Yields rise on easing demand for safety, revised Fed bets

Asia market update: Markets take a breather after recent volatility; Yields rise on easing demand for safety, revised Fed bets; Stocks recover some of their week’s losses, esp bank shares.

General trend

- After seemingly staring into the abyss at the start of the week markets everywhere appeared to be reassured that:

- 1) US banking liquidity issues were relatively isolated cases;

- 2) The FDIC plan to deal with any further issues is adequate.

- Overnight US CPI also came in at a relatively lower rate of annual increase, with M/M Headline numbers 0.4% and Core of 0.5% helping to flip analyst expectations of a 50bps hike by the Fed in Mar from 74% just last week to now 80% expecting only a 25bps hike.

- Today was the monthly “data dump” from China with industrial production, retail sales, property investment, unemployment and a host of commodity demand reports.

- Overall, the data from China could be considered “middling”. Certainly an improvement on last year with China’s reopening, but nothing yet to suggest the GDP growth target of 5% as called for last week at the annual NPC meetings.

- US equity FUTs slightly up.

- Eyes will be on Australian jobs report tomorrow as well as US retail sales overnight Thursday as next indicators for likely CB decisions.

- ECB rate decision on Thursday night also strongly coming into view – will the market expectation of a 50bps hike still hold?

- In sum, a sense of some calm restored today, but for how long as markets alternate between watching inflation data amid concerns about financial stability.

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens +0.5% at 7,041.

- (AU) Australia PM Albanese to visit Fiji Mar 15; to meet with PM Rabuka.

- (NZ) New Zealand Q4 Current Account (NZ$): -9.5B v -7.7Be (Largest reported annual current account deficit to GDP ratio since the series began in March 1988).

- (NZ) S&P Analyst: New Zealand sovereign credit rating could come under pressure.

- (NZ) New Zealand to host CPTPP Trade Minister meeting in July - Trade Minister.

- (NZ) New Zealand Govt approves NZ$25M extension for cyclone-affected businesses.

- (NZ) New Zealand 2023 Pipfruit crop estimate drops 21% after Cyclone Gabrielle.

China/Hong Kong

- (CN) Shanghai Composite opens +0.5% at 3,261.

- (HK) Hang Seng opens +1.4% at 19,523.

- (HK) Hong Kong Q4 Industrial Production Y/Y: -0.1% v -0.6% prior.

- (HK) Hong Kong Q4 PPI Y/Y: -0.4% v +0.4% prior.

- (HK) Hong Kong to make first ministerial visit to UK in 3 years; Financial Services Sctry Hui in April – FT.

- (CN) China Feb YTD industrial production Y/Y: 2.4% V 2.6%E.

- (CN) China Feb YTD Retail Sales Y/Y: 3.5% V 3.5%E.

- (CN) China Feb YTD property investment Y/Y: -5.7% V -8.5%E.

- (CN) China Feb YTD fixed urban assets Y/Y: 5.5% V 4.5%E.

- (CN) China Feb Surveyed Jobless Rate: 5.6% v 5.3%e.

- (CN) China PBOC conducts CNY481.0B in 1-year medium-term lending facility (MLF) AT 2.75% VS. 2.75% PRIOR [CNY200B IN MLF funds are maturing).

- (CN) China PBOC Open Market Operation (OMO): Sells CNY104B v CNY29.0B prior in 7-day reverse repos.

- (CN) China PBOC sets Yuan reference rate: 6.8680 v 6.8949 prior.

- (CN) China PBOC: To issue CNY5.0B in CNY-denominated 6-month bills in Hong Kong on Mar 21st (Tues).

- (CN) China PBOC: Will support SMB and private companies with reasonable bond financing, other measures.

- (CN) China National Bureau of Statistics (NBS) Official: Reiterates economic recovery foundation not solid [comments on Jan-Feb data].

- (CN) China FX Regulator: Will prevent external shocks and risks.

Japan

- (JP) Nikkei 225 opens +0.7% at 27,421.

- (JP) Bank of Japan (BOJ) Jan Minutes (two decisions ago); Reiterates importance of current monetary easing policy.

- (JP) Bank of Japan (BOJ) Gov Kuroda: Attended BIS meeting on Mar 12-13th, at this meeting there was a debate on the SVB collapse.

- (JP) Japan Chief Cabinet Sec Matsuno: Seeing solid wage gains especially from large cos. [Shunto wage talks are due to conclude today].

- (JP) Japan Fin Min Suzuki: No need to provide liquidity in Japan like in the US.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Offers to buy only ¥50B in >25-year JGBs [follows recent decline in JGB yields].

Korea

- (KR) Kospi opens +1.4% at 2,381.

- (KR) South Korea Feb Unemployment Rate: 2.6% v 3.0%e [lowest since Aug].

- (KR) South Korea Jan M2 Money Supply M/M: -0.2% v -0.2% prior (Jan M2 Y/Y money supply marks slowest growth since Aug 2013).

- (KR) South Korea to invest $422B in key tech from chips to EVs by 2026.

- (KR) South Korea Industry Minister: May create Temasek-like [sovereign wealth fund] national investment holding co.

Other Asia

- (TW) US Congressional delegation to visit Taiwan from Mar 15-16 - financial press.

- (TW) Taiwan Defence Ministry: 10 China Air Force planes crossed Taiwan Strait median line past 24 hrs.

- (TW) Taiwan Foreign Ministry says it is aware and trying to get more information on Honduras (regarding seeking China relations).

- (ID) Indonesia Feb Exports Y/Y: 4.5% v 4.6%e.

- (ID) Indonesia Feb Local Auto Sales: 87.0K v 94.1K prior.

- (SG) Singapore Q4 Final Unemployment Rate: 2.0%.

- (PH) Philippines Jan Overseas Cash Remittances: $2.76B; Y/Y: +3.5%.

- (VN) Vietnam Central Bank cut Refinancing Rate by 1bps – press.

North America

- (US) FEB CPI M/M: 0.4% V 0.4%E; Y/Y: 6.0% V 6.0%E (8th straight deceleration in annual pace and lowest Y/Y since Sept 2021).

- CPI (ex-food/energy) M/M: 0.5% v 0.4%e; Y/Y: 5.5% v 5.5%e (lowest annual pace since Dec 2021).

- (US) US Fed to weigh tougher capital, liquidity rules for midsize banks following SVB & Signature failures – WSJ

Europe

- (UK) Foreign Secretary Cleverly: Hope DUP can give the new Brexit deal its full-throated support.

- (IE) Northern Ireland DUP leader Donaldson: It is my current assessment that there remains key areas of concern with Windsor framework which require further clarification.

Levels as of 01:20 ET

- Nikkei 225, -0.2%, ASX 200 +0.9% , Hang Seng +1.2%; Shanghai Composite +0.7% ; Kospi +1.3%.

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

- EUR 1.0759-1.0725 ; JPY 134.62-134.03 ; AUD 0.6711-0.6671 ;NZD 0.6266-0.6219.

- Gold -0.3% at $1,904/oz; Crude Oil +1.5% at $72.37/brl; Copper +0.1% at $4.0085/lb.