EUROPE: Ascension Day Will Will Thin Out Liquidity

Modest dovish moves in GBP STIRs with Bunds away from yesterday’s lows and oil continuing to tick lower.

• BoE-dated OIS little changed to 1bp more dovish across contracts covering ’25 meetings.
• ~90bp of cuts still priced through year-end, a little less dovish than April’s extreme of ~97bp.
• The next 25bp cut is still fully discounted come the end of the May MPC.
• SONIA futures flat to +2.0 contracts remain below April highs.
• We went through potential tweaks to the BoE’s guidance in our latest Gilt Week Ahead.
• If the MPC wants to potentially open the door to a change in the guidance it could remove the word “gradual” but temper the adjustment by keeping “restrictive” and “careful”. This effectively would signal to the market that there was a possibility that the BoE may accelerate rate cuts as far as neutral, which would at least open up the potential for back-to-back cuts between May and August (59bp of cuts currently priced across those 3 meetings).
• BoE’s Ramsden will speak at 10:40 BST, although he seems unlikely to comment on monetary policy matters as he will give the keynote speech on payments innovation at the Innovate Finance Global Summit.
• That should leave macro cues at the fore, with continued focus on tariffs and the global trade backdrop.

Briefly summarising the rest of this morning's Swedish macro data, there isn't much to change the near-term Riksbank outlook (alongside the weaker-than-expected flash Q1 GDP indicator). The April Economic Tendency Survey at 0800BST is a much more important release in this respect, particularly as it is a quarterly survey with a wider range of questions than the usual monthly release.

March Goods Trade Data: The March trade surplus was SEK12.8bln, with February’s revised to SEK15.0bln (vs 14.4bln initial). 

• Country level data is only available for February, and there isn’t an obvious sign of US tariff front-running yet. Total exports to the US were SEK16.0bln, vs SEK15.5bln in Jan but SEK16.2bln in November.
• Vehicle exports (a key export market for Sweden) did jump to SEK4.1bln vs SEK3.1bln in Jan, but it’s a volatile series. We’ll need the March data in hand to better contextualise this increase.

March Lending Data: Household (2.1% Y/Y vs 1.9% prior) and corporate (0.5% Y/Y vs 0.1% prior) continued to gradually accelerate, as past rate cuts feed through to the real economy. Focus will be on whether future months are negative impacted by US tariff related uncertainty.

February Wages: Whole economy wages eased to 3.9% Y/Y (vs 4.1% prior), and has fluctuated between 3.8-4.1% for the last nine months. This steady development has come despite the labour market continuing to gradually weaken. 

• The latest manufacturing sector collective agreements (which act as a benchmark for the whole economy) came in at 3.4% in 2025 and 3.0% in 2026. This is largely consistent with the Riksbank’s 2% target. 

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• The Bank of Thailand (BoT) decision is on April 30 and it is a close call with 4 out of 17 analysts on Bloomberg expecting no change but the rest forecasting a 25bp cut.
• It eased 25bp to 2% at its last meeting in February and may follow that up with another to support growth in the face of increased global trade uncertainty and the impact of March’s earthquake, which are likely to drive a downward revision to its “around 2.5%” growth forecast.
• Thailand’s economy is highly exposed to the US with 20% of its 2024 exports going there, only second to Taiwan in the region. Its exposure to China is a lot less but not immaterial at 12.7% and so its already subdued GDP growth could be impacted directly and indirectly from US trade policy.
• Both headline and core inflation fell below the bottom of the 1-3% BoT band in March.