Lagarde to leave ECB early – FOMC Minutes tonight

Asia market update: RBNZ dovish-hold; Continued Asia hols; Lagarde to leave ECB early; FOMC Minutes tonight.

General trend and developments

- Reminder of Asia markets closed today: China, Hong Kong, Singapore, South Korea, Taiwan, Vietnam.

- New Zealand’s RBNZ held rates (as expected) and its future rate path was inline with market expectations, yet somewhat dovish [path implies ~60% chance of rate hike by Dec 2026 v 100% probability in the swap market]. The OCR is projected to increase slightly sooner compared to Nov 2025. RBNZ noted domestic financial conditions have tightened since November, while raising slightly all of its OCR rate paths by around 10bps and gradually increasing from late 2026 as the economic recovery continues. Nevertheless GDP projections revised downwards for 2026 while being maintained for 2027.

- Swaps traders pared their bets on a RBNZ hike by October, with Kiwi 2-year yields -7bps and the Kiwi dollar -0.8% to trade below 0.60 for first time in two weeks.

- In her presser, new RBNZ Gov Breman (from Sweden’s Riksbank) came across on the dovish side, as per her December comments, with the Kiwi dollar falling a bit more during her post-rate decision press conference.

- Reports that ECB Chief Lagarde to leave her role before the current 8-year term is completed, prior to the Apr 2027 French Presidential election.

-Japan’s January trade balance came in better than expected, measuring a healthy surplus in the adjusted figures. Exports up nearly 17% while imports surprisingly saw a negative read - maybe still a hangover from the US tariff-induced inventory build-up last March through June. Exports to EU and China made up for a drop in US exports.

- Markets no longer pricing a rate hike by BOJ, with a June hike now priced at only 93.5% probability.

- Nasty result for BOJ 5-10 yr outright bond buying op by BOJ. Offered to buy ¥260B in 5-10 yr JGBs with total offers as much as ¥1.05T.

- Los Angeles Port said exports to China “look dismal”; Soybeans to China were hardest hit by tariff policy with exports from the Port of LA falling 80% last year, showing now some improvement in Nov or Dec.

- Spot Silver recovered +3% to $76/oz; Spot Gold +1.2% to $4,932/oz.

- US equity FUTs +0.2% to 0.3% during Asia trading.

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

- Wed Feb 18th UK Jan CPI, (Wed night US Nov & Dec Housing Starts, US Dec Durable Goods, US FOMC Minutes).

- Thu Feb 19th AU Jan Jobs, JP Dec Machine Orders, PH BNP Rate Decision, ID Rate Decision, (Thu night CA Dec Balance of Trade, US Dec Balance of Trade).

- Fri Feb 20th NZ Trade Balance, JP Jan CPI, S&P Global PMIs day, UK Jan Retail Sales, (Fri night US Q4 Adv GDP, US Dec Core PCE).

Holidays in Asia this week

- Mon 16th China, (Hong Kong open for morning trading only), Indonesia, South Korea, Taiwan, USA, Vietnam.

- Tue 17th China, Hong Kong, Indonesia, Philippines, Singapore, South Korea, Taiwan, Vietnam.

- Wed 18th China, Hong Kong, Singapore, South Korea, Taiwan, Vietnam.

- Thu 19th China, Hong Kong, Taiwan, Vietnam.

- Fri 20th China, Taiwan, Vietnam.

[** Note: China markets reopen from Tue, Feb 24th).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.4% at 8,991.

- Australia Jan Westpac Leading Index M/M: -0.1% v +0.1% prior.

- Australia sells A$1.2B v A$1.2B indicated in 4.25% Oct 2036 Bonds: Avg Yield 4.7439% : bid-to-cover: 3.90x.

- New Zealand central bank (RBNZ) leaves official cash rate (OCR) unchanged at 2.25%; as expected.

- New Zealand Central Bank (RBNZ) Monetary Policy Statement: project that the OCR will remain around its current level in the near term, before gradually increasing from late 2026.

- New Zealand Q4 PPI Output Q/Q: 0.1% v 0.6% prior; PPI Input Q/Q: -0.5% v +0.2% prior.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite closed for holiday.

- (US) Los Angeles Port Chief Gene Seroka: Overall exports to China look dismal; Soybeans to China were hardest hit by tariff policy with exports from the Port of LA falling 80% last year, showing now improvement in Nov or Dec.

- US govt today presented new seismic readings to support recent allegations that China conducted secret low-yield nuclear tests - WSJ.

- (CN) USTR Greer: We will see and adjust to any Supreme Court ruling on Trump IEEPA tariffs; Steel and Aluminum tariffs to stay in place [overnight update].

Japan

- Nikkei 225 opens +0.5% at 56,857.

- Japan Jan trade balance: -¥1.2T V -¥2.129TE; Adj Trade Balance: +¥455.5B v -¥162.6Be; Exports Y/Y: 16.8% v 13.0%e; Imports Y/Y: -2.5% v +3.5%e.

- (US) Trump: Our MASSIVE Trade Deal with Japan has just launched! Announces three projects in Texas, Ohio and Georgia.

-BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and >25 Years; (Inline with planned amounts for Q1, 2026).

- Japan PM Takaichi: Confirms to have agreed with US on first set of investment projects - post on X.

- Japan Trade Min Akazawa: Confirms decided to initially proceed with 3 US investment projects totaling $36B as part of $550B US investment deal - financial press.

-Follow Up: Commerce Dept issues Fact Sheet related to Japan trade deal.

-Japan Fin Min Katayama: Reiterates to carry out responsible fiscal policy while keeping in mind IMF's preliminary policy recommendation to Japan - financial press.

- IMF issues Japan Staff Concluding Statement of the 2026 Article IV Mission: Risks to inflation are balanced.

Korea

- Kospi closed for holiday.

Other Asia

- Indonesia Dec External Debt: $431.7B v $425.3B prior.

North America

- Anthropic said to have approached 1789 Capital for investment amid Pentagon tensions, but was reportedly rebuffed by the pro-Trump firm for "ideological reasons" - WSJ.

- (US) US reportedly plans to deploy more advanced missile systems and other weapons in the Philippines to deter Chinese aggression in the South China Sea - WSJ.

- (US) Jan ADP Preliminary Employment Change for 4-weeks ending Jan 31st: +10.3K v +6.5K prior.

- (US) USTR Greer: We will see and adjust to any Supreme Court ruling on Trump IEEPA tariffs; Steel and Aluminum tariffs to stay in place.

- (US) FEB empire manufacturing: 7.1 V 6.2E; New Orders: 5.8 v 6.6 prior, Prices Paid: 49.1 v 42.8 prior ; "Firms remained optimistic that conditions would continue to improve, with employment expected to grow.”

- (CA) Canada Jan CPI M/M: 0.0% V 0.1%E; Y/Y: 2.3% V 2.4%E.

- (US) Fed's Goolsbee (non-voter): Repeats some stuff to like in Friday's CPI report; Seen progress on shelter side, but repeats still concerned about services inflation.

- (US) FEB NAHB HOUSING MARKET INDEX: 36 V 38E.

- (EU) US Energy Sec Wright: US will continue to supply Europe with LNG at low prices.

- (IR) US official: Iran said they would come back in the next 2 weeks with detailed proposals to address some of the open gaps in our positions; Progress was made, but there are still many details to discuss.

- (CA) Canada PM Carney: Talks with US on Canada joining the 'Golden Dome' are going well.

- (US) Vice President Vance: US President Trump has a lot of options regarding Iran; Iranians are not yet willing to acknowledge some of Trump's red lines.

- (US) Fed's Daly (non-voter): Must dig deep to on AI impacts; Too far to link productivity growth all to AI, but something is definitely happening.

Europe

- ECB Chief Lagarde said to be planning to leave ECB before current 8-year term ends - financial press.

- (IR) Reportedly parts of Strait of Hormuz closed for hours over earlier announced drills - German press.

- (IN) India PM Modi: Agreement with France on need to avoid double taxation.

- (IR) Iran Foreign Minister Araghchi: Reached understanding on main principles with US; been good developments compared to last round; date for next round of talks is undecided - comments after Geneva nuclear talks.

- BAYN.DE reportedly plans to make $10.5B offer to settle current and future Roundup cancer lawsuits - press.

Levels as of 00:20 ET

Nikkei 225 +1.2%; ASX 200 +0.5%; Hang Seng closed; Shanghai Composite closed; Kospi closed.

Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; DAX +0.3%; FTSE100 flat.

EUR 1.1858-1.1839; JPY 153.70-153.07; AUD 0.7088-0.7065; NZD 0.6053-0.5996.

Gold +1.2% at $4,937/oz; BTC -0.6% at $67,891 Crude Oil -0.4% at $62.36/bbl; Copper +0.5% at $5.7043/lb.