Market News

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.

Iran appears to be preparing a ground invasion in Lebanon to fight Hezbollah. Is it possible they want to tone things down with Iran before embarking on it?

Comments from Netanyahu in his first press conference since the war:

• Iran is no longer the same Iran
• Dealing heavy blows to Iran's revolutionary guard
• Speak with Trump nearly every day
• We are hitting Iran forces in the streets and at checkpoints
• We are reshaping the Middle East and emerging as a regional power, and in some cases, a global power
• We can create the conditions for regime change but it's up to Iranian people to take to the streets

Separately, an IRGC official is in Iran's state media saying:

• If our energy infrastructures are attacked, we will "burn" the regions oil and gas…

Reports from the Israeli Broadcasting Authority indicate the Security Cabinet is convening this evening to debate a significant expansion of ground operations in Lebanon.

The move follows a week of intensifying friction that saw Israel nearly double its evacuation zones in southern Lebanon, now covering roughly 10% of the country’s territory. With Defense Minister Israel Katz already signaling that the military has been instructed to "broaden operations," tonight's meeting is likely the formal rubber stamp on a deeper push toward the Litani River.

The IDF’s 91st, 210th, and 146th Divisions are positioned to push further north. The goal is to physically push Hezbollah forces (specifically the Radwan Unit) behind the Litani River to stop…

• High-yield 4.871%
• WI level at the time of the auction 4.878%
• Tail -0.7 basis points versus 6 month average of +0.2 basis points
• bid to cover 2.45X versus 6 month average of 2.39%
• Dealer 9.45% versus 6 month average of 11.3%
• Directs 27.2% versus 6 month average of 23.2%
• Indirects 63.4% vs 6 month average of 65.4%

Auction Grade: B+

After to below average auctions, the 30 year bond auction was met with above average demand. The auction came in with a tail of -0.7 basis points and a bid to cover marginally above the six-month average. Domestic demand was stronger and average but international demand was marginally less than the average. Overall the dealers were saddled with less than the average which is good news.

European equities finished the session broadly lower, with Spain’s Ibex leading the declines. The selling pressure was fairly widespread across the region as risk sentiment remained cautious. Despite the drop today, the weekly picture remains mixed with some indices still holding gains for the week heading into the final trading day.

European closing levels (today):

• German DAX: -0.29%

• France CAC: -0.71%

• UK FTSE 100: -0.47%

• Spain Ibex: -1.22%

• Italy FTSE MIB: -0.71%

With one trading day left in the week, performance across the region is mixed. Germany and France are modestly lower for the week, while Spain and Italy continue to show gains despite today’s pullback.

Week-to-date performance:

• German DAX: -0.08%

• France CAC: -0.11%

• UK FTSE 100: +0.20%

• Spain…

The Iran's Foreign Minister spokesperson says that many ships can still as through the Strait of Hormuz if they coordinate with the Iranian Navy.

The conciliatory comments came after a Iran top security official said to US Pres. Trump that we will not relent until making you sorry for this great miscalculation.

Also earlier Iran's deputy finance minister says that we are not laying mines in the Hormuz Strait and that they allowed cents ships to cross. Looking at the price of crude oil, it is come off of the toys and $97.19, currently trading at $94.51 at still up over 7% on the day.