Optimism from German debt brake reform –Tech in focus with NVIDIA GTC

EU mid-market update: Optimism from German debt brake reform; Tech in focus with NVIDIA GTC; Geopolitical eye on Trump/Putin call tomorrow.

Notes/observations

- European indices edge higher as German lawmakers near a pivotal vote (Tuesday-Thursday) to reform debt rules, exempting defense spending and creating a €500B infrastructure fund. CDU’s Merz secures Greens’ backing, easing passage of the constitutional amendment. Relief tempered by Trump’s looming April 2 tariff threats (reciprocal/sectoral) and US recession risks flagged by Treasury’s Bessent.

- Trump-Putin call (Tuesday) on Ukraine ceasefire eyed, but Houthi strikes (US military action ordered) and Iran tensions inject risk premium into oil (WTI flat at $70.1/bbl).

- UK warning lights: Resolution Foundation cites hiring slowdown signaling recession; Make UK reports Q1 output drop. March home prices +1.1% stirs speculation of stamp duty extension. Gilts steady at 4.66% ahead of BoE (Thursday), with wage growth (5.9% forecast) complicating rate cut bets.

- Pantheon expects final 25bps cut to 0.25% for SNB on Thursday, diverging from ECB.

- Dollar softens (DXY 103.7) as US retail sales (forecast +0.6% MoM) risk miss; Analysts warn GBP vulnerable to Reeves’ fiscal tightening (£6B welfare cuts) and see EUR/USD hitting $1.13 by 2025 on German fiscal expansion.

- For data, India's wholesale inflation for February showed signs of acceleration, marking the fastest pace since last June, while trade balance deficit was narrower than expected as both exports and imports declined.

- Overnight, Chinese data showed a broadly positive picture for industrial production, retail sales, and fixed asset investment.

- NVIDIA's GPU Technology Conference (GTC) 2025, taking place from March 17-21 in San Jose, California, with CEO Jensen Huang delivering a keynote on Tuesday at 13:00 ET (17:00 GMT). Analysts anticipate key announcements regarding the next Blackwell variant, potentially the GB300, with improved memory specs and software optimizations, as well as discussions on future technologies like Rubin, Rubin Ultra, 3nm chips, quantum computing, and AI workstations. The event will also likely spotlight AI inference as a central theme.

- Baidu has introduced its latest foundation models, ERNIE 4.5 and ERNIE X1, which are now available to individual users for free. ERNIE 4.5 outperforms GPT-4.5 in several benchmarks while being priced at just 1% of GPT-4.5's cost. It also delivers performance similar to DeepSeek R1, but at half the price.

- Asia closed higher with KOSPI outperforming +1.7%. EU indices +0.1-0.4%. US futures -0.5%. Gold +0.3%, DXY -0.1%; Commodity: Brent +1.0%, WTI +1.0%; Crypto: BTC -0.3%, ETH -0.1%.

Asia

- China Feb New Home Prices M/M: -0.1% v -0.1% prior; Used Home Prices M/M: -0.3% v -0.3% prior.

- China Feb YTD Industrial Production Y/Y: 5.9% v 5.3%e.

- China Feb YTD Retail Sales Y/Y: 4.0% v 3.8%e.

- China Feb YTD Fixed Urban Assets Y/Y: 4.1% v 3.2%e.

- China Feb YTD Property Investment Y/Y: -9.8% v -8.5%e.

- China Feb Surveyed Jobless Rate: 5.4% v 5.1%e.

- Singapore Feb Non-oil Domestic Exports M/M: No est v -3.3% prior; Y/Y: +10.2%e v -2.1% prior; Electronic Exports Y/Y: No est v 9.6% prior.

Global conflict/tensions

- President Trump confirmed he would be speaking with Russia's Pres Putin on Tue, Mar 18th; Might have something to announce on Ukraine-Russia talks by Tues.

- President Trump ordered US military to launch 'decisive and powerful' military action against Houthis in Yemen: Told Iran to end support for Houthis immediately.

Europe

- UK Mar Rightmove House Prices Y/Y: 1.0% v 1.4% prior.

- Moody's raised Greece sovereign rating from Ba1 to Baa3 (investment grade); outlook revised to Stable from Positive.

- Fitch affirmed France sovereign rating at AA-; Outlook Negative.

- Fitch affirmed Portugal sovereign rating A-; outlook positive.

Americas

- US stopgap funding bill passed in the Senate (54-46) (two Democrats joined all but one Republican senator in voting yes).

- US Treasury Sec Bessent reiterated not worried about the market, corrections were ‘healthy’. 'No guarantees' there won't be a recession.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.36% at 548.58, FTSE +0.08% at 8,639.02, DAX +0.27% at 23,000.42, CAC-40 +0.06% at 8,032.84, IBEX-35 +0.44% at 13,044.00, FTSE MIB +0.41% at 38,812.00, SMI +0.30% at 12,969.40, S&P 500 Futures -0.48%].

Market focal points/key themes: European indices open generally lower, but quickly turned around to trade green across the board; markets seen gaining support on prospect of increased government spending in Europe; among sectors leading the way higher are utilities and health care; lagging sectors include real estate and consumer discretionary; Nexans discussing selling Lynxeo to Latour Cpaital; Bpifrance takes stake in Veolia; AstraZeneca acquires EsoBiotec; focus on US retail sales coming out later in the day; earnings expected in the upcoming US session include SAIC.

Equities

- Healthcare: AstraZeneca [AZN.UK] -0.5% (acquisition; trial results) - Industrials: Airbus [AIR.FR] +1.0% (Airbus with Dassault and other co's urge European Commission to 'buy European' and create sovereign infrastructure fund), Rheinmetall [RHM.DE] -2.0% (Thyssenkrupp reportedly ends talks on sale of its TKMS business to Rheinmetall; Will move ahead with spin off of the unit - post close Fri), Volkswagen [VOW3.DE] +1.5% (UBS raised to neutral), QinetiQ [QQ.UK] -17.5% (trading update) - Technology: Siltronic [WAF.DE] -3.5% (Jefferies cuts to hold).

- Telecom: Prosiebensat 1 Media [PSM.DE] +4.0% (General Atlantic to obtain up to 10% stake).

Speakers

- ECB's De Guindos (Spain): reiterated Council view and expected inflation to reach ECB's 2% goal by the end of this year or the beginning of next year. Consumption was not picking up due to uncertainty about economy's medium-term prospect. Effects of tariffs on inflation might be compensated by lower economic activity.

- German IFO Institute updated its economic forecasts which cut the 2025 GDP growth forecast from 0.4% to 1.1% range to 0.2% and set 2026 GDP growth at 0.8%.

- China conference on 'special action plan for stimulating consumption'. NDRC Planning Agency Dep Li Chunlin noted that consumer confidence and demand remained relatively week. PBOC Official Che Shiyi noted that was studying plans to drive consumption with financial support. Would use tool such as RRR and re-lending and discount facilities.

Currencies/fixed income

- USD was steady in quiet trading as the trading week began. Dealers noted that the greenback could face headwinds as concerns over weaker-than-expected economic growth.
The week will see over a dozen central bank meetings including the Fed. BOJ and BOE.

- GBP/USD edging towards the 1.30 area as BOE was seen keeping policy steady this week. Looking ahead the spring budget speech later this month could be a market moving event as Fin Min Reeves was expected to announce spending cuts, and tighter fiscal policy. Markets looking for approx. 50bps more in rate cuts this year.

- EUR/USD staying below the 1.09 level.

- USD/JPY hovering around the 1.09 level. BOJ seen keeping policy steady this week amid the global uncertainty from the US trade tariffs. Markets to focus for any hints on the timing of the BOJ's next action at Gov. Ueda's post-meeting news conference on Wednesday. Market consensus believing the central bank would aim for at least one more rate hike this year, but views were split on timing.

- 10-year German Bund yield at 2.82% and 10-year Gilt yield at 4.65%. 10-year Treasury yield at 4.29%.

Economic data

- (NL) Netherlands Jan Trade Balance: €11.1B v €10.4B prior; Exports Y/Y: +5.1% v -1.1% prior; Imports Y/Y: +3.6 v -1.1% prior.

- (IN) India Feb Wholesale Prices (WPI) Y/Y: 2.4% v 2.3%e.

- (NO) Norway Feb Trade Balance (NOK): 84.7B v 94.1B prior.

- (DK) Denmark Feb PPI M/M: +0.9% v -0.1% prior; Y/Y: 14.4% v 12.1% prior.

- (ES) Spain Q4 Labour Costs Y/Y: 3.6% v 4.4% prior.

- (CZ) Czech Feb PPI Industrial M/M: -0.1% v +0.1%e; Y/Y: -0.1% v +0.1%e.

- (CZ) Czech Jan Import Price Index Y/Y: 3.9% v 3.5% prior; Export Price Index Y/Y: 4.0% v 4.9% prior.

- (TR) Turkey Feb Central Govt Budget Balance (TRY): -310.1B v -139.3B prior.

- (ZA) South Africa Q1 BER Inflation Expectations Survey: 4.3% v 4.6% prior.

- (ES) Spain Jan Trade Balance: -€6.2B v -€4.1B prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 448.5B v 444.1B prior; Domestic Sight Deposits: 440.7B v 435.9B prior.

- (IT) Italy Feb Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 1.6% v 1.7% prelim.

- (IT) Italy Feb Final CPI EU Harmonized M/M: 0.1% v 0.1% prelim; Y/Y: 1.7% v 1.7% prelim; CPI (ex-tobacco) Index: 121.1 v 120.9 prior.

- (CZ) Czech Jan Current Account Balance (CZK): 34.1B v 23.0Be.

- (IN) India Feb Trade Balance: -$14.1B v -$21.4Be; Exports Y/Y: -10.9% v -2.4% prior; Imports Y/Y: -16.3% v +10.3% prior.

Fixed income issuance

- (PH) Philippines sells total PHP30.8B vs. PHP22.0B indicated in 3-month, 6-month and 12-month bills.

Looking ahead

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (SK) Slovakia Debt Agency (Ardal) to sell 2033, 2034, 2035 and 2051 Bonds.

- 06:00 (NO) Norway to sell NOK6.0B in 12-month bills.

- (NG) Nigeria Feb CPI Y/Y: No est. v 24.5% prior.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (DE) Germany to sell €3.0B of 12-month Bubills.

- 06:30 (NL) Netherlands Debt Agency (DSTA) to sell 3-month and 6-month Bills.

- 6:30 (TR) Turkey to sell bonds.

- 07:00 (RO) Romania to sell RON700M in 7.65% 2031 Bonds.

- 07:00 (IL) Israel to sell combined ILS3.0B in 2027, 2028, 2029, 2033, 2034 and 2035 bonds.

- 07:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (BR) Brazil Jan Economic Activity Index (Monthly GDP) M/M: +0.3%e v -0.7% prior; Y/Y: 2.4%e v 2.4% prior.

- 08:15 (CA) Canada Feb Annualized Housing Starts: 246.0Ke v 239.7K prior.

- 08:30 (US) Mar Empire Manufacturing: -2.0e v +5.7 prior.

- 08:30 (US) Feb Advance Retail Sales M/M: +0.6%e v -0.9% prior; Retail Sales (Ex Auto) M/M: +0.3%e v -0.4% prior; Retail Sales (Ex Auto and Gas): +0.4%e v -0.5% prior; Retail Sales (Control Group): +0.3%e v -0.8% prior.

- 08:30 (CA) Canada Jan Int’l Securities Transactions (CAD): No est v 14.4B prior.

- 09:00 (CA) Canada Feb Existing Home Sales M/M: No est v -3.3% prior.

- 09:00 (PL) Poland Feb CPI Core M/M: No est v -0.1% in Dec; Y/Y: No est v 4.0% in Dec.

- 09:00 (PL) Poland Jan Current Account Balance: +€0.2Be v -€0.8B prior; Trade Balance: -€1.0Be v -€2.2B prior; Exports: €27.2Be v €24.7B prior; Imports: €27.8Be v €26.9B prior.

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

- 09:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 10:00 (US) Mar NAHB Housing Market Index: 42e v 42 prior.

- 10:00 (EU) ECB chief Lagarde.

-10:00 (FR) France Debt Agency (AFT) to sell €6.6-8.0B in 3-month, 6-month and 12-month bills (4 tranches).

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- (AR) Argentina Feb Budget Balance (ARS): No est v 2.43T prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.9 prior.

- 19:25 (AU) RBA's Hunter.

- 22:00 (NZ) New Zealand Feb Non Resident Bond Holdings: No est v 61.9% prior.

- 23:00 (TH) Thailand Central Bank to sell THB60B in 3-month bills.

- 23:30 (JP) Japan to sells 12-Month Bills.