Sitting in holding pattern ahead of US Nonfarm Payrolls with wide estimate range

EU mid-market update: Sitting in holding pattern ahead of US Non-Farm Payrolls with wide estimate range; ADP and Challenger earlier in week point to low side bias; Europe digests ECB decision and defense funding shift.

Notes/observations

- European indices opened lower, with broader market sentiment dampened by continued uncertainty around US trade policies. Trump’s delay of 25% tariffs on Canadian and Mexican goods until April 2 failed to offer much support, as doubts persist about his broader strategy. Notably US tech stocks suffer due to skepticism about AI monetization and capex sustainability, as well as relationship to Japanese Yen and carry trade.

- ECB cut rates by 25bps as expected yesterday, but there’s growing caution, with hints that a pause may be on the horizon. Political support for defense spending initiatives in Europe and Germany’s large-scale fiscal plans weigh on investor sentiment. German Bund yields dropped 7bps to 2.82%, after surging earlier in the week on expectations of increased government spending.

- For data, Euro Zone Q4 GDP was revised higher while growth in compensation per employee slowed from Q3. German factory orders fell sharply in Jan, while UK Halifax house price growth was weaker than expected in Feb. Taiwan’s exports surged 31.5% y/y in Feb, beating expectations, although exports to Europe declined. Meanwhile, France’s current account deficit widened to €2.2B.

- Focus now shifts to US Non-Farm Payrolls, with expectations of 160K and maintaining a steady unemployment rate of 4%. Analyst expectations are widespread between +30-300K. Worth noting ADP Employment Change on Wed was lowest since July 2024 and Challenger Job Cuts was highest since July 2020.

-Asia closed lower with Nikkei225 underperforming -2.3%. EU indices -0.4% to -1.4%. US futures +0.2-0.6%. Gold +0.3%, DXY -0.6%; Commodity: Brent +1.3%, WTI +1.3%; Crypto: BTC -2.6%, ETH -4.4%.

Asia

- China Feb YTD Trade Balance: $170.5B v $147.5Be v $104.8B prior; Exports Y/Y: 2.3% v 5.9%e; Imports YTD Y/Y: -8.4% v +1.0%e.

- South Korea Jan Current Account Balance: $2.9B v $12.4B prior.

- Australia Jan Household Spending M/M: 0.4% v 0.5%e; Y/Y: 2.9% v 3.4%e.

- Japan Fin Min Kato stated that was recently seeing one-sided and rapid moves in FX, would not comment on FX levels but 'deeply concerned' about recent FX moves.

- Inflation risks might 'stir' BOJ discussion of rate hike in May. BOJ said to be putting more attention to the risk that sticky food inflation might heighten household inflation expectations (**Note: Japan 30-year JGB yield rose to 2.55% the highest since Jun 2008).

Europe

- ECB said to see April showdown on whether to cut rates again. Chances of ECB rate pause in April was growing. Rates would still likely continue lower with the current Deposit Rate of 2.50% not probably the bottom of the easing cycle.

- BOE's Mann (dovish dissenter) stressed that the gradualist premise (for setting rates) was no longer valid. Evaluating developments on inflation's persistence. Rates needed to remain restrictive; Larger cuts more effectively communicate the stance of policy and influence the economy.

Americas

- Fed's Bostic (non-voter for 2025) noted that the economy was in 'remarkable flux'; Difficult to know where economy would land. Directionality was still very much up in the air. Would be surprised if Fed gets clarity before late Spring and into the Summer. Decision at May meeting, or at June meeting, to depend on how clear things get.

- Fed's Waller (voter) noted that was not thinking about a rate cut at March meeting; Median of two cuts this year remained reasonable. Particularly interested in market pricing of inflation expectations; They were not pricing in any serious long term inflation.

- Pres Trump signed EO for Strategic Bitcoin Reserve; would be capitalized with Bitcoin owned by Fed govt that was forfeited as part of criminal proceedings or civil asset forfeitures.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.47% at 553.28, FTSE -0.31% at 8,656.28, DAX -1.37% at 23,126.03, CAC-40 -0.69% at 8,141.04, IBEX-35 -0.51% at 13,179.93, FTSE MIB -0.16% at 38,719.00, SMI -0.54% at 12,986.20, S&P 500 Futures +0.40%].

Market focal points/key themes: European indices open lower across the board and continued under pressure through the early part of the session; uncertainty around trade policy and worries about economic growth seen weighing on risk appetite; among sectors managing marginal gains are telecom and utilities; sectors leading the way lower include consumer discretionary and industrials; SNO to acquire Sval Energi; Serica confirms merger talks with EnQuest; focus on US NFP data coming out later in the day; no major earnings expected in the upcoming Americas session.

Equities

- Consumer discretionary: Salvatore Ferragamo [SFER.IT] -18.0% (earnings), Austrian Post [POST.AT] -3.0% (Q4 results, rev beats estimates), H&M [HMB.SE] -1.5% (analyst downgrade).

- Energy: DNO International [DNO.NO] +7.0% (to acquire Sval Energi for $450M in cash, valuing deal at EV $1.6B; Will quadruple North Sea output to 80K boepd).

- Healthcare: Biomerieux [BIM.FR] -0.5% (FY24 results, net miss, rev beat, provides initial FY25 guidance).

- Industrials: Elia [ELI.BE] +17.0% (announces €2.2B equity package; earnings), Hensoldt [HAGG.DE] -7.0% (analyst downgrade; US and Ukraine to meet in Saudi Arabia next Wednesday) - Technology: Atos [ATO.FR] -8.5% (10,000 to 1 reverse stock split) - Telecom: Eutelsat [ETL.FR] -18.5% (analyst upgrade; talks over replacing Starlink in Ukraine intensifying).

Speakers

- ECB’s Villeroy (France) commented that it was winning the battle with inflation.

- Russia Govt Spokesperson Peskov noted that Russia might need to take appropriate countermeasures for its own security as saw EU actively discussing militarization.

- More press that BOJ looked to keep its policy steady at the upcoming March meeting in order the gauge the effects of prior hikes. BOJ said to believe that recent wage talk developments were within expectations.

Currencies/fixed income

- USD continued to be on soft footing as it registered its 5th straight day of losses as a memorable week was drawing to a close,.Dealers noted that President rump's tariff policy weighed on sentiment as various reprieve were introduced to foster negotiations Focus on the upcoming Nonfarm Payroll Report due out in the session.

- EUR/USD moving above 1.0850 as the Euro currency continued to be aided by EU and German fiscal plans. ECB also said to be taking a more cautious view on its easing stance at the upcoming April meeting. ECB’s Lagarde comment of policy being "meaningfully less restrictive" prompting the market view.

- USD/JPY was lower as markets anticipated the next BOJ rate hike in May. Recently Japan Rango Trade Union stated that it sought wage hike of 6.09% in 2025 (compared to 5.95% year ago) thus demanding the largest wage hike since 1993. Dealers noted that mounting inflationary pressures could lead to an upgrade in the BOJ's price forecasts in May Staff Projections and prompt discussions over the feasibility of a rate hike.

- Bond yields finally took a breather after a momentous week. in the aftermath of increase spending pledges on defense for Europe. 10-year German Bund yield at 2.81% and 10-year Gilt yield at 4.64%. 10-year Treasury yield at 4.25%. The 10-year JGB yield at 1.51%.

Economic data

- (SE) Sweden Feb Maklarstatistik Housing Prices:3.1%t v 4.2% prior; Apartment Prices Y/Y: 4.9% v 5.7% prior.

- (ZA) South Africa Feb Net Reserves: $61.7B v $61.2Be; Gross Reserves: $66.3B v $65.9B prior.

- (TH) Thailand Feb CPI M/M: 0.0% v 0.1%e; Y/Y: 1.1% v 1.1%e; Core CPI Y/Y: 1.0% v 0.9%e.

- (DE) Germany Jan Factory Orders M/M: -7.0% v -2.5%e; Y/Y: -2.6% v +2.6%e.

- (UK) Feb Halifax House Price Index M/M: -0.1% v +0.7% prior; Y/Y: 2.9% v 3.0% prior.

- (SE) Sweden Feb Budget Balance (SEK): +74.0B v -23.3B prior.

- (NO) Norway Jan Industrial Production M/M: -1.7% v -0.21% prior; Y/Y: -6.5% v +0.3% prior.

- (NO) Norway Jan Manufacturing Production M/M: -1.5% v +3.2% prior; Y/Y: 3.3% v 5.0% prior.

- (DK) Denmark Jan Industrial Production M/M: -11.9% v +4.5% prior.

- (RO) Romania Q4 Preliminary GDP Q/Q: 0.8% v 0.8% advance; Y/Y: 0.7% v 0.7% advance.

- (TR) Turkey Central Bank (TCMB) Mar Inflation Expectation Survey Next 12-month Outlook: 24.6% v 25.3% prior.

- (MY) Malaysia end-Feb Foreign Reserves: $118.3B v $117.7B prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 267.4K v 268.3K tons prior.

- (TH) Thailand May Foreign Reserves w/e Feb 28th: $244.8B v $246.2B prior.

- (FR) France Jan Trade Balance: -€6.4B v -€3.9B prior; Current Account Balance: -€2.2B v+ €2.6B prior.

- (ES) Spain Jan Industrial Production M/M: -1.0% v -0.2%e; Y/Y: -1.0% v +1.3%e; Industrial Output NSA (unadj) Y/Y: -1.0% v +4.3% prior.

- (ES) Spain Q4 INE House Price Index Q/Q: 1.8% v 2.8% prior; Y/Y: 11.3% v 8.1% prior.

- (CH) Swiss Feb Foreign Currency Reserves (CHF): 735.4B v 736.4B prior.

- (AT) Austria Feb Wholesale Price Index M/M: -0.2% v +1.5% prior; Y/Y: -0.1% v +1.3% prior.

- (RU) Russia Narrow Money Supply w/e Feb 28th (RUB):18.07 T v 18.29T prior.

- (TW) Taiwan Feb CPI Y/Y: 1.6% v 1.8%e; CPI Core Y/Y: 1.0% v 1.4%e; PPI Y/Y: 3.5% v 3.9% prior.

- (TW) Taiwan Feb Trade Balance: $6.6B V $7.9Be; Exports Y/Y: 31.5% v 18.4%e; Imports Y/Y:47.8% v 19.7%e.

- (CN) China Feb Foreign Reserves: $3.227T v $3.229Te; Gold reserves: 73.61M v 73.45M troy oz prior (4th straight month of resumed purchases).

- (HK) Hong Kong Feb Foreign Reserves: $416.4B v $421.5B prior.

- (UN) Feb FAO World Food Price Index: 121.7 v 124.9 prior.

- (CZ) Czech Feb International Reserves: $148.7B v $148.2B prior.

- (SG) Singapore Feb Foreign Reserves: $379.3B v $376.7B prior.

- (EU) Euro Zone Q4 Final GDP Q/Q: 0.2% v 0.1% prelim; Y/Y: 1.2% v 0.9% prelim.

- (EU) Euro Zone Q4 Final Employment Q/Q: 0.1% v 0.1% prelim; Y/Y: 0.7% v 0.6% prelim.

- (EU) Euro Zone Q4 Household Cons Q/Q: 0.4% v 0.6% prior; Govt Expenditures Q/Q: 0.4% v 0.9% prior; Gross Fix Capital Q/Q: 0.6% v 1.8% prior.

- (GR) Greece Q4 GDP Q/Q: 0.9% v 0.4% prior; Y/Y: 2.9% v 2.3% prior; GDP NSA (unadj) Y/Y: 2.7% v 2.4% prior.

- (GR) Greece Q4 Unemployment Rate: 9.5% v 9.0% prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR275M vs. ZAR1.0B indicated in I/L 2031, 2038 and 2058 bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (IE) Ireland Feb Live Register Monthly Change: No est v -0.6K prior; Live Register Level: No est v 165.4K prior.

- 06:00 (CL) Chile Feb CPI M/M: 0.4%e v 1.1% prior; Y/Y: 4.7%e v 4.9% prior.

- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £3.0B respectively).

- 06:00 (BE) Belgium Debt Agency (BDA) to sell Bonds via Ori Auction.

- 06:15 (SE) Sweden Central Bank (Riksbank) Breman.

- 06:30 (CL) Chile Feb Trade Balance: $2.3Be v $3.4B prior; Total Exports: No est v $10.4B prior; Total Imports: No est v $7.1B prior; Copper Production: No est v $4.1B prior.

- 06:30 (CL) Chile Feb International Reserves: No est v $44.5B prior.

- 06:30 (IN) India Forex Reserve w/e Feb 28th: No est v $640.5B prior.

- 06:30 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (BR) Brazil Q4 GDP Q/Q: 0.4%e v 0.9% prior; Y/Y: 4.0%e v 4.0% prior; GDP Quarters Accumulated: 3.5%e v 3.1% prior.

- 07:00 (MX) Mexico Feb CPI M/M: 0.3%e v 0.3% prior; Y/Y: 3.8%e v 3.6% prior.

- 07:00 (MX) Mexico Feb CPI Core M/M: 0.5%e v 0.4% prior; Y/Y: 3.6%e v 3.7% prior.

- 07:00 (MX) Mexico Feb Vehicle Production: No est v 312.3K prior; Vehicle Exports: No est v 219.4K prior.

- 08:00 (RU) Russia Feb Official Reserve Assets: No est v $620.8B prior.

- 08:00 (PL) Poland Feb Official Reserves: No est v $225.4B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Feb Change in Nonfarm Payrolls: +160Ke v +143K prior; Private Payrolls: +146Ke v +111K prior; Manufacturing Payrolls: +3Ke v +3K prior.

- 08:30 (US) Feb Unemployment Rate: 4.0%e v 4.0% prior; Underemployment Rate: No est v 7.5% prior; Labor Force Participation Rate: 62.6%e v 62.6% prior.

- 08:30 (US) Feb Average Hourly Earnings M/M: 0.3%e v 0.5% prior; Y/Y: 4.1%e v 4.1% prior; Avg Weekly Hours All Employees: 34.2e v 34.1 prior.

- 08:30 (CA) Canada Feb Net Change in Employment: +20.0Ke v +76.0K prior; Unemployment Rate: 6.7%e v 6.6% prior; Full Time Employment Change: No est v +35.2K prior; Part Time Employment Change: No est v +40.9K prior; Participation Rate: No est v 65.5% prior; Hourly Wage Rate: 3.7%e v 3.7% prior.

- 08:30 (CA) Canada Q4 Capacity Utilization Rate: 79.3%e v 79.3% prior.

- 09:30 (TR) Turkey Feb Cash Budget Balance (TRY): No est v -204.9B prior.

- 10:15 (US) Fed’s Bowman.

- 10:45 (PT) ECB’s Centeno (Portugal).

- 10:45 (US) Fed’s Williams.

- 11:00 (EU) Potential sovereign ratings after European close (S&P on Norway and Iceland; Fitch on Estonia).

- 11:45 (ECB’s Kazaks.

- 12:20 (US) Fed’s Kugler.

- 12:30 (US) Fed chair Powell at University of Chicago.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 13:00 (BR) Brazil Feb Monthly Trade Balance: $1.9Be v $2.2B prior; Total Exports: $22.8Be v $25.2B prior; Total Imports: $21.0Be v $23.0B prior.

- 13:00 (US) Fed’s Kugler on panel with ECB’s Kazaks.

- 14:00 (AR) Argentina Jan Industrial Production Y/Y: No est v 8.4% prior; Construction Activity Y/Y: No est v -10.2% prior.

- 15:00 (US) Jan Consumer Credit: $15.0Be v $40.8B prior.

- 15:15 (UK) BOE’s Mann.

- 18:00 (CO) Colombia Feb CPI M/M: 1.0%e v 0.9% prior; Y/Y: 5.2%e v 5.2% prior.

- 18:00 (CO) Colombia Feb CPI Core M/M: 1.0%e v 0.8% prior; Y/Y: 5.2%e v 5.4% prior.

Weekend

- 20:30 (CN) China Feb CPI Y/Y: 0.4%e v 0.5% prior; PPI Y/Y: -2.1%e v -2.3% prior.