EUROPEAN INFLATION: German HICP Confirms Flash, Transport the Main Upward Driver
Apr-10 08:38
German final HICP confirmed the flash estimate, rising 2.8% Y/Y (2.0% prior) and 1.2% M/M (0.4% prior) in March. The rate of inflation is the highest since December 2024, following February's 2.01%, and looks broadly unchanged from the flash estimate.
- Looking at the details, the data appears little changed from the flash estimate: in terms of ECOICOP 2 divisions, a likely energy-driven 4.4ppt pickup in transport HICP (now 6.6% Y/Y vs 2.2% prior) is the main upward driver of headline inflation.
- Also likely influenced by the rise in energy prices, the household/water/household fuels division rose 0.4ppt to 0.9% Y/Y. Air fares (which go into services but are of course energy-influenced) rose 16.1%Y/Y from 7.8%Y/Y in February. Air fares in particular are expected to rise further in April, with other energy prices also likely to increase relative to March.
- There was also a more modest rise in restaurants and accommodation services HICP to 3.4% Y/Y (from 3.2% prior).
- Partially offsetting the upward drivers, food and non-alcoholic beverages HICP dropped 0.4ppt to 1.5% Y/Y, which we noted in the Eurostat flash release was driven by unprocessed food.
- While we don't yet have updated HICP special aggregates from Destatis (and also need to wait for 2dp HICP from Eurostat) CPI details show energy CPI unrevised from flash at 7.2% Y/Y (-1.9% Feb), while services CPI was also unrevised at 3.2% Y/Y, unchanged from February. (Note that in the flash release services HICP increased a tenth when rounded from 3.5% (3.48%) in February to 3.6% (3.55%) in March).
- Core CPI also confirmed the flash estimate at 2.5% Y/Y, unchanged from Feb and holding at this rate for three months. On a monthly basis core CPI rose 0.6% M/M (after 0.3% Feb).
- Next week, we'll see final inflation readings for Spain (Tues), France (Weds), and Italy (Thurs), followed by the final Eurozone-wide print later on Thursday. The Eurozone print will also contain updated national-level HICP special aggregates and the 2dp German print.
Note that we take March 2026 HICP data from Destatis, combined with prior series from Eurostat, as the Destatis HICP back series pre-2026 continues to be missing.
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GILTS: Bear Flattening, Futures Through First Support
Mar-11 08:37
Gilts sell off with oil bid through early London trade, while hawkish comments from an ECB Governing Council member provide spillover pressure from Bunds.
- Futures trade as low as 90.51, breaching initial support located at the March 9 high/gap support (90.54). Bears look to the March 6 low (89.43) next.
- Conversely, bulls need to break the 20-day EMA (91.68) to turn focus higher.
- Yields 7-10bp higher, curve flattens. Pre-existing week-to-date yield highs remain untested across benchmarks.
- Flattening driven by reduction in pricing of BoE rate cuts.
- Short end last discounting 5bp of easing through July, with contracts as much as 14bp less dovish for late ’26 meetings.
- BoE’s Breeden will speak in front of the House of Lords Financial Services Regulation Committee this morning, but will cover Stablecoins, so don’t expect much on monetary policy.
- That will leave geopolitical matters and related oil volatility at the fore.
FRANCE DATA: Bank of France See Q1 GDP At 0.2-0.3% Q/Q, Now With Downside Risk
Mar-11 08:34
Released yesterday: "GDP could grow between 0.2% and 0.3% in the first quarter", from the Banque de France's monthly business survey for March (unchanged from Feb), though they now note downside risk due to the Middle East conflict. While the conflict is yet to show in hard economic data, we are seeing the first signs of concern over downside risks that could stem from the conflict.
- "However, this technical forecast is subject to downside risk, given the uncertainties related to the conflict in the Middle East and its impact on supply chains and energy prices, which could weigh on activity at the end of the quarter."
- The growth estimate is unchanged from the February survey, and is also in line with Bloomberg consensus at 0.2% Q/Q. This would also be unchanged from 0.2% Q/Q realised growth in Q4 2025. Further ahead, growth is seen staying in the 0.2-0.3% Q/Q range for the remainder of the year (Bloomberg consensus).
- Data were collected between 25 Feb - 4 Mar 2026, covering around 8500 businesses: "about one-third of the responses were collected before [events in the Middle East] and two-thirds after. For February, according to the business leaders surveyed, economic activity continued to grow at a pace consistent with expectations."
- "For March, businesses anticipated continued strong activity in industry and services, and more limited activity in construction. However, while uncertainty continued to decline in the initial responses prior to February 28, it rebounded sharply in subsequent responses, with businesses citing risks of rising energy prices and logistical disruptions."
- We note that French hard output data has been more mixed recently: IP rebounded in Jan at 0.5% M/M (0.4% cons, -0.5% prior, revised up 0.2ppt), but entirely due to a strong rebound in transport equipment (all other manufacturing categories saw flat/negative growth M/M).
- Elsewhere in the survey, it's noted that "price increases remain moderate ... Overall, 11% of industrial companies reported increasing their selling prices in February, while 5% reduced them. Price decreases were mainly seen in the automotive (-12%), pharmaceutical (-10%), and food processing (-10%) sectors. Price increases were more concentrated in pharmaceuticals (+28%), computer, electronic, and optical products (+17%), and electrical equipment (+15%)."
FOREX: FX Exchange Traded Roll update
Mar-11 08:26
FX CME Roll pace update:
- EUR: 42%.
- GBP: 56%.
- JPY: 48%.
- CHF: 48%.
- CAD: 40%.
- AUD: 55%.
- NZD: 62%.
- SEK: 44%.
- NOK: 58%.
