GERMAN DATA: Prelim Q1 GDP Inline, 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.
- For 2025 in total, the (outgoing) government recently downwardly revised its official forecast by 0.3% to 0.0%, now broadly matching the 'joint economic forecast' of a set of research institutes, who are looking for 0.1% growth this year.
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EGBS: Bunds Don't Close Opening Gap Higher As Pullback Eases
Pullback from highs in EGBs comes to a halt as the recovery from lows in equity index futures doesn’t garner much further momentum.
- Elsewhere, note that the regional level German CPI data points to a roughly in line-with-expected national CPI reading (detailed in previous bullets).
- Bund futures have failed to close the opening gap higher on the move off highs, last 129.21 vs. pullback lows of 129.04. Cash yields 3-4bp lower, 5s now outperform on the German curve.
- EGB spreads to Bunds little changed to 1.5bp wider on the day.
OPTIONS: EUR Sees Sizeable Expiry Interest Against Both GBP, USD
Spot EUR/USD remains pinned between two relatively decently sized expiries rolling off at the cut today: $1.0800(E957mln), $1.0875-90(E672mln), which could contain range barring any major German inflation surprise or renewed tariff risk from Trump today.
USD/JPY, meanwhile, sees $868mln rolling off at Y150.00 and EUR/GBP with E1.1bln layered between 0.8360-70.
- AUD/USD: $0.6300(A$542mln)
- USD/CNY: Cny7.2800($915mln)
GERMAN DATA: State CPI data broadly in line with expectation
- The first few German state CPIs look broadly in line with expectations. We have received states which make up around 85% of the index and it is currently tracking at 0.32%M/M.
- In the Bloomberg survey German national CPI (not HICP) estimates were split between 0.2-0.4%M/M: the median estimate is 0.3%M/M but the modal estimate is 0.4%M/M.
- So we are broadly in line with expectations.
- The Y/Y is also tracking at 2.20% (consensus is 2.2%).
- Note that surprises in state CPI do not always fully correlate with surprises in HICP.
