ITALY DATA: Confidence Improves In May, But Too Early To Call An Uptrend
May-29 09:09
Italian business and consumer confidence improved in May, likely supported by signs of easing trade tensions between the US and China. The survey did not capture the announcement and subsequent delay of the US’ 50% tariff on EU goods last week. While a positive development, it is still too early to determine whether sentiment has entered a more pronounced uptrend.
- Consumer confidence jumped to 96.5 (vs 93.0 cons, 92.7 prior), but remains below February’s level. There was a sharp rise in the “Economic climate” subcomponent to 97.5 (vs 89.6 prior), while the “personal climate” index also improved.
- Manufacturing confidence inched up to 86.5 (vs 85.8 prior). The export order subcomponent remains weak at -25.3 (vs -25.6 in April), but has been so since 2023 (i.e. there isn’t an obvious tariff impact).
- Services (94.5 vs 91.4 prior) and retail (102.8 vs 101.8 prior) confidence rose in May, while construction sentiment (102.2 vs 103.6 prior) fell slightly.
- The final Q1 GDP report is due tomorrow. Very few details were provided in the flash release, which noted that "there is a positive contribution by the domestic component (gross of change in inventories) and a negative one by the net export component". Of course, the data does not capture Liberation Day and subsequent developments in the trade complex.
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EUROZONE DATA: Credit Growth Firms Again Although Impulse Stabilising
Apr-29 09:07
- Private sector lending growth continued its steady acceleration in March, rising two tenths to 2.6% Y/Y or three tenths to 2.0% Y/Y when adjusting for sales & securitisations (highest since Jun 2023)
- Adjusting for sales & securitisations, lending growth to both non-financial corporates (NFCs) and households accelerated two tenths to 2.3% Y/Y (highest since Jul 2023) and 1.7% Y/Y (highest since Jun 2023) respectively.
- Spain leads lending growth to households (2.6% Y/Y) with France lagging (0.7% Y/Y), although France leads NFC growth (3.1% Y/Y) whilst Italy is the only country still contracting (-0.9% Y/Y but from -4.0% Y/Y as recently as July).
- The Eurozone credit impulse metric of 3mth flows vs 3mths a year ago has broadly plateaued so far in 2025, at around 2% GDP after a large swing from the -5 to -6% GDP seen in mid-2023 when credit growth started to slow abruptly - see top right chart.
- On this relative impulse basis, Spain leads (3.4% GDP), followed by Italy (2.5%), France (1.2%) and Germany (0.6%).
- Separately, Eurozone M3 money supply surprisingly eased to 3.6% Y/Y (cons 4.0) from a downward revised 3.9% (initial 4.0) for its softest since Dec. For rough context, it averaged 5.0% Y/Y through 2019.
GILT AUCTION RESULTS: 1.25% Nov-54 Linker Gilt
Apr-29 09:05
| 1.25% Nov-54 Linker | Previous | |
| Amount | GBP0.90bln | GBP1.00bln |
| Avg yield | 2.175% | 2.126% |
| Bid-to-cover | 3.31x | 3.06x |
| Avg price | 79.907 | 80.714 |
| Pre-auction mid | 79.716 | 80.644 |
| Previous date | 14-Jan-25 |
TARIFFS: France to consider small parcel fees for Chinese imports
Apr-29 08:53
Bloomberg headlines report that France is considering "small-parcel fees as flows from China surge".
- Note that there is concern in Europe about small value imports flooding the markets due to the US' imposition of tariffs on "de minimis" goods.
- Previously goods under USD800 imported via the postal network could be imported to the US tariff-free. That is due to end on 2 May for goods from China and Hong Kong (it's a separate but related announcement to the reciprocal tariffs).
- These headlines are one of the first real acknowledgements of how other countries will potentially be looking to deal with goods that are "dumped" in other countries due to not being viable to export to the US any more.
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