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BoJ retains -0.1% policy rate and 0.0% 10Y JGB target

Chris Scicluna
  • After higher US Treasury yields weighed heavily on Wall St, Asian equities follow weaker today, with China’s market especially soft after US-China talks in Alaska open with a terse exchange.
  • Japan’s national CPI offers no surprises in February with preferred core measure up 0.2%Y/Y.
  • UK consumer confidence picks up to a 1-year high in March.

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Fed upgrades economic outlook

Chris Scicluna
  • Wall Street erases earlier losses after the Fed upgrades economic outlook but continues to project modest inflation and stable policy through 2023.
  • Euro area trade data for January will show record surplus and cast further light on early Brexit impact.
  • Aussie unemployment rate falls sharply to 5.8% in February, as employment surge wipes out post-pandemic losses.

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Japan’s Reuters Tankan points to slightly improved business conditions

Chris Scicluna
  • Japanese exports fall in February following two months of solid increase.
  • Fed policy very likely unchanged today, but the economic outlook will inevitably be more upbeat posing upside risks to Treasury yields.
  • Weakness in euro area new car registrations in February confirmed; final euro area inflation data for February likely to confirm flash CPI estimate at 0.9%Y/Y.

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Fed the #1 focus this week with dot plot set to suggest earlier first tightening

Chris Scicluna
  • All eyes on the Fed this week after sell-off in Treasury markets resumed on Friday. 
  • BoJ likely to announce modest tweaks to ETF purchases and operation of YCC at conclusion of policy review on Friday.
  • BoE monetary policy announcement on Thursday too, but policy change unlikely.
  • Japan’s core machinery orders decline in January following strong Q4; Tertiary Industry Activity Index declines much more than consensus expectation in January.

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UK GDP falls less than expected in January

Chris Scicluna
  • Gilts follow USTs lower as the drop in UK GDP in January is somewhat less severe than expected, even as exports fall at a record pace as Brexit kicks in.
  • Japan’s MoF Business Outlook Survey points to a softer Q1 but firms signal that improved conditions are expected thereafter.
  • Kiwi manufacturing PMI softens in February but still consistent with solid expansion.

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