UK DATA: ONS releases update on PPI data; immediate market impact limited
Jul-10 09:11
- The ONS has released some updated PPI data, albeit acknowledging that there are still some errors in these data that have not been ironed out yet. It has noted that it expects "there is some additional work to undertake, though further corrections are mostly expected to be small in magnitude."
- The ONS "intend to reinstate full publication of our monthly PPI and quarterly SPPI bulletins in October 2025" but the decision has been made to publish some data as the ONS "acknowledge the value to users of having PPI and SPPI statistics in the public domain to inform policy and decision-making."
- So in essence, the ONS is arguing it's better to have some data and that transparency is preferable, albeit the data is incomplete with some likely small revisions, rather than wait for the data to be fully corrected and updated.
- PPI data are used in the calculation of GDP price indices, amongst other things, so the publication of this data will help with forecasts for that going forward.
- "The PPI, IPI and EPI data for 2025 in the accompanying dataset are consistent with the inputs used to derive chained volume measures published in our GDP monthly estimate, UK: April 2025 bulletin on 12 June, our UK trade: April 2025 bulletin on 12 June, and our GDP quarterly national accounts, UK: January to March 2025 bulletin on 30 June... The full implementation of historical data is being managed in line with the national accounts revision policy."
- The charts below show the impact both since the beginning of the revision period published today and over the past 2 years. PPI output has remained relatively flat over the period, while PPI input has moved lower between January and April (largely due to crude inputs falling to -29.8%Y/Y in April from +0.3%Y/Y in January).
- The data released today as they only go up to April are very lagged and don't give us too much information - and as thess data are consistent with the numbers used in GDP data published recently, the immediate impact here isn't huge. These updated provisional numbers likely will feed into the BOE's models for the August MPR forecasts, however.
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FOREX: GBP Dip Bottoms Out Ahead of Key EMA Support
Jun-10 09:09
- GBP has broken lower on the back of a poorer-than-expected labour market report. Average weekly earnings came in softer-than-expected at 5.3% vs. Exp. 5.5% and the monthly change in payrolled employees dropped sharply: to -109k vs. Exp. -20k, with the April figure also subject to a downward revision. As a result, the UK jobs picture and the latest insight into wage growth have been marked lower relative to the Bank of England's projections, raising the odds of a more activist approach from the MPC.
- As a result, BoE OIS markets have returned closer to 2 x 25bps rate cuts for this year, with September close to fully priced for the next cut. Risks to this position, however, include revisions to these numbers in subsequent releases, which have a track record in correcting data outliers.
- Weakness in GBP came in two phases this morning, first on the soft payrolls data, and then again on the SONIA open, with GBPUSD nearing 1.3462, its 20-day EMA. A clear break of this average would suggest potential for a
deeper correction and expose the 50-day EMA for direction, at 1.3299. EURGBP meanwhile has cleared 0.8440, its 50-day EMA and key resistance, exposing 0.8541, the May 2 high. - The USD trades firmer against broader G10, with the corrective relief for the USD Index isolating the downtrendline drawn off the early February high as next resistance, today at 99.575.
- There are no remaining key data releases due Tuesday, and no further central bank speakers (the Fed remain inside the pre-decision media blackout period), keeping focus on the resumption of trade talks between US and Chinese trade negotiation teams in London.
EURIBOR OPTIONS: ERZ5 97.81/97.93/98.50/98.62 Call Condor Sold
Jun-10 09:07
ERZ5 97.81/97.93/98.50/98.62 call condor 3K given at 10.5.
BONDS: Equity Dip Provides Background Support
Jun-10 09:05
Another downtick in European equity indices helps limit any pullbacks in bonds. No meaningful macro headline flow seen since the UK labour market data.
