EXECUTIVE SUMMARY
- RUBIO SAYS TALKS IN SAUDI ARABIA KEY TO RESUMING MILITARY SUPPORT FOR UKRAINE
- UKRAINE BOMBARDS RUSSIA, FORCING MOSCOW AIRPORTS TO CLOSE
- PBOC STARTS PARING YUAN SUPPORT AMID US EXCEPTIONALISM DOUBTS
- WEAKER CONSUMPTION DRIVES JAPAN'S Q4 GDP LOWER
Figure 1: E-Mini S&P (top) oversold as per 14-day RSI (bottom)
Source: MNI/Bloomberg
NEWS
US/UKRAINE (WSJ): Marco Rubio Says Talks in Saudi Arabia Key to Resuming Military Support for Ukraine
The Trump administration might restart intelligence and military support to Kyiv if high-level talks between U.S. and Ukrainian officials on a potential peace process make headway on Tuesday, Secretary of State Marco Rubio said. “My hope is that we are going to have a really good meeting tomorrow and we will be in a different place very soon,” Rubio told reporters on his plane shortly before arriving here Monday night.
US (BBG): Trump Partly Blocked From Defunding USAID as Lawsuits Go On
A US judge ordered the Trump administration to undo some of its cuts to billions of dollars in foreign assistance programs through the US Agency for International Development, the latest turn in a legal fight that’s likely to end up at the US Supreme Court. In a ruling Monday, US District Judge Amir Ali in Washington issued a mixed ruling on a an effort by a group of nonprofits to block the spending cuts. The ruling requires USAID to follow through on payments obligations under contracts with groups that provide food and other essential services to people across the globe.
RUSSIA/UKRAINE (NYT): Ukraine Bombards Russia, Forcing Moscow Airports to Close
The mayor of the Russian capital called the attack the war’s largest against the city. It appeared to be a reminder of Ukraine’s power to strike as its president proposes an air truce. Ukraine unleashed one of its largest long-range drone bombardments of the war before dawn on Tuesday at targets across Russia, including dozens of strikes directed at the Moscow region, as both sides stepped up attacks ahead of talks intended to end three years of fighting. The Russian Ministry of Defense claimed to have shot down 337 drones, with at least 91 sent toward the capital and the region around it.
ECB (MNI): 'Momentous and Dangerous' Geopolitical Shift - Rehn
There is a "momentous shift taking place in global politics in a dangerous way for Europe,” Bank of Finland Governor Olli Rehn said Tuesday, noting that the continent needed to rapidly "come up with measures to support Ukraine and to boost its own defences.” According to Rehn, uncertainty is weighing on investment in the euro area and on its exports, and the risks are on the downside. Inflation is stabilising at the target level, but growth in the economy is subdued, although a significant increase in Europe’s defence spending and in its investment in defence could increase the euro area’s production.
US/UK (FT): Elon Musk Expresses Support for Reform UK Rival After Dispute
Elon Musk has expressed an interest in backing an alternative to Reform UK, following a spat that erupted last week between the populist party’s leader Nigel Farage and his most high-profile MP. The tech billionaire’s allies say he has indicated he would support a credible alternative party, according to people familiar with the matter, after Reform on Friday suspended Rupert Lowe, one of its five MPs.
UK (FT): Keir Starmer Defends Planned Welfare Cuts to Anxious Labour MPs
Sir Keir Starmer has told anxious Labour MPs that it is right to slash billions of pounds from the welfare bill, amid warnings that the cuts could pose the biggest threat to his authority since becoming prime minister. Labour officials say the government is looking to cut some £5bn from the cost of the Personal Independence Payment (PIP) - the main disability benefit - as chancellor Rachel Reeves attempts to fix a hole in the public finances and get more people into work.
NORWAY (MNI): Finance Ministry Revises 2025 Mainland GDP Projection Down to 2.0%
The Norwegian finance ministry revised its 2025 mainland GDP growth projection down by 0.3pp to 2.0% Y/Y compared to its October forecast round, while the 2026 mainland GDP projection was revised a tenth higher to 2.2%. The softer outlook for 2025 reflects a sharp downward revision to housing investment (-4.7% vs 12.1% in October), which was offset a little by upgrades to consumption and government spending.
CHINA (BBG): PBOC Starts Paring Yuan Support Amid US Exceptionalism Doubts
Doubts over US exceptionalism are giving China a much needed break from strongly defending its currency, as the yuan’s strength allows it to dial back support via its daily reference rate. The gap between the People’s Bank of China’s daily reference rate versus narrowed to 675 pips on Monday, the least since early December. While the so-called fixing remains near the strongest level since November, its smaller spread with estimates signals weakening official support for the currency.
CHINA (MNI EXCLUSIVE): Low Inflation Gives Room for More China Easing
A senior China advisor sees greater room for fiscal and monetary stimulus. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
BOJ (MNI EXCLUSIVE): BOJ Sees Steady Wage Hikes Despite Tariff Concerns
U.S. tariffs will not impact Japanese wage hikes this year. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
S. KOREA (BBG): Korea’s New FX Rules Renew Calls for More Fundamental Changes
South Korea’s new measures to boost foreign currency inflows are tinker-at-the-margins tweaks that will breed short-term stability while exposing the need for more fundamental policy changes, analysts say. Among the rules introduced Sunday to boost investor interest include raising FX derivatives’ hedging limits, allowing domestic institutions to buy foreign currency-denominated “Kimchi” bonds, and streamlining foreigners’ tax paperwork.
PHILIPPINES (MNI): Ex-President Duterte Arrested on Return to Philippines
Philippine authorities executed an International Criminal Court (ICC) arrest warrant against Ex-President Rodrigo Duterte on his return from Hong Hong and took him to custody at the Vilamor Airbase amid an investigation into his brutal "war on drugs" which resulted in thousands of deaths. The ICC warrant seen by Philstar.com reportedly argued that it was necessary to detain Duterte because of his continued political influence even though he no longer holds public office. The warrant was issued over allegations of crimes against humanity committed as part of Duterte's anti-drug campaign.
DATA
UK DATA (MNI): BRC-KPMG Retail Sales: Modest Growth as "Consumers Remain Cautious"
- UK BRC FEB BY VALUE SHOP SALES LFL +0.9% YY, TOTAL +1.1% YY
BRC-KPMG retail sales increased a modest 1.1% Y/Y in February, softer than the firm 2.6% print recorded in January driven by the end of New Year sales. More Valentine's purchases than last year were cited in the press release while the CEO of the Institute of Grocery Distributions says "February's volume sales dipped" in the food and drink sector. The three months to February average growth of 2.4% (from 1.1% in January), is the highest three-month average since November 2023 - though this will include December's firm reading which was distorted by Black Friday). Also note this is a value rather than a volume index, so these numbers include inflation.
JAPAN DATA (MNI): Weaker Consumption Drives Japan's Q4 GDP Lower
- JAPAN Q4 ANNUALIZED GDP REV +2.2%; PRELIM +2.8%; MEDIAN +2.7%
- JAPAN Q4 GDP +0.6% Q/Q; PRELIM +0.7%; MEDIAN +0.7%
Japan's economy for the October-December period grew at a slower pace as private consumption was revised down, although capital investment was revised up, second preliminary data released by the Cabinet Office showed on Tuesday. GDP rose 0.6% q/q, or annualised 2.2%, revised from the first preliminary estimates of 0.2% q/q, and against the 0.7% q/q forecast. Private consumption, which accounts for about 60% of Japan’s GDP, was revised to 0.0% from 0.1%, and its contribution was revised to 0.0pp from 0.1pp.
JAPAN Q4 PRIVATE CONSUMPTION +0.0% VS. +0.1%; MEDIAN +0.1% (MNI)
JAPAN JAN HOUSEHOLD SPENDING +0.8% Y/Y; DEC +2.7% (MNI)
JAPAN JAN HOUSEHOLD SPENDING -4.5% M/M; DEC +1.6% (MNI)
AUSTRALIA DATA (MNI): Lower Rates & Inflation Drive Improved Consumer Sentiment
March Westpac consumer confidence jumped 4.0% m/m to 95.9, the highest in three years, boosted by the RBA's 18 February 25bp rate cut, the start of an easing cycle. It also revised down 2025 underlying inflation projections and said that it has "more confidence that inflation is moving sustainably towards the midpoint" of the band after lower-than-expected Q4 CPI. Cost-of-living has been the main concern for households and both of these developments appear to have reassured them that their financial situation will improve.
FOREX: EUR Buoyed as Differences Narrow in German Politics
- The EUR trades well, helping buoy EUR/USD to another cycle high of 1.0921 after The Greens yesterday appeared to soften their resistance to supporting the debt brake proposals before the end of this parliament - meaning sufficient concessions are likely to be made to pass the legislation before a trickier set of Bundestag mathematics kicks in for the upcoming parliament.
- EUR/USD now faces resistance at 1.0937 next, clearance above which would cement a break of the US election highs, and add to the near-term upward momentum in the pair. As a result, the USD is offered against most others, with only the JPY underperforming. EUR/JPY remains below the 100-dma, which marks the next upside level at Y161.32.
- Scandinavian currencies remain particularly firm. Norway followed Sweden's headline-beating pace of inflation yesterday, meaning market pricing for easing from both the Swedish RIksbank as well as the Norges Bank has contracted sharply - supporting both currencies. USD/NOK has corrected to new YTD lows, testing 10.6605 support - the 76.4% retracement for the rally posted off the September 2024 lows.
- US JOLTS jobs data marks the calendar highlight Tuesday, as markets look for higher quality data on the labour markets following last week's NFP print and headed into next week's FOMC decision. There are no remaining central bank speakers today, leaving focus on geopolitical risks as Ukrainian and US representatives meet in Saudi Arabia to discuss the prospect of peace talks and settlements with Russia.
EGBS: Bunds Erase Yesterday's Gains Amid Renewed German Spending Prospects
Bund futures have erased yesterday’s gains after the German Green party signalled hopes for a defence spending deal by the end of this week. Futures are -73 ticks at 127.10, piercing last Friday’s 127.18 low. Initial firm support and the bear trigger is 126.64 (Mar 6 low), clearance of which would expose 126.49 (2.95% 10-year yield level) and 126.56, a Fibonacci projection.
- There has been little in the way of regional data this morning, while Bank of Finland Governor Rehn echoed the ECB’s intensely data-dependent approach ahead of the April decision.
- The German curve has bear steepened, with 2-year yields 1.5bps higher and 10-year yields up 5bps. Germans ASWs (vs 3-month Euribor) have tightened up to 1bp on the session.
- Books are open for today’s 10-year Dec-35 EU-bond syndication. The E9bln WNG size was within MNI’s E7-10bln range.
- Renewed German spending prospects has supported European equities, helping 10-year EGB spreads to Bunds tighten. The BTP/Bund spread is 2.5bps tighter today at 110.5bps. Note that Portugal’s minority government is expected to lose a confidence vote today, triggering new elections.
GILTS: Either Side of Unchanged Given Mixed Offshore Inputs
Gilt yields either side of unchanged as the late Monday rally in U.S. Tsys is countered by fresh weakness in Bunds as hopes surrounding a German fiscal accord being struck in the immediate term rise once again.
- Futures -15 at 92.14 last.
- Recent gains in the contract appear corrective from a technical standpoint, with the bear mode remaining intact.
- First support at Friday’s low (91.67), while Friday’s high (92.63) continues to present initial resistance.
- Yields 1bp lower to 1bp higher, curve twist steepens.
- The 10-Year gilt/Bund spread is on track for its first sub-180bp close since September (last ~5bp tighter on the day at ~176bp), with German fiscal expectations continuing to drive cross-market moves.
- Next support of note in the spread located at 175bp, which protects the 76.4% retracement of the July ’24 to December ’24 widening (174.5bp).
- Books are open on the new 1.875% Sep-49 I/L gilt. We pencil in a GBP4.0bln size, although we see risks of the transaction being upsized to GBP4.5bln and expect books to close at 10:00 GMT.
- BoE-dated OIS little changed on the day, showing a little over 55bp of cuts through December.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.456 | +0.1 |
May-25 | 4.266 | -18.9 |
Jun-25 | 4.197 | -25.7 |
Aug-25 | 4.053 | -40.1 |
Sep-25 | 4.009 | -44.6 |
Nov-25 | 3.912 | -54.3 |
Dec-25 | 3.881 | -57.4 |
EQUITIES: E-Mini S&P Sell-Off Monday Strengthens Bearish Conditions
The trend in the Eurostoxx 50 futures contract is unchanged, it remains bullish and the latest pullback appears corrective. Support at the 50-day EMA, at 5309.38, remains intact for now. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend. However, a clear break of the 50-day EMA would signal a possible reversal. A resumption of gains would refocus attention on the 5600.00. A bear threat in S&P E-Minis remains present and Monday’s extension strengthens bearish conditions. The move down also reinforces the significance of the breach of 5809.00, the Jan 13 low. This level marked the mid-point of a double top on the daily chart and the break confirms the pattern and an important short-term reversal. Sights are on 5499.25, the Sep 9 2024 low. Firm resistance to watch is 5979.06, the 50-day EMA.
- Japan's NIKKEI closed lower by 235.16 pts or -0.64% at 36793.11 and the TOPIX ended 30.04 pts lower or -1.11% at 2670.72.
- Elsewhere, in China the SHANGHAI closed higher by 13.665 pts or +0.41% at 3379.828 and the HANG SENG ended 1.35 pts lower or -0.01% at 23782.14.
- Across Europe, Germany's DAX trades higher by 132.55 pts or +0.59% at 22753.92, FTSE 100 lower by 1.67 pts or -0.02% at 8598.11, CAC 40 up 44.61 pts or +0.55% at 8093.93 and Euro Stoxx 50 up 24.04 pts or +0.45% at 5411.97.
- Dow Jones mini up 143 pts or +0.34% at 42093, S&P 500 mini up 19.75 pts or +0.35% at 5641.75, NASDAQ mini up 89.75 pts or +0.46% at 19547.25.
Time: 09:55 GMT
COMMODITIES: Gold in Consolidation Mode, Trend Remains Bullish
A bearish trend condition in WTI futures remains intact and last week’s fresh short-term cycle lows reinforce current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.36, the 50-day EMA. Gold is in consolidation mode. The trend condition remains bullish and the recent pullback appears to have been a correction. A stronger rally would refocus attention on $2962.2, a Fibonacci projection. This would also open the $3000.0 handle. On the downside, a resumption of weakness would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2826.3. The 50-day average marks a key support.
- WTI Crude up $0.21 or +0.32% at $66.24
- Natural Gas down $0.02 or -0.49% at $4.475
- Gold spot up $21.08 or +0.73% at $2909.91
- Copper up $1.15 or +0.25% at $467.7
- Silver up $0.3 or +0.93% at $32.4075
- Platinum up $5.5 or +0.57% at $968.07
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 11/03/2025 | 1000/0600 | ** |  US | NFIB Small Business Optimism Index |
| 11/03/2025 | - | *** |  CN | New Loans |
| 11/03/2025 | - | *** | CN | Money Supply |
| 11/03/2025 | - | *** | CN | Social Financing |
| 11/03/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 11/03/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 11/03/2025 | 1600/1200 | *** | US | USDA Crop Estimates - WASDE |
| 11/03/2025 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 12/03/2025 | 0001/0001 | * |  GB | RICS House Prices |
| 12/03/2025 | 0730/0730 | GB | DMO propose calendar for first 3 weeks of FY25/26 | |
| 12/03/2025 | 0845/0945 |  EU | Lagarde at "ECB and Its Watchers" conference Frankfurt | |
| 12/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 12/03/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 12/03/2025 | 1100/1200 | EU | ECB Wage Tracker | |
| 12/03/2025 | 1230/0830 | *** | US | CPI |
| 12/03/2025 | 1345/0945 | *** |  CA | Bank of Canada Policy Decision |
| 12/03/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 12/03/2025 | 1515/1615 | EU | Lane at "ECB and Its Watchers" conference Frankfurt | |
| 12/03/2025 | 1700/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 12/03/2025 | 1800/1400 | ** | US | Treasury Budget |