PLN: Core CPI Miss and Narrowing Polls Pressuring Zloty
EURPLN (+0.4%) has traded on the front foot through Friday’s session, with the break of the week’s earlier highs assisting today’s gains. Meanwhile, core CPI came in a touch below the expectations based on the annual reading from earlier in the week, providing an additional zloty headwind.
- Warsaw Mayor & government ally Rafał Trzaskowski remains the front-runner ahead of the first round of presidential election this weekend, but betting market data suggest that the gap to runner-up Karol Nawrocki, supported by the main opposition Law and Justice party, has narrowed. This is likely weighing on the zloty at the margins as well given a Trzaskowski win is largely seen as a PLN-positive outcome.
- An exit poll will be published when voting ends at 9pm local time on Sunday, with official results trickling in overnight and final results expected several days later. See our full preview here.
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MNI: US MAR INDUSTRIAL PROD -0.3%; CAP UTIL 77.8%
- MNI: US MAR INDUSTRIAL PROD -0.3%; CAP UTIL 77.8%
- US FEB IP REV TO +0.8%; CAP UTIL REV 78.2%
- US MAR MFG OUTPUT +0.3%
BONDS: Incremental Fresh Session Lows For TY Futures Before Bonds Stabilise
Post-data reaction and fresh session highs for crude see TY futures register an incremental session low, before finding a base as crude pulls back from best levels and e-mini futures edge lower, allowing Bund and gilt futures to find support before bears can test session lows.
EUROZONE DATA: Easter Timing Weighs On Services Inf, Other Components Sticker
The March pullback in Eurozone services inflation was heavily impacted by the timing of Easter, with non-travel/tourism related categories looking firmer. While this won’t stand in the way of a 25bp cut on Thursday, it may add tension within the Governing Council around how far into the 1.75-2.25% neutral range the ECB can go. For now, growth risks related to tariffs and associated uncertainty clearly dominate the ECB’s reaction function, but services stickiness adds risk to sub-2% policy rate forecasts.
- Annual services inflation was 3.45% Y/Y, versus a 3.42% flash and 3.68% in February).
- Package holiday inflation was 0.87% M/M, corresponding to a 2.92% Y/Y rate (vs 7.94% prior). That’s likely due to the timing of Easter, which fell in March last year but is in mid/late-April this year. Accommodation services (4.11% Y/Y vs 4.64% prior) and airfares (-4.54% Y/Y vs 1.52% prior) also eased, also driven by Easter-timing effects.
- Meanwhile, other services categories were stickier. Services related to recreation and personal care, excluding package holidays and accommodation ticked up to 3.72% Y/Y (vs 3.65% prior), while communication, housing and miscellaneous services inflation also rose on an annual basis.
- In the latter category, we note that insurance inflation re-accelerated to 8.78% Y/Y, from 7.77% in February and 8.04% in January.
- The ECB’s seasonally adjusted services inflation index was revised up 0.03pp to 0.30% M/M in March, after incorporating the final Eurostat data from this morning (NSA monthly services inflation was revised to 0.44% vs 0.41% flash). That’s then the fourth consecutive month that sequential services inflation has rounded to 0.3% - almost 4% on an annualised basis.
