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Affirm Holdings shares tumbled in New York after CNBC reported that Swedish fintech rival Klarna will now be Walmart’s sole provider of “buy now, pay later” loans in the United States. That’s a negative for Affirm, which announced a BNPL partnership with Walmart in 2019. 

Klarna wrote in a press release earlier that “it will be partnering with OnePay, a leading consumer finance app, to exclusively offer installment loans for purchases at Walmart in the United States.” 

Klarna CEO Sebastian Siemiatkowski called the deal a “game changer,” adding that it gives its AI-powered payments and commerce network platform massive access to millions of customers and a new avenue of expansion nationwide. 

Klarna’s exclusive BNPL partnership with Walmart comes just days after the company filed an initial public offering prospectus and will test the IPO market that has been ice-cold for the last few years.

Bloomberg provided more color about Klarna’s financials:

The Stockholm-founded digital payments company’s revenue climbed 24% last year. Klarna had net income of $21 million on revenue of $2.81 billion for 2024, according to its filing Friday with the US Securities and Exchange Commission. The company has amassed 85 million customers around the world and 600,000 retail partners.

The deal is a big blow to Affirm. Traders dumped company shares, down 12% in New York in the first 15 minutes of trading, pushing shares into a bear market (-26% YTD).

Klarna will provide BNPL loans to Walmart customers at a time when Goldman Sachs has declared the big-box retailer the winner of the value wars among retailers.

It’s not like it ever gets quiet any more, but this week will be especially busy week for central bank watchers with decisions due from the Fed, the BoJ (both Wednesday) and the BoE (Thursday), amongst others. Economic data highlights include retail sales in the US (today, which came in mixed), various US housing data, labor market stats in the UK (tomorrow) and inflation in Japan (Friday) and Canada (tomorrow). 

After we had the white smoke of a deal on Friday, the spotlight will be on the vote around the huge proposed fiscal expansion in Germany. The Bundestag and the Bundesrat are expected to hold votes tomorrow and Friday, respectively, before the new Bundestag sits from March 25. We’ll preview these below. Note that overnight Trump has said he’ll speak to Putin tomorrow so that’s another thing to watch

The full day by day week ahead is at the end as usual but let’s preview a few of the key events. 

First, the Fed is widely expected to stay on hold on Wednesday. In their preview, DB economists still expect limited guidance about the policy path ahead given all the extreme uncertainty. The statement is likely to announce a pause in QT beginning in April, and forward guidance indicating that QT is expected to resume once the debt ceiling is resolved and the liability composition of the balance sheet normalizes. There are risks that a slowing is announced rather than a pause. The economists also expect the SEP to maintain two rate cut dots this year but with an upward drift in individual dots that could push the median dot to one cut as a risk. The economic projections will likely show higher inflation, somewhat weaker growth, and an unchanged forecast for the unemployment rate this year. Last week’s inflation data looked softer on the surface but still point towards another strong core PCE print. Today’s retail sales are the last piece of data influencing the Fed, although printing inconclusive (miss on headline, big beat on control group), they won’t be a huge help to markets.

According to Goldman, rates will not be the focus during the FOMC meeting as consensus/market pricing are firmly on no rate change with Fed indicating no hurry to cut until policy changes under the new administration become less volatile and uncertain and the outlook becomes clearer. Goldman economists believe that the Fed leadership would prefer for the median 2025 dot to continue to show two cuts this year to avoid adding to recent market turbulence but also see 2026 and 2027 median dots to remain unchanged, implying a path of 3.875% / 3.375% / 3.125% over 2025 / 2026 / 2027, though with higher means each year than last time. Finally, Goldman expects the FOMC’s median economic projections to show a 0.3% upward revision to 2025 core PCE inflation to 2.8% and a 0.3% downgrade to 2025 GDP growth to 1.8%, mainly reflecting the tariff news.

In terms of Germany, this week will be a landmark one with votes on the deal in the Bundestag tomorrow and the Bundesrat on Friday. With the deal agreed on Friday the bulk of the execution risk has been averted. Assuming it goes through, which must be now over 95% probability-wise according to DB’s Jim Reid, this could lead to a fiscal stimulus of 3-4% of GDP by 2027 at the latest. So as DB says, don’t underestimate how huge this package is. That said there are still risks both in terms of the vote and the constitutional court ruling around whether not enough time was provided to scrutinize the deal. However the legislation is covered by less than 20 pages of text, so the legal risk here is low. Reid notes that in his view markets have fully caught up to how much of a game changer this will be for Germany over the next few years. Longer-term, Germany should use this period to embark on significant structural reform. Hopefully the comfort of higher growth towards the latter part of this decade won’t reduce the likelihood of this.

Back to central banks, the BoJ is expected to keep rates steady and the current monetary policy framework maintained on Wednesday. For the BoE, our UK economist expects the BoE to keep the Bank Rate unchanged at 4.5%.

In geopolitics, the Trump/Putin call on Tuesday could be a prelude to a ceasefire accord.

In micro, the NVDA GTC event will be a focus this week with the Jensen’s Keynote late on Tuesday. Also have earnings from FDX, NKE and MU on Thursday.

Courtesy of DB, here is a day-by-day calendar of events

Monday March 17

• Data: US February retail sales, March Empire manufacturing index, NAHB housing market index, January business inventories, China February home prices, industrial production, property investment, retail sales, Canada February existing home sales, housing starts, January international securities transactions

Tuesday March 18

• Data: US February industrial production, capacity utilisation, building permits, housing starts, import and export price index, March New York Fed services business activity, Japan January core machine orders, Tertiary industry index, February trade balance, Germany March Zew survey, Italy January trade balance, Eurozone March Zew survey, January trade balance, Canada February CPI
• Central banks: ECB’s Rehn and Escriva speak
• Earnings: Xiaomi, XPeng
• Auctions: US 20-yr Bond (reopening, $13bn)

Wednesday March 19

• Data: US January total net TIC flows, Japan January capacity utilisation, Eurozone Q4 labour costs, New Zealand Q4 GDP
• Central banks: Fed’s decision, BoJ’s decision, ECB’s Villeroy, Centeno, Guindos and Elderson speak
• Earnings: Vonovia, Tencent, Ping An Insurance, General Mills

Thursday March 20

• Data: US Q4 current account balance, March Philadelphia Fed business outlook, February leading index, existing home sales, initial jobless claims, China 1-yr and 5-yr loan prime rates, UK January average weekly earnings, unemployment rate, February jobless claims change, Japan February national CPI, Germany February PPI, Eurozone January construction output, Canada February industrial product price index, raw materials price index, Australia February labour force survey
• Central banks: BoE’s decision, Riskbank decision, SNB decision, ECB published economic bulletin, Lagarde, Lane and Villeroy speak
• Earnings: Nike, FedEx, Micron, Lennar, RWE, Accenture, PDD Holdings
• Auctions: US 10-yr TIPS (reopening, $18bn)
• Other: European Council meeting, through March 21

Friday March 21

• Data: UK March GfK consumer confidence, February public finances, France March manufacturing confidence, February retail sales, Italy January current account balance, ECB January current account, Eurozone March consumer confidence, Canada January retail sales
• Central banks: Fed’s Williams speaks, ECB’s Escriva speaks
• Earnings : Meituan, Carnival, Nio

* * *

Finally, looking at just the US, key economic data releases this week are the retail sales report on Monday and the Philadelphia Fed manufacturing index on Thursday. The March FOMC meeting is on Wednesday. The post-meeting statement will be released at 2:00 PM ET, followed by Chair Powell’s press conference at 2:30 PM. New York Fed President Williams will deliver a speech on Friday.

Monday, March 17

• 08:30 AM Retail sales, February (GS +0.7%, consensus +0.6%, last -0.9%); Retail sales ex-auto, February (GS +0.4%, consensus +0.3%, last -0.4%); Retail sales ex-auto & gas, February (GS +0.5%, consensus +0.4%, last -0.5%); Core retail sales, February (GS +0.5%, consensus +0.3%, last -0.8%): We estimate core retail sales expanded 0.5% in February (ex-autos, gasoline, and building materials; month-over-month SA), reflecting continued growth in measures of card spending and payback for a particularly weak January reading but a slight drag from colder-than-usual weather. We estimate a 0.7% increase in headline retail sales, reflecting higher auto sales and gasoline prices.
• 08:30 AM Empire manufacturing index, March (consensus -2.0, last +5.7)
• 10:00 AM Business inventories, January (consensus +0.3%, last -0.2%)
• 10:00 AM NAHB housing market index, March (consensus 42, last 42)

Tuesday, March 18

• 8:30 AM Housing starts, February (GS +2.0%, consensus +1.1%, last -9.8%); Building permits, February (consensus -1.6%, last -0.6%)
• 08:30 AM Import price index, February (consensus -0.1%, last +0.3%)
• 09:15 AM Industrial production, February (GS +0.2%, consensus +0.2%, last +0.5%); Manufacturing production, February (GS +0.4%, consensus +0.3%, last -0.1%); Capacity utilization, February (GS 77.8%, consensus 77.8%, last 77.8%):  We estimate industrial production increased +0.2%, reflecting a rebound in auto manufacturing and another month of strong utilities production due to increased demand for heating as a result of colder-than-usual temperatures. We estimate capacity utilization remained at 77.8%.

Wednesday, March 19

• 02:00 PM FOMC statement, March 18 – March 19 meeting: As discussed in our FOMC preview, we expect the FOMC to reiterate that it is not in a hurry to deliver further interest rate cuts and intends to remain on the sidelines until policy changes under the new administration become less volatile and uncertain and the outlook becomes clearer. While we expect FOMC participants to rethink their projections now that the first tariffs have taken effect and further tariff increases look likely, we suspect that the Fed leadership would nevertheless prefer for the median 2025 dot to continue to show two cuts this year to avoid adding to recent market turbulence. We also expect the 2026 and 2027 median dots to remain unchanged, implying a path of 3.875% / 3.375% / 3.125% over 2025 / 2026 / 2027, though with higher means each year than last time. The longer-run or neutral rate projection might continue to creep higher from 3% to 3.125%. We expect the FOMC’s median economic projections to show a 0.3pp upward revision to 2025 core PCE inflation to 2.8% and a 0.3pp downgrade to 2025 GDP growth to 1.8%, mainly reflecting the tariff news.

Thursday, March 20

• 08:30 AM Current account balance, Q4 (consensus -$330.0bn, last -$310.9bn); 08:30 AM Initial jobless claims, week ended March 15 (GS 215k, consensus 224k, last 220k):  Continuing jobless claims, week ended March 8 (consensus 1,888k, last 1,870k)
• 08:30 AM Philadelphia Fed manufacturing index, March (GS flat, consensus 8.0, last 18.1)
• 10:00 AM Existing home sales, February (GS +2.0%, consensus -3.4%, last -3.9%) 

Friday, March 21

• There are no major economic data releases scheduled.
• 09:05 AM New York Fed President John Williams (FOMC voter) speaks: New York Fed President John Williams will deliver a keynote address at a conference in Nassau, Bahamas. Text and Q&A are expected. On March 4th, President Williams said he thought “the current stance of policy is good” and that he did not “see any need to change it right away.” Williams also noted that he “factor[s] in some effects of tariffs now on inflation because I think we will see some of those effects later this year,” and that he will “be watching carefully … [how] this is affecting consumer confidence, business confidence, the uncertainty around this and the effects on economic activity, employment, and things like that.”

Source: DB, Goldman

At a moment British prime minister Kier Starmer is busy trying to form a “coalition of the willing” to defend Ukraine, and to enforce any future peace agreement “on the land, at sea, and in the sky” – Russia is asserting its clear rejection of any plan which sends Western troops to Ukrainian soil under the guise of ‘peacekeeping forces’. France’s Macron has also been firmly behind Starmer’s efforts.

Former Russian president and current Deputy Chairman of the Security Council Dmitry Medvedev has warned that any deployment of “peacekeepers” from NATO member states would trigger all-out war, and that Moscow will respond as such.

In a post on X on Sunday, Medvedev, charged that Starmer and Macron are “playing dumb” in seeking to advance their plans. “Time and again they are told that peacekeepers must be from non-NATO states. No, we will send tens of thousands – just lay it out – you want to give military aid to the neo-Nazis in Kiev,” Medvedev wrote.

“That means war with NATO. Consult with Trump, scumbags,” he concluded.

Russian Foreign Minister Sergey Lavrov also in prior statements presented the same position, saying Western boots on the ground as ‘peacekeepers’ would be tantamount to the “direct, official, undisguised involvement of NATO countries in the war against Russia.”

Medvedev’s words stating that the European allies must consult with Trump is in acknowledgement of the reality that any Western peacekeeping force would realistically have to have the backing of the United States. Some European leaders appear to be willing to test going it alone, however.

For example, Danish Foreign Minister Lars Lokke Rasmussen told DR radio on Monday that “if it comes to the point where a European presence is needed for a ceasefire or peace agreement to be reached, then Denmark is in principle prepared for that.”

Interesting post from Medvedev, which may be hinting at peacekeepers (non-NATO) in the future?
“Time and again they are told that peacekeepers must be from non-NATO states.” pic.twitter.com/2D9H7vIb4I

— Alex Christoforou (@AXChristoforou) March 16, 2025

The UK’s Starmer had said over the weekend, “We will accelerate our military support [to Ukraine], tighten our sanctions on Russia’s revenues, and continue to explore all lawful routes to ensure that Russia pays for the damage it has done to Ukraine.”

Clearly all of this is hawkish Britain trying to fill the prior role of Washington under the Biden administration, now that Trump is stepping back support and strongly leaning on Zelensky to quickly achieve peace with Russia.

By Benjamin Picton, Senior strategist at Rabobank

Let Them Eat Flatscreens

Speaking to NBC’s ‘Meet the Press’ on Sunday, US Treasury Secretary Scott Bessent said that US stocks experiencing a correction is “healthy”. Naturally, this statement caused some alarm for many Wall Street types who had been counting on Bessent to be the second Trump administration’s ‘voice of reason’ on economic policy, tempering some of the President’s more hawkish instincts on trade and throwing fresh liquidity bones to financial markets whenever they showed signs of wobbling.

Markets might have been hoping that the first Trump administration’s fixation on the stock market as a barometer of administrative success would carry over into a second term, but it now  appears that that is not the case. Trump himself has suggested in euphemistic fashion that the economy will be in for a “little bit of an adjustment” in the months ahead, and Bessent says that the economy needs to “detox” itself from government spending. Unfortunately, detox programs are usually characterised by nasty withdrawal symptoms for the patient (See “Is Trump Trying To Push The US Into A Recession?”).

As we warned in late November, the view that Bessent would be a source of internal dissent for the Trump economic agenda always carried a whiff of wishful thinking. Bessent’s CV (heavy on economic history and big picture thinking) and his statement that he wanted to be involved in the “grand global economic reordering” were clear signs that he did not intend to be a do-nothing  pick for Treasury Secretary. Indeed, despite (or perhaps because of?) his background as a macro hedge fund manager he appears to be much more interested in strategic questions of ‘who makes what? where? and for what purpose?’ than the day-to-day movements of market indices. 

Bessent last week articulated the ideological underpinnings of the Trump economic agenda as clearly as anyone when he said that “access to cheap goods is not the essence of the American Dream.” This is a landmark statement, because access to cheap consumption goods has been the essence of the American dream since the 1950s at least and America’s role as consumer of last resort for foreign surplus has been one of the enduring linchpins of the post-WWII economic system. The rise of China – a nation that does not share American values – and the structural imbalances created by suspected state-subsidized overproduction means that this model is now past its use-by date. Thus, a new model is being adopted to safeguard US pre-eminence in world affairs.

Bessent: “The American dream is not “let them eat flat screens.” That if American families aren’t able to afford a home, don’t believe that their children will do better than they are, the American dream is not contingent on cheap baubles from China, that it is more than that.… https://t.co/YmzIV71th9

— zerohedge (@zerohedge) March 16, 2025

Markets seemingly interpreted this “grand economic reordering” not as an abandonment of the post WWII model (which no longer serves the interests of the United States), but a doubling-down on the policies of the post-2008 malaise where US institutions magicked up new liquidity to bid up asset prices and make rich people richer. The hope was that the ensuing wealth effect would spur consumption spending and that prosperity would resume while addressing structural imbalances could be addressed piecemeal or put off for another day. This is no longer the game being played. As Bessent said in a recent interview with CNBC: “the bottom 50 percent of working Americans have gotten killed. We are trying to address that.”

In a nutshell, what is now happening is that the United States is aiming to confront and contain the rise of an ideological challenger – China – by mirroring its trade practises back to it. Bessent says that trade has been free, but it has not been fair. He says that reciprocal tariffs will force US trading partners to give the USA the same access to their markets that they have to the US market, and that he expects the 20% tariffs on China exports to be “eaten” by Chinese firms as they seek to offload their enormous exportable surplus into the world’s largest consumer market.

In short, ‘Make America Great Again’ means putting the focus squarely on production while consumption is emphasized only to the extent that the reduced importance of the globalized and financialized sectors of the economy is seen as a way to rebuild the American blue-collar middle class (J.D. Vance’s people) and close the consumption gap between the rich and the poor. Comparative advantage and economic efficiency are being de-emphasised. Security of supply chains is being re-emphasized. None of this is to be found in any orthodox economic textbook because it is not productivity-enhancing or GDP optimal under spurious assumptions of free markets where nobody cheats.

As has long been the case with China, the United States now wants to sell to you, but they do not want to buy from you unless they have no domestic alternative. Consequently, the MAGA program is effectively promising to make America stronger and to make Americans better off in the long run by delivering them real reductions in living standards via higher prices for consumer goods in the here and now. Bessent says that consumers will be insulated by a strong Dollar and a willingness from Chinese firms to simply carry the cost, but what if they aren’t? If Kennedy’s America was willing to “pay any price, bear any burden, meet any hardship… to assure the survival and success of liberty”, so is Trump’s. 

In an ironic twist, reports emerged from the Xinhua news agency over the weekend that the Chinese government is set to announce fresh economic measures that may shift the Chinese economy to be more consumption based as it seeks to respond to US tariff pressure on the trade channel by boosting demand growth through other channels. So, while the American Dream may no longer consist of access to cheap consumption goods, suddenly it seems that the Chinese Dream might.

New measures are set to include efforts to stabilise equity and real estate markets (figures for January released today show further sharp falls in Chinese real estate prices), pro-natalist policies to increase China’s birth rate, subsidies for childcare, more generous pensions and healthcare support, and efforts to boost local tourism. The calculus seems to be that the construction of a more generous welfare state in China will lead to a lower household savings rate (what does that mean for interest rates?) and a rebalancing of economic activity towards consumption, just as it did in the West.

Further details of the plan are set to be released today, but China faces strong economic headwinds. 

• First, China has set itself a CPI target of 2% in 2025, but has been struggling against deflation for months and prices actually fell by 0.7% in the year to February. Deflation increases the real value of debt over time, which is a problem given the heavy debt loads of Chinese local governments. To combat disinflation and spur consumption activity China plans to run its largest fiscal deficit since 1994 this year (4% of GDP) and the PBOC will set ‘moderately loose’ monetary policy, its most accommodative monetary stance in 14 years.
• The second headwind to a more consumption-oriented Chinese economy is ideological. Xi Xinping is reportedly not a great believer in consumption-driven economics because he views it as decadent and Western. Marxist economics favours real production.

This sets up an interesting dynamic where the leaders of China and the United States now agree that the importance of real production is the central thrust of Keynes’ dictum that “whatever we can do, we can afford.” By contrast, European policy makers are now slaying fiscal sacred cows by relaxing borrowing rules to fund rearmament, but all the Euros in the world will do little good (and might do some inflationary harm) if European industry lacks the capacity to actually produce the defence materiel that it is attempting to finance. This is now the central challenge for Europe.

None other than the far-right, nazi-saluting, goose-stepping advocates for freedom and secure borders – the AfD party – are the last thing standing between Germany’s so-called’ coalition of the status quo voting tomorrow for a massive debt package to fund its warmongering (and save the economy).

With one day left, the Alternative for Germany party has challenged the vote at the constitutional court, arguing the Bundestag had not given time for outside experts to scrutinize plans that lifted the euro and shares last week.

As Reuters reports, Independent lawmaker Joana Cotar also said she had filed a complaint in order to thwart Tuesday’s vote in parliament, while three lawmakers from the pro-business Free Democrats (FDP) also plan petitions.

“The federal government has so far been unable to answer very simple and fundamental questions on this,” FDP finance expert Florian Toncar told dpa.

The parliamentary budget committee approved the plans on Sunday. 

The measures have already survived earlier legal challenges last week from the AfD and the Left party., but  this time yields are sliding a little – perhaps signaling there’s a chance AfD succeeds…

Merz cannot afford many defectors on Tuesday as his conservatives, SPD and Greens are set to clear the two thirds majority needed to pass constitutional amendments with just 30 votes to spare.

The urgency comes from a blend of taking advantage of a crisis of commitment from Trump to save Europeans at any cost and the ongoing collapse of the German economy…

“The German economy is stuck,” said Timo Wollmershaeuser, head of Ifo’s economic forecasts. 

“Despite a resurgence in purchasing power, consumer sentiment remains subdued, and companies are also reluctant to invest.”

The OECD cut its 2025 German growth forecast to 0.4% from 0.7% while the economy ministry in its monthly report flagged high levels of domestic and foreign policy uncertainty.

The ministry did, however, talk up the prospect of a “stabilising effect” if Merz’s plans succeeded.

“Stabilizing” is one word for hyperinflationary debt hell we guess…

Futures are lower to start the week – but well off the lowest levels of the session – following the best day for US stocks since November, as the market digests trade war news and the Trump Put remains absent. Over the weekend, Scott Bessent dismissed recent stock declines as healthy, reinforcing the view that President Donald Trump’s administration is unlikely to step in to boost markets (the Fed is a different matter). Trump also reminded investors over the weekend that he would be imposing both broad reciprocal tariffs and additional sector-specific tariffs on April 2. As of 8:00am ET, S&P futures are down -0.2% having been down as much as 0.6% earlier; Nasdaq futures are down 0.1% as Mag 7 stocks edged lower, though Nvidia gained before its much anticipated conference on artificial intelligence. Europe’s Stoxx 600 index rose 0.4%, extending its year-to-date outperformance against US stocks. In global news, Trump will speak with Russian President Vladimir Putin on Tuesday about ending the war in Ukraine. So far the Ukraine ceasefire news is having a muted impact. Trump also said reciprocal tariffs and additional sector-specific tariffs will hit on April 2. Meanwhile, the US retail operator of Forever 21 filed for bankruptcy after years of poor performance. Bond yields are lower as the curve bull flattens while the USD falls to fresh 4 month lows. Commodities are bid higher led by Ags and Energy, following the latest stimulus vows from China. Today’s macro data focus is on Retail Sales where a stronger number may give the market comfort in trying to create a relief rally and the Fed on Weds could be supportive too.

In premarket trading, Tesla leads losses among Mag 7 stocks (Alphabet -0.1%, Amazon +0.3%, Apple -0.2, Microsoft -0.4%, Meta +0.1%, Nvidia +1.4% and Tesla -0.5%), DocuSign rose 1% after William Blair upgraded the e-signature software firm to outperform, noting market opportunity for the company’s Intelligent Agreement Management platform. Incyte (INCY) sinks 14% after reporting topline results from a Phase 3 clinical trial program evaluating the safety and efficacy of povorcitinib. Here are some other notable premarket movers:

• Netflix (NFLX) gains 1% as MoffettNathanson turns bullish, saying the company’s ability to better monetize its engagement remains an underappreciated aspect of its scale.
• Norwegian Cruise Line (NCLH) rises 4% after JPMorgan upgraded the stock to overweight, noting that management signaled during an investor conference that there were no detectable changes in demand and that their 2025 outlook was cautious. The stock is down 25% year-to-date.
• Science Applications (SAIC) climbs 10% after the government IT services contractor posted 4Q results and provided guidance.
• Sprouts Farmers Market (SFM) climbs 1% after Deutsche Bank raised its rating to buy from hold following the stock’s recent pullback.

Bessent told NBC’s Meet the Press Sunday that he’s not worried by the slump in US stocks, after about $5 trillion was wiped from the S&P 500’s value and the index tumbled into a correction. “Corrections are healthy,” he told NBC. Traders still don’t seem convinced. His comments are a blow to those harboring hopes that President Donald Trump will seek to cushion the market impact of his policies. 

“This statement caused some alarm for many Wall Street types who had been counting on Bessent to be the second Trump administration’s ‘voice of reason’ on economic policy,” said Benjamin Picton, a strategist at Rabobank. The comments effectively dash prospects that policymakers will throw “liquidity bones to financial markets whenever they showed signs of wobbling,” Picton added.

Meanwhile, fears of a protracted global trade war are benefiting haven assets, with gold holding close to record highs around $3,000 an ounce, and Treasury yields edging lower. Bund yields dropped five basis points as jitters mounted over Tuesday’s parliamentary vote on Germany’s landmark spending package.

Another source of concern is the US threat of “unrelenting” military strikes on Yemen’s Houthi militants, who said they would respond by targeting US vessels in the Red Sea. The events lifted Brent crude futures above $71 a barrel, while European shipping stocks, including AP Moller-Maersk A/S and Hapag-Lloyd AG, gained.

It’s a busy week on the macro front as the Federal Reserve, Bank of England and the Bank of Japan are set to hold policy meetings. While they are not expected to change interest rates, investors will watch in particular for any clues from the Fed on what kind of support could be offered to the economy.  Swaps see high odds of three Fed cuts this year, but Fed chair Jerome Powell faces the task of assuring investors the economy remains on solid footing, while signaling policy support will be provided when required. US retail sales data due later Monday are expected to reinforce the picture of a slowing economy, following on from below-forecast inflation readings last week.

In Europe, the Stoxx 600 rose 0.4%, with energy and utilities shares leading gains after China said it would take steps to revive consumption, while consumer products and retail stocks are the biggest laggards. Here are the biggest movers Monday:

• Phoenix Group shares rise as much as 7.8%, the most since May, after the insurance and pension fund company delivered operating profit ahead of expectations and upgraded its outlook through to 2026
• ProSieben shares climb as much as 5%, the highest intraday since July. The German media company is nearing a deal to give General Atlantic up to 10% in the firm through a convertible bond
• CVS Group advances as much as 13%, the most since Sept. 2021, following an upgrade of the veterinary health company to outperform by RBC based on factors including strong Australian margins
• U-blox rises as much as 9.3% to the highest since July, after the Swiss semiconductor company signed an agreement to divest its Cellular business to Trasna
• Forterra shares rise as much as 3.5% after the building products company was upgraded by analysts at Peel Hunt, who argue there is major earnings upside when volumes recover
• QinetiQ shares drop as much as 22%, the most on record, after analysts warned of sharp cuts to consensus after the company downgraded growth expectations for this year and next
• Energean slides as much as 11% after the oil and gas company warned Carlyle has not yet obtained regulatory approvals in Italy and Egypt for a deal to buy a portfolio of assets from the London-listed company
• Siltronic slides as much as 4.7% as Jefferies cuts its rating on the semiconductor equipment manufacturer to hold from buy, cautioning that the outlook remains difficult

Stocks across Asia also rose, pulled higher by a rebound in technology shares and a sense of optimism over China’s plans to boost consumption. The MSCI Asia Pacific Index gained as much as 1.2%, with chip makers TSMC and Samsung Electronics giving it the biggest boost as they tracked a recovery in US tech shares Friday. Benchmarks in Hong Kong, Japan and South Korea all moved higher. The biggest news for traders to digest came from China, after a weekend report from the state news agency said Beijing will promote “reasonable growth” in wages and set up a mechanism to adjust the minimum salary, something it seems to do every other months. A raft of economic data also showed signs of recovery in the economy, including a pickup in retail sales. The response of mainland Chinese stocks was muted. Although a gauge of Chinese shares listed in Hong Kong rose around 0.6%, the onshore benchmark CSI 300 Index drifted lower. The market appeared underwhelmed with a Monday press conference. Elsewhere, we get the Bank of Japan’s policy decision due on Wednesday, with the central bank widely expected to keep rates steady.

“China’s latest measures reinforce that boosting consumption is a top priority this year, with a multi-pronged approach involving several ministries and a host of different measures,” said Charu Chanana, chief investment strategist at Saxo Markets. “This could help to broaden out the momentum we have seen in China stocks this year, primarily led by tech.”

In FX, the Bloomberg Dollar Spot Index is set for a second daily loss and is down 0.2%, hitting a fresh four-month low as investors awaited US retail sales and manufacturing data for further clues on the state of the world’s biggest economy. The Norwegian krone is the best performer among the G-10 currencies, rising 0.9% against the greenback. The pound and euro rise 0.3% each. 

In rates, treasuries are slightly richer across the curve, following a wider bull-flattening rally seen across bunds which find support from short covering flow ahead of Tuesday’s vote on the spending package. 10-year Treasury yields drop 3 bps to 4.28% in a slight bull-flattening move. Gilts are steady. Bunds rally, led by longer-dated maturities before Tuesday’s vote in the Bundestag on the spending package. German 30-year yields fall 8 bps to 3.13%. Treasury auctions this week include $13 billion 20-year bonds Tuesday and $18 billion 10-year TIPS Thursday.

In commodities, Bitcoin is little changed around $83,500. Spot gold climbs $12 to near $3,000/oz having topped that level for the first time on Friday. WTI rises 1% to $67.80 a barrel.

Looking at today’s calendar, US economic data calendar includes March Empire manufacturing, February retail sales (8:30am), January business inventories and March NAHB housing market index (10am). Fed officials are in external communications blackout ahead of March 19 policy announcement

Market Snapshot

• S&P 500 futures down 0.6% to 5,607.50
• STOXX Europe 600 up 0.4% to 548.55
• MXAP up 0.9% to 187.43
• MXAPJ up 0.9% to 586.91
• Nikkei up 0.9% to 37,396.52
• Topix up 1.2% to 2,748.12
• Hang Seng Index up 0.8% to 24,145.57
• Shanghai Composite up 0.2% to 3,426.13
• Sensex up 0.4% to 74,153.00
• Australia S&P/ASX 200 up 0.8% to 7,854.06
• Kospi up 1.7% to 2,610.69
• German 10Y yield little changed at 2.85%
• Euro little changed at $1.0880
• Brent Futures up 0.6% to $70.99/bbl
• Gold spot up 0.0% to $2,985.40
• US Dollar Index little changed at 103.71

Top Overnight News

• Treasury Secretary Scott Bessent said he’s not worried about the recent downturn that’s wiped trillions of dollars from the equities market as the US seeks to reshape its economic policies. “I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy, they are normal,” Bessent said Sunday on NBC’s Meet The Press. “I‘m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.” BBG
• Trump and Russia’s Vladimir Putin will speak tomorrow as the US presses for a deal on Ukraine. Trump said much of the discussion will be about territory. BBG
• US President Trump invoked the Alien Enemies Act against Tren De Aragua which he declared is attempting and threatening invasion against the US, while he said any Venezuelans aged 14 or older who are TDA members and not US citizens or lawful permanent residents are liable to be “apprehended, secured and removed as alien enemies”.
• Voters are souring on the economy even as Trump’s second term boosted positivity about the US as a whole, an NBC News poll showed. The Democratic Party got its lowest approval in the poll’s history at 27%. BBG
• US Senate voted 54-46 to pass the stopgap funding bill to keep the government funded through September 30th, while President Trump signed the budget appropriations bill into law.
• Trump’s trade war w/Europe risks damaging an economic relationship worth ~$9.5T (in terms of goods/services trade and foreign direct investment). WSJ
• US President Trump’s administration was reportedly considering a new travel ban that would impact 43 countries, with a draft plan developed by the State Department several weeks ago: NYT
• Oracle is accelerating discussions with the White House on a deal to run TikTok’s US business. Politico
• Chinese consumption, investment and industrial production beat estimates at the start of the year, pointing to signs of economic resilience. However, Beijing’s consumption-focused press conference underwhelmed. Bloomberg Economics called the plan to boost spending “skeletal.” BBG
• China’s economic data for Jan/Feb comes in ahead of plan, including industrial production (+5.9% vs. the Street +5.3%) and retail sales (+4% vs. the Street +3.8%). RTRS
• Plans are being made for global CEOs to meet Xi Jinping on March 28 following an upcoming forum in Beijing, people familiar said. BBG
• GIR revised our 2025 and 2026 earnings to $262 and $280 respectively (previously $268 and $288), reflecting growth of 7% in both 2025 and 2026 (vs. 9% and 7% previously). Furthermore, we now expect the S&P 500 will trade at a forward P/E of 20.6 by year-end vs. 21.5 previously. Our revised 3-, 6-, and 12-month S&P 500 price targets are 5600 (-1%), 5900 (+5%), and 6500 (+15%). GIR
• OECD Economic Outlook, Interim Report March 2025; cuts global growth outlook – cites trade tensions

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the week on the front foot following last Friday’s resurgence on Wall St and amid encouraging Chinese activity data but with gains capped owing to geopolitical tensions after the US conducted strikes on Yemen’s Houthis and with participants awaiting this week’s central bank decisions. ASX 200 gained with the advances led by notable strength in the commodity-related sectors and following encouraging data from Australia’s largest trading partner. Nikkei 225 climbed at the open despite the lack of obvious catalysts, while Japan’s largest labour union anticipates an average 5.46% wage increase this year which would surpass 5% for the second consecutive year and  would be the highest in 34 years but is still below the union’s 6.09% pay increase demand. Hang Seng and Shanghai Comp were positive with sentiment underpinned following recent support pledges and after encouraging Chinese activity data in which Industrial Production topped forecasts and Retail Sales matched estimates. However, gains in the mainland were limited as data also showed an increase in Urban Unemployment and House Prices remained in deep contraction territory.

Top Asian News

• China’s State Planner Vice Chair says consumption is improving, though consumer confidence remains weak.
• PBoC detailed measures to improve the quality and efficiency of financial services and will grow the financial ecosystem that supports tech innovation, while state media reported that China should choose the right timing and strength for monetary easing.
• China’s State Council released a special action plan to boost domestic consumption which includes measures to increase residents’ income, pensions and wages, as well as establishing a childcare subsidy scheme and increasing revenue from land reform including rural areas.
• China’s NDRC said it is to encourage foreign investment in technology and manufacturing with the state planner to release an expanded list of industries it seeks to attract foreign investment in.
• China’s stats bureau spokesperson said China’s economy remains resilient but achieving the 2025 growth target will not be easy and the external environment is becoming more complex and severe. The spokesperson added that China’s property market faces some pressures, despite signs of stabilising but they expect China’s consumer prices to improve further and expect Q1 economic operations to be steady. Furthermore, it was stated that macroeconomic policies will provide more support for the economy and the employment situation remains largely stable with the rise in the February jobless rate still within normal ranges.
• PBoC says Official says it will use policy tools such as reserve requirement ratio and relending and discount facilities.
• Dozens of foreign CEOs set to attend Beijing’s CDF business summit this month; some expected to meet President Xi, according to Reuters sources.
• CAICT says shipments of phones within China are down 14.3% Y/Y in January. Shipments of foreign-branded phones, such as Apple (AAPL) -20.6% Y/Y.

European bourses (STOXX 600 +0.3%) opened mixed, and traded indecisively on either side of the unchanged mark; though sentiment gradually picked up as the morning progressed. European sectors hold a positive bias, but with the breadth of the market fairly narrow. Energy takes the top spot, lifted by underlying strength in oil prices; the complex is buoyed by heightened geopolitical tensions after the US struck Houthi targets. On that, the militant group said it would continue naval operations until the Gaza blockade is lifted and aid is let in. Basic Resources benefits from the risk tone, and after constructive Chinese activity data overnight, with particular focus on the stronger-than-expected Industrial Production data. US equity futures (ES -0.4%, NQ -0.4%, RTY -0.6%) are lower across the board, with slight underperformance in the RTY, giving back some of the significant strength seen on Wall Street on Friday. Intel’s (INTC) new CEO plans to overhaul the chip design and manufacturing business, plans to restart AI efforts and produce chips at annual cadence as it looks at further cuts, Reuters reports.

Top European News

• ECB’s de Guindos says that the administration of US President Trump has increased economic uncertainty due to tariff deregulation. Trade was is bad for the global economy. Effect of tariffs on inflation may be compensated by lower economic activity. Believes inflation is converging on 2% and everything is going in the “right direction”. Increased uncertainty has made the current situation more opaque compared to six months ago. Spain will need to spend 2.7% GDP on Defence in four years and raise its budget by EUR 6bln per year. Seeing a decrease in services inflation due to evolution of wages, should lead overall inflation to the 2% target.
• UK Chancellor Reeves is to pledge to change the law to restrict merger investigations by the Competition and Markets Authority, according to FT.
• Britain’s largest regulators will be given performance reviews by ministers and set targets for cutting red tape and growing the economy, according to The Times.
• Moody’s raised Greece’s sovereign rating from Ba1 to Baa3; Outlook revised to Stable from Positive and affirmed Spain at A; Outlook Stable. It was also reported that Fitch affirmed France at AA-; Outlook Negative, affirmed Portugal at A-; Outlook Positive, and affirmed Poland at A-; Outlook Stable.
• German Economy Ministry says economic weakness continues at the start of 2025 amid subdued domestic/foreign demand and increased uncertainty.
• German Ifo institute has lowered their economic forecasts to 0.2% for 2025 and 0.8% in 2026.

FX

• USD net softer vs. peers in what has been a weekend lacking in incremental newsflow on the trade front aside from Trump reiterating that he has no intention of creating exemptions on steel and aluminum tariffs, adding that he will impose reciprocal and sectoral tariffs on April 2nd. Focus is also on the US government averting a shutdown. DXY is currently tucked within Friday’s 103.57-104.09 range, ahead of US Retail Sales.
• EUR is steady vs. the USD and tucked within Friday’s 1.0830-1.0912 range. Incremental macro drivers over the weekend for the EZ are lacking and therefore markets are bracing for the outcome of tomorrow’s vote in the Bundestag on the German reform package. ECB’s de Guindos remarked that he believes inflation is converging on 2% and everything is going in the “right direction”. However, this provided little traction for the EUR.
• GBP is a little firmer and trades within a 1.2926-58 range, in what has been a catalyst-thin session thus far, but has focus remains on Thursday’s BoE meeting.
• JPY is a little lower and the marginal G10 underperformer today, partly thanks to slightly positive risk tone following constructive Chinese data which has lifted Antipodeans and European stocks. USD/JPY currently towards the mid-point of a 148.47-149.09 range.
• Antipodeans continue to extend on the upside on Friday, with gains today facilitated by the constructive Chinese activity data and after China unveiled a special action plan to boost consumption.
• PBoC set USD/CNY mid-point at 7.1688 vs exp. 7.2199 (Prev. 7.1738)

Fixed Income

• EGBs bid with OATs outperforming after Fitch left France’s rating alone on Friday. More broadly, benchmarks bid with yields weighed on by pressure in European gas benchmarks ahead of the Putin-Trump call. Action which has lifted OATs by over 70 ticks at best with Bunds not far behind.
• Bunds also potentially acknowledge further complaints lodged with the Constitutional Court ahead of Tuesday’s Bundestag vote on fiscal reform, reform which Merz believes will pass though he acknowledges it will be close; firmer by over 50 ticks and just shy of the 128.00 mark.
• USTs await US Retail Sales before the latest update to Atlanta Fed’s GDPnow tracker which is currently running at -2.4% though the gold-adjusted figure is -0.4%. Firmer by a handful of ticks but essentially contained with yields mixed and the curve flatter.
• Gilts are following EGBs but magnitudes are much less pronounced. UK specifics light once again but the clock counts down to next week’s OBR update and before that a welfare reform announcement.

Crude

• Crude is on a stronger footing today, with gains attributed to heightened geopolitical tensions after the US struck Houthi targets. Further for the region, the militant group said it would continue naval operations until the Gaza blockade is lifted and aid is let in. Brent’May currently sits at the upper end of a USD 70.68-71.80/bbl range.
• European gas is lower, after optimistic updates from Trump over the weekend, where he said he would speak to Russian President Putin on Tuesday.
• Precious metals are mixed, with spot gold firmer by around USD 7/oz, whilst silver is a little lower. The yellow-metal has slipped below the USD 3,000/oz mark, to currently trade at the upper end of USD 2,982.36-2,994.12/oz range; upside today has been facilitated by the aforementioned heightened geopolitical tensions.
• Base metals are mixed, with the complex failing to materially benefit from the constructive Chinese activity data overnight, where Industrial Production printed above expectations but with Urban unemployment and House Prices remaining at subdued levels. 3M LME Copper is a little firmer today and trades within a USD 9,776.45-9,845.35/t range. Elsewhere, Trump reiterated his firm stance on tariffs, stating there would be no exemptions on steel and aluminium duties and confirming reciprocal and sectoral tariffs will be imposed on April 2nd.
• Iraq agreed to double electricity imports from Turkey.
• India’s February Gold imports at USD 2.3bln; February oil imports at USD 11.8bln

Geopolitics: Middle East

• US President Trump ordered the US military to launch ‘decisive and powerful’ military action against Houthis in Yemen and told Iran to end support for Houthis immediately, while the Pentagon said US strikes against Houthis will last days or weeks., Furthermore, it was later reported that the death toll from the US attacks on Yemen reached 53.
• US Defence Secretary Hegseth said the US campaign will be unrelenting, while he added that Iran has been enabling the Houthis far too long and they better back off.
• US Secretary of State Rubio commented that the US military campaign in Yemen will go on until the Houthis no longer have the capability to strike ships and said there is no way Houthis would have the ability to attack shipping unless they had support from Iran.
• US Secretary of State Rubio spoke with Russian Foreign Minister Lavrov on Saturday and told him about US operations against Houthis, while Lavrov stressed the need for an immediate cessation of the use of force against Yemen Houthis and said it is important for all parties to engage in political dialogue in order to find a solution that avoids further bloodshed, according to Reuters.
• Yemen’s Houthis said naval operations will continue until the Gaza blockade is lifted and aid is let in, while the group said it targeted a US aircraft carrier with ballistic missiles and drones in the Red Sea but showed no proof, according to Reuters.
• Iranian Revolutionary Guards top commander Salami said Tehran will respond decisively and destructively to any enemy taking threats into action and noted that Yemen’s Houthis take strategic and operational decisions on their own, according to state media.
• Israeli air strike killed nine in Gaza amid ceasefire disputes. It was separately reported that the Israeli PM’s office said Israel will continue Gaza ceasefire talks in accordance with the US proposal for the immediate release of 11 living hostages and half of the dead. Furthermore, an Israeli delegation was in Egypt discussing hostages with senior Egyptian officials and PM Netanyahu moved to dismiss the head of the Shin Bet security service, according to the PM’s office cited by Reuters.
• Syria’s military fired rockets and shells at Lebanon on Sunday after accusing Iran-backed Hezbollah of executing three Syrian army personnel, according to Bloomberg.

Geopolitics: Ukraine

• Ukrainian President Zelensky said Ukraine’s partners must define a clear position on security guarantees and the path to peace must begin unconditionally, while he added there must be a foreign troop contingent based on Ukraine soil as part of a peacekeeping arrangement and the question of territory is complex and should be discussed later.
• Russian Defence Ministry said Russia will demand Kyiv’s neutral status and NATO’s refusal to accept Ukraine in a peace treaty on Ukraine, while Russia opposes any troops in Ukraine as part of post-conflict guarantees, not just NATO troops. Furthermore, it was stated that the issue of unarmed observers as part of post-conflict international support for Ukraine may be discussed only once a peace treaty is worked out.
• US President Trump said he will be speaking with Russia’s President Putin on Tuesday and may have something to announce on Ukraine-Russia talks by Tuesday. Trump added that land and power plants are the focus of talks toward a Russia-Ukraine deal and they are already talking about “dividing up certain assets” between the two sides.
• US President Trump said it feels like Russia is going to make a deal with them and stated that they had pretty good news coming out of Russia. Trump also announced that General Kellogg was appointed as Special Envoy to Ukraine and will no longer be an envoy to Russia.
• US envoy Witkoff said differences between Ukraine and Russia have narrowed and they had positive discussions with Russian President Putin, while Witkoff said he expects Trump and Putin to speak this week and that US negotiating teams will meet with Ukrainians this week and will also meet with Russians.
• UK PM Starmer said following a meeting with world leaders that they reaffirmed commitment to Ukraine’s long-term security and agreed that Ukraine must be able to defend itself and deter future Russian aggression, while they agreed military planners would convene again in the UK this week to progress practical plans for how militaries can support Ukraine’s future security. Furthermore, Starmer said they will accelerate military support, tighten sanctions on Russia’s revenues and will continue to explore all lawful routes to ensure that Russia pays for the damage it has done to Ukraine, as well as commented that Putin’s response to the ceasefire proposal is not good enough.
• Russia launched an air attack on Ukraine’s capital of Kyiv and the Russian Defence Ministry said its forces retook control of two settlements in Russia’s Kursk region.
• Ukrainian drone attack targeted energy facilities in Russia’s Astrakhan region and sparked a fire, according to the regional governor.

Geopolitics: Other

• Azerbaijan’s Defence Ministry said Armenian forces opened fire on Azeri positions on Sunday, while Armenia’s Defence Ministry said the statement by Azerbaijan does not correspond to reality.
• North Korea said its nuclear forces will ‘exist forever’ and criticised G7 states for nuclear hegemony, while it will steadily update and strengthen its nuclear armed forces and said demand by G7 for North Korea to abandon nuclear weapons is a provocation. It was also reported that North Korea condemned the US deployment of additional stealth fighter jets to Japan, according to KCNA.

US Event Calendar

• 08:30: Feb. Retail Sales Advance MoM, est. 0.6%, prior -0.9%
• 08:30: Feb. Retail Sales Ex Auto MoM, est. 0.3%, prior -0.4%
• 08:30: Feb. Retail Sales Control Group, est. 0.3%, prior -0.8%
• 08:30: March Empire Manufacturing, est. -2.0, prior 5.7
• 10:00: Jan. Business Inventories, est. 0.3%, prior -0.2%
• 10:00: March NAHB Housing Market Index, est. 42, prior 42

DB’s Jim Reid concludes the overnight wrap

This morning we’ve launched our latest global market survey, which we’re doing on a quarterly basis now. We ask simple questions to tease out your thoughts on tariffs, whether your view on Germany has changed, your preference for US or European equities, whether the US equity correction is over just as it began, and a few other topical questions. We would very much appreciate all responses. They are all anonymous. We’ll publish the results later this week. The link to fill it in is here.

A reminder that late last week we launched our Deutsche Bank Research Institute (DBRI), a new offering designed to provide valuable insights for corporates, investors and policymakers navigating today’s complex and rapidly evolving global landscape. The Institute will connect the world to Europe and Europe to the world, across geopolitics, macroeconomics, technology, and the evolving corporate landscape. The new Institute website is here and is open to the public so you can share widely. It contains the inaugural “What Germany’s economy needs now” paper which outlines a series of necessary reforms which will demand a historic effort from the next government. Hopefully the huge fiscal stimulus package that will likely get approved this week (more later) will give them the opportunity to implement these reforms. See the English version here and the German here.

It’s a busy week for central bank watchers with decisions due from the Fed, the BoJ (both Wednesday) and the BoE (Thursday), amongst others. Economic data highlights include retail sales in the US (today), various US housing data, labour market stats in the UK (tomorrow) and inflation in Japan (Friday) and Canada (tomorrow). After we had the white smoke of a deal on Friday, the spotlight will be on the vote around the huge proposed fiscal expansion in Germany. The Bundestag and the Bundesrat are expected to hold votes tomorrow and Friday, respectively, before the new Bundestag sits from March 25. We’ll preview these below. Note that overnight Trump has said he’ll speak to Putin tomorrow so that’s another thing to watch

The full day by day week ahead is at the end as usual but let’s preview a few of the key events. Firstly, the Fed is widely expected to stay on hold on Wednesday. In their preview (see “March FOMC preview: Patience is a virtue amidst cross currents”), our economists still expect limited guidance about the policy path ahead given all the extreme uncertainty. The statement is likely to announce a pause in QT beginning in April, and we expect forward guidance indicating that QT is expected to resume once the debt ceiling is resolved and the liability composition of the balance sheet normalises. There are risks that a slowing is announced rather than a pause. Our economists also expect the SEP to maintain two rate cut dots this year but with an upward drift in individual dots that could push the median dot to one cut as a risk. The economic projections will likely show higher inflation, somewhat weaker growth, and an unchanged forecast for the unemployment rate this year. Last week’s inflation data looked softer on the surface but as our economists pointed out, they still point towards another strong core PCE print. Today’s retail sales will likely be the last piece of data influencing the Fed.

In terms of Germany, this week will be a landmark one with votes on the deal in the Bundestag tomorrow and the Bundesrat on Friday. With the deal agreed on Friday the bulk of the execution risk has been averted. Assuming it goes through, which must be now over 95% probability wise (on my crude guestimates), our economists believe this could lead to a fiscal stimulus of 3-4% of GDP by 2027 at the latest. So don’t underestimate how huge this package is. Our economists’ note here from Friday outlines the remaining risks both in terms of the vote and the constitutional court ruling around whether not enough time was provided to scrutinise the deal. However the legislation is covered by less than 20 pages of text, so we think the legal risk here is low. We also don’t think there is a large risk that the constitutional court rules against the legitimacy of this outgoing parliament given that most experts believe they have constitutional power until the last session. I still don’t think markets have fully caught up to how much of a game changer this will be for Germany over the next few years. Longer-term though our inaugural Institute paper suggests Germany should use this period to embark on significant structural reform. Hopefully the comfort of higher growth towards the latter part of this decade won’t reduce the likelihood of this.

Back to central banks, the BoJ is expected to keep rates steady and the current monetary policy framework maintained on Wednesday. See our economists’ preview of the meeting here. For the BoE, our UK economist expects the BoE to keep the Bank Rate unchanged at 4.5% (his full preview can be found here).

Asian equity markets have begun the week on the front foot after mixed China data but in anticipation of a domestic 30-point action plan to stimulate consumer spending and bolster stock and real estate markets. There is a press conference at 3pm local time (7am GMT so just after we go to print). As I check my screens, the KOSPI (+1.52%) is leading gains in the region with the Hang Seng (+1.07%), Nikkei (+1.20%), and the S&P/ASX 200 (+0.83%) also notably higher. Mainland Chinese stocks are more mixed with the CSI (-0.24%) lower but with the Shanghai Composite (+0.19%) edging higher. S&P 500 (-0.55%) and NASDAQ 100 (-0.59%) futures are slipping after the strong rally on Friday but are also being weighed down by an interview with Bessant over the weekend who suggested stock market corrections are normal and didn’t suggest the administration is going to shy away from what it would see as difficult but necessary changes to the economy.

Coming back to China, industrial output accelerated at a faster pace in the first two months of 2025, advancing +5.9% (v/s +5.3% expected) while retail sales rose by +4.0% in the January-February period from a year ago, against market expectations for a +3.8% y/y growth. Fixed asset investment rose by +4.1% on a year-to-date basis, beating the +3.2% growth estimated by Bloomberg. The unemployment rate rose to 5.4% in February (v/s +5.1% expected), the highest level in two years. Meanwhile, new home prices dipped -0.1% versus a month earlier after two months of relatively steady prices indicating that the nation’s property slump lingers despite the country’s latest efforts to prop up the market. Used-home prices dropped -0.34%, the same pace as the previous month, and fell -0.1% from January in top-tier cities. The market has moved on to focus on the announcement as we go to print.

Looking back at last week now and markets saw a fresh selloff as tariff uncertainty mounted and investors grew more cautious on the US outlook. That meant the S&P 500 fell -2.27% in what was also its 4th consecutive weekly loss. Moreover, if the index sees a 5th weekly decline this week, that would be the longest run of declines since the 2022 bear market. However, on Friday there was then a very sharp recovery, which saw the S&P 500 pare back its losses for the week to rise +2.13% on the day, marking its best daily performance since Trump’s election victory back in November. And there were other signs by the weekend that market volatility was easing, as the VIX index closed at 21.77pts, which was its lowest level since the start of March.

Nevertheless, that recovery on Friday wasn’t enough to save most assets from a significant slump, with US HY spreads (+30bps last week) posting their biggest move wider last week since the turmoil last summer. Those losses were echoed around the world, albeit to a lesser extent, and Europe’s STOXX 600 fell -1.22% (+1.14% Friday) in its worst week of 2025 so far. Notably, Friday even saw gold prices move above the $3,000/oz mark for the first time intraday, before closing slightly beneath that at $2,984/oz.

There were also big moves in European sovereign bond markets, as Germany’s CDU leader Friedrich Merz reached an agreement with the Greens on proposals to amend the constitutional debt brake to allow more borrowing. That meant yields continued to push higher in Europe, with those on ten-year bunds up +3.9bps last week (+2.1bps Friday) to 2.87%, whilst the French 10yr OAT yield was up +1.3bps (+1.0bps Friday) to 3.57%.

For US Treasuries, it was a more stable story, with the 10yr yield up +1.1bps last week (+4.4bps Friday) to 4.31% despite having traded as low as 4.15% early last Tuesday. Friday’s rise in yields came amid a significant jump in inflation expectations in the University of Michigan’s preliminary index for March. It showed 1yr expectations rising to +4.9% (vs. +4.3% expected), which is their highest since November 2022. And 5-10yr expectations also jumped up to a 32-year high of +3.9% (vs. +3.4% expected). In turn, that led investors to dial back their expectations for Fed rate cuts this year, with just 65bps priced in by the December meeting at the close, the fewest in over two weeks. The UoM survey continues to show extreme polarisation of inflation and economic views along party lines but the rise in expectations overall and from Independent voters is starting to be a concern.

Fast-fashion retailer Forever 21 filed for bankruptcy Sunday — for the second time in six years. The filing, published in a Delaware court, comes as the company grapples with rising inflation, fierce competition from Chinese e-commerce giants, trade uncertainty, and declining foot traffic in shopping malls, among other mounting headwinds. 

F21 OpCo, LLC, the operator of Forever 21 stores and the licensee of the Forever 21 brand in the U.S., stated in the filing that it “will conduct liquidation sales at its stores while simultaneously conducting a court-supervised sale and marketing process for some or all of its assets.”

Brad Sell, the company’s chief financial officer, explained in a statement: “While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends.” 

It is evident that Forever 21 has struggled to compete with e-commerce giants such as Shein and Temu, particularly in the wake of the post-Covid online shopping boom. Additionally, uncertainty stemming from President Donald Trump’s trade war has further complicated the retailer’s outlook.

Public trade data compiled by counterparty and supply chain risk intelligence firm Sayari shows Forever 21’s suppliers reside mainly in China… 

Bloomberg provided more color on Forever 21’s first round of bankruptcy in 2019:

It’s the clothing brand’s second stint with bankruptcy. Its first in 2019 was rife with fighting, left creditors little recovery and resulted in the closing of hundreds of locations it had during its heyday.

A group of buyers — including Simon Property Group, Brookfield Corp. and Authentic Brands — teamed up to buy Forever 21 out of bankruptcy through a venture called Sparc Group. That group partnered with Shein in 2023 as Forever 21 attempted to solve some of its operational issues.

The move to liquidate means that Forever 21 is not “forever”… in other words, executives could not find a buyer for the retailer that operates 350 US stores and hundreds more globally. 

The USS Gravely (DDG-107), an Arleigh Burke-class guided-missile destroyer in the US Navy, departed Naval Weapons Station Yorktown on the Virginia Peninsula on Saturday. The warship will operate in US and international waters in support of the “southern border mission,” according to a press release published by the US Northern Command. 

The USS Gravely is en route to support our #southernborder security mission. Read more at https://t.co/AgqTDMBCyb pic.twitter.com/E01vkLOHDf

— U.S. Northern Command (@USNorthernCmd) March 15, 2025

“USS Gravely’s deployment will contribute to the U.S. Northern Command southern border mission as part of the DOD’s coordinated effort in response to the Presidential Executive Order. Gravely’s sea-going capacity improves our ability to protect the United States’ territorial integrity, sovereignty, and security,” Gen. Gregory Guillot, Commander, USNORTHCOM, stated. 

USNORTHCOM explained that Gravely’s mission will be “restoring territorial integrity at the U.S. southern border and reinforces the nation’s commitment to border security by enhancing maritime efforts and supporting interagency collaboration,” adding, “The ship’s deployment highlights the Department of Defense and Navy’s dedication to national security priorities, contributing to a coordinated and robust response to combating maritime related terrorism, weapons proliferation, transnational crime, piracy, environmental destruction, and illegal seaborne immigration.”

Ship tracking website Vessel Finder showed Gravely’s position (20 hours ago) off the Virginia Beach coast, transiting south… 

USS Gravely’s advanced radar and electronic warfare systems allow the US military to track multiple drug cartels—now designated as foreign terrorist organizations—threats simultaneously, including aircraft, missiles, and surface vessels.  

As we’ve been detailing, the US government has been conducting round after round of signals intelligence (SIGINT) operations near the US-Mexico border and over Mexico using spy planes and CIA drones… 

• USAF Spy Plane Runs SIGINT Operation Near Cabo As US Preps For Potential Cartel Fight

• USAF Spy Jet Flies Second SIGINT Operation On US Border With Focus On Narco Hub

• Border Czar “Expects” Kinetic Warfare Between US Troops & Mexican Drug Cartels

• US Designates Mexican Cartels As “Foreign Terrorists,” Signaling Financial Warfare Looms

• US P-3B Orion Spy Plane Spotted Over Mexico As SIGINT Ops Target Cartels

• CIA Reportedly Flying MQ-9 Spy Drones Over Mexico As Cartel Fight Nears

What you see above is part of the preliminary work to disrupt, dismantle, and eliminate the command and control structures of drug cartels that kill 100,000 American lives per year. 

Remember, the Chinese are heavily involved as well… 

Of course, Democrats are melting down on social media over the deployment of the Arleigh Burke-class guided-missile destroyer to the region—potentially the Gulf of America.

pic.twitter.com/2lZF5hCNMy

— Mostly Peaceful Memes (@MostlyPeacefull) March 16, 2025

The party is full of open-border globalists who have flooded the nation with millions of unvetted migrants, including thousands of terrorists, while offering no solutions to the ongoing migrant crisis that has overwhelmed local, state, and federal governments. That’s because Democrats see illegals as future voters and weaponized their rogue federal judges to obstruct President Trump’s efforts to restore national security by blocking deportations. 

There’s a broader theme for readers to understand: “Making Sense Of Hemispheric Defense In Trump Era.”

Authored by Alex Kimani via OilPrice.com,

• At CERAWeek 2025, Saudi Aramco’s CEO Amin Nasser challenged the IEA’s forecast of peak oil demand.

• The IEA maintained that even with peak demand, ongoing investments in oil and gas will be necessary due to natural field declines.

• Aramco’s ambitious plans to scale blue hydrogen and ammonia face high costs and weak market demand, particularly in Europe and Asia.

With the CERAWeek 2025 conference in Houston drawing to a close, C-Suite executives, ministers and top officials have weighed in on the trajectory of the global oil and gas sector with experts debating whether tariffs, trade, and competition will replace security, affordability, and sustainability in shaping energy markets and policy. However, one of the biggest highlights of the conference has been the showdown between Saudi Aramco’s CEO Amin Nasser and IEA Executive Director Fatih Birol and their highly divergent views on the future of the global oil industry. Once again, the Aramco CEO was adamant that there were “inherent flaws” in the energy transition away from conventional fuels, saying, “So I pay little attention to forecasts claiming that next year will be peak this, or peak that,” in a thinly-veiled dig at the IEA which has predicted a peak in oil demand by the end of the current decade.

In its defense, the IEA says an oil demand peak doesn’t necessarily mean a rapid plunge in fossil fuel consumption is imminent, adding that  it will probably be followed by “an undulating plateau lasting for many years.” Indeed, Fatih Birol reiterated that position in his remarks to the Houston conference, where he said investments in existing oil and gas fields are still needed to counter steep natural declines. Whereas some analysts interpreted this as an about-face, designed to pander to Trump and his “drill baby drill” agenda, in reality the IEA has never advocated for an end to investments in upstream oil and gas.

“Even as demand for fossil fuels falls, energy security challenges will remain since the process of adjustment to changing demand patterns will not necessarily be easy or smooth. For example, the peaks in demand we see based on today’s policies do not remove the need for investment in oil and gas supply, given how steep the natural declines from existing fields often are,” the IEA stated in its 2023 World Energy Outlook.

Republican lawmakers have threatened to reassess funding for the IEA, accusing it of becoming an “energy transition cheerleader.”

Cutting Emissions, Not Oil

With the global energy transition picking up steam, hundreds of companies have laid out plans to cut their greenhouse gas emissions with the more ambitious ones pledging to achieve net zero emissions. Given this backdrop, Big Oil companies are finding themselves in a dilemma whereby they are under pressure to join the fight against climate change at a time when demand for the energy commodities they produce remains high. Not surprisingly, many are coming up with innovative ways to clean up their act without giving up their legacy businesses.

Saudi Aramco is not any different. The world’s biggest oil and gas company has unveiled plans to reach net-zero by 2050 without sacrificing oil and gas production.

During a rare two-day visit by Fortune last May, the world’s largest fossil fuel company lifted the curtain on dozens of research projects underway at its headquarters in Dhahran, in eastern Saudi Arabia, which the company believes will help it tackle climate change, even while pumping a mammoth 9 million barrels or so of oil a day. Aramco claims its tech breakthroughs have the potential to cut carbon emissions from each barrel of oil it produces by 15% by 2035, equivalent to 51.1 million tons of carbon a year.

“We don’t see any contradiction. Combating emissions from these conventional energy sources is a very viable option,” says Ashraf Al-Ghazzawi, Aramco’s executive vice president for strategy and corporate development.

“We need all sources of energy to meet the growth in demand, which is just tremendous in the developing world. The main pillar of our strategy and technology is efficiency and optimization of our existing production,” he told Fortune. 

According to Khowaiter, the company has tripled its research-and-development staff since 2010, and listed 1,033 patents with the U.S. patent office. Aramco now spends about $800 million a year on R&D, 60% of which is focused on “sustainability”.

Carbon capture is one of the technologies Aramco has adopted to cut emissions. 

At its Hawiyah gas plant, the company captures carbon emitted during oil and gas production; transports it 50 miles away then injects it into an oil well to boost the recovery of crude, as well as to store the carbon. Khowaiter revealed that the company aims to cut the cost of carbon capture by 50%, making it commercially viable. In December, Saudi Aramco signed a shareholders’ agreement with Linde Plc (NYSE:LIN) and Schlumberger Limited (NYSE:SLB) for dthe evelopment of a 9mn t/y CCS hub at Jubail. Under the agreement, Aramco will hold 60%, with Linde and SLB each taking 20%. The 9mn t/y first-phase facility is due online by end-2027.

Aramco also aims to produce 11 million tonnes of blue ammonia from its Jafurah natural gas field by 2030. For over a decade, the company has explored potential technologies to produce lower-carbon hydrogen from hydrocarbons, including Thermo-Neutral Reforming (TNR) with a goal to produce ‘blue’ hydrogen from about two million tonnes of blue hydrogen–by capturing the CO2 emissions from the production. However, Aramco is likely to struggle to find  a buyer for its blue ammonia, with CEO Amin Nasser revealing its blue hydrogen costs the equivalent of about $250 a barrel of oil– three times higher than the current Brent spot price.

“It is very difficult to identify any off-take agreement in Europe [for blue hydrogen]… and they explained it’s because of the high cost. Even the customers in Japan and Korea [which are planning massive H2 economies] are waiting for government incentives. Until they get these incentives, it’ll be costly for them to pursue that blue hydrogen,” Nasser told a call with analysts.

Figuring out which among the multiple lines of R&D will finally work could take years for Aramco to determine, with time not on its side. Still, the company has rejected any notion that it should cut fossil fuel output, “We were never an either-or company. Aramco provides a great example where emissions can be dealt with, it can be managed,” Ghazzawi, Aramco’s strategy chief, has declared.

Key Takeaways

• Since 2015, China has gained the most billionaires on a net basis globally, despite economic headwinds.

• Western Europe follows next, with strong inflows into Switzerland.

• With net outflows of 29 billionaires, Eastern Europe saw the largest decline likely influenced by the Russia-Ukraine war and the COVID-19 pandemic.

Since 2020, 176 billionaires holding over $400 billion in wealth have relocated to a new country.

This equals about one in 15 of the world’s billionaires, driven by factors like tax advantages and business-friendly environments. China, Switzerland, and the U.S. are among the top destinations, while Eastern Europe has experienced the largest billionaire outflows over the past decade.

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows billionaire migration since 2015, based on data from UBS.

China Sees the Highest Net Billionaire Migration

On a net basis, China has gained more billionaires than any other global region over the past decade, reaching a total of 501 in 2024.

Overall, 73 ultra-wealthy individuals moved to the country while 48 exited, resulting in a net increase of 25 billionaires. Despite recent economic challenges, collective billionaire wealth has doubled since 2015, reaching $1.8 trillion.

From a regional standpoint, Western Europe follows next in line, gaining 20 billionaires.

Altogether, billionaires in the region hold $2.7 trillion in wealth, rising 16% since 2023. Germany leads with the highest number of billionaires, at 117, followed by Switzerland (85) and the United Kingdom (82).

When it comes to North America, 55 billionaires relocated here over the past 10 years while 42 left. Amid the 2024 stock market boom, the U.S. housed a total of 835 billionaires with a combined wealth of $5.8 trillion, growing by 27.6% over the year. Together, California and New York are home to roughly 40% of the country’s wealthiest individuals.

Similarly, billionaire wealth in the Middle East and Africa grew significantly in 2024, rising by 21.5%. In the UAE, for example, billionaire wealth surged by 39.5% between 2023 and 2024 alone. With 18 billionaires, it has the most in the region outside of Israel, which has 32.

Since 2020, the Middle East and Africa attracted the highest influx of billionaire wealth across global regions tracked by UBS.

To learn more about this topic from a U.S.-based perspective, check out this graphic on the wealth of America’s 20 richest billionaires.