Daily Brief Macro: U.S. Treasuries and the Trump Effect and more

• If the Fed convinces the market that it is leaving the door open to easing and sees Fed Funds reduction multi-year, then 2yr could hold onto a small discount .
• 10yr yields will likely maintain a small to modest premium to 2yr.
• Funding will keep 10yr Treasuriies elevated unless a slowdown in the economy is evident, but the 10yr budget bill now looks like it will produce a budget deficit in 2026-27.

• Xi’s Tech Summit: China’s Wake-Up Call: On Monday, February 17, Xi Jinping sat down with China’s tech elite in what looked like a serious course correction. Jack Ma (Alibaba) was there. So was Ren Zhengfei (Huawei). But one key figure was missing: Robin Li, Baidu’s CEO. His absence sent Baidu’s stock into a tailspin, wiping out billions in market value before state media scrambled to calm investors down.

• Trump’s Tech Playbook: No More Playing Defense: Beijing is watching what’s happening in Washington—and it doesn’t like what it sees. The Trump administration is moving fast, rolling back regulation, cutting deals with industry giants, and pushing AI, semiconductors, and defense tech like it’s the new space race.

• Baidu’s Stock Crash: A Symbol of China’s Problem: The Baidu selloff shows that investors are still nervous about China’s real stance on tech. It’s one thing to invite Jack Ma back into the room—it’s another to convince the market that Beijing is serious about letting private companies thrive again.

•  Export earning crosses US$1 billion in 2024, up 7.66% from 2023  
• Local downstream producers appalled over rubber yield fall  
• Domestic tire industry in a bid to consolidate  

• Episode number eight of the Barbarians podcast on Valentine’s Day, February 14, 2025, featuring guest Kevin Jang, CIO of Virgo Digital Asset Management
• Kevin’s background includes experience in trading fixed income markets and digital assets, providing valuable insights on correlations between traditional macroeconomics and digital assets
• Discussion on recent market events such as blowout jobs numbers and higher than expected CPI, signaling a potential turning point in the markets and a shift in investor sentiment

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• UK CPI inflation jumped 0.2pp beyond expectations to 3% y-o-y in January amid broadly excessive price rises, to the extent that the median annualises at almost 6%.
• Underlying pressures have been trending higher since easing began, and the headline rate is set to keep rising, albeit with little change before the BoE’s likely cut in May.
• Demand growth keeps unemployment low, suggesting monetary conditions are too loose for tight cyclical pressures. We expect rate hikes in 2026 to reverse premature cuts.

• The Monetary Policy Committee reduced the OCR by 50 basis points to 3.75%, in line with expectations, citing declining inflationary pressures and significant economic slack, with further cuts likely through 2025.
• While near-term inflation may experience volatility due to exchange rate depreciation and higher fuel costs, core inflation and inflation expectations remain well-anchored around the target midpoint.
• Global risks, including trade policy uncertainty and geopolitical fragmentation, pose downside risks to growth. Still, the Committee remains confident that maintaining inflation stability will provide flexibility to respond to future shocks.

• Casinos / In Depth: Casino plan could put Thailand behind only Las Vegas and Macao
• Consumption /In Depth: China’s policymakers target consumption to kick economy into gear
• Energy Insider /: BYD crushes rivals in global EV sales, oil producing ship that captures its own emissions unveiled

• Bank Indonesia held the BI-Rate at 5.75%, in line with expectations, maintaining a cautious stance as inflation remains within target and global financial uncertainty persists.
• The central bank reinforced macroprudential measures to support credit growth and external stability, including expanding the KLM programme and strengthening foreign exchange policies.
• Future rate decisions will be data-driven, with further easing contingent on inflation stability, Rupiah resilience, and global financial market developments, particularly the trajectory of US monetary policy.