US TSYS: Cash Bonds Slightly Richer, PPI & Claims Data Later

• China’s major bourses were lower today as President Trump signing tariffs on steel and aluminium imports as he indicated that autos, chips and pharmaceuticals were next in his sights.
• The Hang Seng lead the way lower down -0.59%, with the CSI 300 down -0.36%, Shanghai Comp down -0.16% and Shenzhen down -0.31%
• Taiwan’s TAIEX bucked the trend rising +0.20% today.
• South East Asian bourses followed a similar trend with Malaysia’s FTSE KLCI down marginally by 0.06% and the Jakarta Composite continued its poor run down -1.50%, to be down for a fifth successive day of trading.
• As Indian markets get going on their trading day the NIFTY 50 is opening very weak, down -0.45% in what could be a fifth successive day of declines.
• Korea however is bucking this trend as discussions in parliament centre around a special budget to stimulate growth in the ailing economy.  Yesterday the opposition proposed the idea of an additional budget and the ruling People’s Party said today, it does not oppose the idea. 
• The KOSPI is a regional bright spot today up +0.83%

Indonesia’s consumer confidence was slightly lower in January at 127.2 after 127.7 but it printed above the Q4 average of 124.9 and remains at a solid level and in line with continued robust private consumption growth of around 5%, where it was in Q4, or even higher.

• Bank Indonesia unexpectedly cut rates 25bp to 5.75% in January and continues to support the economy with macroprudential policies. It is unlikely to cut again on February 19, especially given USDIDR is above 16300, but there is likely to be further easing to support growth before mid-year.
• The government is working to boost household spending by scaling back proposed VAT increases to only luxury goods, introducing a temporary 50% discount on electricity tariffs in January and February, free school meals and rice distribution. The budget deficit is likely to be narrower than in 2024 though.
• USDIDR is up 0.2% today to 16372 following US President Trump signing the order for tariffs on all US imports of steel and aluminium. The pair is up 0.3% since the January 15 BI decision but off the February 3 high of 16471. Also, the February average of the JP Morgan NEER is down 1.1% m/m with the index now 2.1% lower on a year ago. Thus, BI is likely to focus again on rupiah stability this month.

Indonesia consumer confidence vs real consumption y/y%

TYH5 is 109-06, -0-01 from NY closing levels. 

• Headlines have continued to rattle markets & squelch sentiment.
• Since the market close, headlines have stated that US President Donald Trump signed an order imposing 25% tariffs on steel and aluminium, with no exemptions. The tariffs also target finished metal products and take effect on March 4. Trump indicated tariffs on cars, drugs, and chips could follow, with further reciprocal tariffs expected within two days.
• That said, “US President Donald Trump has declared he would give "great consideration" to a tariff exemption for Australia.” (per ABC)
• There has been no cash trading for US tsys in Asia-Pac session today with Japan out for the Foundation Day Holiday.
• The focus turns to Fed Chairman Powell's testimony to the Senate Banking Committee today at 1000ET (text, Q&A). There is also a $58bn 3-year Treasury note sale.