EU bonds performed poorly, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on March 10

Global Market Review

1. European and American market conditions

The three major stock index futures fell, with Dow futures mainly blue-chip stocks falling 0.86%; S&P 500 futures falling 0.93%; and Nasdaq 100 futures mainly technology stocks falling 1.05%. European stock markets fell, with the German DAX index falling 0.96%; the French CAC40 index falling 0.49%; and the UK FTSE 100 index falling 0.42%.

2. Market news interpretation

EU bonds performed poorly, and the market focused on German fiscal plans and French rating risks

①DanskeBank analysts Kristoffer Kj?rLomholt and FilipAndersson pointed out that due to Germany's 500 billion euro infrastructure plan, increased defense spending and debt brake adjustments, EU bond performance lags significantly behind the US Treasury and swap markets.

②The EU also announced a defense plan of 800 billion euros, further exacerbating the volatility in the bond market.

③ Looking forward to this week, the market focus will be on Germany's fiscal plan, which is expected to be passed this week. DanskeBank has closed short positions on German Treasury ASW spread, although the spread may widen further.

④ Given that German Treasury yields rose sharply by about 40 basis points last week, analysts recommend going long for 10-year Treasury bonds, as there will usually be a rebound after such a significant increase.

⑤ Greece was upgraded to A by DBRS, but France faces the risk of being downgraded to A+ this week, as Fitch will evaluate it on Friday and France is currently on a negative outlook.

⑥ Major events in the EU's primary market include the expected joint issuance of the EU, as well as the auction of government bonds in Italy and Germany, and Portugal may also be auctioned.

HSBC strategists raise European stock ratings except the UK

HSBC strategists raise European stock market ratings except the UK from reduced shares to increased shares, as they expect euro zone fiscal stimulus to become a "potential game-changing factor." AlastairPinder-led team said it underestimated the U.S. support for NATO, and Ukraine would trigger a "watershed moment" in the eurozone. They also downgraded the U.S. stock market rating to neutral; “It should be emphasized that we have no negative view of the U.S. stock market — but tactically, we think there are better opportunities elsewhere right now,” the strategists wrote in the report. "If a slight slowdown in economic growth forces the market to digest expectations that the Fed is more easing and bond yields are falling, then this may constitute a net benefit for the stock market."

The ECB needs to remain open to the path of interest rate cuts

① ECB Management avatradescn.committee Kazir said that euro zone inflation still faces a large number of upward risks, and the ECB needs to remain open to the issue of continuing interest rate cuts or suspending interest rate cuts.

②The European Central Bank cut interest rates last Thursday, the sixth time since June, but considering uncertainties such as U.S. tariffs, increased defense spending and fluctuations in energy prices, the central bank has proposed the possibility of a suspension of interest rate cuts.

③ Kazermire pointed out that tariffs will slow economic growth and boost inflation, and the ECB needs to maintain flexibility and rely on data to make decisions.

④ The ECB previously expected inflation to fall back to its 2% target after mid-2025, but revised its forecast last week, believing that it will not be able to reach its target until the first quarter of 2026.

⑤ Kazrimir stressed that there is no conclusive evidence that inflation will continue to cool down, and the European Central Bank needs to make cautious decisions and avoid hasty actions.

German industrial production rose but exports fell

① Data on March 10, 2025 showed that Germany's industrial production increased by 2.0% month-on-month in January, exceeding the expected 1.5%. ② However, Germany's exports fell 2.5% month-on-month in January, well below the expected 0.5% growth, and imports rose 1.2% month-on-month. ③ Germany's exports to EU countries fell by 4.2% in January, exports to countries outside the EU fell by 0.4%, and the trade surplus fell to 16 billion euros, lower than the 20.7 billion euros in December 2024 and 25.3 billion euros in January 2024. ④The German economy faces many challenges.Including risks of trade conflict with the United States, as well as global economic uncertainty. ⑤ Although industrial production increased in January, German industrial orders fell by 7% month-on-month, and overall industrial production was still about 10% lower than the pre-epidemic level, and economic recovery still faced resistance.

Japanese Treasury market trends and central bank interest rate hike expectations

① Japan's benchmark 10-year Treasury bond yield rose to its highest level since 2008 on Monday, reaching 1.575%. ② At the same time, U.S. Treasury yields fell again, highlighting the market's expectations that the Bank of Japan will continue to raise interest rates. ③Data shows that Japan's basic wage growth rate hits the fastest in more than 30 years, and this trend supports the Bank of Japan's policy direction of gradual interest rate hikes. ④In addition, the sluggish demand price of 5-year Treasury bonds has also exacerbated the bullish momentum of the bond market, and some investors have not bought for the time being due to the expected interest rates continuing to rise.

Germany's industrial output growth exceeded expectations in January showed signs of easing in the long-term recession

Germany's industrial output increased by 2% from the previous month, higher than market expectations. The Bureau of Statistics said that growth is mainly driven by cars. The figures are in stark contrast to a report last week that showed factory orders fell that month, driven by large projects. But there have also been some positive signs recently: S&P Global PMI data show that the industrial recession that began in 2022 is weakening. The prospects for the German factory have changed dramatically recently as Prime Minister-elect Merz hopes to strengthen his military force to fight Russia and invest 500 billion euros in infrastructure construction. While the barriers remain, analysts generally believe that this will have a positive impact on economic growth. However, German manufacturing still faces the threat of US trade tariffs. Trump has warned that a 25% tariff on European imported goods is in the works.

Indonesia intends to increase mining royalties to support the finance

According to a public consultation document released over the weekend, the Indonesian Ministry of Energy and Mineral Resources is considering raising mining taxes on various minerals, including copper to coal, after the previous fixed-rate royalties may now be raised with the price increase. The proposal avatradescn.comes as the Indonesian government is working to address the huge cost problems caused by Prabowo’s signature initiatives, including free school lunches and Danantara National Investment Fund. After the proposal to raise VAT was rejected, ministries were asked to cut budgets to fund the two multi-billion dollar policies. The potential tax increase avatradescn.comes amid a difficult period for Indonesia's mining industry. The country's two largest exports, nickel and coal, have fallen to multi-year lows, forcing some producers to consider cutting production. In terms of nickel, the 10% uniform tax rate imposed on production will be replaced by a tax rate of 14%-19%, depending on the benchmark price determined by the government. The tax rate for products produced by smelters will also increase. In addition, royalties for tin, copper and gold production will also increase.

Indian bond yields rose slightly, the market focused on inflation data and central bank bond purchase plans

①On March 10, Indian government bonds were collectedThe yield rose slightly, with the 10-year benchmark yield closing at 6.7024%, a slight increase from 6.6881% in the previous trading day.

② Indian states plan to raise 49,522 crore rupees (about 5.68 billion US dollars) through bond issuance, which is 11,000 crore higher than the previously announced plan.

③The bond issuance is in the last month of the fiscal year, with weak market demand, but the RBI plans to purchase Rs 50,000 crore bonds on March 12 and March 18 respectively, and banks are expected to actively participate.

④PuneetPal, head of fixed income at PGIM India Fund, said that despite the central bank's active open market operations, banks' profit-taking still set a lower limit on bond yields.

⑤ He expects bond yields to fall sharply in the early stages of the new fiscal year (starting in April), but before the end of March, banks' profit-taking losses will continue to cause yield range fluctuations.

⑥ India's February retail inflation data will be released on Wednesday, and a Reuters survey showed that inflation could drop from 4.31% in January to 3.98%, which will be the first time in six months below the central bank's medium-term target.

3. Trends of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:22 Beijing time, the euro/USD rose, and is now at 1.0851, an increase of 0.14%. Before New York, the euro against the dollar price tried to break through the $1.0830 level, but it returned to the upside again to keep today's bullish trend effective and active with the goal of $1.0975 as the next main site.

GBP/USD: As of 20:22 Beijing time, GBP/USD rose, now at 1.2928, an increase of 0.04%. Before the New York Stock Market, the price of GBPUSD was under negative pressure to fall below $1.2925, noting that the price has risen again, trying to trade above this level again to keep the positive scenario valid for today, which is supported by EMA50, reminding you that our first target is at $1.3000.

Spot gold: As of 20:22 Beijing time, spot gold fell, now at 2903.49, a drop of 0.30%. Before New York, gold prices are testing key support for $2900.00, and we are still waiting to break this support or break the $2920.00 resistance to clearly confirm the next trend, which keeps us neutral until now.

Spot silver: As of 20:22 Beijing time, spot whiteSilver fell, now at 32.482, down 0.10%. Before the New York market, silver prices show sideways trading starting in the morning, as long as the price is above $32.25, our bullish view today will remain valid and supported by EMA50, which supports the price below, reminds you that our target starts at $32.86 and extends to $33.35 after breaking through the previous level.

Crude oil market: As of 20:22 Beijing time, U.S. oil rose, now at 67.450, an increase of 0.63%. Before the New York Stock Exchange, crude oil price trading was clearly aggressively attacking $67.05 and trying to break through it, prompting people to be cautious in the upcoming trades as confirmation breakouts would block the negative scenarios suggested in the morning and push prices to establish a bull market with the main goal of testing the $69.50 area.

4. Institutional View

JPMorgan Chase: Raising its economic growth expectations for the euro zone this year and next year, mainly driven by Germany

①JPMorgan Chase follows the pace of Wall Street peer Goldman Sachs. It is expected that with the support of Germany's fiscal easing reform, the euro zone's economic growth in 2025 will be boosted. Similar to Goldman Sachs, JPMorgan Chase expects euro zone economic growth to rise by 0.1 percentage point to 0.8%. For 2026, JPMorgan Chase expects its economy to grow by 1.2%, up by 0.3 percentage points;

② In a report late last Friday, JPMorgan Chase economists said: "This amendment is mainly driven by Germany, but we also expect growth in other countries in the region will increase slightly due to spillover effects and slightly loose fiscal policy." Last week, parties participating in negotiations to form a new German government agreed to relax fiscal rules, which will bring about a nearly trillion euro borrowing boom, funding defense and infrastructure spending;

③ However, JPMorgan Chase also warned that uncertainty in Trump's tariff policy could drag economic growth in the avatradescn.coming months, and expected the euro zone inflation rate to rise slightly this year and next year. JPMorgan said in the same report that the ECB is not expected to cut interest rates in April, while the previous forecast was a 25 basis point cut. The brokerage expects only two interest rate cuts this year, in June and September, respectively, and three interest rate cuts were expected.

Economist: Japan's real wages will continue to decline in the short term

SMBC Nikkei Securities economists said that as prices rise faster than wage growth rate, Japan's real wages may continue to decline in the short term. Inflation-adjusted wages fell 1.8% year-on-year in January, the first decline in three months, according to government data released on Monday. Economists say, “2025The recovery of electricity and gas subsidies could slow price increases in February and March, helping to narrow down real wage declines. But this is not enough to turn the actual salary into a positive state. "They expect actual wages to turn positive in the second half of this year, when food inflation is expected to ease, and wage growth this year will also take effect.

The above content is about "[Aihua Foreign Exchange Market Analysis]: EU bonds performed poorly, and the short-term trend analysis of spot gold, silver, crude oil and foreign exchange on March 10" was carefully avatradescn.compiled and edited by Aihua Avatrade Foreign Exchange Editor. I hope it will be helpful to your trading! Thank you for your support!

A thing you have done will always have experience and lessons. In order to facilitate future work, you must analyze, study, summarize, concentrate the experience and lessons of your past work, and raise it to the theoretical level to understand.