GERMAN DATA: May Industrial Production Stronger On Manufacturing, Energy
German industrial production outperformed expectations in May at 1.2% M/M, compared to consensus of -0.2% following a slight downward revision of April's rate to -1.6% (-1.4% unrevised). On a yearly basis, IP came in at 1.0% (vs -0.3% cons; -2.1% Apr revised, from -1.8% unrevised).
- This means that the orders and production data from May point in different directions (May orders, published Friday, were weak) - that is not totally uncommon; overall, our reading remains that also taking consensus into consideration, the picture in the sector is arguably brighter than what it was a couple of months ago.
- We saw risks to today's IP consensus figures following Friday's weak turnover in manufacturing print tilting to the downside - however, the correlation between the two measures was negative this month, with manufacturing production (excl. construction and energy) also up 1.4% M/M.
- Energy production was notably up, also, at +10.8% M/M while construction came in at -3.9%. Destatis doesn't comment on the energy jump - dry and sunny conditions may have boosted solar output in the month.
- Within manufacturing, drivers were automotive production (+4.9% M/M) and pharmaceutical production (+10.0%). Auto production seems to be stabilising around H2-23/H1-24 levels after some weakness around the turn of the year. Pharmaceutical production appears to have also stabilised somewhat after weakness in H2-24 and early '25. We would argue these are both sectors which can be strongly driven by foreign demand, both appear to have weak domestically-generated orders (based on Friday's data). It is too soon to tell if we will see continued growth in these sectors or whether they will remain more consistently at current levels in coming months, after moving off their lows.
- Looking a month ahead, the truck toll index for the full month of June, which correlates with the industrial production index to a decent extent, will only be published on Wednesday - but daily data already published points towards some moderate pick-up in activity last month. Sentiment, as said, stands at (partially multi) year highs in the sector.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
We've just published our UST Issuance Deep Dive - Download Full Report Here
- May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
- The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
- Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
- Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
- May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.
- Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
- There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
