SWEDEN: Long-term Inflation Expectations Comfortably Anchored Around Target
Swedish long-term inflation expectations remain well-anchored around the target, according to Origo Group’s latest “big” expectations survey. Inflation expectations have broadly tracked developments in spot, which have been on a decelerating trend since March. More favourable inflation prospects encouraged the Riksbank to lend more support to economic activity with a 25bp cut at yesterday’s meeting.
- Compared to the last quarterly survey in March, 5-year ahead CPI expectations eased to 2.0% (vs 2.2% prior).
- Employee organisation expectations were 2.0% (vs 2.1% prior), while employer organisation expectations were steady at 2.1%. A more notable fall was seen amongst manufacturing purchasing managers (1.8% vs 2.3% prior), offset a little by trading purchasing managers (2.2% vs 2.0% prior).
- Compared to the last monthly survey, money market participants long-term inflation expectations were steady at 2.0% in June.
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GERMAN DATA: PPI ex-Energy Highest Since May 2023, Chinese Rerouting Focus Ahead
German PPI fell by 0.9% Y/Y in April, below consensus of 0.6% Y/Y and March's -0.2% Y/Y.
- Consistent with German CPI in April, energy deflation was more prominent than before, at -6.4% Y/Y (vs -3.6% prior) - that was main downside contributor this time, Destatis adds.
- That leaves ex-energy PPI higher vs March, at 1.5% Y/Y - the highest rate since May 2023.
- Looking at the non-energy categories, non-durable goods stand out with a 3.2% Y/Y rate. Destatis flags some high-inflation food items in conjunction with the category.
- In the months ahead, PPI may be watched more closely than before on the back of the firmer US tariff stance - the question is if any Chinese rerouting of products previously intended for the US filters through to the Eurozone through lower intermediate / durable goods prices.
WTI TECHS: (N5) Gains Considered Corrective
- RES 4: $72.12 - High Feb 20
- RES 3: $71.10 - High Apr 2 and key resistance
- RES 2: $65.82 - High Apr 4 2 and key resistance
- RES 1: $62.90/63.44 - 50-day EMA / High May 13
- PRICE: $61.93 @ 07:20 BST May 20
- SUP 1: $54.33 - Low April 9 and the bear trigger
- SUP 2: $53.30 - 2.236 proj of the Feb 20 - Mar 5 - Apr 2 price swing
- SUP 3: $52.14 - 2.382 proj of the Jan 15 - Feb 4 - 11 price swing
- SUP 4: $50.00 - Psychological round number
A downtrend in WTI futures remains intact and recent gains are considered corrective. Key resistance to watch is $62.90, the 50-day EMA. It has recently been pierced, a clear break of it would highlight a stronger reversal. This would open $65.82, the Apr 4 high. For bears a reversal lower would refocus attention on $54.33, the Apr 9 low and bear trigger. Clearance of this support would confirm a resumption of the downtrend.
BUNDS: The Contract is still eyeing the Upside Gap
- While the German Bund trades in a fairly contained 22 ticks range going into the Cash Open, it is still looking at closing that gap up to 130.76.
- The contract printed above Yesterday's and Friday's high Overnight.
- Support in Bund is seen at 129.71, printed a 129.72 low Yesterday.
- The German PPI came below consensus, but not a real known market mover, had not impact on Govies. There are no Tier Data out of Europe or the US for Today, for North America, we get the Canadian CPI, but won't impact Bund.
- SUPPLY: Germany €1bn 5yr (equates to 8.4k Bobl) won't impact the contract, the €1bn 2053 (equates to 6.6k Buxl) should have limited impact. Finland 2032, 2035 (won't impact Bund).
- SPEAKERS: There are plenty of speakers, today includes, ECB Wunsch, Knot Cipollone, BoE Pill, Fed Bostic, Barkin, Collins, Musalem, Kugler
