Traders to navigate German debt brake vote

EU mid-market update: Traders to navigate German debt brake vote, Trump/Putin talks and NVIDIA conf ahead of tonight's BOJ decision which kicks off a dozen rate decisions before week end.

Notes/observations

- European equities opened higher, extending gains from Asia, though US futures dipped and now reaching for flat. DAX led charge, up 1% to near-record levels, driven by optimism around Germany’s debt brake reform vote. Autos surged, while defense stocks like Rheinmetall also gained. Real estate and household goods lagged.

- German Bundestag votes today on a €500B debt package to boost defense, infrastructure, and climate initiatives by amending the debt brake. CDU/CSU, SPD, and Greens back the plan, but securing 489 votes may get uncertain due to internal dissent. Key provisions include unlimited defense borrowing, major transport upgrades, and a Green-driven climate neutrality goal. If passed, the Bundesrat votes Friday, with CDU, SPD, and Green-led states likely securing the needed 46 of 69 votes. The result will shape Germany’s fiscal policy and Merz’s coalition prospects.

- Eyes are on US-Russia discussions, with Trump and Putin set to speak today around 09:00ET. Progress could ease geopolitical tensions, pressuring the dollar and supporting risk assets. UK and EU are advancing plans to seize Russian assets to boost defense spending.

- NVIDIA GTC 2025 will spotlight major advancements in AI and GPU technology, with CEO Jensen Huang’s keynote on today around 13:00ET expected to introduce the Blackwell Ultra (B300) GPUs featuring 288GB of memory for AI training. The conference may also preview the next-gen Rubin series, slated for 2026, alongside discussions on Rubin Ultra and post-Rubin architectures. A dedicated “quantum day” will highlight Nvidia’s role in quantum computing. Analysts anticipate a strong emphasis on Blackwell advancements, AI inference, and forward-looking innovations in 3nm chips, AI workstations, and quantum computing, reinforcing Nvidia’s leadership in AI-driven computing.

- Economic data was thin. Spain’s trade deficit widened to €6.19B in Jan, the largest since Oct 2022, on weak exports (-1.2% YoY) and surging imports (+6.2%). Hong Kong’s jobless rate rose to 3.2%, a two-year high.

- UK 10-year gilts rose 4bps to 4.678%, tracking Bunds, as markets await German fiscal plans and Thursday’s BoE decision (rates expected on hold).

- Asia closed higher with Hang Seng outperforming +2.5%. EU indices +0.5-1.3%. US futures 0.0%. Gold +0.7%, DXY -0.1%; Commodity: Brent +1.3%, WTI +1.3%; Crypto: BTC -0.7%, ETH -0.3%.

Asia

- Japan Fin Min Kato noted that bond market should determine yield movements. Govt would respond appropriately while allowing market forces to drive bond price fluctuation.

Global conflict/tensions

- Israeli military confirmed to have carried out 'extensive' strikes on Gaza targets belonging to Hamas; Offensive to continue as long as necessary, and will expand beyond airstrikes.

- Russia President Putin and Trump to speak on Tuesday about the war in Ukraine.

- Pres Trump administration said to discuss recognizing Crimea as part of Russia as sweetener for ending war in Ukraine.

Americas

- Trump confirmed Fed's Bowman is his nominee for Vice Chair of bank supervision (as expected).

- President Trump: China's President Xi would coming to Washington in the not too distant future.

Speakers/Fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.53% at 553.84, FTSE +0.36% at 8,711.84, DAX +0.92% at 23,343.85, CAC-40 +0.49% at 8,113.70, IBEX-35 +0.73% at 13,224.12, FTSE MIB +0.71% at 39,298.00, SMI +0.14% at 13,076.50, S&P 500 Futures -0.02%].

Market focal points/key themes: European indices open higher across the board and advanced through the early part of the session; markets focused on German debt brake reform; among sectors leading the way higher are energy and industrials; lagging sectors include consumer discretionary and communication services; reportedly BAE systems looking to buy Iveco’s defense unit; German and Euroarea ZEW survey scheduled for later in the day; corporate events expected in the upcoming US session include Adobe Investor summit and investors days at Corning and The Mosaic Group.

Equities

- Energy: SFC Energy [F3C.DE] +11.0% (Receives follow-up order from long-standing Canadian Government customer), Rubis [RUI.FR] -3.0% (analyst downgrade - cut to hold at Kepler) - Financials: Close Brothers [CBG.UK] -14.5% (earnings).

- Industrials: ThyssenKrupp [TKA.DE] +6.5% (Germany's next defense budget said to favor European suppliers - press), Fraport [FRA.DE] -4.0% (FY24 results) - Technology: ASML [ASML.NL] +2.0% (EU chip names higher ahead of NVDA GTC conference), Computacenter [CCC.UK] +11.5% (FY24 results).

Speakers

- ECB's Rehn (Finland) noted that growth in the region was picking up gradually; inflation outlook was two-sided. Monetary policy was becoming meaningfully less restrictive. Reiterated Council not on any pre-determined rate path.

- Norway Stats Agency (SSB) updates its Economic Outlook which cut the 2025 Mainland GDP growth forecast from 1.8% to 1.2% and raised the 2025 Underlying CPI from 2.8% to 3.1%.

- Bank of Korea (BOK) Feb Minutes saw a member call for policy coordination with govt. Member noted that policy should focus more on economic recovery. Economic growth expected to be below forecast.

- China Foreign Min Wang stated that China trade policies with EU were stable; Welcomed Airbus to enhance investment in China.

Currencies/fixed income

- USD was on soft footing as the greenback tested multi-month lows against various European pairs.USD expressing broad weakness ahead of key rate decisions ths week,

- EUR/USD tested 1.0950 ahead of the German Bundestag debate and vote on spending measures. Dealers noted optimism over business sentiment and a historic key parliamentary vote on fiscal expansion. Bundestag poised to approve a change to the constitution, abandoning the fiscal stance Germany has always been known for

- GBP/USD probed the 1.30 level for the 1st time since Nov ahead of BOE rate decision.

- USD/JPY tested the 150 level before consolidating ahead of Wed’s BOJ rate decision.

- 10-year German Bund yield at 2.84% and 10-year Gilt yield at 4.67%. 10-year Treasury yield at 4.31%.

Economic data

- (HK) Hong Kong Feb Unemployment Rate: 3.2% v 3.1%e.

- (IT) Italy Jan Total Trade Balance: -€0.3B v +€5.8B prior; EU Trade Balance: -€0.6B v -€2.0B prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR3.75B vs. ZAR3.75B indicated in 2032, 2037 and 2048 bonds.

Looking ahead

- 06:00 (DE) Germany Mar ZEW Current Situation Survey: -80.5e v -88.5 prior; Expectations Survey: 48.3e v 26.0 prior.

- 06:00 (EU) Euro Zone Mar ZEW Expectations Survey: No est v 24.2 prior.

- 06:00 (EU) Euro Zone Jan Trade Balance: €13.8Be v €14.6B prior; Trade Balance (NSA): No est v €15.5B prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (UK) DMO to sell £4.25B in 4.375% Mar 2028 Gilts.

- 06:15 (CH) Switzerland to sell 3-month Bills.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:30 (PL) Poland to sell Fixed-rate Bonds.

- 06:30 (TR) Turkey to sell 3-year and 5-year Bonds (2 tranches).

- 07:00 (BR) Brazil Mar FGV Inflation IGP-10 M/M: 0.4%e v 0.9% prior.

- 07:00 (IE) Ireland Jan Trade Balance: No est v €6.5B prior.

- 07:00 (IL) Israel Feb Unemployment Rate: No est v 2.6% prior.

- 07:00 (FI) Finland to sell €1.0-1.5B in 2034 and 2038 RFGB Bonds.

- 07:30 (CL) Chile Q4 GDP Q/Q: 0.4%e v 0.7% prior; Y/Y: 3.7%e v 2.3% prior.

- 07:30 (CL) Chile Q4 Current Account Balance: -$2.5Be v -$3.1B prior.

- 07:30 (CL) Chile Central Bank Traders Survey.

- 07:30 (EU) ESM to sell 6-month bills.

- 08:30 (US) Feb Housing Starts: 1.385Me v 1.367M prior; Building Permits: 1.453Me v 1.473M prior.

- 08:30 (US) Feb Housing Starts M/M: +1.4%e v -9.8% prior Building Permits: M/M: -1.4%e v -0.6% prior.

- 08:30 (US) Feb Import Price Index M/M: -0.1%e v 0.3% prior; Y/Y: 1.6%e v 1.9% prior; Import Price Index (ex-petroleum) M/M: 0.2%e v 0.1% prior.

- 08:30 (US) Feb Export Price Index M/M: -0.2%e v 1.3% prior; Y/Y: No est v 2.7% prior.

- 08:30 (US) Mar New York Fed Services Business Activity: No est v -10.5 prior.

- 08:30 (CA) Canada Feb CPI M/M: 0.6%e v 0.1% prior; Y/Y: 2.2%e v 1.9% prior; CPI Core-Median Y/Y: 2.7%e v 2.7% prior; CPI Core-Trim Y/Y: 2.7%e v 2.7% prior; Consumer Price Index: 162.4e v 161.3 prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 09:15 (US) US Feb Industrial Production M/M: 0.2%e v 0.5% prior; Capacity Utilization: 77.8%e v 77.8% prior; Manufacturing Production M/M:+0.3%e v -0.1% prior.

- 11:30 (US) Treasury to sell 52-Week Bills.

- 12:00 (CO) Colombia Jan Economic Activity Index (Monthly GDP) Y/Y: No est v 3.0% prior.

- 13:00 (US) Treasury to sell 20-Year Bond Reopening.

- 16:00 (NZ) New Zealand Q1 Westpac Consumer Confidence: No est v 97.5 prior.

- 16:30 (US) Weekly API Oil Inventories.

- 17:45 (NZ) New Zealand Q4 Current Account Balance (NZD): -6.7Be v -10.6B prior; Current Account GDP Ratio YTD: -6.1%e v -6.4% prior.

- 19:30 (AU) Australia Feb Westpac Leading Index M/M: No est v 0.12% prior.

- 19:50 (JP) Japan Feb Trade Balance: +¥688.3Be v -¥2.736T prior (revised from -¥2.759); Adj Trade Balance: +¥509.3Be v -¥856.6B prior; Exports Y/Y: 12.6%e v 7.3% prior (revised from 7.2%); Imports Y/Y: 0.8%e v 16.2% prior (revised from 16.7%).

- 19:50 (JP) Japan Jan Core Machine Orders M/M: -0.1%e v -1.2% prior; Y/Y: 6.6%e v 4.3% prior.

- 21:10 (KR) Bank of Korea to sell KRW1.0T in 3-year Bonds.

- 23:00 (TH) Thailand to sell THB8.0B indicated in 2050 Bonds.

- (JP) Bank of Japan (BOJ) Interest Rate Decision: Expected to leave Target Rate unchanged at 0.50% (no set time).