GILTS: Curve Flatter, Looking Offshore For Cues

• MNI: GERMANY FLASH APRIL MANUF PMI 48.0 (FCAST 47.6, MAR 48.3)
• GERMANY FLASH APRIL SERVICES PMI 48.8 (FCAST 50.2, MAR 50.9)

The French flash April services PMI was weaker than expected at 46.8 (vs 47.6 cons, 47.9 prior). Although still above February's 45.3 reading, the services index has been in contractionary territory for the last eight months. Manufacturing was a little better than expected at 48.2 (vs 47.9 cons, 48.5 prior), but has been below 50 for 27 months now. The composite reading was thus weaker than expected at 47.3 (vs 47.8 cons, 48.0 prior).

Services new orders fell sharply, particularly for domestic markets. Given the current tariff-related uncertainty, the slowdown in the decline of export sales is on the margin a relief, even as underlying demand conditions remain weak. 

Key notes from the French release (translated via Google translate):

• "Service providers explain the decline in their activity by the decrease in new business, which has recorded their sharpest decline since November 2020".
• "The sharp acceleration in the decline in overall new business volumes observed in April reflects a sharp deterioration in demand in domestic markets. New orders from abroad recorded their smallest decline since August 2022"..."this slowdown in the decline in export sales is explained by a strengthening of demand from Africa and parts of Europe".
• "Employment continued to decline in the French private sector in April, with the drop in staff numbers reported during the month being modest but slightly higher than that recorded in March".
• "The decline in employment coincided with a deterioration in the outlook for activity in the French private sector. Although moderate, the degree of pessimism among businesses reached its highest level in nearly five years"..."this trend exclusively reflects a deterioration in confidence in the services sector".
• "A further easing of pressures on business costs, with prices paid posting their lowest inflation since December 2024. At the same time, strong competitive pressures led French private companies to reduce their selling prices for the first time in three months".
• "Data collected from April 9 to 22"

USM5 118.00/120.00 call spread paper paid 20 on 5K.