CN-US tentative trade truce still on hold amid reports Trump to roll back Metal, Aluminum tariffs

General trend and developments

-Pres Trump increasingly seen as likely to extend the trade truce with China after overnight reports Trump Admin has ‘shelved’ a number of key security and technology issues ahead of Trump’s April meeting with Pres Xi in Beijing (including use of Chinese equipment in US data centers).

-Breaking news just prior to this Market Update out of the FT, reporting that Pres Trump said to be considering to “roll back” tariffs on metal, aluminum goods.

-Also noteworthy was the US Dept of Commerce significantly marking down its duties on Chinese battery-grade Graphite to 160% in its final determination, well down from its May 2025 threat of 721% tariffs.

-Meanwhile US/Taiwan finally signed their trade deal, amid warnings from China that US arms deal(s) for Taiwan could jeopardize Trump’s state visit to China in April.

-In other trade-related news Brazil (fellow BRICS member of China) said to apply anti-dumping measures against coated flat steel and cold-rolled flat steel from China.

-Japan, US may still have distance between them on their $550B trade deal, after some vague comments from Japan’s top trade rep Akazawa, with no set timing on the next round of talks even though he cannot say when the first projects are to be established.

-Bank of Japan (BOJ) rate hike probabilities unchanged from day earlier. Japanese yield curve today headed lower in the morning, but steepened somewhat in the afternoon.

-2025's hawkish BOJ member Tamura was more muted in fresh comments today. However, Tamura still saw the neutral rate at north of 1%, and the BOJ not yet near it. [The big change of course since Tamura last spoke in October was Takaichi's resounding election win and the now firm grip on MOF power held by her Fin Min Katayama].

-Goldman Sachs General Counsel suddenly resigned today over the Epstein files.

- US equity FUTs -0.1% to -0.2% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

-Fri Feb 13th NZ Business PMI, (Fri night US Jan CPI).

Holidays in Asia this week

-Wed Feb 11th Japan.

-Thu Feb 12th Taiwan.

-Fri Feb 13th Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX opens -0.9% at 8,965.

- New Zealand Dec Manufacturing PMI: 55.2 v 56.1 prior (4th month of expansion).

- New Zealand Dec Net Migration: 2.9K v 1.6K prior.

- New Zealand Q1 Inflation Expectation Survey 2-year Outlook: 2.4% v 2.3% prior.

China/Hong Kong

- Shanghai Composite opens -0.5% at 4,115; Hang Seng opens -1.5% at 26,640.

- China Jan New Home Prices M/M: -0.4% v -0.4% prior.

- Reportedly Trump Administration has shelved a number of key tech security measures aimed at Beijing ahead of an April meeting between Trump and Xi - press.

- Brazil trade body said to apply antidumping measures against coated flat steel and cold-rolled flat steel from China - press.

- Japan former FX chief Yamasaki: Sees Yen firming as response to PM Takaichi's stance "becoming clear" for investors - financial press.

- ‘Several' prominent China economists are said to have called for loosening restrictions on the movement of money in and out of the country - US financial press.

- China State Tobacco Monopoly Administration: Issues measures to prevent overcapacity related to the e-cigarette industry.

- Shenzhen government: to issue notice to regulate gold market ops - financial press.

- China Media: Yuan conversion is ‘surging’ - update.

- Hong Kong said to be attracting South-East Asian issuers looking for exits amid illiquid domestic markets.

- China PBOC sets Yuan reference rate: 6.9398 v 6.9457 prior (strongest since May 11th, 2023).

- China PBOC Open Market Operation (OMO): Injects CNY145B; Net injects CNY114B v injects CNY448B prior.

Japan

- Nikkei 225 opens -0.8% at 57,197.

- Japan seizes Chinese fishing boat off of Nagasaki coast - Japanese press.

- Japan's Trade Min Akazawa: Discussed projects under Japan's US-bound investment package with Lutnick.

- Japan PM Takaichi's Adviser Honda: BOJ might see scope to raise this year, but may avoid hiking in March - financial press.

- Japan Chief Cab Sec Kihara: Aware of Chinese fishing vessel captain arrest; Takes firm stance on illegal fishing by foreign vessels - financial press

- Japan Fin Min Katayama: Decided to support feasibility test for blockchain.

- Japan BOJ Board member Tamura (hawk; dissenter): - Reiterates that neutral rate is at least around 1%; Personally feel Japan's recent inflation is becoming sticky.

Korea

- Kospi opens -0.2% at 5,514.

- South Korea Dec M2 Money Supply M/M: 0.6% v -0.1% prior.

- US reportedly proposes South Korea investment in Texas Petrochem - press.

- South Korea Fin Min Koo, BOK Gov Rhee: To strengthen bond market monitoring; Govt bond yields have edged higher (inline) - financial press.

- South Korea Unification Ministry: Recent drone incident goes against South Korea govt principle of peaceful coexistence with North Korea, will prevent recurrence.

- South Korea to extend fuel tax cut by another 2 months - update.

Other Asia

- (IN) India Jan CPI y/y: 2.8% v 2.8%e (annual pace back within target range).

- (IR) Trump: I guess a deal with Iran could be reached over the next month; I will talk to them as long as I like; Any deal is ultimately up to me.

- (TW) Taiwan Pres Lai: The trade deal with the US marks a pivotal moment for Taiwan's economy and industries [follows signing of trade agreement with the US].

- (MY) Malaysia Q4 GDP Q/Q: 0.8% v 0.9%e; Y/Y: 6.3% v 5.7%e.

- (MY) Malaysia Q4 Current Account Balance (MYR): 2.0B v 11.0Be.

- (MY) Malaysia Central Bank (BNM) Gov Ghaffour: Core inflation expected to remain broadly stable, close to long-term average in 2026.

- (ID) Indonesia President: To proceed with free meals program.

- (SG) Senior Min Jeffrey Siow: Singapore sees new growth sectors like quantum computing.

- (TH) Thailand PM Anutin: Reportedly to invite former PM Thaksin's Pheu Thai party into coalition govt - financial press.

North America

-*(US) Pres Trump said to 'roll back' tariffs on metal, aluminum goods - FT.

- (US) Jan Existing Home Sales: 3.91M v 4.15Me (slowest pace since Dec 2023); Month’s supply: 3.7 v 3.5 prior.

- (US) Department of Commerce Increases Duties on Chinese Battery-Grade Graphite to 160%+ in Final Determinations; Duties will remain in effect unless revoked and will be reviewed every five years.

- (US) Fed's Miran (dovish dissenter): See natural rate of Unemployment at around 4%.

- (US) Initial Jobless Claims 227K v 223Ke; Continuing Claims: 1.862M v 1.850Me.

- (US) Interior Sec Burgum, Chair of National Energy Dominance Council: Confirms US will sell Venezuelan oil to China.

- (US) Weekly EIA Natural Gas Inventories: -249 BCF vs. -257 BCF to -264 BCF Indicated Range.

- (US) US court said to block the FTC 2024 merger disclosure rule; cites court riling – financial press.

- (VE) US Energy Sec Wright: Expect Venezuelan oil sales to surpass $5B; US will not guarantee security on the ground in Venezuela - NBC interview.

- (PE) Peru Central Bank (BCRP) leaves Reference Rate unchanged at 4.25%; as expected; Inflation will remain around 2% in the coming months.

- (CO) Colombia said to be planning to force banks to fund emergency spending.

Europe

- (EU) Commission Pres Von Der Leyen: Will present a single market roadmap in March.

- (UK) BOE’s Breeden (dovish dissenter): expect a rate cut within the coming months.

- (UK) Chancellor Reeves: Have confidence that UK will beat economic forecasts for 2026.

- (FR) France Pres Macron: Need progress on capital market by June; Will move to a smaller group without progress in June.

- (RU) Reportedly Russia govt memo envisages return to US$-backed system and JVs in energy, oil & gas and metals & mining - press (in line with reporting on so-called 'Dmitriev Package' of $12T in investments between US and Russia).

Levels as of 00:20 ET

Nikkei 225 -0.9%; ASX 200 -1.4%; Hang Seng -2.1%; Shanghai Composite -0.7%; Kospi +0.8%.

Equity S&P500 Futures -0.0%; Nasdaq100 -0.1%; DAX -0.0%; FTSE100 -0.7%.

EUR 1.1873-1.1858; JPY 0.6550-0.6522; AUD 0.7098-0.7078; NZD 0.6041-0.6028.

Gold +1.1% at $4,977/oz; BTC -1.3% at $66,352, Crude Oil -0.2% at $62.71/bbl; Copper +0.5% at $5.7778/lb.