MNI US OPEN - BoJ Likely to Adopt Wait-And-See Stance

EXECUTIVE SUMMARY

• MNI BOJ PREVIEW - WAIT-AND-SEE STANCE
• TRUMP SAYS CHINA TO ‘EAT’ TARIFFS, REDUCING CONSUMER IMPACT
• US RACES TO CALM INDIA-PAKISTAN TENSIONS AS SIGNS MOUNT OF CLASH
• SPD APPROVES COALITION DEAL w/CDU/CSU

Figure 1: Australia trimmed mean CPI (Y/Y, %) back in RBA target band

Source: MNI/LSEG

NEWS

MNI BOJ PREVIEW - MAY 2025: Wait-And-See Stance

The Bank of Japan (BoJ) is scheduled to hold its Monetary Policy Meeting (MPM) on April 30–May 1, during which it will also release its latest Outlook Report. The BoJ is widely expected to leave its benchmark interest rate unchanged at 0.5%. This decision comes amid a complicated economic backdrop: while Tokyo’s core inflation rose to 3.4% in April — its highest level in two years — risks to economic growth are increasing. Given the significant shifts in external conditions, particularly the U.S. tariff policy changes since the last MPM in March, the BoJ is likely to adopt a cautious, wait-and-see stance at this meeting.

GERMANY (MNI): SPD Approves Coalition Deal w/CDU/CSU - Reuters

Reuters wire reporting that, according to two sources, the membership of the centre-left Social Democratic Party of Germany (SPD) has approved the coalition deal with the centre-right Christian Democratic Union/Christian Social Union (CDU/CSU). If confirmed, this would set up a rubber-stamp vote in the Bundestag on 6 May to approve CDU leader Friedrich Merz as the next chancellor. The report claims that 84% of those members that votes approved the deal. The story does not say what turnout was. In order for the agreement to be approved, a simple majority of those voting was required with a turnout threshold of 20%.

GERMANY (MNI): SPD Co-leader Klingbeil Puts Himself Forward as Fin Min & VC

Tagesspiegel reports that co-leader of the centre-left Social Democrats (SPD), Lars Klingbeil, has put himself forward to serve as finance minister and vice chancellor in the incoming 'grand coalition' gov't with the centre-right Christian Democratic Union/Christian Social Union (CDU/CSU). NTV reports that the party's executive committee voted unanimously in favour of this position. The prospect of Kingbeil serving as finance minister and vice chancellor had previously been mooted during the course of coalition negotiations

CHINA (MNI): China Passes Private Economy Promotion Law

MNI (Beijing) Chinese lawmakers have voted to adopt the Private Economy Promotion Law, the first dedicated law towards promoting the private sector, state media outlet Xinhua announced on Wednesday. The law will further optimise the development of the private economy and ensures fair market competition for all categories of business, Xinhua said. 

DATA

EUROZONE Q1 FLASH GDP +0.4% Q/Q (MNI)
EUROZONE Q1 PRELIM FLASH GDP +1.2% Y/Y (MNI)

GERMANY DATA (MNI): State CPIs Firmer Than Expected at First Glance

• BAVARIA APR CPI +0.4% M/M, +2.1% Y/Y
• NRW APR CPI +0.4% M/M, +1.8% Y/Y
• BADEN WUERT APR CPI +0.5% M/M, +2.4% Y/Y

So far the M/Ms are coming in in between 0.4% and 0.5%, except Lower Saxony at 0.3%. The Y/Ys run a bit of a wider range, in between 1.8% and 2.4%. National CPI (non-HICP) expectations were for a 0.3% M/M increase and for the Y/Y print to decelerate 0.2pp to 2.0%. This means that from the M/M, there should be some slight upside risks to consensus CPI - but note that we haven't received all state-level data quite yet, so take that call with a pinch of salt. For HICP (which doesn't always follow surprises in the national CPI), the consensus made ahead of these releases was for 0.4% M/M and a 0.2ppt Y/Y deceleration to 2.1%.

GERMAN DATA (MNI): Prelim Q1 GDP In Line, IFO Sees Negative Growth "Possible" Again

German Q1 flash GDP came in in line with consensus at 0.2% Q/Q (vs 0.2% cons; -0.2% Q4). On an annual basis, GDP printed -0.2% (vs -0.2% cons and prior). Broadly, German real GDP continues to sideline - which it has since about 2022. Few details are provided in the flash release, but Destatis notes that private consumption as well as investments contributed positively in Q1. We've flagged a possible positive consumption contribution following this morning's retail sales data. IFO sees downside risk for the months ahead as US tariff frontrunning, which they think has contributed to the positive print this time, might reverse soon. They think negative growth is "possible" again.

GERMANY DATA (MNI): Retail Sales Keep Open Positive Consumer Spending GDP Contribution

German March retail sales came in at -0.2% M/M (real, seasonally-adjusted) and +2.2% Y/Y in March. That follows February's +0.2% M//M (downwardly revised but already known from +0.8%) and January's +0.7% M/M - meaning that while retail sales did not have an overly strong Q1, consumer spending should have the potential for a slightly positive contribution in the flash Q1 GDP data, to be published at 09:00 BST/10:00 CEST. Consensus for that stands at +0.2% Q/Q total.

GERMANY APR UE RATE (SA) 6.3% (FCST 6.3%); MAR 6.2% (MNI)
GERMANY APR UE NET CHANGE (SA) +4K; MAR +25K (MNI)
GERMANY MAR UE TOTAL (SA) 2.922 MN; MAR 2.918 MN (MNI)

FRANCE DATA (MNI): GDP Inches Up 0.1% Q/Q, But Composition Weak

• FRANCE Q1 FLASH GDP +0.1% Q/Q, +0.8% Y/Y
• FRANCE MAR CONSUMER MANUF SPENDING -0.9% M/M, -2.1% Y/Y
• FRANCE MAR CONSUMER SPENDING -1% M/M, -1.5% Y/Y

French Q1 flash GDP was in line with consensus at 0.1% Q/Q (vs -0.1% prior), but the composition of expenditures was weak. Domestic demand excluding inventories made no contribution to growth in the first quarter (vs a 0.2pp contribution in Q4), while foreign trade pulled the quarterly rate 0.4pp lower. Inventories then made up the remaining 0.5pp. On annual basis, GDP growth was 0.8% Y/Y (vs 0.7% cons, a two tenth upwardly revised 0.8% prior).

FRANCE DATA (MNI): Small Upside Surprise to French April Flash HICP

• FRANCE APR HICP +0.6% M/M, +0.8% Y/Y
• FRANCE APR CPI +0.5% M/M, +0.8% Y/Y
• FRANCE MAR PPI -0.6% M/M, -0.6% Y/Y

French flash April HICP was firmer-than-expected at 0.8% Y/Y (vs 0.7% cons, 0.9% prior). This follows an upside surprise in Spain yesterday, keeping focus on the German and Italian data later this morning. On a monthly basis, HICP was 0.6% M/M (vs 0.4% cons, 0.2% prior). Services inflation was steady at 2.3% Y/Y, with non-energy industrial goods unchanged at -0.2% Y/Y. Food inflation rebounded to 1.2% Y/Y, the highest since May 2024. This was driven by a small rise in unprocessed foods to 4.0% Y/Y (vs 3.8% prior) and a larger uptick in processed foods to 0.9% Y/Y (vs 0.2% prior).

ITALY DATA (MNI): Stronger-Than-Expected Q1 GDP; But Q2 Prospects Bleak

Italian flash Q1 GDP was slightly stronger-than-expected at 0.3% Q/Q, with last quarter's reading also revised up a tenth on a rounded basis to 0.2%. GDP rose 0.6% Y/Y (vs 0.4% cons, a downwardly revised 0.5% prior). Sentiment was fairly steady in Q1, but prospects for Q2 growth appear bleak with a sharp drop in April business and consumer confidence noted. Very few details are provided in the flash release, which notes that "there is a positive contribution by the domestic component (gross of change in inventories) and a negative one by the net export component".

PORTUGAL DATA (MNI): Portugal Delays Key Wednesday Data Releases Due to Power Outage

Portugal is delaying release of its inflation, retail sales and Q1 GDP data from April 30 (tomorrow) to May 2 (Friday) due to the national electricity blackout, per national stats agency INE.

SWITZERLAND DATA (MNI): Largest KOF Drop Since March 2022

• SWISS KOF APR ECONOMIC BAROMETER 97.1

The Swiss KOF Economic Barometer fell by 6.1 points in April, to 97.1, below consensus of 101.9 and the most pronounced drop since March 2022. This is the first time the indicator is in contractionary territory since December 2024. "In particular, the indicator bundle for manufacturing experiences a strong setback. Similarly, the indicator bundles for other services and hospitality are under downward pressure. Solely the level of the indicator bundle for financial and insurance services remains nearly unaltered."

CHINA DATA (MNI): Caixin Apr Manufacturing PMI Hits Three-Month Low

MNI (Beijing) China's Caixin manufacturing PMI came in at 50.4 in April, down from March's 51.2, staying in the expansionary zone above the 50 mark for the seventh straight month but hitting a three-month low, the financial publisher said on Wednesday. The production and new order sub-index stayed above the breakeven 50 but expanded at a lower pace. The new export order sub-index fell into the contraction range to hit the lowest level since August 2023 amid U.S. tariff disruption.

JAPAN DATA (MNI): Japan Mar Factor Output Posts 1st Drop in 2 Months

• JAPAN MAR FACTORY OUTPUT -1.1% M/M; FEB +2.3%

Japan's industrial production fell 1.1% m/m in March for the first drop in two months following +2.3% in February due to the lower production of automobiles, although production machinery rose, data released by the Ministry of Economy, Trade and Industry showed on Wednesday. Production of automobiles fell 5.9% m/m in March for the first drop in three months following +0.2% in February, clouding the outlook for solid demand for automobiles caused by U.S. tariffs. Production machinery rose 6.9% in March for the second straight rise following +8.3% in February.

JAPAN DATA (MNI): Retail Sales Pot Slight Miss, Still Up +3% Y/Y

• JAPAN MAR RETAIL SALES +3.1% Y/Y; FEB +1.3%
• JAPAN MARCH RETAIL SALES -1.2% M/M; FEB +0.4%

Japan retail sales were slightly below market forecasts. We were -1.2% m/m, against a 0.7% forecast, with Feb revised to a 0.4% gain. In y/y terms we rose 3.1%, against a 3.5% forecast and 1.3% in Feb. The y/y trend is around mid range of the past 12 months as we have oscillated between flat to +5%. The authorities remain focused on driving sustained/positive real household spending growth, aided by positive real wages growth. The next round of labour earnings data is due next Friday.

AUSTRALIA DATA (MNI): Aussie Trimmed Mean at 0.9% Q/Q

• AUSTRALIA Q1 CPI +0.9% Q/Q
• AUSTRALIA Q1 TRIMMED CPI +0.7% Q/Q
• AUSTRALIA MONTHLY MAR CPI 0.5% MM, 2.4% YY

Australian Q1 trimmed mean inflation increased 0.7% q/q, 10 basis points higher than expected, and 2.9% y/y, down from Q4’s 3.3%, data released by the Australian Bureau of Statistics showed Wednesday. The headline rate printed at 2.4% y/y, flat against Q4. The monthly indicator for March, released alongside the full quarterly read, showed trimmed mean at 2.7% y/y. The Reserve Bank of Australia wants trimmed mean, its preferred measure of inflation, at the 2.5% target range midpoint. 

FOREX: USD/JPY Struggles on Approach to Recovery High Ahead of GDP

• JPY is weaker against  all others early Wednesday, however USD/JPY is yet to make any meaningful test on the Friday recovery high at 144.03. With tariff limbo still in place, and no trade negotiations to speak of between the US and China, G10 currencies are awaiting the next macro cue or headline to trade with any real conviction. That said, EUR/GBP continues its losing streak, with the cross hitting a new lower low of 0.8482 in overnight trade.
• Moves follow the cross trading through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323.
• Meanwhile, Australian CPI for Q1 came in toward the upper-end of expectations, helping AUD/USD recover well into the European morning. Spot faltered on the approach toward yesterday's 0.6450 highs, however, meaning the pair has traded either side of the 0.64 handle for eight consecutive sessions. The 200-dma defines the first topside level, at 0.6460.
• US data picks up Wednesday, with MNI Chicago PMI for April seen moderating further to 45.9 from 47.6 previously. Advance GDP,  Personal income, spending and the latest PCE stats for March are also due. Central bank speak sees BoE's Lombardelli, ECB's Villeroy & Makhlouf as well as the BoC minutes. The Fed remain inside their pre-decision media blackout period.

EGBS: Bunds Narrow Gap to Resistance; Look Through Domestic Data

Bunds have strengthened through the morning, with no obvious headline driver. Markets have been happy to look through today’s backward-looking flash Q1 GDP data, and didn’t really react to higher-than-expected French and German state-level flash inflation.

• Bunds are +32 at 131.71, narrowing the gap to resistance and the bull trigger at 132.03 (Apr 7 high).
• The German curve has lightly flattened, with yields 3-4bps lower.
• The French and German state-level inflation reports look to be on the firm side relative to consensus, while Italian HICP was a touch lower than expected.
• Eurozone Q1 flash GDP was 0.4% Q/Q, above the 0.2% expected by analyst and the ECB. We suspect this figure may be flattered by rounding, while tariff-front-running (particularly in Ireland) likely also provided a temporary boost.
• Final terms have been set for today’s 15-year Portugal syndication, while Germany sold 15/20-year Bunds. After a string of weak German auction results, today's supply was digested more smoothly.
• 10-year EGB spreads are biased slightly wider on the session.
• Alongside the usual focus on tariff headlines, today’s US data calendar is also heavy, with Q1 flash GDP released alongside the March PCE report. 

GILTS: Early Rally Extends

Gilts extend on their early rally, after weaker oil prices (on the day) and a pullback from yesterday’s highs in e-minis provided background support for wider core global FI markets at the open.

• Futures have traded as high as 93.72, further establishing the recent bullish move. Our technical analyst’s next resistance level is located at 94.00.
• Yields 2.5-5.5bp lower, curve flattens.
• 10s are below the 4.460% yield support level we have identified in recent days, with the next downside level of note coming in at the trendline support drawn off the Dec 8 ’21 lows (4.411%).
• 2s10s and 5s30s continue to hold above 60bp & 120bp, respectively.
• Modest outperformance vs. Bunds allows the move below 200bp in the 10-Year yield spread to extend a little further, last 197.5bp, probing support at 197.4bp.
• The GBP4.5bn 4.375% Mar-28 gilt auction generated a solid cover ratio, tight tail and LAP that topped pre-auction mids.
• BoE MPC member Lombardelli will appear at 16:30 BST, although scope for meaningful monetary policy comments may be limited by the nature of her appearance, as she launches the Bank’s new economics teacher training partnership with Manchester University.
• ~94bp of BoE cuts priced through year-end vs. April extremes of ~97bp.
• Next 25bp cut fully discounted for next month.
• SONIA futures flat to +4.5, given the rally in gilts.
• Expect macro cues (tariff headlines, European national level inflation data and U.S. economic data) to set the tone for most of the day.
• Month-end index extension projections for gilts are modest at best.

EQUITIES: Corrective Bull Cycle in E-Mini S&P in Play, Resistance at 50-Day EMA

Eurostoxx 50 futures maintain a positive tone and are holding on to their recent gains. The contract has cleared the 20-day EMA and pierced the 50-day EMA, at 5102.56. A clear break of this average would strengthen the current bull cycle and signal scope for a continuation of the corrective uptrend. This would open 5165.00 next, the Apr 3 high. Support to watch lies at 4812.00, the Apr 16 low. Clearance of this level would highlight a reversal. A corrective bull cycle in S&P E-Minis that started on Apr 7, remains in play. The contract has breached a number of important short-term resistance points. Price has cleared the 20-day EMA and pierced 5528.75, the Apr 10 high. The next key resistance is 5618.25, the 50-day EMA. A clear breach of this EMA would strengthen a bull theme. Initial key support lies at 5127.25, the Apr 21 low. A break would be bearish.

• Japan's NIKKEI closed higher by 205.39 pts or +0.57% at 36045.38 and the TOPIX ended 16.68 pts higher or +0.63% at 2667.29.
• Elsewhere, in China the SHANGHAI closed lower by 7.624 pts or -0.23% at 3279.031 and the HANG SENG ended 111.3 pts higher or +0.51% at 22119.41.
• Across Europe, Germany's DAX trades higher by 109.52 pts or +0.49% at 22562.44, FTSE 100 higher by 2.51 pts or +0.03% at 8462.17, CAC 40 up 27.68 pts or +0.37% at 7584.44 and Euro Stoxx 50 up 4.05 pts or +0.08% at 5173.51.
• Dow Jones mini up 6 pts or +0.01% at 40695, S&P 500 mini down 9.75 pts or -0.17% at 5579.5, NASDAQ mini down 58.5 pts or -0.3% at 19605.

Time: 10:00 BST

COMMODITIES: WTI Futures Approaching Initial Support at $58.29, Apr 29 Low

A medium-term bearish theme in WTI futures remains intact and the latest move down reinforces this theme, signalling the end of the correction between Apr 9 - 23. The correction allowed an oversold trend condition to unwind. A clear resumption of the bear cycle would open $53.72, a Fibonacci projection. Initial support to watch is at $58.29, the Apr 29 low. Resistance to watch is $65.38, the 50-day EMA. Gold is unchanged and the yellow metal continues to trade below its recent highs. The trend needle points north and the latest move down appears corrective. The retracement has allowed an overbought condition to unwind. Moving average studies are in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, a Fibonacci projection. Initial firm support to watch lies at 3239.5, the 20-day EMA.

• WTI Crude down $1.07 or -1.77% at $59.36
• Natural Gas up $0 or +0.03% at $3.38
• Gold spot down $33.84 or -1.02% at $3284.51
• Copper down $20.8 or -4.27% at $464.8
• Silver down $0.54 or -1.64% at $32.361
• Platinum down $10.31 or -1.05% at $967.99

Time: 10:00 BST

Date	GMT/Local	Impact	Country	Event
30/04/2025	1000/1200	**	IT	PPI
30/04/2025	1100/0700	**	US	MBA Weekly Applications Index
30/04/2025	1200/1400	***	DE	HICP (p)
30/04/2025	1215/0815	***	US	ADP Employment Report
30/04/2025	1230/0830	***	CA	Gross Domestic Product by Industry
30/04/2025	1230/0830	***	US	GDP
30/04/2025	1230/0830	***	US	Employment Cost Index
30/04/2025	1230/0830	***	CA	Gross Domestic Product by Industry
30/04/2025	1230/0830	***	US	Treasury Quarterly Refunding
30/04/2025	1342/0942	***	US	MNI Chicago PMI
30/04/2025	1400/1000	**	US	NAR Pending Home Sales
30/04/2025	1400/1000	***	US	Personal Income and Consumption
30/04/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
30/04/2025	1530/1630		GB	BOE Lombardelli At New Economics Teacher Training Launch
30/04/2025	1730/1330		CA	BOC Meeting Minutes
01/05/2025	2300/0900	**	AU	S&P Global Manufacturing PMI (f)
01/05/2025	0030/0930	**	JP	S&P Global Final Japan Manufacturing PMI
01/05/2025	0130/1130	**	AU	Trade price indexes
01/05/2025	0130/1130	**	AU	Trade Balance
01/05/2025	0200/1100	***	JP	BOJ Policy Rate Announcement
01/05/2025	0630/0830	**	CH	Retail Sales
01/05/2025	0830/0930	**	GB	BOE Lending to Individuals
01/05/2025	0830/0930	**	GB	BOE M4
01/05/2025	0830/0930	**	GB	S&P Global Manufacturing PMI (Final)
01/05/2025	-	***	US	Domestic-Made Vehicle Sales
01/05/2025	1230/0830	***	US	Jobless Claims
01/05/2025	1230/0830	**	US	WASDE Weekly Import/Export
01/05/2025	1345/0945	***	US	S&P Global Manufacturing Index (final)
01/05/2025	1400/1000	***	US	ISM Manufacturing Index
01/05/2025	1400/1000	*	US	Construction Spending
01/05/2025	1430/1030	**	US	Natural Gas Stocks
01/05/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
01/05/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result