Market News

• Prior +0.1%
• GDP +0.8% vs +0.9% y/y expected
• Prior +0.7%

The more detailed breakdown as per the following:

• Services +0.0% vs +0.2% m/m expected
• Prior +0.3% (revised to +0.2%)
• Industrial output -0.1% vs +0.2% m/m expected
• Prior -0.9%
• Manufacturing output +0.1% vs +0.2% m/m expected
• Prior -0.5%
• Construction output +0.2% vs 0.0% m/m expected
• Prior -0.5%

This is lower than expected and it doesn't bode well for the UK economy if we start to see more weakness going forward. We've seen some downside in the pound as weakening growth coupled with higher inflation expectations and rate hike bets is an awful recipe.

The Director of Economic Statistics, Liz McKeown, said: "Growth ticked up slightly in the latest three months, partly reflecting the recovery of car…

• Japan warns on oil price impact, signals FX action as USD/JPY nears 160
• ICYMI - Tesla wins UK licence to supply electricity to households
• US, EU and Japan advance critical minerals trade deal with price floor plan
• Poor US decision-making process underestimated Iran’s willingness to disrupt Hormuz
• PBOC sets USD/ CNY reference rate for today at 6.9007 (vs. estimate at 6.8888)
• FX option expiries 13 March 2026 New York cut (10:00 ET)
• Australia to release 762 million litres of fuel after easing stockpile rules
• Reuters poll: RBA seen raising cash rate to 4.10% on March 17, then 4.35% by end-2026
• US grants temporary license allowing sale of Russian oil cargoes already loaded (oil TACO)
• Five pipelines that can bypass the Strait of Hormuz. But not replace…

Japan trade minister Akazawa:

• Will continue to discuss Japan’s allocation and timing of IEA-led coordinated oil reserves release
• Japanese government, together with private sector operators, will make utmost efforts in securing alternative sources of crude oil.
• Japanese companies are exploring alternative sources for crude oil procurement, including U.S., Central Asia, and South America

ICYMI - Tesla receives UK licence to supply electricity to homes, expanding its push into retail energy.

Summary:

• Tesla Energy Ventures has been granted a UK electricity supply licence by regulator Ofgem.

• The move allows Tesla to sell electricity directly to British households.

• Tesla aims to combine solar generation, battery storage and energy retail services.

• The company will compete with suppliers such as Octopus Energy, British Gas and EDF.

• The development comes amid rising energy price concerns linked to the Iran conflict.

Tesla is preparing to enter Britain’s retail electricity market after receiving regulatory approval to supply power directly to households, marking a new step in the company’s push into energy services.

Britain’s energy…

The U.S., EU and Japan are preparing a coordinated critical minerals trade framework that could include price floors and tariffs aimed at countering China’s dominance in key supply chains.

Japan Times with the info.

Summary:

• The U.S., EU and Japan are preparing a framework for a critical minerals trade agreement.

• The proposal may include price floors and tariffs to counter Chinese market influence.

• Talks are being led by the U.S. Trade Representative with negotiations expected to begin in April.

• The push follows Chinese export controls on rare earths and key minerals.

• The deal could include stockpiling, investment coordination and research collaboration.

The United States, Japan and the European Union are moving toward a coordinated strategy to…

The U.S., EU and Japan are preparing a coordinated critical minerals trade framework that could include price floors and tariffs aimed at countering China’s dominance in key supply chains.

Japan Times with the info.

Summary:

• The U.S., EU and Japan are preparing a framework for a critical minerals trade agreement.

• The proposal may include price floors and tariffs to counter Chinese market influence.

• Talks are being led by the U.S. Trade Representative with negotiations expected to begin in April.

• The push follows Chinese export controls on rare earths and key minerals.

• The deal could include stockpiling, investment coordination and research collaboration.

The United States, Japan and the European Union are moving toward a coordinated strategy to…

Officials say U.S. planning underestimated Iran’s willingness to disrupt the Strait of Hormuz, exposing weaknesses in the administration’s decision-making process.

CNN with the info.

Summary:

• Officials say the Trump administration underestimated the risk of Iran disrupting the Strait of Hormuz.

• Interagency economic and energy analysis was reportedly not central to planning discussions.

• Decision-making relied heavily on a smaller circle of yes-men advisers around the president.

• Disruptions to tanker traffic have triggered volatility in global oil markets.

• Naval escorts for tankers are being considered but are currently deemed too dangerous.

The Trump administration significantly underestimated the potential consequences of military action…

New Zealand manufacturing activity held strong in February with the PMI at 55.0, marking the first three-month run above 55 since mid-2021.

Summary:

• New Zealand manufacturing PMI held at 55.0 in February, signalling continued expansion.

• Result was almost unchanged from January’s 55.1 and above the long-run average of 52.5.

• Marks the first three-month run above 55 since mid-2021.

• New orders (57.6) and production (56.7) led the expansion.

• Employment eased slightly but remained in expansion at 50.4.

• Manufacturers reported stronger orders, enquiries and export demand.

New Zealand’s manufacturing sector continued to expand solidly in February, with activity holding at elevated levels for a third straight month, according to the latest BNZ–BusinessNZ…

Another of Trump's yes men with 'expert' comments on his war.

• US Treasury Secretary Bessent says we know that Iran has not mined the Strait of Hormuz.
• Says there will be a lower oil price regime over the medium-term after the conflict
• Says the Fed is a long way from returning to quantitative easing

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U.S. Treasury Secretary Scott Bessent said Washington believes Iran has not mined the Strait of Hormuz, noting that some vessels are still navigating the strategic waterway despite heightened tensions in the region. Tankers, including Iranian and Chinese-flagged ships, have continued passing through the strait, indicating the shipping route remains physically open even as attacks on commercial vessels have disrupted trade flows.

Bessent also…

Data from NZ only, unlikely to move markets noticeably upon release.

• US initial claims 213K vs 215K estimate
• US January trade balance -54.5B vs -66.6B expected
• US housing starts for January 1.487M versus 1.348M estimate
• Israel may launch a ground campaign in Lebanon imminently
• Netanayu: Iran is no longer the same Iran
• U.S. Treasury sells $22 billion of 30 year bonds at a high yield of 4.871%
• Iran's Foreign Minister spokesman: Many ships can still pass through the Strait of Hormuz
• Britain's Defence Secretary says Iran is likely laying mines in Strait of Hormuz
• Canada January trade balance -3.65B vs -0.9B expected
• US Energy Secretary Wright: Iran operations to take weeks, not months

Markets:

• WTI crude oil up $9.14 to $96.38
• US 10-year yields up 5.5 bps to 4.26%
• Gold down $85 to $5089
• USD leads, AUD lags
• S&P 500 down…

Iran’s UN envoy, comments reported via Reuters:

• We are not going to close Strait of Hormuz but it is our right to preserve ‘peace and security’ in the waterway

Oil implications (should be a headwind, a welcome one!). The Strait is almost as good as closed now anyway given the war risks.