EXECUTIVE SUMMARY
- UKRAINE DISCUSSIONS TOP OF AGENDA FOR MUNICH SECURITY CONFERENCE
- VANCE WIELDS THREAT OF SANCTIONS, MILITARY ACTION TO PUSH PUTIN INTO UKRAINE DEAL - WSJ
- TRUMP FLOATS DEAL WITH RUSSIA, CHINA TO CUT DEFENSE SPENDING
- SNB MAY NEED SUBZERO-RATE TOOL TO STEER FRANC, TSCHUDIN SAYS
Figure 1: Eurostoxx 50 targeting all-time highs
Source: MNI/Bloomberg
NEWS
SECURITY (MNI): Ukraine Discussions Top of Agenda for MSC
The future of Ukraine will be the main topic of focus at the Munich Security Conference (MSC), getting underway today. Sideline talks between Ukrainian President Volodymyr Zelenskyy and US Vice President JD Vance will be closely watched, with the Zelenskyy administration making clear on 13 Feb that it would not accept any peace deal that it was not involved in negotiating. There have been concerns in Kyiv and European capitals that US President Donald Trump's push for a rapid settlement with Russian President Vladimir Putin will see Ukraine and Europe excluded from talks and no concessions drawn out from Russia.
US (WSJ): Vance Wields Threat of Sanctions, Military Action to Push Putin Into Ukraine Deal
Vice President JD Vance said Thursday that the U.S. would hit Moscow with sanctions and potentially military action if Russian President Vladimir Putin won’t agree to a peace deal with Ukraine that guarantees Kyiv’s long-term independence. Vance said the option of sending U.S. troops to Ukraine if Moscow failed to negotiate in good faith remained “on the table,” striking a far tougher tone than did Defense Secretary Pete Hegseth, who on Wednesday suggested the U.S. wouldn’t commit forces.
US (MNI): House Budget Committee Advances Resolution, Clears First Procedural Hurdle
The House Budget Committee advanced a budget resolution yesterday, clearing the first procedural hurdle towards legislating President Donald Trump’s agenda. House Budget Committee Chair Jodey Arrington (R-TX) said in remarks ahead of the vote: “This budget resolution provides the fiscal framework for what will be one of the most consequential pieces of legislation in modern history...” The resolution sets out a $1.5 trillion floor for spending cuts, with a target of $2 trillion; allows $4.5 trillion for tax cuts; raises the debt limit by $4 trillion; and hikes defence spending by $300 billion.
US (BBG): Trump Officials Ordered by Judge to Lift Freeze on USAID Funding
A federal judge temporarily blocked President Donald Trump’s executive order cutting financing for foreign assistance programs administered by the US Agency for International Development. US District Judge Amir Ali in Washington said in a written ruling late Thursday he was convinced that unless he halted the administration’s actions, “the scale of the enormous harm that has already occurred will almost certainly increase.”
US/RUSSIA/CHINA (BBG): Trump Floats Deal With Russia, China to Cut Defense Spending
President Donald Trump floated the idea of a three-way meeting with the leaders of Russia and China in which the countries would agree to cut defense spending in half. Trump, speaking to reporters in the Oval Office Thursday, suggested repeatedly that he’d seek such a deal with Presidents Xi Jinping and Vladimir Putin, saying the money could be spent better elsewhere.
US/INDIA (BBG): India to Boost Oil, LNG Imports From US to Avoid Tariffs
India has agreed to boost oil and gas imports from the US in an effort to reduce the trade imbalance between the two countries and avoid retaliatory tariffs. “I think we purchased about $15 billion in US energy output,” India’s Foreign Secretary Vikram Misri said during a media briefing in Washington on Thursday, after Prime Minister Narendra Modi met President Donald Trump. “There is a good chance that this figure will go up as much as $25 billion.”
SNB (BBG): SNB May Need Subzero-Rate Tool to Steer Franc, Tschudin Says
The Swiss National Bank must have the ability to take interest rates below zero to efficiently control the strength of the national currency, according to board member Petra Tschudin. “If necessary, it allows us to steer the rate differential also in a low-interest environment in a way that the franc becomes less attractive than other currencies and therefore doesn’t appreciate excessively,” she told the Neue Zuercher Zeitung newspaper in an interview published Friday.
FRANCE (FT): Europe Must Respond to Trump ‘Electroshock’, Says Macron
Emmanuel Macron has described Donald Trump’s return as an “electroshock” that should force Europe to secure its own future as well as Ukraine’s. In an interview at the Élysée Palace shortly after Trump agreed with Vladimir Putin of Russia to hold imminent peace talks, the French president championed the need for Europe to “muscle up” on defence and the economy.
CHINA (BBG): China Invites Jack Ma and DeepSeek Founder to Meet Top Leaders
China has invited prominent entrepreneurs including Alibaba Group Holding Ltd. co-founder Jack Ma to meet the nation’s top leaders, people familiar with the matter said, a potentially momentous show of support for the private sector after years of turmoil. The meeting may happen as soon as next week and include DeepSeek founder Liang Wenfeng, the people said. While further details are sparse, the people said President Xi Jinping is expected to attend.
CHINA (MNI): China Machinery Expects Stable Trade in 2025
MNI (Beijing) China’s machinery industry expects foreign trade to remain stable in 2025, after growing 7.5% last year, accounting for 19% of the country's goods trade, Luo Junjie, executive vice president of the China Machinery Industry Federation, told a conference on Friday. Luo noted the machinery industry faced pressure last year from insufficient effective demand and continued price declines, but expected the government’s trade-in and upgrade policies would drive market improvement this year.
S.KOREA (WaPo): South Korea’s Likely Next Leader Wants Warmer Ties With China, North Korea
South Korea's likely next leader would support President Donald Trump's efforts to restart dialogue with North Korea's Kim Jong Un - and would even consider nominating him for the Nobel Peace Prize if there was a significant breakthrough, signaling a sharp change from Seoul's current hard-line approach toward Pyongyang. Lee Jae-myung would also temper South Korea's hawkish approach toward China - potentially putting him at odds with the Trump administration - if he becomes the country's president and returns a progressive government to Seoul.
DATA
EUROZONE DATA (MNI): Flash Estimate of Q/Q GDP Revised A Tenth Higher
- EUROZONE FLASH Q4 GDP +0.1% Q/Q, +0.9% Y/Y
Eurozone flash estimate of GDP for Q4 on a quarterly basis was revised up from preliminary flash estimate to 0.1% Q/Q (vs 0.4% in Q3, 0.2% ECB Dec f'cast), though it remained unrevised on an annual basis at 0.9% Y/Y (0.9% in Q3 as well). Q4 2024 remains the weakest quarter of 2024. Looking ahead the ECB forecast GDP growth of 0.3% in the first quarter of 2025.
EUROZONE DATA (MNI): Sluggish Productivity Trend Persists in Q4
Eurozone real productivity per employee fell 0.1% Q/Q in Q4, ending a streak of three consecutive positive readings. On an annual basis, productivity rose 0.2% Y/Y, up from 0.0% in Q3 and the highest since December 2022. However, this was still below the ECB's December MPR projection of 0.5%. A cyclical recovery in productivity growth is key to the ECB's projection for a rebound in economic activity. Although the declining trend in productivity growth appears to have been arrested over the past few quarters, evidence of a upswing is still lacking.
SPAIN DATA (MNI): Non-Energy Cooling in Spanish HICP Despite Weight Boost
- SPAIN JAN HICP -0.1% M/M, +2.9% Y/Y
Spain January final HICP inflation confirmed flash estimates at 2.9% Y/Y (vs 2.8% in Dec) and the sequential reading at -0.1% M/M (vs 0.4% in Dec). The national CPI was one-tenth below flash and consensus at 2.9% (vs 3.0% flash, 2.8% prior), after flash came a tenth higher than expected, though on a sequential basis it confirmed flash at 0.2% M/M (vs 0.5% in Dec). All major HICP sub-components softened except for energy. Services inflation softened to 3.5% Y/Y (vs 3.7% prior). Package holidays fell 14.9% M/M reversing most of Decembers 17.5% gain, transport services also decreased by 4.9% M/M (vs -0.1% in December), as did accommodation prices printing -4.9% M/M (-1.8% prior).
CHINA DATA (MNI): China Jan Yuan Loans, Financing Beat Expectations
- CHINA JAN NEW LOANS CNY5.13 TRLN VS MEDIAN CNY4.53 TRL
- CHINA JAN TSF CNY7.06 TRLN VS MEDIAN CNY6.50 TRLN
- CHINA END-JAN M2 +7.0% Y/Y VS MEDIAN +7.3%; END-DEC +7.3% Y/Y
- CHINA END-JAN M1 +0.4% Y/Y VS -1.4% Y/Y END-DEC
- CHINA END-JAN M0 +17.2% Y/Y VS +13.0% Y/Y END-DEC
MNI (Beijing) China's new yuan loans and aggregate finance both beat market expectations in January amid the traditional boom season, while M1 turned positive partly due to the revised statistical methods, data released Friday by the People's Bank of China showed. M1 money supply grew by 0.4% y/y, reversing December's 1.4% fall and turning positive for the first time after falling for nine straight months. The PBOC has broadened M1's statistical scope to further include personal demand deposits and customers’ provisions of non-bank payment institutions, starting Jan 2025.
CHINA DATA (MNI): China 2024 Real Estate Loan Recovered: PBOC
MNI (Beijing) China’s real estate loans bounced back in 2024 as the country strengthened policy support to the sector, data on the People’s Bank of China website showed Friday. At the end of the fourth quarter, the total balance of real estate loans was CNY52.8 trillion, down 0.2% year-on-year, but the growth rate was 0.8 percentage points higher than at the end of 2023 and also higher than the 1% decline in the first three quarters in 2024.
RATINGS: Austrian & Irish Updates Headline This Evening’s Sovereign Schedule
Sovereign rating reviews of note scheduled for after hours on Friday include:
- Fitch on the Czech Republic (current rating: AA-; Outlook Stable)
- Moody’s on Ireland (current rating: Aa3; Outlook Positive) & Switzerland (current rating: Aaa; Outlook Stable)
- S&P on Austria (current rating: AA+; Outlook Positive)
- Morningstar DBRS Latvia (current rating: A, Stable Trend)
- Scope Ratings on Ireland (current rating: AA; Outlook Stable) & Sweden (current rating: AAA; 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: Lower Close for USD Index Would be Fifth Consecutive Decline
- The greenback is again on the backfoot early Friday, meaning a negative close today would confirm a fifth consecutive session of losses, with the USD Index having already plumbed a new year-to-date low today. This leaves the greenback within ~0.6% of the next major support, crossing at the 106.207 100-dma.
- The non-specific installation date of reciprocal tariffs remains the latest driver of currency price action, with the USD remaining on the backfoot after Trump confirmed that levies will be installed, but declined to provide a specific deadline.
- As a result, growth and risk proxies are trading well - putting AUD and NZD toward the top-end of the G10 table - while the phase of corrective JPY strength into the Thursday close has moderated considerably.
- Focus for the session ahead rests on the US retail sales release for January, as well as import/export prices indices and Industrial production for the same month. The central bank speaker slate is uncharacteristically quiet, with just Fed's Logan on the docket - taking part in a moderated Q&A.
EGBS: Bund Futures Off Session Lows as Tariff Announcements Digested
Bund futures have moved away from session lows, now -10 ticks at 132.75 (from a low of 132.55). The prospect of delayed US reciprocal tariffs appeared to weigh at the open, with immediate downside growth risks removed for now.
- Eurozone Q4 GDP growth saw a small upward revision to 0.1% Q/Q , though remains below the ECB’s December projection. Productivity per employee growth remains sluggish.
- Long-end German ASWs have widened for a second day (albeit off intraday highs at typing). Positioning and spillover from US spread widening are possible drivers.
- 10-year Bund yields peaked at 2.445%, but have since fallen back to 2.429%. This dynamic allowed 10-year EGB spreads to Bunds widen away from opening lows.
- Spreads are generally within 1bp of yesterday’s closing levels, with GGBs underperforming a little. Spreads remain tighter on the week, aided by further solid European equity performance.
GILTS: A Little Softer Alongside Modest Hawkish Repricing in Short End
Gilts are off session lows after increased odds of U.S. tariff implementation on the UK (owing to the use of VAT) weighed at the open.
- Markets seem to favour trading off the risks to inflation posed by the tariffs, although related downside risks to growth (and the potential for the BoE to react dovishly if GDP takes a meaningful hit) may be limiting losses.
- Note there is a window for negotiation, with the tariffs not set to go into play until early April. This may also be limiting the sell off.
- Futures comfortably within yesterday’s range, leaving initial support and resistance (92.31/94.35) untouched, with the bull cycle remaining in play in the contract.
- Yields ~2bp higher in a parallel shift across the curve.
- BoE-dated OIS shows ~56.5bp of cuts through year-end vs. ~57.5bp late yesterday and after briefly showing ~55bp earlier today.
- Expect macro and cross-market cues to continue to dominate on Friday, with little of note on the UK calendar and domestic focus pinned on next week’s labour market and inflation data.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.429 | -2.5 |
May-25 | 4.234 | -22.0 |
Jun-25 | 4.152 | -30.2 |
Aug-25 | 4.002 | -45.2 |
Sep-25 | 3.970 | -48.4 |
Nov-25 | 3.903 | -55.1 |
Dec-25 | 3.890 | -56.4 |
EQUITIES: Eurostoxx 50 Target March 2000 All-Time High at 5525.00
The Eurostoxx 50 futures contract continues to appreciate. The move higher this week confirms once again, a resumption of the uptrend that started on Nov 21 ‘24. Moving average studies are in a bull mode set-up too, highlighting a dominant uptrend. Sights are on a major resistance at 5525.00, the March 2000 all-time high. Clearance of this level would highlight a key bullish break. Initial firm support to watch lies at 5283.40, the 20-day EMA. S&P E-Minis have traded higher this week. The recovery undermines a recent bearish threat and attention turns to the next resistance at 6162.25, the Jan 24 high. Clearance of this level would expose key resistance at 6178.75, the Dec 6 ‘24 high. A move above this hurdle would resume the primary uptrend. On the downside, initial key support has been defined at 6014.00, the Feb 10 low. A break would be viewed as a bearish development.
- Japan's NIKKEI closed lower by 312.04 pts or -0.79% at 39149.43 and the TOPIX ended 6.38 pts lower or -0.23% at 2759.21.
- Elsewhere, in China the SHANGHAI closed higher by 14.241 pts or +0.43% at 3346.724 and the HANG SENG ended 805.96 pts higher or +3.69% at 22620.33.
- Across Europe, Germany's DAX trades lower by 13.43 pts or -0.06% at 22598.42, FTSE 100 lower by 18.01 pts or -0.21% at 8746.68, CAC 40 up 41.79 pts or +0.51% at 8206.31 and Euro Stoxx 50 up 16.08 pts or +0.29% at 5516.79.
- Dow Jones mini down 47 pts or -0.1% at 44764, S&P 500 mini up 1.5 pts or +0.02% at 6136.75, NASDAQ mini up 17.75 pts or +0.08% at 22131.
Time: 09:50 GMT
COMMODITIES: Gold Trading Close to This Week's Highs, Bullish Theme Strengthens
WTI futures have pulled back from Tuesday high and price has again traded below the 50-day EMA - at $72.14. Attention is on $70.43, the Feb 6 low. It has been pierced, a clear break would undermine a bullish theme and confirm a breach of the 50-day EMA. This would strengthen a bearish threat and open $68.05, the Dec 20 ‘24 low. Key S/T resistance has been defined at $75.18. A move above this level is required to reinstate a bull theme. A bull cycle in Gold remains in play and the yellow metal is trading closer to its latest highs. Recent gains once again confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on the $2962.2, a Fibonacci projection. The first key support to watch is $2820.6, the 20-day EMA.
- WTI Crude up $0.28 or +0.39% at $71.59
- Natural Gas up $0.07 or +1.79% at $3.693
- Gold spot up $7.09 or +0.24% at $2935.29
- Copper up $1.45 or +0.3% at $484
- Silver up $0.93 or +2.88% at $33.2715
- Platinum up $9.73 or +0.97% at $1009.67
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 14/02/2025 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 14/02/2025 | 1330/0830 | ** | CA | Wholesale Trade |
| 14/02/2025 | 1330/0830 | *** |  US | Retail Sales |
| 14/02/2025 | 1330/0830 | ** | US | Import/Export Price Index |
| 14/02/2025 | 1415/0915 | *** | US | Industrial Production |
| 14/02/2025 | 1500/1000 | * | US | Business Inventories |
| 14/02/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 14/02/2025 | 2000/1500 | US | Dallas Fed's Lorie Logan | |
| 17/02/2025 | 2350/0850 | *** |  JP | GDP |