EXECUTIVE SUMMARY
- CHINA TO WELCOME TRUMP-ALIGNED SENATOR WITH TRADE TALKS STALLED
- US SEEKS TO REOPEN TERMS OF UKRAINE MINERALS DEAL
- UK FEB BORROWING OUTPACING OBR'S OCTOBER FORECASTS
- JAPAN'S FEB CORE CPI RISES 3.0% VS. JAN'S 3.2%
Figure 1: Borsa Istanbul Bank Index extends this week's decline to 25%
Source: MNI/Bloomberg
NEWS
US/CHINA (MNI): China to Welcome Trump-Aligned Senator With Trade Talks Stalled
President Xi Jinping’s government is set to welcome a US senator close to Donald Trump for talks in China, as the world’s largest economies try to move forward trade negotiations that have stalled at lower levels. Montana Senator Steve Daines is set to meet a senior Chinese leader Saturday ahead of an annual gathering of global corporate titans in Beijing that doesn’t normally attract sitting government figures. The Republican will be the first American politician to publicly sit down with a top Communist Party official since Trump returned to office, opening a window for direct communication.
US/UKRAINE (FT): US Seeks to Reopen Terms of Ukraine Minerals Deal
The Trump administration is seeking new terms for US access to critical minerals and energy assets in Ukraine, widening its economic demands on Kyiv as it pushes for a peace deal with Russia. Washington wants Kyiv to agree to detailed provisions about who owns and controls a joint investment fund, and to a broader scope, potentially covering US ownership of other economic assets such as Ukraine’s nuclear power plants, two Ukrainian officials said.
SECURITY (MNI): Ukraine "Proximity Talks" to Take Place in Riyadh on Monday
US President Donald Trump's Ukraine envoy, Keith Kellogg, confirmed yesterday that US officials will lead "proximity" talks between Ukraine and Russia at a hotel in Riyadh on Monday, March 24: "one group's going to be in this room, one group's going to be in this room, and we'll sit and talk, go back and forth," Kellogg said.The first priority is to formalise a 30-day energy infrastructure ceasefire and begin talks on establishing a maritime/shipping truce. US State Dept spokesperson Tammy Bruce said: "We are just a breath away from a full ceasefire, and then we can begin to talk about [an enduring peace]"
UK (BBG): Heathrow Airport Shuttered by Nearby Fire, Disrupting Travel
London’s Heathrow airport will close all day Friday after a nearby fire caused a major power outage, throwing one of the world’s busiest airports and the travel plans of hundreds of thousands of people into chaos. The blaze erupted at an electrical substation in Hayes north of Heathrow just before midnight, and large teams of firefighters are battling the flames. The cause of the fire is not known at this time, the fire service said. Disruptions would continue “over the coming days and passengers should not travel to the airport under any circumstances,” Heathrow said in a statement. The airport said it can’t say when power will be reliable restored.
UK (FT): UK’s Statistics Agency Admits Issues With More Key Data
The UK’s official statistics agency on Friday paused the publication of two price indices used to help calculate GDP figures, the latest admission of flawed data at the beleaguered authority. The Office for National Statistics said it had found flaws in its producer price indices and services producer price indices, which provide an indication of price pressures within business supply chains. “During work to improve the systems used to create the producer price index (PPI) and the services producer price indices (SPPI), our quality assurance identified a problem with the chain-linking methods used to calculate these indices,” said the ONS.
SWEDEN (MNI): Govt Announces SEK5.8bln Stimulus Package
Ahead of the 2025 Spring budget bill on April 15, the Swedish Government has announced a SEK5.8bln stimulus package to support the economy. This package comes in addition to the SEK60bln of stimulus measures announced in the Autumn budget bill. With the prospect of increased European-wide defence spending also looming, the more expansionary fiscal stance underscores Riksbank expectations for the policy rate to remain at 2.25% going forward (albeit against a considerably uncertain backdrop).
JAPAN (BBG): Japan Labor Union Group Updates Wage Hike Tally to 5.40% Gain
Japan’s largest labor union group says that its affiliated unions secured a 5.40% wage gain in this year’s negotiations as of March 19, updating last week’s initial tally. The Japanese Trade Union Confederation Rengo releases a report on the second results of this year’s spring wage negotiations on Friday.
CHINA/JAPAN (BBG): Japan, China Set for Economic Talks As US Tariff Pressure Rises
Japan and China are set to hold their first economic dialogue in six years on Saturday, an event aimed at reducing tensions as the Asian giants face trade pressure from the US. China is Japan’s largest trading partner but the two nations have been at loggerheads over issues including a territorial dispute and a ban imposed by Beijing on seafood from Japan following the release of wastewater from the crippled Fukushima Dai-ichi Nuclear Power Plant.
TURKEY (MNI): Rout on Turkish Stocks Continue, Bank Index Down 9%
Turkish markets remain highly turbulent, with the Borsa Istanbul Index down 7% after triggering another circuit breaker. The Banking Index is 9% lower, bringing losses this week to over 25%. The lira sits 0.5% lower versus the greenback. The central bank delivered a 200bp hike to the overnight lending rate yesterday, taking it from 44% to 46%. The bank also said it would suspend lending at its lower, benchmark one-week repo rate of 42.5% for an unspecified period.
ISRAEL (WSJ): Netanyahu Fires Israeli Intelligence Chief, Deepening Domestic Turmoil
Israeli Prime Minister Benjamin Netanyahu fired his domestic intelligence chief, extending a purge of rivals in the security establishment while further overhauling the cabinet that presided during the devastating Oct. 7, 2023, attacks. Netanyahu convened his ministers Thursday for a vote to remove Shin Bet Director Ronen Bar after arguing that the spy chief had lost his trust. The move, which the prime minister had signaled last weekend, was controversial because the Shin Bet is currently investigating some of Netanyahu’s aides. Bar was also a key player in the negotiations with Hamas to free the remaining hostages and reach a cease-fire, and his ouster gives Netanyahu’s close aides a tighter grip over the talks.
DATA
UK DATA (MNI): UK Feb Borrowing Outpacing OBR's October Forecasts
- UK FEB PSNB GBP+10.71 BN
- UK FEB PSNB-X GBP+10.71 BN
- UK FEB PSNCR GBP6.36 BN
- UK FEB CGNCR GBP8.32 BN
UK government borrowing was GBP10.7 billion in February, GBP0.1 billion more than in February 2024 and the fourth highest February borrowing since monthly records began in 1993, the Office for National Statistics said Friday. Overall borrowing in the financial year to February 2025 was GBP132.2 billion; GBP14.7 billion more than at the same point in the last financial year and the third highest financial year-to-February borrowing since monthly records began in 1993.
UK MAR GFK CONSUMER CONFIDENCE INDEX -19 (MNI)
FRANCE MAR MANUF SENTIMENT AT 96 (MNI)
JAPAN DATA (MNI): Japan's Feb Core CPI Rises 3.0% vs. Jan's 3.2%
- JAPAN FEB CORE CPI +3.0% Y/Y; JAN +3.2%
- JAPAN FEB CORE-CORE CPI +2.6% Y/Y; JAN +2.5%
- JAPAN FEB SERVICES PRICES +1.3% Y/Y; JAN +1.4%
Japan's annual core consumer inflation rate decelerated to 3.0% y/y in February from January’s 3.2% due to lower energy prices, although prices for foods excluding perishables rose, data released by the Ministry of Internal Affairs and Communications showed on Friday. February’s index stayed above the Bank of Japan’s 2% target for the 35th consecutive month. Energy prices rose 6.9%, down from 10.8% the prior month, while food excluding perishables increase 5.6%, up 50 basis points.
JAPAN DATA (MNI): Japan H’hold Assets at JPY2,230 Trln End-Dec
The balance of financial assets held by Japanese households stood at a record high of JPY2,230 trillion at the end of December, up 4.0% y/y due to bonuses and for the 19th straight quarterly rise, preliminary fund circulation data released by the Bank of Japan on Friday showed. The balance of cash and deposits held by Japanese households at the end of December stood at JPY1,134 trillion, up 0.6% from a year earlier.
FOREX: Softer Equity Picture Underpins USD
- Equities in European are extending a moderation off recent highs, with core European bourses off 0.5-0.9% as flow-driven profit-taking remains a dominant theme in cross-asset markets. For currencies, this has translated to another push higher for the USD, although Scandi currencies are the outperformers on the day.
- JPY is the weakest in G10. The Rengo union have moderated their pay demand slightly in the final tally - although the demand for an average wage hike of 5.40% remains the largest pay demand for over three decades. USD/JPY has gravitated back toward the Y150.00 handle, however broader trend signals continue to point to a bearish condition, pointing to Y148.35 as key support.
- Of note, the pair will also imminently print a death cross (50-dma < 200-dma) for the first time since September of last year, which may further suggest that the recovery off recent lows has been corrective in nature.
- UK public finances data served as a further reminder of the precarious position of the UK fiscal condition ahead of next week's Spring statement. While this morning's data won't feature in the OBR's forecasting round (cut-off was last month), GBP is among the poorest performers on the day, meaning GBP/USD extended the pullback off the cycle high printed this week to not far off 100 pips.
- Canadian retail sales are the data highlight Friday, with markets expecting sales to have declined 0.4% across January, set to add more evidence to the building argument that the Canadian economy is faltering in the near-term. The FOMC's media blackout period has now concluded, meaning markets look ahead to appearances from Fed's Goolsbee and Williams - both speaking across the US morning.
BONDS: 10-year Gilt/Bund Spread Widens 5bps; Bundesrat Session in Progress
The 10-year Gilt/Bund spread has widened ~5bps this morning to 191.5bps, with UK paper lagging on the back of yesterday’s hawkish BOE vote split and this morning’s public sector finance data.
- 10-year Gilt yields are +2.9bps at 4.674%, just off earlier highs of 4.695%. Meanwhile, soft global equity sentiment has provided a tailwind to Bunds, with 10-year yields down 2.5bps to 2.756%.
- The UK curve has lightly bear steepened, with 2s10s and 5s30s up ~1bp.
- In futures, Bunds are +36 ticks at 128.54, with Gilts -12 at 91.92. Recent gains in both contracts are considered corrective, with bearish technical themes still intact.
- The February UK PSNB requirement was higher-than-expected at GBP10.7bln (vs 7.0bln cons, -13.3bln prior).
- The fiscal data reaffirms the fragile state of Government finances, but worth noting that the cut-off date for the OBR’s forecasts ahead of next week’s EFO was after last month’s public sector finance release, so today’s number won’t factor into the latest projections.
- Meanwhile, the Bundesrat session to vote on the reform to the constitutional debt brake and formation of an E500bln infrastructure fund has started. The states supportive of the reform should have enough votes to carry the two-thirds supermajority threshold, but a decision may not come till this afternoon.
- 10-year EGB spreads to Bunds are biased a little wider in light of the equity weakness. GGBs underperform, with spreads to Bunds +2bps at 81bps.
- Eurozone flash March consumer confidence is due at 1500GMT.
EQUITIES: E-Mini S&P Trend Bearish, Shallow Recoveries Deemed Corrective
Eurostoxx 50 futures continue to trade above their recent lows. The medium-term trend direction remains up and the recent pullback is considered corrective. Support to watch is the 50-day EMA, at 5282.03. It has recently been pierced. A clear break of it would highlight a stronger short-term bear threat and suggest scope for a retracement towards 5160.00, the Feb 4 low. The bull trigger is 5516.00, the Mar 3 high. The trend condition in S&P E-Minis is bearish and the latest recovery appears corrective. Moving average studies are unchanged and remain in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold. Recent gains are allowing this set-up to unwind. Firm resistance to watch is 5937.64, the 50-day EMA. The bear trigger is 5559.75, the Mar 13 low.
- Japan's NIKKEI closed lower by 74.82 pts or -0.2% at 37677.06 and the TOPIX ended 8.2 pts higher or +0.29% at 2804.16.
- Elsewhere, in China the SHANGHAI closed lower by 44.117 pts or -1.29% at 3364.831 and the HANG SENG ended 530.23 pts lower or -2.19% at 23689.72.
- Across Europe, Germany's DAX trades lower by 188.87 pts or -0.82% at 22812.23, FTSE 100 lower by 51.04 pts or -0.59% at 8650.82, CAC 40 down 53.33 pts or -0.66% at 8041.38 and Euro Stoxx 50 down 42.11 pts or -0.77% at 5409.22.
- Dow Jones mini down 173 pts or -0.41% at 41788, S&P 500 mini down 23.75 pts or -0.42% at 5639.25, NASDAQ mini down 94.75 pts or -0.48% at 19582.25.
Time: 08:55 GMT
COMMODITIES: WTI Futures Close to Week's High, But Shy of Initial Resistance
A bearish condition in WTI futures remains intact and the latest recovery appears corrective - for now. Recent weakness resulted in a breach of $69.80, the Feb 4 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.73 next, the Oct 10 ‘24 low. MA studies are in a bear-mode position, highlighting a dominant downtrend. Key pivot resistance to watch is $69.15, 50-day EMA. A clear uptrend in Gold is intact and this week’s resumption of the bull cycle reinforces current conditions. The yellow metal is holding on to the bulk of its recent gains. Thursday’s fresh trend high reinforces the bull theme and sights are on $3079.2 next, a Fibonacci projection. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Support is at $2953.5, the 20-day EMA.
- WTI Crude up $0.14 or +0.21% at $68.27
- Natural Gas down $0.05 or -1.26% at $3.925
- Gold spot down $10.82 or -0.36% at $3033.66
- Copper down $4 or -0.78% at $507.2
- Silver down $0.51 or -1.52% at $33.068
- Platinum down $9.01 or -0.91% at $979.54
Time: 08:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 21/03/2025 | 1100/1100 | ** |  GB | CBI Industrial Trends |
| 21/03/2025 | 1230/0830 | ** |  CA | Retail Trade |
| 21/03/2025 | 1305/0905 |  US | New York Fed's John Williams | |
| 21/03/2025 | 1500/1600 | ** |  EU | Consumer Confidence Indicator (p) |
| 21/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 21/03/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |