Today's Update 03-10-2025

Key Points and Metrics

Key Points and Metrics:

• Eurozone Sentix Investor Confidence Index

  • Actual: -2.9

  • Forecast: -9.3

  • Previous: -12.7

  • Insight: The index shows an improvement in investor confidence in the Eurozone, as the actual figure is better than both the forecast and previous values.

• ECB's Nagel Speaks

  • Investors are attentive to any remarks from ECB officials that could provide insights into future monetary policy decisions.

• NY Fed Inflation Expectations (1 Year)

  • Previous: 3%

  • Note: No current actual or forecast values provided. Inflation expectations are crucial for anticipating future interest rate movements.

• U.S. Treasury Bills Auctions

  • 6-Month Bill High Yield:

    • Previous Yield: 4.135%

    • Indicates the return investors demand for holding short-term U.S. government debt.

  • 6-Month Bill Bid-to-Cover Ratio:

    • Previous Ratio: 3.270

    • Measures demand for the bills; a higher ratio indicates stronger demand.

  • 3-Month Bill High Yield:

    • Previous Yield: 4.210%

  • 3-Month Bill Bid-to-Cover Ratio:

    • Previous Ratio: 2.770

• Upcoming Economic Data and Events:

  • March 10

    • New Zealand Manufacturing Sales

      • Previous: -1.2%

      • A decline indicates a contraction in manufacturing activity.

  • Japan Economic Indicators

    • Japanese All Household Spending YoY:

      • Forecast: 3.7%

      • Previous: 2.7%

    • Japanese All Household Spending MoM:

      • Previous: 2.3%

    • Increases suggest rising consumer spending, which can boost economic growth.

  • Australian Consumer Sentiment

    • Previous: 0.1%

    • Reflects the level of consumer confidence in economic activity.

  • Japan GDP Revisions

    • GDP Revised QoQ Annualized:

      • Forecast: 2.8%

      • Previous: 2.8%

    • GDP Revised QoQ:

      • Forecast: 0.7%

      • Previous: 0.7%

    • Confirmation of GDP figures indicates steady economic performance.

  • March 11

    • 00:01 - UK BRC Retail Sales YoY

      • Forecast: 2%

      • Previous: 2.5%

    • Australian NAB Business Confidence and Conditions

      • Business Confidence Previous: 4

      • Business Conditions Previous: 3

    • Dutch CPI YoY and MoM

      • CPI YoY Forecast: 3.8%

      • Previous: 3.3%

      • CPI MoM Previous: -0.2%

• Notable News Items:

  • Germany's Greens Party announced they won't support the draft debt package in parliament, leading to a weakening of the Euro.

  • Mexico and Canada Relations:

    • Mexico's President Sheinbaum emphasized a relationship of respect with Canada's Carney.

  • German Economic Insights:

    • Finance Minister Kukies highlighted the need for competitiveness and growth to achieve necessary fiscal space.

    • Open to common EU financing for specific projects, particularly in defense.

    • Expressed hope for further discussions with the Greens to gain support for debt brake reform.

  • ECB Communications:

    • ECB's Nagel refrained from speculating on future meetings but stressed the importance of data analysis in the current environment.

  • EU Commitments:

    • EU's Dombrovskis affirmed readiness to provide necessary support to Ukraine and initiate talks on defense spending flexibility.

  • Trade Developments:

    • Reports suggest that U.S. President Trump may meet China's President Xi in China as soon as April, potentially easing trade tensions.

  • Energy Sector Updates:

    • Alberta Premier sees no slowdown in oil output despite tariff concerns and hopes to engage with U.S. officials on tariff discussions.

    • The U.S. Energy Secretary Wright stated that wind, solar, and batteries cannot fully replace the diverse uses of natural gas.

Market Pulse: Growth Concerns Trigger Risk-Off Sentiment

• Eurozone Sentix Investor Confidence: Improved to -2.9 vs forecast -9.3 (previous -12.7)

• German Industrial Production: Rose 2.0% MoM vs forecast 1.5% (previous -2.4%)

• German Trade Balance: Fell to €16B vs forecast €19.9B (previous €20.7B)

• Norwegian CPI: Jumped to 3.6% YoY vs forecast 2.6% (previous 2.3%)

• S&P 500 Futures: Down 1% as market sentiment deteriorates

• Treasury Yields: 10-year rates down 5 basis points; 2-year yield significantly lower since mid-February

• Trump Administration: Planning to cancel 83% of USAID programs; scheduled tech CEO roundtable today

Market Sentiment

Anxiety over potential tariffs and government workforce cuts is fueling a three-week period of volatility in global markets. Wall Street analysts are modifying their bullish outlooks as concerns about US economic growth intensify. Investors are seeking safety in government bonds across the US and Europe.

Political Developments

• Germany: Greens Party won't support draft debt package in parliament, creating political uncertainty

• Trump Administration: Planning executive orders today; scheduled tech roundtable with industry leaders

• Ukraine: Trump indicated Ukraine will sign minerals deal but wants them to "want peace"

• China-US Relations: Reports suggest Trump may meet Xi in China as soon as April (SCMP)

Central Bank Watch

• ECB's Kazimir: "We must remain open-minded on whether we cut rates or pause"; warns inflation risks remain tilted to upside

• ECB's Nagel: Germany needs reforms, not just higher spending

• Fed Rate Expectations: Markets pricing in potential May rate cut as economic concerns grow

Final Thoughts

The market is experiencing a significant shift in sentiment as concerns about US economic health intensify. The combination of potential tariffs on major trading partners, rising unemployment, and planned federal workforce cuts is creating a narrative of slowing growth in the world's largest economy. Bond traders are increasingly signaling recession risks, driving Treasury yields lower across maturities.

This marks a notable pivot from the previous market dynamic where US economic resilience was the dominant theme. Investors should monitor upcoming economic data closely, particularly the JOLTS job openings report tomorrow and inflation expectations, as these will provide critical insights into whether the Fed might accelerate its rate-cutting timeline to protect against economic deterioration.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.

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Harry