GERMAN DATA: IP Confirms March As Strong Month For DE Industry Boosted by Pharma
German industrial production grew 3.0% M/M, more than consensus of 1.0% (February -1.3%). That means that Q1 overall saw 1.4% higher production volumes than Q4'24 - the most significant increase since the beginning of early 2022. On a yearly comparison, IP remains negative (but less so than before) at -0.2% Y/Y (Feb -4.1%, revised from -4.0%; the Y/Y has been negative each month since May 2023).
- In combination with firm factory orders, the print confirms March was a comparatively strong month for German manufacturing - which might have been underpinned by US tariff frontrunning, the German economy ministry speculates.
- We had flagged upside risks to consensus following yesterday's real turnover in manufacturing print.
- "Numerous economic branches contributed to the positive development in industry in March 2025. In particular, the production increases in the automotive industry (+8.1%), the pharmaceutical industry (+19.6%) and the manufacture of machinery and equipment (+4.4%) had an impact on overall performance", Destatis comments.
- Note that exports to the US rose to their highest ever level in March which may have helped underpin the 19.6% increase pharmaceutical production. Given that US pharma tariffs have not yet been confirmed that increase in production may continue into April and potentially beyond (assuming that US storage space is not filling up).
- We often look to the German truck toll index, which does correlate to a decent degree with IP and that printed -0.2% M/M for April. That would normally indicate that the imminent outlook is not for a continuation of March's uptick. However, pharma products don't require trucks as large as most manufactured products to transport the same volumes. So this signal may not be as strong as it usually is.
- A rebound lower for German IP does looks likely later this year when some of these front running effects are unwound. And this is despite sentiment in German manufacturing improving recently (i.e. manufacturing PMI at 48.4 in April, highest since Aug-22). But it might not be quite as quick to moderate as it would have otherwise been.
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STIR: SONIA Whites Outperform On Dovish Ex-MPC Speak
The front-end of the SONIA strip outperforms Euribor counterparts, whites +1.0 to +6.5 ticks versus yesterday’s settlement levels and reds +4.0 to +5.5 ticks. U5 futures outperform, but remain short of yesterday’s fleeting session high (current 96.205 vs a high of 96.355 yesterday).
- Front-end outperformance appears in part be due to dovish comments from former BOE officials Bean and Blanchflower. Bean suggested the BOE should deliver a 50bp cut in May, while Blanchflower argued for an aggressive inter-meeting cut (see here).
- BOE-dated OIS price 27bps of easing through the May decision, 3bps more dovish than yesterday’s close. Meanwhile, there are now 77bps of cuts priced through year-end (versus a dovish extreme of over 90bps yesterday morning).
- BOE’s Lombardelli speaks at 1700GMT today. She is considered close to the centre of the MPC, and hence any comments they make that deviate from the “gradual and careful” language would be deemed to be important. And of course any discussion of the impact of tariffs on the UK will be watched closely.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-25 | 4.187 | -26.8 |
| Jun-25 | 4.087 | -36.9 |
| Aug-25 | 3.911 | -54.5 |
| Sep-25 | 3.833 | -62.3 |
| Nov-25 | 3.727 | -72.8 |
| Dec-25 | 3.682 | -77.3 |
| Feb-26 | 3.614 | -84.1 |
| Apr-26 | 3.599 | -85.7 |
| Source: MNI/Bloomberg |
EGB OPTIONS: Bund call spread seller
RXK5 130.50/134.00cs sold at 74.5 in 3k.
SILVER TECHS: Impulsive Reversal Wave
- RES 4: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 3: $32.947/34.590 - 20-day EMA / High Mar 28
- RES 2: $32.491 - 50-day EMA
- RES 1: $30.815 - Low Feb 28
- PRICE: $30.172 @ 08:12 BST Apr 8
- SUP 1: $28.351 - Low Apr
- SUP 2: $27.686 - Low Sep 6 ‘24
- SUP 3: $27.180 - Low Aug 14 ‘24
- SUP 4: $26.451 - Low Aug 8 ‘24 and a key support
Silver continues to trade in a volatile manner. Last week’s sell-off confirmed a clear reversal of its recent uptrend. The metal yesterday traded through support at $28.748, the Dec 19 low. A clear break of this level would signal scope for a continued sell-off, towards $27.686, the Sep 6 ‘24 low. Initial resistance to watch is $30.815, the Feb 28 low. The contract is oversold, gains would allow this set-up to unwind.
