French and Spanish CPI clears path for more ECB rate cuts while EU attempts to navigate tariffs

 EU mid-market update: French and Spanish CPI clears path for more ECB rate cuts while EU attempts to navigate tariffs; Musk aims to complete DOGE cuts by May; US PCE in focus.

Notes/observations

- Overall macro theme unchanged with tariffs hanging over European sentiment like a dark cloud. Continues to weigh on EU auto makers specifically. Markets still on edge for any Trump comments and any pivot to stance. Ahead of another Atlanta Fed's GDPNow update later today, none of the five GDP indicators and trackers we analyse below are flashing a US recession for Q1 2025 as of today.

- In general, European bourses are red, but in muted fashion, with exception of UK FTSE100 which outperforms after better-than-expected retail sales data. Direction hanging on US PCE data at 08:30 ET.

- In the macro arena, German consumer sentiment remained largely static, though a mixed bag of data is on deck: French and Spanish inflation figures are below forecasts (causing traders to increase ECB rate cut bets for 2025), and French producer prices posted their first monthly decline since last fall. UK data presents a nuanced picture – retail sales surprised to the upside and GDP growth in Q4 confirmed a modest expansion, though manufacturing and services show mixed contributions.

- Elon Musk aims to complete DOGE (Department of Government Efficiency) cuts by May 2025, targeting $4 billion in daily reductions to slash the US deficit by $1 trillion within his 130-day tenure. He emphasizes that "legitimate" social security recipients will see increased, not reduced, benefits.

- Today’s IPO: CoreWeave, a cloud infrastructure provider specializing in GPU-based computing for AI, confirmed its IPO pricing of 37.5M IPO shares under "CRWV" ticker at $40/share for holders. The company, which serves major clients like Microsoft (62% of 2024 revenue) and likely Meta (15%), relies heavily on Nvidia GPUs and partners such as Dell and Super Micro for its supply chain, supporting its 32 data centers and over 250,000 GPUs. Financially, CoreWeave reported $1.9 billion in revenue for 2024, up from $228.9 million in 2023, but posted a $863.4 million net loss and carries $5.46 billion in debt.

- Chief Strategist at BCA Research predicts that Trump's trade tactics, including "reciprocal tariffs" to be announced on April 2nd, could lead to lower tariffs on US exports and imports within 6-12 months. He views the announcement as an "opening bid" for negotiations rather than a revenue-raising plan, though it may initially cause equity market risks. Meanwhile, BCA's Berezin warns of a looming recession due to a weakening US consumer outlook, also flagging concerns over Trump’s potential un-funded tax cuts, which could raise bond yields during budget talks.

- Asia closed lower with Nikkei225 underperforming -2.0%. EU indices -0.5% to +0.1%. US futures -0.2% to -0.4%. Gold +0.5%, DXY +0.2%; Commodity: Brent +0.1%, WTI +0.2%; Crypto: BTC -2.4%, ETH -5.6%.

Asia

- Japan Mar Tokyo CPI Y/Y: 2.9% v 2.7%e; CPI Ex-Fresh Food Y/Y: 2.4% v 2.2%e.

- BOJ Summary of Opinions noted downside risks stemming from the US had heightened recently; would need to consider options including a shift from its current accommodative monetary policy stance to a neutral one.

- New Zealand Mar ANZ Consumer Confidence: N93.2 v 96.6 prior.

- Australia PM Albanese announced election day was on May 3rd.

- Goldman Sachs pushed back its call for an RBA rate cut from April to May.

- Japan PM Ishiba openly discussed the possibility of liquidity support measures for companies amid Trump tariff uncertainty. Economic impact from auto tariffs would be very large; assessing industry impact.

Global conflict/tensions

- Trump reportedly pushing for control all of Ukraine's mineral and energy assets, with US to receive all royalties until Ukraine has paid off $100B, 50/50 thereafter. The new deal offering also said to provide no guarantees of security from Russian aggression.

- Russia Pres Putin suggested possibility of placing Ukraine under a temporary administration to allow for elections and signature of accords; Trump wants to see an end to Ukraine conflict for a variety of reasons.

- Pres Putin noted that geopolitical rivalry had heated up in the Arctic; US had long eyed Greenland.

Europe

- ECB's Schnabel (Germany) noted that recovery might have been held back by households' "misperception" of inflation and income thus making them reluctant to spend.

Americas

- Fed's Collins (voter) stated that Fed would likely hold rates steady for longer give the outlook, which seemed appropriate.

- Fed’s Barkin (non-voter for 2025) stated that a dense fog had fallen as federal policy changes had created near term instability; Fed was waiting for uncertainty to clear before acting.

- Canada PM Carney noted that the old relationship with the US, based on deepening integration of our economies and tight security and military cooperation, was over. Would fight US tariffs with retaliatory trade actions of our own (**Note: Pres Trump and Canada PM Carney to speak on Friday).

- Congressional Budget Office (CBO) 30-year outlook noted US debt to hit record 156% of GDP by 2055 from 100% at the end of FY 2024.

- Mexico Central Bank (Banxico) cut its Overnight Rate by 50bps to 9.00% (as expected) for its 6th straight cut since the resumption of its easing cycle. Statement noted it could continue calibrating the monetary policy stance and consider adjusting it in similar magnitudes.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.03% at 546.16, FTSE +0.28% at 8,690.26, DAX -0.27% at 22,603.53, CAC-40 -0.26% at 7,969.46, IBEX-35 -0.24% at 13,396.05, FTSE MIB -0.24% at 39,005.00, SMI +0.29% at 12,894.70, S&P 500 Futures -0.24%].

Market focal points/key themes: European indices open lower across the board but quickly recovered to trade mixed in the early part of the session; tariff concerns seen still overshadowing the market; among sectors pulling to the upside are real estate and utilities; underperforming sectors include industrials and technologies; automotive subsector underperforming, as tariffs remain an issue; Catalana Occidente receives takeover offer from Inoc; WH Smith divests it high street business to Modella; Tencent invests in Ubisoft; focus on US PCE price index figures coming out later in the day; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Ubisoft [UBI.FR] +10.5% (Tencent to invest €1.16B for minority stake in Ubisoft’s new subsidiary focused on Assassin’s Creed, Far Cry, and Rainbow Six), Adidas [ADS.DE] -0.5% (Lululemon guidance), Currys [CURY.UK] +1.5% (UK retail sales economic data better than expected).

- Financials: BBVA [BBVA.ES] -1.5% (Adjusts terms of Sabadell offer: 1 BBVA share and €0.29 in cash for every 5.3456 Sabadell shares).

- Industrials: Ferrari [RACE.IT] +2.0% (Kepler raised to buy; affirmed outlook, may raise prices), Maersk [MAERSKB.DK] +2.5% (implementing peak season surcharge for scope South Europe to Mexico), Adecco [ADEN.CH] +4.5% (Goldman raised to buy) - Technology: ASML Holding [ASML.NL] -1.0% (CoreWeave IPO concerns for AI-related names).

Speakers

- ECB’s De Guindos (Spain) noted that trade war would mostly impact economic growth. Disinflation process was continuing and target to be achieved in coming months, Trade war’s impact on inflation would be offset over medium term by lower economic growth.

- South Africa Central Bank (SARB) Gov Kganyago noted that keeping current inflation target would be costly for government (**Note: Kganyago, has long been an advocate of lowering the objective).

- Japan PM Ishiba stated that did not see tariff countermeasures as most effective now.

Currencies/fixed income

- USD was again steady against the major pairs with focus on trade tariff implications as the “liberation day’ approached.

- EUR/USD holding below the 1.08 level as key EU inflation data provided more insight to the upcoming ECB meeting. Market currently pricing approx. 80% that ECB would cut its key rate in April. Overall market eyeing a total 60bps more in rate cuts for the year.

- GBP/USD slightly higher after Q4 final GDP was revised slight higher and better UK retail sales for Feb.

- USD/JPY at 150.40.

- 10-year German Bund yield at 2.72% and 10-year Gilt yield at 4.74%. 10-year Treasury yield at 4.32%.

Economic data

- (NL) Netherlands Mar Producer Confidence: -1.5 v -1.2 prior.

- (FI) Finland Feb GDP Indicator Y/Y: 1.2% v 3.8% prior.

- (DE) Germany Apr GfK Consumer Confidence: 24.5 v -22.5e- (UK) Q4 Final GDP Q/Q: 0.1% v 0.1% prelim; Y/Y: 1.5% v 1.4% prelim.

- (UK) Q4 Final Private Consumption Q/Q: 0.1% v 0.0% prelim; Government Spending Q/Q: 0.5% v 0.8% prelim; Gross Fixed Capital Formation Q/Q: -0.6% v -0.9% prelim; Exports Q/Q: -1.8% v -2.5% prelim; Imports Q/Q: 2.9% v 2.1% prelim.

- (UK) Q4 Final Total Business Investment Q/Q: -1.9% v -3.2% prelim; Y/Y: +1.8% v -0.7% prelim.

- (UK) Q4 Current Account Balance: -£21.0B v -£24.5Be.

- (UK) Feb Retail Sales (ex-auto/fuel) M/M: +1.0% v -0.5%e; Y/Y: 2.2% v 0.4%e.

- (UK) Feb Retail Sales (including auto/fuel) M/M: +1.0% v -0.4%e; Y/Y: 2.2% v 0.6%e.

- (UK) Jan Visible Trade Balance: -£17.9B v -£16.7Be; Overall Trade Balance: -£0.6B v -£3.0Be.

- (SE) Sweden Feb Retail Sales M/M: +0.1% v -0.6% prior; Y/Y: 2.8% v 3.1% prior.

- (NO) Norway Feb Retail Sales w/auto fuel M/M: -0.1% v -0.4%e.

- (NO) Norway Mar Unemployment Rate: 2.1% v 2.2% prior; Unemployment Rate (seasonally adj): 2.0% v 2.0%e.

- (FI) Finland Jan Final Trade Balance: -€0.2B v -€0.2B prelim.

- (DK) Denmark Feb Unemployment Rate 2.5% v 2.5% prior; Gross Unemployment Rate: 2.9% v 2.9% prior.

- (TR) Turkey Mar Economic Confidence: 100.8 v 99.2 prior.

- (HU) Hungary Q4 Current Account Balance: €0.9B v €0.5B prior.

- (HU) Hungary Feb Unemployment Rate: 4.5% v 4.4%e.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 235.3K v 256.3K tons prior.

- (TH) Thailand May Foreign Reserves w/e Mar 21st: $247.1B v $247.5B prior.

- (FR) France Mar Preliminary CPI M/M: 0.2% v 0.3%e; Y/Y: 0.8% v 0.9%e.

- (FR) France Mar Preliminary CPI EU Harmonized M/M: 0.2% v 0.4%e; Y/Y: 0.9% v 1.1%e.

- (FR) France Mar PPI M/M: -0.8% v +0.6% prior; Y/Y: -1.4% v -2.2% prior.

- (FR) France Feb Consumer Spending M/M: -0.1% v +0.2%e; Y/Y: 0.1% v 0.4%e.

- (ES) Spain Mar Preliminary CPI M/M: 0.1% v 0.4%e; Y/Y: 2.3% v 2.6%e; CPI Core Y/Y: 2.0% v 2.1%e.

- (ES) Spain Mar Preliminary CPI EU Harmonized M/M: 0.7% v 0.9%e; Y/Y: 2.2% v 2.5%e.

- (CH) Swiss Mar KOF Leading Indicator: 103.9 v 102.5e.

- (AT) Austria Feb PPI M/M: 0.0% v -0.3% prior; Y/Y: -0.1% v -0.4% prior.

- (RU) Russia Narrow Money Supply w/e Mar 21st (RUB): 18.11T v18.11 T prior.

- (DE) Germany Mar Unemployment Change: +26.0K v +10.0Ke; Unemployment Claims Rate: 6.2% v 6.2%e.

- (EU) ECB Feb 1 Year CPI Expectations: 2.6% v 2.5%e; 3 Year CPI Expectations: 2.4% v 2.4%e.

- (IT) Italy Mar Consumer Confidence: 95.0 v 98.5e; Manufacturing Confidence: 86.0 v 87.3e; Economic Sentiment: 93.3 v 9478 prior.

- (PT) Portugal Mar Consumer Confidence: -16.0 v -15.3 prior; Economic Climate Indicator: 2.4 v 2.7 prior.

Fixed income issuance

- (DK) Denmark sold total DKK200M sell 3-month and 6-month bills

Looking ahead

- (MX) Mexico Feb Public Balance (MXN): No est v -7.2B prior.

- 06:00 (EU) Euro Zone Mar Economic Confidence: 96.7e v 96.3 prior; Industrial Confidence: -10.6e v -11.4 prior; Services Confidence: 6.4%e v 6.2 prior; Consumer Confidence (final): No est v -14.5 advance.

- 06:00 (IT) Italy Jan Industrial Sales M/M: No est v -2.7% prior; Y/Y: No est v -7.2% prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance ((bills, Oats).

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell €5.25-6.25B in 5-year and 10-year BTP bonds.

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell €2.0-2,75B in 2032 and 2033 Floating Rate Bonds (CCTeu).

- 06:30 (IN) India Feb Fiscal Deficit YTD (INR): No est v 11.695T prior.

- 06:30 (BE) Belgium Mar CPI M/M: No est v 0.2% prior; Y/Y: No est v 3.6% prior.

- 07:00 (PT) Portugal Feb Retail Sales M/M: No est v -2.3% prior; Y/Y: No est v 5.8% prior.

- 07:00 (IE) Ireland Feb Retail Sales Volume M/M: No est v -0.5% prior; Y/Y: No est v -0.3% prior.

- 07:00 (IT) Italy Feb PPI M/M: No est v 2.0% prior; Y/Y: No est v 6.0% prior.

- 07:00 (BR) Brazil Mar FGV Inflation IGPM M/M: -0.2%e v +1.1% prior; Y/Y: 8.8%e v 8.4% prior.

- 07:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£0.5B, £2.5B and £3.0B respectively).

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 07:30 (IN) India Forex Reserve w/e Mar 21st: No est v $654.3B prior.

- 07:30 (IN) India Feb Eight Infrastructure (key) Industries: No est v 4.6% prior.

- 08:00 (ZA) South Africa Feb Monthly Budget Balance (ZAR): No est v -62.7B prior.

- 08:00 (BR) Brazil Feb National Unemployment Rate: 6.8%e v 6.5% prior.

- 08:00 (MX) Mexico Feb Unemployment Rate: 2.6%e v 2.7% prior; Unemployment Rate (seasonally adj): No est v 2.6% prior.

- 08:00 (CL) Chile Feb Unemployment Rate: 8.1%e v 8.0% prior.

- 08:30 (US) Feb Personal Income: 0.4%e v 0.9% prior; Personal Spending: +0.5%e v -0.2% prior; Real Personal Spending (PCE): +0.3%e v -0.5% prior.

- 08:30 (US) Feb PCE Price Index M/M: 0.3%e v 0.3% prior; Y/Y: 2.5%e v 2.5% prior.

- 08:30 (US) Feb Core PCE Price Index M/M: 0.3%e v 0.3% prior; Y/Y: 2.7%e v 2.6% prior.

- 08:30 (CA) Canada Jan GDP M/M: 0.3%e v 0.2% prior; Y/Y: 2.1%e v 2.2% prior.

- 09:00 (RU) Russia Q4 Final Current Account Balance No est v $4.8B prelim.

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

- 09:00 (DE) ECB's Nagel (Germany).

- 10:00 (US) Mar Final University of Michigan Confidence: 57.9e v 57.9 prelim.

- 10:10 (EU) ECB's Muller (Estonia).

- 11:00 (US) Mar Kansas City Fed Services Activity: No est v 2 prior.

- 12:00 (EU) Potential sovereign ratings after European close (Moody's on EU; Fitch on Sweden).

- 12:15 (US) Fed’s Barr.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 13:30 (BR) Brazil Feb Total Formal Job Creation: +227.5Ke v +137.3K prior.

- 13:30 (BR) Brazil Feb Total Federal Debt (BRL): No est v 7.253T prior.

- 15:00 (AR) Argentina Jan Wages M/M: No est v 3.1% prior.

- 15:30 (US) Fed’s Bostic.