to move higher, providing some offset.
- Bund futures trade as high as 133.46, shy of initial resistance at 133.71.
- Yields 2.5-3.5bp lower on the German curve.
- ASWs widen given the risk off move, Buxl leads +1.2bp vs. 3-month Euribor.
- EGB spreads little changed to 1bp wider vs. Bunds given the risk-off start, although the recovery from lows in equities limits that move.
- Quarterly rolls inflate volumes in EGB futures.
- Month-end extension flow should be more supportive for EGBs than for gilts.
- ECB-dated OIS shows ~88bp of cuts through year-end vs. ~86bp late yesterday.
- In the UK, macro impulses comfortably outweigh hawkish leaning comments from BoE’s Ramsden.
- Gilt futures near initial resistance at 93.51. A break there would expose the Feb 6 high & bull trigger (93.83).
- Yields 2.5-4.5bp lower across the UK curve, flattening
- 10s ~1bp tighter vs. Bunds, spread trades away from 210bp.
- BoE-dated OIS shows ~58bp of cuts through year-end vs. ~56bp late yesterday.
- National German CPI & U.S. PCE data eyed from here.
EQUITIES: Latest Pullback in Eurostoxx 50 Futures Still Considered Corrective
The trend condition in the Eurostoxx 50 futures contract remains bullish and - for now - the latest pullback is considered corrective. The contract has pierced support at the 20-day EMA. at 5413.51. A clear break of this EMA would signal scope for a deeper retracement - note that the 50-day EMA lies at 5258.43 and also represents a key area of support. For bulls, a resumption of gains would open 5574.57 next, a Fibonacci projection. The latest move down in S&P E-Minis still appears corrective, however, price has breached a number of important supports this week; 6014.00, the Feb 10 low, and 5935.50, the Feb 3 low. The sharp move down signals scope for a deeper retracement and has exposed the next key support at 5809.00, the Jan 13 low. A breach of this level would highlight a stronger reversal. On the upside, initial firm resistance to watch 6038.96, the 50-day EMA.
- Japan's NIKKEI closed lower by 1100.67 pts or -2.88% at 37155.5 and the TOPIX ended 54.16 pts lower or -1.98% at 2682.09.
- Elsewhere, in China the SHANGHAI closed lower by 67.165 pts or -1.98% at 3320.897 and the HANG SENG ended 776.97 pts lower or -3.28% at 22941.32.
- Across Europe, Germany's DAX trades lower by 90.81 pts or -0.4% at 22458.66, FTSE 100 lower by 5.08 pts or -0.06% at 8751.28, CAC 40 down 32.68 pts or -0.4% at 8069.84 and Euro Stoxx 50 down 30.53 pts or -0.56% at 5442.03.
- Dow Jones mini up 104 pts or +0.24% at 43402, S&P 500 mini up 17.75 pts or +0.3% at 5894.25, NASDAQ mini up 63.5 pts or +0.31% at 20669.75.
Time: 09:50 GMT
COMMODITIES: Bull Cycle in Gold Remains in Play Despite Recent Shallow Pullback
A bearish theme in WTI futures remains intact and this week’s sell-off reinforces current conditions. The move lower has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirms a resumption of the downtrend that started on Jan 15 and paves the way for an extension towards $67.75, the Dec 20 ‘24 low. Key short-term resistance has been defined at $74.06, the Feb 3 high. Despite a pullback, a bull cycle in Gold remains in play. Note that the yellow metal has traded through the 20-day EMA, at $2882.1. This signals scope for a deeper short-term retracement, possibly towards the 50-day EMA, at $2802.4 and a key area of support. For bulls, a resumption of gains would refocus attention on the next objective at $2962.2, a Fibonacci projection. This would also open the $3000.0 handle.
- WTI Crude down $0.71 or -1.01% at $69.67
- Natural Gas up $0 or +0.08% at $3.937
- Gold spot down $15.96 or -0.55% at $2861.4
- Copper down $6.4 or -1.39% at $455.45
- Silver down $0.11 or -0.35% at $31.1705
- Platinum down $1.66 or -0.17% at $949.21
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 28/02/2025 | 1300/1400 | *** |  DE | HICP (p) |
| 28/02/2025 | 1330/0830 | *** |  CA | GDP - Canadian Economic Accounts |
| 28/02/2025 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 28/02/2025 | 1330/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 28/02/2025 | 1330/0830 | *** |  US | Personal Income and Consumption |
| 28/02/2025 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 28/02/2025 | 1445/0945 | *** | US | MNI Chicago PMI |
| 28/02/2025 | 1600/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 28/02/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 01/03/2025 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 01/03/2025 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
| 03/03/2025 | 2200/0900 | ** |  AU | S&P Global Manufacturing PMI (f) |