UK wage data above consensus – BoE's Pill says rate cut discussion likely during summer

EU mid-market update: UK wage data above consensus; BOE's Pill says rate cut discussion likely during summer; Awaiting US PPI and Powell remarks.

Notes/observations

- UK jobs market cooling off compared to last year, opening the way for the BOE to begin easing its monetary policy.

- UK wage growth rises from month ago levels and likely a concern to BoE.

- BOE chief economist Pill noted Rate cut like to come under consideration in the summer.

- German and Spanish final CPI readings unrevised.

- German ZEW Survey continued its improvement on recovery hopes.

- Apple supplier Foxconn raised its Q2 outlook.

- White House released formal details on China tariffs ahead of Biden's announcement.

- Focus on upcoming US inflation data (PPI today; CPI on Wed) and Fed's Chair Powell remarks this morning.

Asia

-South Korea Apr Import Price Index M/M: 3.9% v 0.5% prior; Y/Y: +2.9% v -0.5%.

- South Korea Apr Export Price Index M/M: 4.1% v 0.3% prior; Y/Y: 6.2% v 2.3% prior.

- New Zealand Apr Total Card Spending M/M: +0.9% v -0.9% prior; Retail Card Spending M/M: -0.4% v -0.7% prior.

- Japan Apr PPI (Domestic CGPI) M/M: 0.3% v 0.3%e; Y/Y: 0.9% v 0.8%e.

- Japan Fin Min Suzuki stated that Govt and BOJ have been working to end deflation; watching JGB yield developments closely. Reiterated important for currencies to move in stable manner reflecting fundamentals.

- Australia said to forecast a budget surplus of A$9.3B for FY ending June 2024 (the first back-to-back surpluses in ~two decades).

- IMF concluded its Article IV consultation with Japan and noted that the economy continued to grow, but recovery remained uneven. Further hikes in Japan's short-term policy rate should proceed at a gradual pace and be data-dependent.

- People’s Daily noted that China interest rates and RRR might see cuts in order to facilitate the upcoming issuance of special treasury bonds.

Europe

- France President Macron stated that EU needed consolidation among banks and even open to French bank being bought by EU rival.

- Germany said to consider tax breaks to get people working longer hours.

- SNB Chairman Jordan stated that the fight against inflation was far advanced and domestic situation was now much better.

Americas

- US Treasury Sec Yellen reiterated she hoped that China saw any trade actions as targeted. Hopefully would not see a significant Chinese response. But that's always a possibility.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.01% at 520.84, FTSE +0.11% at 8,424.03, DAX -0.18% at 18,704.96, CAC-40 -0.11% at 8,200.48, IBEX-35 +0.02% at 11,153.95, FTSE MIB +0.28% at 34,915.00, SMI -0.11% at 11,733.10, S&P 500 Futures +0.04%].

Market focal points/key themes: European indices open mixed with a downward bias and continued in that direction through the early hours of trading; among better performing sectors are telecom and utilities; sectors inclined to the downside are financials and industrials; Anglo American announces a series of planned divestitures; Delivery Hero to sell its Taiwan business to Uber; focus on release of US PPI later in the day; earnings expected in the upcoming US session include Alibaba, Home Depot and Sea Limited.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] +20.0% (Uber Eats to buy Delivery Hero's FoodPanda business in Taiwan), Currys [CURY.UK] +8.5% (trading update).

- Utilities: Veolia Environment [VIE.FR] +2.5% (earnings).

- Healthcare: Alcon [ALC.CH] +8.5% (earnings), Bayer [BAYN.DE] -1.0% (earnings), Novo Nordisk [NOVOB.DK] +1.0% (trial data).

- Technology: Infineon [IFX.DE] +0.5% (Foxconn raises Q2 outlook).

- Materials: Anglo American [AAL.UK] -1.0% (plans to divest or spin-off some units) - Telecom: Vodafone [VOD.UK] +4.0% (earnings; initial outlook).

Speakers

- BOE’s Pill (Chief economist) stated that was making good progress on returning CPI to target but more work needed to be done. Stated that the negative contribution from energy on inflation was about to go away. Rate cut like to come under consideration in the summer. Risk was loosening policy restrictions too soon.

- Hungary Central Bank Dep Gov Virag stated that needed further efforts to maintain disinflation. Inflation to rebound to above 4% in coming months. Room for rate cuts in H2 was limited.

- German ZEW Economists noted that the signs of economic recovery were growing.

- Qatar PM stated that there was no clarity on how to stop Gaza war from Israel side. In status of a stalemate in cease fire talks.

- White House presented its details on Chinese tariffs. Confirmed tariff rate on Chinese EVs to rise from 25% to 100% in 2024. Tariffs on semiconductors to go from 25% to 50%.

- USTR Tai stated that would be proposing modifications to tariffs and continue to work with partners to expand opportunities for US workers and manufacturers.

- US National Cyber Dir stated that China could use cyber capabilities to wreak havoc in civilian infrastructure in the event of conflict.

Currencies/fixed income

- USD price action remain quiet with focus on upcoming US inflation data over the next few sessions.

- GBP/USD initially moved higher after UK wage growth rose from month ago levels and likely a concern to BOE. Dealers did point out that UK jobs market was cooling off compared to last year and opening the way for the BOE to begin easing its monetary policy. Pair at 1.2530 by mid-session.

- EUR/USD continued to face resistance at the 1.08 level. German and Spanish final CPI readings unrevised and had no impact on price action. German ZEW Survey continued its improvement on recovery hopes but unable to muster momentum to break the 1.08 level.

- USD/JPY continued to edge higher as Japanese officials keep their usual rhetoric. Pair above 156.40 by mid-session. The 160 level remain pivotal resistance.

Economic data

- (SE) Sweden Apr PES Unemployment Rate: 3.2 v 3.4% prior.

- (NO) Norway Q2 Consumer Confidence: -16.3 v -24.2 prior.

- (FI) Finland Apr CPI M/M: 0.0% v -0.1% prior; Y/Y: 1.9% v 2.2% prior.

- (UK) Apr Jobless Claims Change: +8.9K v -2.4K prior; Claimant Count Rate: 4.1% v 4.1% prior; Payrolled Employees (monthly change): -85K v +20Ke.

- (UK) Mar Average Weekly Earnings 3M/Y: 5.7% v 5.5%e; Weekly Earnings (ex-bonus) 3M/Y: 6.0% v 5.9%e.

- (UK) Mar ILO Unemployment Rate: 4.3% v 4.3%e; Employment Change 3M/3M: -178K v -220Ke.

- (DE) Germany Apr Final CPI M/M: 0.5% v 0.5% prelim; Y/Y: 2.2% v 2.2% prelim.

- (DE) Germany Apr Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 2.4%v 2.4% prelim.

- (RO) Romania Apr CPI M/M: 0.1% v 0.4%e; Y/Y: 5.9% v 6.4%e.

- (JP) Japan Apr Preliminary Machine Tool Orders Y/Y: -11.6% v -3.8% prior.

- (CH) Swiss Apr Producer & Import Prices M/M: 0.6% v 0.1% prior; Y/Y: -1.8% v -2.1% prior.

- (IN) India Apr Wholesale Prices (WPI) Y/Y: 1.3% v 1.1%e.

- (ES) Spain Apr Final CPI M/M: 0.7%e v 0.7% prelim; Y/Y: 3.3%e v 3.3% prelim.

- (ES) Spain Apr Final CPI EU Harmonized M/M: 0.6%e v 0.6% prelim; Y/Y: 3.4%e v 3.4% prelim.

- (ES) Spain Apr Core M/M: 0.6% v 0.6% prior; Y/Y (final): 2.9%e v 2.9% prelim.

- (CZ) Czech Mar Current Account Balance (CZK): 64.4B v 27.0Be.

- (DE) Germany May ZEW Current Situation Survey: -72.3 v -75.9e; Expectations Survey: 47.1 v 46.4e.

- (EU) Euro Zone May ZEW Expectations Survey: 47.0 v 43.9 prior.

- (GR) Greece Apr CPI Y/Y: % v 3.2% prior; CPI EU Harmonized Y/Y: % v 3.4% prior.

Fixed income issuance

- (EU) European Union opened its book to sell EUR-denominated 30-year bonds via syndicate; guidance seen +91bps to mid-swaps.

- (IT) Italy Debt Agency (Tesoro) opened its book to sell new green 2037 BTP bond via syndicate; guidance seen +11bps to Mar 2037 BTP.

- (ID) Indonesia sold total IDR21.36T vs. IDR22.0Ttarget in bills & bonds.

- (NL) Netherlands Debt Agency (DSTA) sold €1.53B vs. €1.0-2.0B indicated in 0.00% Jan 2029 DSL Bonds; Avg Yield: 2.695% v 2,544% prior.

- (ES) Spain Debt Agency (Tesoro) sold total €1.9B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £600M in 0.125% Mar 2073 inflation-linked Gilts (UKTi); Real Yield: 0.994%; bid-to-cover: 3.29x.

Looking ahead

- OPEC Monthly Oil Report.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa Q1 South Africa Unemployment Rate: 32.3%e v 32.1% prior.

- 05:30 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €5.0B in2.90% Jun 2026 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2031, 2035 and 2048 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €1.694B with 20 bids recd).

- 06:00 (US) Apr NFIB Small Business Optimism Index: 88.2e v 88.5 prior.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month bills.

- 08:00 (PL) Poland Mar Current Account Balance: €0.6Be v €0.5B prior; Trade Balance: €0.3Be v €0.3B prior; Exports: €28.5Be v €27.2B prior; Imports: €28.1Be v €26.9B prior.

- 08:00 (BR) Brazil CONAB Crop Report.

- 08:00 (BR) Brazil Mar IBGE Services Volume M/M: +0.2%e v -0.9% prior; Y/Y: -2.5%e v 2.5% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Apr PPI Final Demand M/M: 0.3%e v 0.2% prior; Y/Y: 2.2%e v 2.1% prior.

- 08:30 (US) Apr PPI (ex-food/energy) M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.4% prior.

- 08:30 (US) Apr PPI (ex-food/energy/trade) M/M: 0.2%e v 0.2% prior; Y/Y: No est v 2.8% prior.

- 08:30 (CA) Canada Mar Wholesale Sales (ex-petroleum) M/M: -1.3%e v 0.0% prior.

- 08:30 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:15 (DE) ECB’s Schnabel (Germany).

- 10:00 (US) Fed Chief Powell.

- 11:00 (CO) Colombia Mar Industrial Production Y/Y: -3.5%e v 0.0% prior; Manufacturing Production Y/Y: -7.5%e v -2.2% prior.

- 11:00 (CO) Colombia Mar Retail Sales Y/Y: -3.5%e v -1.8% prior.

- 11:30 (US) Treasury to sell 52-Week Bills.

- 15:00 (AR) Argentina Apr National CPI M/M: 8.9%e v 11.0% prior; Y/Y: 287.9%e v 287.9% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 20:00 (AU) Australia to sell A$800M indicated in 2.75% Jun 2035 bonds.

- 21:20 (CN) China PBOC 1-Year Medium Term Lending Facility (MLF) Monthly Setting.

- 21:30 (AU) Australia Q1 Wage Price Index Q/Q: 0.9%e v 0.9% prior; Y/Y: 4.2%e v 4.2% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$500M in 2031 and 2034 bonds.

- (CN) China to sell CNY40B in ultra-long Treasury bonds (**Insight: new bonds differ from normal government bonds in that the money raised is for targeted purposes).

- (US) Maryland Democratic Primary and GOP Primary.

- (US) Nebraska Democratic Primary and GOP Primary.

- (US) West Virginia Democratic Primary and GOP Primary.