RBNZ cuts another 50bps but easing to slow – BoJ’s Takata fails to move Yen

Asia market update: RBNZ cuts another 50bps but easing to slow; BOJ’s Takata fails to move Yen; Focus on UK Jan CPI, US Jan Housing Starts, FOMC Minutes.

- New Zealand RBNZ cut by the expected 50bps to 3.75% for its fourth straight cut (with the last three all by 50bps). Now projects OCR low of 3.10% (by Q1 2026), implying a further 65 bps of further easing. In his lpress conference, Gov Orr said to expect 2 x 25bp cuts by mid-2025, perhaps April and May. Kiwi dollar initially fell -0.4% post-decision, but rose to end up +0.2% as Orr spoke.

- Japan Jan trade balance saw widest deficit since Jan 2023; JP yields kept rising to 14-15 year highs overnight, 10-year bond yields +4bps to 1.436%, however little reaction to BOJ board member Takata’s speech, where his comments stayed inline.

- Kospi outperformed +2.1% with Hynix +4%, Samsung +3%, Hanmi Semi +9% as K-Chips Act cleared a key legislative hurdle.

- Currencies slightly stronger v USD.

- Australia Q4 Wage Price Index saw its lowest growth since Mar 2022.

- China Jan new home prices continued their post-Covid grind downwards.

- Reportedly US Customs now has the wherewithal to enforce tariffs on products from China that have benefited from the De Minimus exemption as soon as the next one to three months; One analyst believes that companies will move to ocean shipping over air due to required filing and processing delays.

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian time zone)

- Wed 19th (Wed night ID Rate Decision, UK Jan CPI, US Jan Housing Starts, FOMC Minutes).

- Thu 20th AU Jan jobs, CN Feb LPR.

- Fri 21st AU & JP Flash Feb PMIs, JP Jan National CPI, (Fri night EU & US Flash PMIs).

- Sat 22nd CN Jan FDI (YTD), DE Federal Election.

Holidays in Asia this week

- Mon 17th (Monday night US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,479.

- Australia Q4 Wage Price Index Q/Q: 0.7% v 0.8%e; Y/Y: 3.2% v 3.2%e (lowest growth q/q since Mar 2022).

- Australia Jan Westpac Leading Index M/M: +0.12% v -0.02% prior.

- Australia sells A$800M vs. A$800M indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.5607% v 4.4684% prior; bid-to-cover: 4.14x v 4.00x prior.

- New Zealand central bank (RBNZ) cuts official cash rate (OCR) by 50BPS TO 3.75%; as expected.

- RBNZ Gov Orr: Inflation outlook gives us confidence for more cuts - post rate decision press conference.

- New Zealand Q4 PPI Input Q/Q: -0.9% v +1.9% prior; PPI Output Q/Q: -0.1% v +1.5% prior (update).

- New Zealand Jan REINZ House Sales Y/Y: +17.5% v -1.8% prior [overnight update].

- New Zealand Jan Non Resident Bond Holdings: 61.9% v 61.7% prior.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.6% v +3.7% prior [overnight update].

China/Hong Kong

- Hang Seng opens -0.9% at 22,777; Shanghai Composite opens -0.1% at 3,320.

- China Jan New Home Prices M/M: -0.1% v -0.1% prior.

- HKMA lent HK$5.5B to banks through the discount window on Feb 18th [highest since Dec 2019] – update.

- HKMA: China MOF sells CNY12.5B of Sovereign bonds in Hong Kong.

- (US) Tier1 analysts citing call with US Customs expert: Believe U.S. Customs already has the manpower and technology to enforce tariffs on products from China as soon as the next one to three months; Believes that companies will be forced to move to ocean shipping when De Minimis exemption is eventually removed, because every item entering the US by air will then be through traditional forms of entry demanding substantial details in filing for each individual item [overnight update].

- China MOF sells 3-month and 7-year bonds.

- China Jan FX Net Client Settlement (CNY): -281.9B v -75.1B prior [overnight update].

- China PBOC sets Yuan reference rate: 7.1705 v 7.1697 prior.

- China PBOC Open Market Operation (OMO): Injects CNY539B in 7-day reverse repos; Net drains CNY19B v prior injects CNY456B.

Japan

- Nikkei 225 opens -0.1% at 39,221.

- JAPAN JAN TRADE BALANCE: -2.759¥T V -¥2.103TE (widest deficit since Jan 2023 of -3.496T).

- Japan Dec Core Machine Orders M/M: -1.2% v 0.5%e; Y/Y: 4.3% v 7.5%e.

- Japan Jan Tokyo Condominiums for Sale Y/Y: -44.2% v -2.4% prior.

- Bank of Japan (BOJ) Board member Takata: Necessary for BOJ to shift gears as appropriate; BOJ's policy flexibility has increased - meeting with local leaders in Miyagi.

- Japan Upper House approves Junko Koeda (potential hawk) as BOJ board member; To replace Seiji Adachi (dove) from Mar 26th, 2025.

- BOJ Outright Bond Purchase Operation for 1~3 Years; 3-5 Years; 5~10 Years; and >25 Years; (Reduced purchase amounts inline with Dec guidance).

- Japan sells ¥3.2T vs. ¥3.2T indicated in 12-Month Bills; Avg Yield: 0.6107% v 0.5429% prior; bid-to-cover: 3.48x v 3.67x prior.

- Coca-Cola Japan to raise prices for fruit juice carton products [overnight update].

- Bank of Japan (BOJ) Gov Ueda: Reiterates to continue efforts at careful communication - comments in parliament [overnight update].

Korea

- Kospi opens +0.3% at 2.633.

- South Korea Government: State-run Korea Land & Housing Corp to purchase unsold new apartments in areas [excluding Seoul] in order to support the property market; to provide up to KRW5.0T of liquidity to builders.

- South Korea to begin anti-dumping probe into hot-rolled steel - local press.

Other Asia

- Singapore PM Wong: Sees 2025 GDP growth between 1-3% - budget speech; Sees FY25 budget surplus S$6.8B or 0.9% of GDP vs surplus S$6.4B in FY24 [overnight update].

- Singapore PM Wong: Will develop new national semiconductor R&D fab facility and biotech infrastructure for S$1.0B [overnight update].

North America

- (US) Pharma leaders said to meet Pres Trump in attempt to tweak new Admin's drug policies - US financial press.

- (US) Pres Trump's pick Howard Lutnick has enough votes in the Senate to be confirmed as Commerce Sec - financial press.

- Treasury Secretary Bessent: US Pres Trump's plan to end war Ukraine is 'elegant' - TV interview.

- US Senate advances Trump FBI Director nominee Kash Patel in procedural vote - financial press.

- *(US) SEC of state Rubio: Russia and US agree to restore embassy staffing; agreed on four principles with Russians during talks in Saudi Arabia.

- (BR) Brazil said to plan to join OPEC+ group of oil exporters - press (update).

- (US) Feb empire Manufacturing: +5.7 V -2.0E; New Orders: +11.4 v -8.6 prior.

- (CA) Canada JAN CPI M/M: 0.1% V 0.1%E; Y/Y: 1.9% V 1.9%E.

- (CA) Canada Jan Existing Home Sales M/M: -3.3% v -5.8% prior.

- (EU) ECB’s Cipollone (Italy): Risks to Inflation outlook are more balanced; Euro area's economic recovery remains weak - conference comments.

- (US) Feb NAHB Housing market index: 42 V 46E.

- (US) Fed’s Daly (non-voter for 2025): Doesn't comment on monetary policy in discussion on bank regulation - speech text.

Europe

- (PT) Portugal Jan PPI M/M: -1.5% v +0.2% prior; Y/Y: -0.3% v +1.6% prior.

- (EU) ECB's Holzmann (Austria): March rate decision depends on data; harder to cut rates as neutral level is approached.

- (EU) European Commission to tell member states to lower electricity taxes to minimum legal threshold as part of draft clean industrial deal document; To promote more flexible gas storage refilling, including with dynamic targets.

Levels as of 00:20 ET

- Nikkei 225 -0.5%, ASX 200 -0.7%, Hang Seng -0.5%; Shanghai Composite +0.5%; Kospi +2.1%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; Dax flat; FTSE100 -0.1%.

- EUR 1.0441-1.0454; JPY 151.72-152.32; AUD 0.6342-0.6367; NZD 0.5678-0.5724.

- Gold -0.1% at $2,946/oz; Crude Oil +0.2% at $71.97/brl; Copper -0.3% at $4.5705/lb.