POWER: German Spot Price Soars Despite Lower Demand, Widens French Premium

• MNI: US MBA: MARKET COMPOSITE -4.2% SA THRU APR 25 WK

As we suspected, the Eurozone flash Q1 GDP release was flattered by rounding, coming in at 0.352% unrounded. That’s still well above the 0.2% projected by consensus and the ECB, but the data was nonetheless skewed by tariff-front loading, particularly in Ireland. Sentiment data points to weak growth momentum in Q2, as US tariffs start to kick in and associated uncertainty continues to weigh.

• Irish GDP rose 3.2% Q/Q, with the stats office noting that “this was driven by an increase in the multinational dominated sectors in Q1 2025 with a more modest increase in the domestic sectors”. Irish February goods trade data showed a 211% Y/Y increase in exports to the US, which largely comprised of medical and pharmaceutical products - an obvious indication of front-loading amongst major US Pharma companies based in Ireland.
• Ireland contributed 0.11p to the Eurozone-wide quarterly reading, despite only making up 4% of total GDP.
• Across the four major economies, detailed information on the Q1 data is lacking. However, we note that domestic demand appears to have been a positive contributor in Germany, Spain and Italy, while net trade was a negative contributor to France and Italy. Net trade was not mentioned in the German press release, suggesting a flat/negative contribution there too.
• Summarising the main quarterly GDP prints released yesterday/this morning:
  • Eurozone: 0.4% Q/Q vs 0.2% cons, 0.2% prior.
  • Germany: 0.2% Q/Q vs 0.2% cons, -0.2% prior.
  • France: 0.1% Q/Q vs 0.1% cons, -0.1% prior.
  • Italy: 0.3% Q/Q vs 0.2% cons, 0.2% prior.
  • Spain: 0.6% Q/Q vs 0.7% cons, 0.7% prior.

• Treasuries trade twist flatter as the front end modestly pares latest gains whilst the long end consolidates and in the case of 2-s and 30s builds upon prior gains.
• Weaker than expected Caterpillar results have weighed on equities but with little sign of spillover into Treasuries.
• Futures volumes have been subdued overnight ahead of a particularly heavy docket before further risk events after the equity cash close with results from Meta and Microsoft.
• Today sees the Treasury QRA at 0830ET (MNI preview) along with multiple data releases that include Q1 GDP (mini preview here) and March PCE (here).
• Cash yields are 1bp higher (2s and 3s) to 2bp lower (20s and 30s).  
• 10Y yields at 4.162% eye 4.15% for the first time since early Apr 8, i.e. comfortably pre-tariff pause levels.
• TYM5 trades at 112-06 (+01) in a narrow range, consolidating yesterday’s rally with an overnight high of 112-09.
• Prior clearance of 111-25 (50% retrace of Apr 7-11 bear leg) has undermined a prior bearish theme and the contract has again stepped closer to latest resistance at 112-12 (61.8% retrace of the same bear leg). To the downside, support at 111-07+ (20-day EMA).
• Data: Weekly MBA data (0700ET), ADP employment Apr (0815ET), GDP Q1 advance (0830ET), Employment Cost Index Q1 (0830ET), MNI Chicago PMI Apr (0945ET), PCE report Mar (1000ET), Pending home sales Mar (1000ET)
• Bill issuance: US Tsy $60B 17W bill auction (1130ET)
• Full Treasury Quarterly Refunding Announcement (0830ET). Recent market volatility has reduced the possibility that Treasury will adjust its guidance that it will keep nominal coupon auction sizes unchanged for "at least the next several quarters", as changing this would signal an intention to increase bond supply in the near future. That view was further boosted by details in Monday's borrowing estimates.