Daily Brief Macro: EA Resilience Is Perfunctory Problem and more

• Crashing US surveys in 2025 have looked idiosyncratic, as spurious exaggeration of exceptionalism ends. The ESI corroborates the PMI’s resilience in the euro area.
• Price expectations have been trending further above long-run averages without a one-off shock, suggesting European policy is too loose for this stage of the economic cycle.
• EA unemployment remains lower than a year ago, inconsistent with tight monetary conditions. We still see the ECB’s last cut in June, much sooner than the market prices.

• On 27 February, the Financial Supervisory Service (FSC) announced that it plans to give greater scrutiny on rights offerings and IPOs in Korea that could potentially destroy shareholder value.
• Overall, these attempts to improve the rights offerings and IPOs in Korea appear to be a step in the right direction. 
• However, these measures are likely to negatively impact new rights offerings and IPOs in 2025. Various trading strategies involving rights offerings and new IPOs may need to be revised.

• Cryptocurrencies / In Depth: How cryptocurrency gets used to move billions of yuan in and out of China
• Corruption /: New probe into former Hubei leader brought down by Covid pandemic
• Trade /: Washington wants to seal new trade deal with Beijing, ex-U.S. Treasury Secretary says

• Europe is outperforming the US in terms of stock market performance this year
• Valuations in the US are high, while Europe is trading at a historic discount
• Expectations for US companies are high, while Europe’s expectations are low, leading to potential momentum shifts between the two regions

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• The ECB emphasised a cautious and data-dependent approach in the account of its January rate cut decision. Market expectations were noted to price in a slower rate-cutting cycle, with the end-2025 rate projected at 2.08%.
• While inflation continues to decline, services inflation remains elevated due to persistent wage growth. The ECB expects wage pressures to moderate, but upside risks, including geopolitical uncertainty and trade disruptions, could delay further easing.
• Some Governing Council members noted that rates are approaching neutral territory, suggesting limited room for additional cuts. The ECB will assess future moves each meeting, with flexibility to slow or accelerate easing.

• China injects $55 billion into banks, boosting lending and infrastructure investments.

• Korea and Thailand cut interest rates to stimulate struggling business sectors.

• Hong Kong reduces government expenditure while India aims for higher economic growth with necessary reforms.