Daily Macro Update

Trump's update on? "reciprocal tariffs" lacked specifics - rates (to be charged) would be studied over the weeks ahead, which could create the potential space to resolve challenges and prolong a degree of uncertainty -markets interpret this as a toothless threat for? negotiating leverage.

Bessent? subtly indicated an apprehension that politics of tariffs could easily backfire as it could push up inflation & grind down growth, making this high stakes wager for Trump who is eager to declare his? authority over the economy.

Hence the risk is not anymore about tariffs but centres around the difficult path? the Tax cut has to pass through - markets have? mostly priced in.

PPI told a familiar story of rising pace of prices - Egg prices up 53% y/y as per CPI. PPI showed a 44% increase for the month and 186.4% gain from a year ago.Category called "traveler-accommodation services"? (hotels, resorts, & vacation rentals) up 5.7% m/m & diesel fuel? up more than 10%

Financial & health care services ,which play a big role in PCE ,saw price decreases in Jan. Hence CPI & PPI show PCE to measure a 0.22% gain & inflation? down to 2.5% y/y from 2.8% y/y.

Market's reading the tea leaves like this might make you want to smack your head against a table..you'll do it again when you hear hawkish Fed speak.

Market has? already latched on to? "Ukraine war resolution" outcome.German elections uncertainty to political outlook - possibility of easing? debt break.Bunds outperform swaps. Possible disappointment in all these factors - positive is? above average EZ savings - to stay ranged after three consecutive sessions of gains.

Data shows Japanese companies moved their China investments elsewhere - drops 60% in 10 years.China issues US$8.2 billion in bills in HK to stabilise yuan & sends a signal -determined to prevent excessive CNY weakness. Moreso, PBoC's balance sheet saw significant contraction - if you combine the two, CNY? stability seems the only aim & no? imminent Fiscal stimulus

UK has avoided a recession after economy unexpectedly picked up in Q4 2024 - shot in arm for Labour after chancellor faced intense criticism.China ready to improve ties & deepen cooperation with UK.Greene & Pill cautious on rate cuts.1.2596 UBB &2025 top at 1.2616 strong -1.2442 low to stay in tact .

Akazawa says Japan will take appropriate action reg US reciprocal tariffs. Junko Koeda, nominated to join the monetary policy board BoJ , was approved in a lower house vote. 152.50 -153.00 range.

Today's Weekly Fx Reserve data? will be seen with? great interest -Range shrinks to 86.75 - 86.95., as? Fx hands the baton to Equities.?