GERMAN DATA: Labour Market Off Lows, But Remains Weak
May-01 15:46
Latest German labour market data on balance showed some recovery vs last month but overall remains weak.
- Employment rose by 6k on a seasonally adjusted basis in March vs +9k in February - but for Q1 on average, Destatis estimates employment having decreased by 7k vs Q4. Detailed results on that will be published May 16.
- More timely unemployment data for April rose a little less than expected (4k vs 15k cons) after a very soft 25k in March on a seasonally-adjusted basis. The unemployment rate meanwhile remained at 6.3%.
- 'Kurzarbeit' applications (the state benefit for firms in economic turmoil has to be reported in advance, which can be interpreted as an early indicator for future use) decreased by around 6k in April vs March (to 37k Apr through 1st-24th) although it can be volatile - see bottom left chart.
- The demand side of the labour market recovered as new vacancies saw their largest jump since March 2021. As the measure also can be volatile, next month's data will confirm if this was just a one-off and will be reversed soon again amid the ongoing downtrend since 2022. Overall vacancies remained stable at 652k.
- Recall the IFO employment index signals further softening ahead - while it improved in April (93.9 points vs 92.8 prior), it remains in contractionary territory, with weakness centred around manufacturing.
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US DATA: Texas Services Sector Activity Pulls Back Sharply, But Prices Contained
Apr-01 15:33
Dallas Fed's Texas Service Sector Outlook Survey general business activity index collapsed to a 16-month low -11.3 in March from positive 4.6 prior. This is just 3 months after a 33-month high 10.8 and mirrors other regional Fed surveys that have seen a sharp deterioration over the past couple of months.
- The outlook is deteriorating as well, with the future general business activity index falling to -1.1 from positive 12.3, down over 32 points in just 2 months. "Other future service-sector activity indexes such as employment and capital expenditures also fell but remained in positive territory, reflecting expectations for slower growth in the next six months."
- One contrast with other regional services surveys though: price pressures diminished. Current prices paid dipped 1 point to 27.0, reversing February's rise, with prices received at a 4-month low 5.2 (7.9 prior).
- That said, there were multiple anecdotes included with the survey that suggested that higher tariffs could impact pricing in future - though the outlook was uncertain at this stage.
FED: US TSY 14D AUCTION: HIGH RATE 4.250%; 96.51% AT HIGH
Apr-01 15:32
- US TSY 14D AUCTION: HIGH RATE 4.250%; 96.51% AT HIGH
- US TSY 14D BILL AUCTION: DEALERS TAKE 31.07% OF COMPETITIVES
- US TSY 14D BILL AUCTION: DIRECTS TAKE 4.11% OF COMPETITIVES
- US TSY 14D BILL AUCTION: INDIRECTS TAKE 64.82% OF COMPETITIVES
- US TSY 14D AUCTION: BID/COVER 3.43
EURGBP: BofA Recommend Buying EUR/GBP 0.83 Put Options
Apr-01 15:25
Bank of America recommend buying one-month EUR/GBP 0.8300 puts, citing market complacency over the EU's relative exposure to trade risk over the UK. They also note positive seasonality effects for GBP over April.
- They see the EU at greater risk from US tariffs due to the UK's very small goods surplus with the US, while their prop flow data shows funds buying the EUR ahead of the announcement tomorrow, after selling the EUR in previous weeks.
- BofA note that FTSE-listings repatriate overseas earnings for dividend purposes over April, and while the impact has faded due to structural factors after the Brexit vote, they see a return to normality for the seasonality effect ahead.
