MNI US OPEN - US Homeowners Set for Largest Property Tax Hike in 5 Years

NEWS

FED (MNI): Fed Gov Kugler Expects 'Some Lowering' Of Rates This Year
The Federal Reserve should cut interest rates this year if expectations for inflation to head lower without a broader U.S. economic slowdown pan out, Fed Governor Adriana Kugler said Wednesday. "Most FOMC participants expect that it will be appropriate to begin lowering the federal funds rate sometime this year," she said. "My own expectation is consistent with that; if disinflation and labor market conditions proceed as I am currently expecting, then some lowering of the policy rate this year would be appropriate."

US (BBG): US Homeowners See Biggest Property Tax Rise in Five Years
US homeowners paid more than $4,000 in property taxes on average last year, with total levies rising by the most in five years. Data collected by ATTOM, a real estate data firm, which tracked property taxes for 89.4 million single-family homes, shows that governments collected more than $363 billion in 2023. That’s an increase of 6.9% and almost double the 3.6% gain a year earlier.

UK (MNI): BoE Decision Maker Panel Survey Looks Soft
Looking in more detail at the DMP, there is further softness in the survey when looking at the details. We still don't think this is enough to increase the risks of a May cut and generally see the decision for the first cut to be in either June or August. We still think that the ONS' AWE series remains the most important factor in the decision to reach a quorum to cut on the MPC. The single month figure for realised employment growth fell from 2.7% in December to 1.7% in March which meant the 3-month average fell 0.3ppt to 2.0%Y/Y in the 3-months to March from 2.3% in the 3-months to February. This is the lowest 3-month average since the 3-months to November 2021.

RIKSBANK (MNI): Krona, Fed Could Delay Rate Cut - Riksbank Minutes
Riksbank policymakers agreed conditions were in place for a first rate cut in May or June but a krona depreciation and delayed policy easing by the U.S. Federal Reserve could delay the move, Executive Board March meeting minutes revealed. All five members supported both the decision to leave the policy rate unchanged and forecasts showing a 25-basis-point cut on the way with a roughly 50/50 chance of it coming in May or June.

DENMARK (BBG): Denmark Ousts Top Military Chief After Red Sea Defense Failures
Denmark has ousted its top military chief after revelations that the Danish frigate in the Red Sea failed to defend itself during an assault. The Nordic country sent the vessel to the region earlier this year to fight attacks from the Houthis. But the ship suffered system failures during an operation in March and was unable to launch its anti-aircraft missile for half an hour, according to local media reports. That left its 175 staff in danger.

AUSTRALIA (MNI): RBA To Change Policy Implementation Mechanism
The Reserve Bank of Australia will look to change how it implements monetary policy, targeting a plan to operate with ample reserves. The system will meet demand for reserves via full allotment auction at the RBA’s open market operations. The RBA currently operates a floor system with an excess of reserves. Prior to the pandemic, the Reserve used a corridor system with scarce reserves. The RBA noted the ample reserve system would operate "somewhere between these two.”

RBNZ (MNI): Baked-In Inflation To Quash RBNZ Rate Cut Hopes
Baked-in price hikes for non-tradable items and legacy fixed mortgages yet to roll on to higher rates will keep inflationary pressure elevated throughout 2024 and the Reserve Bank of New Zealand’s Official Cash Rate higher for longer, a former deputy governor told MNI.

TAIWAN (BBG): Taiwan Begins Recovery From Quake as TSMC Resumes Production
Taiwan’s semiconductor industry restarted operations and emergency personnel worked to help injured and trapped citizens as the island begins to recover from its worst earthquake in 25 years.Taiwan Semiconductor Manufacturing Co., the leading producer of advanced chips for Apple Inc. and Nvidia Corp., said it would resume production less than 24 hours after evacuating staff and halting operations. The company said there has been no damage to its most critical chip-making equipment.

SOUTH KOREA (BBG): Bank of Korea Considers Forward Guidance Overhaul
The Bank of Korea may overhaul how it provides guidance on future path of interest rates, Reuters reports, citing four people familiar with the matter. Changes would include extending the time frame and providing visual estimates to boost transparency

CHINA (MNI): China Steel Export Growth Seen Slowing In 2024
Growth in China’s steel exports will slow this year from last year's 36.2% as authorities restrain mills from chasing low-profit foreign sales even as domestic demand remains weak, an advisor and local researchers told MNI.

CHINA (MNI): Iron Ore Prices To Fall Further-China Advisor, Analyst
Iron ore prices paid by Chinese importers are set to fall further before stabilising at about USD80-90 per tonne, as the country’s property sector remains weak and investment in heavy infrastructure slows, a Beijing-based advisor and market analysts told MNI. China’s iron ore supply increased by 15 million tonnes year-on-year during January to February amid robust imports, while steel mills’ repeatedly-delayed resumption of production following Chinese New Year has sent inventories to as high as 145 million tonnes, an analyst from GF Futures told MNI.

JAPAN (MNI): BOJ Concerns Grow Over Regional Bank Stability
Regional and cooperative shinkin banks will find policy normalisation far more challenging than their larger peers due to the mismatch of interest paid on deposits compared to that received via their typically longer-dated fixed income investments, raising concern among Bank of Japan officials, MNI understands.

JAPAN (MNI): Smaller Firms Split Over Wage Hikes - BOJ Report
Several Bank of Japan branch managers expect smaller firm wage hikes equal to, or higher than 2023 following strong wage hikes at major firms, but the results could be mixed as firms eye profits and rivals, the BOJ’s regional economic report said on Thursday.

JAPAN (MNI): Majority Of Regions Cut Economic View - BOJ
Seven out of the nine regional branch managers have lowered their economic assessment from three months ago, but maintain their economies are recovering or picking moderately, the Bank of Japan’s regional economic report said on Thursday. “Eight regions, excluding the Hokuriku Region, reported that their respective economies had been recovering moderately, picking up, or picking up moderately, although some weakness had been seen in part,” the BOJ said.

DATA

UK MAR FINAL SERVICES PMI 53.1 (FLASH 53.4); FEB 53.8
EUROZONE MAR FINAL SERVICES PMI 51.5 (FLASH 51.1); FEB 50.2
GERMANY MAR FINAL SERVICES PMI 50.1 (FLASH 49.8); FEB 48.3
FRANCE MAR FINAL SERVICES PMI 48.3 (FLASH 47.8); FEB 48.4
ITALY MAR SERVICES PMI 54.6 (FCAST 53.1); FEB 52.2
SPAIN MAR SERVICES PMI 56.1 (FCAST 55.5); FEB 54.7

MNI: EUROZONE FEB PPI -1% M/M, -8.3% Y/Y

AUSTRALIA FEB BUILDING APPROVALS -1.9% M/M, -5.8% Y/Y

SWITZERLAND DATA: March CPI Below Consensus

• Swiss headline CPI was 1.0% Y/Y and 0.0% M/M in March (vs 1.2% Y/Y, 0.6% M/M prior). Analysts had forecasted a headline print of 1.3% Y/Y and 0.3% M/M.
• Core CPI also printed at 1.0% Y/Y, with the monthly reading at 0.1% M/M (vs 1.1% Y/Y, 0.7% M/M prior).
• Domestic product inflation was 1.8% Y/Y and -0.2% M/M (vs 1.9% Y/Y, 0.5% M/M prior), while imported product inflation remained negative on an annual basis at -1.3% Y/Y and 0.7% M/M (vs -1.0% Y/Y, 1.0% M/M prior).
• This means Q1 Swiss headline CPI averaged 1.17% Y/Y, broadly in line with the SNB's March monetary policy meeting projections (of 1.2%).

EGB SUMMARY: Firmer In Spite Of Impressive Services PMIs

Core/semi-core EGBs are off intraday highs but remain firmer on the day, as markets digest this morning’s strong services PMI data alongside Spanish and French supply.

• The March services PMIs were strong across the board, particularly in Spain and Italy. This helped the Eurozone final composite above 50.0 for the first time since May 2023 (was 49.9 in the flash) - indicating regional activity is recovering from a trough in 2H 2023.
• Bunds nonetheless moved higher following the PMIs, with order-related flow proving supportive.
• E12bln LT OAT supply from France and E6.6bln Bono/Obli/ObliEi supply from Spain were well digested, with low prices above pre-auction mid-prices in each line offered.
• Bunds are +34 at 132.55, while OAT futures are +36 at 127.32.
• The German and French cash curves have bull flattened today, but the German 2s10s curve remains steeper this week.
• 10-year periphery spreads to Bunds are tighter, though the BTP/Bund spread remains above the 140bps handle.
• The ECB’s March meeting minutes headline the remainder of today’s regional docket, while US jobless claims data will also be of interest ahead of tomorrow’s payrolls release.

FOREX: CHF Slides as Inflation Slows Faster Than Forecast

• Swiss CPI data has been the most moving release of the morning, showing inflationary pressure slowing faster than expected in March. This puts CPI further below the SNB's inflation target and helps justify the last SNB rate cut - and potentially more monetary easing to come. EUR/CHF surged in response, rallying to clear the late March highs as well as key resistance and the bull trigger of 0.9842.
• The spot rally puts the cross back into technical overbought territory, with the 14-day RSI rivalling levels seen before the corrective pullback off the March 27th high. CHF is comfortably the poorest performer in G10.
• On the strong side, AUD and NZD trade well, with both currencies higher against most others. AUD/USD's break of the resistance at the 50-day EMA yesterday has aided further gains today - butting the pair just below the next upside level at 0.6602.
• The USD Index is lower for a third consecutive session, but nearby support remains unchallenged at 103.905. Above this mark, the underlying upside bias remains after the formation of a golden cross in DMA space in mid-March.
• Focus ahead turns to weekly jobless claims data and the February US trade balance. ECB accounts are also set for release on top of appearances from Fed's Harker, Barkin, Goolsbee, Mester and Kashkari.

EQUITIES: Trend Condition in e-mini S&P Unchanged, Remains Bullish

The trend condition in S&P E-Minis is unchanged and remains bullish, however, the recent move lower highlights a corrective cycle that suggests potential for a bearish extension. The contract has breached bull channel support - at 5291.12 - drawn from the Jan 17 low. A bullish trend condition in Eurostoxx 50 futures remains intact and the latest pullback is considered corrective. Tuesday’s fresh cycle highs confirm once again an extension of the uptrend and maintains the price sequence of higher highs and higher lows.

• Japan's NIKKEI closed higher by 321.29 pts or +0.81% at 39773.14 and the TOPIX ended 25.49 pts higher or +0.94% at 2732.
• Across Europe, Germany's DAX trades higher by 28.75 pts or +0.16% at 18393.35, FTSE 100 higher by 23.08 pts or +0.29% at 7959.31, CAC 40 up 21.71 pts or +0.27% at 8173.03 and Euro Stoxx 50 up 13.57 pts or +0.27% at 5081.57.
• Dow Jones mini up 101 pts or +0.26% at 39585, S&P 500 mini up 16 pts or +0.3% at 5279.5, NASDAQ mini up 79 pts or +0.43% at 18454.25.

COMMODITIES: Bull Theme in WTI Underpinned

The trend condition in Gold remains bullish and the yellow metal has traded to fresh all-time highs once again this week. The move higher maintains the price sequence of higher highs and higher lows and note that moving average studies are in a bull-mode condition. A bull theme in WTI futures remains intact and this week’s rally reinforces current conditions and confirms a resumption of the uptrend. The contract has traded through $84.87, the Sep 15 ‘23 high, paving the way for a climb towards the $90.00 handle further out.

• WTI Crude down $0.21 or -0.25% at $85.24
• Natural Gas down $0 or -0.16% at $1.837
• Gold spot down $8.54 or -0.37% at $2292.46
• Copper up $4.45 or +1.06% at $423.65
• Silver down $0.14 or -0.52% at $27.0795
• Platinum down $1.71 or -0.18% at $940.22