In today’s briefing:
- UK: Low CPI As Seasonal Sales Extend
- UK Fiscal Smoke Over Treading Water
- UK Breaks Ground On First Tire To Fuel Facility Amid ELT Export Row
- Steno Signals #190 – Is Europe and China still the havens in macro? Not so fast..
- Asian Equities: India – What Would FIIs and DIIs Buy and Sell?
- The Drill: Approaching the End of the Tariff and Peace Trades?
- CX Daily: Taming the Wild West of China’s Supply Chain Finance
- US Inflation & Recessions Concerns Overdone
UK: Low CPI As Seasonal Sales Extend
- UK CPI inflation slowed by 15bps to 2.84%, rounding slightly under expectations. The services rate was surprisingly resilient, and January’s upside news broadly persisted.
- Downside news from clothing and core goods prices occurred because January sales extended broadly and unusually. Postponed Spring lines should drive a March rebound.
- Headline inflation outcomes are benign enough not to threaten the BoE’s likely cut in May, but ongoing resilience still makes that the final move in our forecast.
UK Fiscal Smoke Over Treading Water
- Attempts to recreate fiscal headroom after slippage rely on implausible and optimistic assumptions. Further tax rises and delayed prudence are likely in the Autumn budget.
- Replacing aid resources with capital defence spending helps loosen fiscal policy inside the budgetary rules. Policy changes are relatively neutral over the next few years.
- Without corrective action, the gross financing requirement path is £18bn a year higher than in the Autumn, and almost £50bn higher than last Spring, burdening gilt issuance.
UK Breaks Ground On First Tire To Fuel Facility Amid ELT Export Row
- US$127 million tire recycling plant coming up in Sunderland
- TRA calls for immediate action to end the T8 exemption
- ATMA’s stress to rein in ELT imports comes as wakeup call for UK
Steno Signals #190 – Is Europe and China still the havens in macro? Not so fast..
- Greetings from Copenhagen, and welcome back to our weekly editorial on everything macro and markets.
- The tariff headlines are back in a more digestive fashion as the broad tariff scare seen over the past couple of weeks have been more or less cooled down by US officials late last week and over the weekend, which is very benign news for a market who feared that tariffs would hit right around everyone around the globe, which is the reason why businesses, households and consumers have changed behaviour and delivered a US growth scare over the past month – and it will likely continue going into April as trends currently persist rather than turn.
- The tariff campaign will hence be a lot more targeted than previously communicated, which is probably what most people expected initially (until Trump went rogue), with the reciprocal part of the tariffs being a race to the bottom and vice versa – which evidently looks to be the case now.
Asian Equities: India – What Would FIIs and DIIs Buy and Sell?
- We analyze FIIs’ and DIIs’ buying/selling trend across sectors and their sector-wise stances relative to benchmarks to assess which sectors they would buy or sell in the near term.
- FIIs and DIIs have bought consumer discretionary and healthcare secularly. They recently started buying financials and IT, after prolonged selling. They’ve also secularly bought industrials, barring the last two quarters.
- We conclude that both FIIs and DIIs shall continue to buy financials, industrials and consumer discretionary. They would also buy healthcare and sell materials, energy, IT and consumer staples.
The Drill: Approaching the End of the Tariff and Peace Trades?
- Welcome to our weekly editorial on everything geopolitics- and commodities! We are approaching the “Liberation Day” on Apr 2 where we will (hopefully) get more clarity around the tariffs plans from Trump.
- We have recently seen a semi-u-turn from the Trump administration on the severity and depth of the reciprocal tariffs announced next week, and the base-case is a softer stance with some negotiated exemptions for big partners.
- This is also exactly what paves the way for a very decent comeback in US risk assets now, something that we expect to continue into April when the softened USD and slightly lower USD bond yields start feeding through via easier financial conditions.
CX Daily: Taming the Wild West of China’s Supply Chain Finance
- SCF /In Depth: Taming the Wild West of China’s supply chain finance
- EVs /Chinese EV maker Neta on brink of collapse as $600 million funding round falls through
- BYD tops Tesla: Chinese electric-vehicle (EV) giant BYD Co. Ltd. is on a roll, overtaking U.S. rival Tesla Inc. with revenue of 777 billion yuan ($107 billion) in 2024.
US Inflation & Recessions Concerns Overdone
- We are overweight US equities and forecast one 25bp rate cut in 2025. Bias is towards growth and momentum stocks – industrials, tech hardware, banks and traditional energy.
- US inflation is picking up but won’t spike upwards, even with US import tariffs rates rising.
- While recent macro data have been weak, the business cycle is intact and talk of a recession overblown. The on-going stock market correct is an opportunity to buy on dip.
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