EQUITY TECHS: E-MINI S&P: (M5) Gains Considered Corrective

The Philadelphia Fed's Nonmanufacturing Business Outlook Survey showed a continued deterioration in regional services activity after a brief period of exuberance, mirroring the drop in the neighboring Empire State (NY Fed) survey. The regional general activity index dropped 24 points to -32.5, marking the lowest level since the start of the Covid pandemic. New orders fell to a 23-month low (-19.5) and the 6-month outlook for activity fell to a post-2020 low (-24.0).

• Per the Philadelphia Fed, "The indexes for general activity, new orders, and sales/revenues remained negative, with the former two declining further. On balance, the firms reported a decrease in full-time employment. Both price indexes rose and indicate overall increases in prices. The respondents expect declines in growth overall over the next six months both for their firms and in the region."
• This survey only has data back to 2011 but the currently depressed level of business activity has only been matched in periods of extreme weather (2011) and the Covid pandemic (2020).
• This is a very different story than being told by the flash March S&P PMI which rose to a 3-month high 54.3 in March, so the state of the services sector amid broader government policy uncertainty and possible deterioration in domestic demand remains obscured.
• One clearly consistent theme across these surveys though is inflation: prices paid rose to a 16-month high (36.0), with prices received up to just a 3-month high (8.4), potentially suggesting margin pressures at services firms (the March flash PMI noted an 18-month high in service sector prices paid).
• With manufacturing surveys including the Philly Fed's showing similar price pressures, it is hard not to get a sense of ongoing "stagflation" in the economy, in the soft/survey data at least so far.

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• Chancellor Reeves will begin delivering the Spring Statement tomorrow in the House of Commons immediately after Prime Ministers’ Questions concludes – so slightly after 12:30GMT / 13:30CET / 8:30ET.
• Given the limited content, the FT is reporting that the speech will only be 25 minutes long.
• The gilt remit and full OBR forecasts are normally published when the statement is finished – so around 13:00GMT (possibly slightly before or a little later). Note that in previous years with longer speeches, this has been more like 13:30.
• We would then expect the DMO to announce the consultation agenda for its FQ1 issuance (the remainder of April through to June) at 15:30GMT. This will likely include a more granular breakdown of which auctions in FQ1 are for each maturity bucket, with guidance on which gilts will be issued (see page 4 of the MNI Spring Statement Preview).
• The DMO is to hold consultations with investors and GEMMs on 31 March.
• The rest of the FQ1 (remainder of April through to June) gilt operations calendar will be published at 7:30BST on Friday 4 April.