GLOBAL MACRO: Growth Indicators Subdued But Not Flashing Red Yet

Asian equities traded mixed as investors reacted to U.S. President Donald Trump’s plan to impose 25% tariffs on all steel and aluminum imports. Steel and aluminum stocks across Japan, South Korea, India, and Australia fell sharply, with Nippon Steel (-2.6%), Posco (-4.8%), Tata Steel (-3%), and South32 (-2%) among the major decliners.

• Despite broader trade concerns, Hong Kong outperformed, with the Hang Seng Tech Index rising 1.5%, driven by optimism over Chinese AI and telecom stocks. China Telecom surged 10% on expectations of increased AI-related investment. Elsewhere the HSI is 1.40% higher, while the CSI 300 is little changed
• In Japan, stocks fluctuated as Trump’s tariffs pressured steelmakers, but optimism around PM Ishiba’s first meeting with Trump, which avoided any direct trade disputes helped limit losses. The Nikkei 225 is 0.1% higher while the Topix trades unchanged.
• Taiwan equities have struggled with TSMC falling 2.20%, this follows a 1.60% drop in the Philadelphia SE Semiconductor Index on Friday.
• South Korea's KOSPI is slightly higher today, with Samsung up 0.75%.
• Australia's ASX200 and New Zealand NZX50 are both about 0.24% lower today with steel and aluminum stocks weighing on the market.
• Meanwhile, Indian equities fell, with the Nifty 50 down 0.5% as metal stocks weighed on the index.

• If Friday’s moves for gold was all about US data  giving mixed messages about the US economy and the potential for rate rises; today it was more about news that Trump is to levy tariffs on steel and aluminum imports.
• The mixed data result from Friday was quickly forgotten as gold’s safe haven bid re-asserted itself as the tariff news broke. 
• Opening $$2,861.07 in Asian trade gold has trended higher throughout reaching highs of $2,878.87.
• To add to the tariff headlines coming from Trump on aluminum and steel are claims that Elon Musk has found ‘irregularities’ at treasury.
• Gold’s ascent through all key technical levels continued last week as bullion moved further away from the 20-day EMA of $2,785.85 pulling all major technicals higher in signs that the bullish momentum is likely to continue.
• The coming fortnight sees major gold producers report earnings, and likely to provide insight into gold’s outlook.
• Safe haven demand remains a key determinant of gold’s fortunes and yet as US data provides mixed results for the outlook for rates, the strength of the USD in the face of tariff threats remains a key factor that determines gold’s fortunes in the near term.

• There was little reaction to headlines out earlier this morning surrounding a 25% tariff on steel and aluminum imports to the US. TU is -00 3/8 at 102-22 3/4, while TY is 00+ at 109-08.
• A bull phase in Treasury futures remains in play and the contract is holding on to its latest gains. TY Price has traded through the 50-day EMA of 109-11. This highlights potential for a stronger reversal and sights are on 109.30, a Fibonacci retracement. On the downside, initial support to watch is unchanged at 108-20+, Tuesday’s low. Clearance of it would signal a reversal and the end of a corrective cycle.
• In cash tsys today, the belly of the curve is outperforming, with the 2s5s20s -1.5bps at -36.170. The 2yr is -0..8bps at 4.281%, while the 10yr is -1.4bps at 4.481%
• Hedge funds increased their net short position in 5yr note futures to over 3m contracts, the most bearish stance since November, per CFTC data for the week ending Feb. 4. Leveraged funds added $12.8m/DV01 in shorts on 5yr notes and extended net shorts in 10-year and ultra 10yr notes by $7.7m/DV01 combined. Meanwhile, asset managers aggressively unwound net long positions in 10yr note futures by $9.1m/DV01 but increased net longs across most other tenors, including ultra 10yr to ultra-long bonds, by a combined $9.1m/DV01.
• Fed-dated OIS was pricing in approximately 35bp of rate cuts for the year vs. 42bp priced at Thursday close with the first full 25bp of easing moving out to the September policy meeting from July prior
• Projected rate cuts through mid-2025 consolidate vs. Friday (*) as follows: Mar'25 at -2.5bp (-3.9bp), May'25 at -7.3bp (-10.7bp), Jun'25 at -15.8bp (-19.6bp), Jul'25 at -20.6bp (-25.1bp).
• There is little on the calendar today, focus this week is on Powell's testimony to Congress, on Tuesday CPI and Wednesday PPI inflation measures.