06:18 AM EST, 03/05/2025 (MT Newswires) -- Commerzbank in its "European Sunrise" note of Wednesday highlighted:

Markets: German bond Buxl future slumps 3pts after German announcements, remains under pressure in Asia as United States Treasuries soften after President Donald Trump's speech in Congress. S&P falls to pre-election level, e-minis trade sideways in Asia. The US dollar under pressure with EUR rising above $1.06.

U.S.: Trump defends his newly enacted tariffs in his speech while acknowledging "there'll be a little disturbance." He wants to bring down mortgage rates, balance the budget and calls for an end to $52 billion chips subsidies. He defends the decision to suspend military aid to Ukraine but hints at compromise by saying that a rare earth initiative could be unveiled later this week.

Tariffs: Commerce Secretary Howard Lutnick offers hope for compromise, says the U.S. could meet "in the middle someway" with Canada and Mexico with an announcement "probably" Wednesday. The New York Times reports Trump signaled privately that he will stick with tariffs. The United Kingdom's finance minister says "give and take" is needed.

Fed: Federal Reserve Bank of New York President John Williams expects to see effects of tariffs on inflation "later this year," still sees inflation moving to 2% over time.

Ukraine: President Volodymyr Zelenskiy calls the clash with Trump "regrettable," is ready to sign a deal on minerals and security.

==EUROPE:

Germany: CDU/CSU and SPD agree on a major fiscal package: Military spending above 1% of gross domestic product to be excluded from debt brake; 500 billion euros extra budget for infrastructure over 10 years (including 100 billion euros for Lander); debt brake relief for Lander. This "whatever it takes package" (CDU leader Friedrich Merz) will be presented to the Bundestag next week. Greens and FDP are critical, Left Party wants to file a GCC complaint. Debt brake reform with expert commission envisaged until year-end.

Ratings: S&P revises EFSF and French agencies outlooks to negative from stable in reaction to outlook revision on France, affirms AA-.

EU mulls concessions in FRTB regulation for as much as three years. Other options include sticking with plans but delaying for one year. The decision is to be made after consultation by the end of June (Bloomberg).

==ASIA:

Japan: Bank of Japan Governor Kazuo Uchida wants to continue raising rates, but not at each meeting.

China plans a 7.2% increase in defence spending, same as last year, sets a 2025 GDP target at around 5%, cuts inflation target to 2% from 3%. Caixin Services PMI better than expected.