GERMAN DATA: Broad-Based Weakness In April IFO, Lowest Since May 2020

The Economic Tendency actually ticked up to 99.9 in March (vs a downwardly revised 99.7 prior). It looks like the survey period may have come too early in the month to fully capture the Iran war fallout: “Typically, half of the responses to the Business Survey are received within the first five days after mailing and approximately 80 percent within ten days. ....Already during the first week, more than 60 percent of companies and households had responded to the survey”.

• Manufacturing and construction sentiment rose by 3.0 and 1.9 points respectively in March, while declines were seen in trade (-5.8 points), services (-2.1 points) and consumer confidence (-1.1 points).
• Selling price indices don’t point to an urgent need to deliver a pre-emptive hike (i.e. in May) for now, but Riksbank board members will be closely watching to see if any trends start forming in next month’s survey, which is released before the May 7 decision.
• At an aggregate level, the 3-month expected selling prices diffusion index ticked up slightly to 13 (vs 12 in Feb, 14 in Jan). Across industries, services rose to 17 (vs 14 prior) and retail trade ticked up to -1 (vs -2 prior). Manufacturing bounced back to 10 (vs 5 in Feb, 11 in Jan, 5 in Dec) – unsurprising to see 100% of respondents in the “Coke & refined petroleum products” industry report a rise in expected prices relative to February.
• The expected employment index fell back to 4 (vs 5 in Feb, 6 in Jan and 7 in Dec).

Early upside in gilts extends as futures push through yesterday’s high.

• Gilt futures as high as 88.51 before backing off to ~88.30.
• Bears remain in technical control at this stage, with bulls still needing to force a move above the March 18 low (89.09). A correction would allow technically oversold conditions to unwind.
• Yields ~9bp lower across the curve. 2s nearly 35bp below Monday’s high, while 10s are ~25bp below their Monday high.
• Move comes with crude oil trading lower on U.S. efforts to de-escalate the war in Iran while the market waits for the official response of the Iranian regime to the U.S. request for a ceasefire.
• Reports have pointed to Iran setting a high bar for any ceasefire agreement, while the IRGC’s growing influence when it comes to the day-to-day operations within the country presents another layer of complication.
• Elsewhere, the U.S. continues to increase its military presence in the region, even though reports have suggested that the two countries could hold high level reports as soon as Tuesday.
• BoE-dated OIS pricing 61bp of tightening vs. 66bp ahead of the gilt open.
• February CPI data roughly met expectations, it shouldn’t impact monetary policy given escalation in the Middle East in the time since.
• The Citi-YouGov inflation expectations survey saw the short-term component surge to +5.4% from +3.3%, registering the highest level since ’23.
• BoE MPC member Greene will speak at 12:00 London.

• RES 4: $108.071 - 76.4% retracement of the Jan 29 - Feb 6 sell-off
• RES 3: $99.668 - 61.8% retracement of the Jan 29 - Feb 6 sell-off
• RES 2: $90.015/97.804 - High Mar 10 / 2 
• RES 1: $80.184 - 50-day EMA       
• PRICE: $73.261 @ 08:08 GMT Mar 25
• SUP 1: $61.007 - Low Mar 23
• SUP 2: $60.000 - Round number support 
• SUP 3: $56.496 - Low Dec 4 ‘25
• SUP 4: $53.345 - Low Nov 28 ‘25 

A bear cycle in Silver remains intact. Monday’s initial move lower resulted in a breach of key short-term support at $64.098, the Feb 6 low and bear trigger. A clear break of this level would strengthen bearish conditions and confirm a resumption of a medium-term corrective cycle plus open the $60.00 handle. Key short-term resistance has been defined at $97.804, the Mar 2 high. Initial firm resistance is seen at  $80.184, the 50-day EMA.