POLAND: Presidential Contenders To Face Off In Debate, Gov't Cuts Copper Tax
- Presidential hopefuls Trzaskowski and Nawrocki will face off in a televised debate tonight, possibly the last one before the run-off scheduled for June 1. The course of the debate may be influenced by yesterday's meeting between Nawrocki and Confederation's Mentzen (summary here), in which the candidate declared his broad support for the far-right party's agenda. This morning's media coverage has focused on several specific comments made by Nawrocki, including his indirect admission of participation in arranged fights of football hooligans, which may resurface during the debate. Trzaskowski will be a guest on Mentzen's podcast on Saturday, before both him and Nawrocki hold their respective campaign rallies on Sunday.
- Ultranationalist MEP Grzegorz Braun, who won 6.34% of the vote in the first round of the election, said that Nawrocki's camp reached out with a proposal to promise him a presidential pardon in exchange for his support in the second round. The European Parliament recently allowed Polish prosecutors to charge Braun with seven offences.
- The Together Party reiterated that its leader Adrian Zandberg, who got 4.86% of the vote, will not endorse any candidate ahead of the run-off. Zandberg said that if the ruling coalition was serious about its willingness to cooperate, it should call an extraordinary parliament session and amend the budget to boost spending on public housing and healthcare.
- The Finance Minister confirmed a change in the method of calculating the copper tax, effectively lowering the levy on state-owned copper producer KGHM. The change is intended to boost local copper production by 1mn tons over 10 years and is estimated to cost the budget around PLN500mn this year alone.
- The NBP will release April money supply data at 13:00BST/14:00CEST.
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BUNDS: Trade developments are firmly at the forefront
- Tariffs are clearly at the forefront, EGBs and Bund have brushed aside the weaker German PMIs, Bund now tests Yesterday's low, with the Risk Tone tilted to the upside following Trump's comment on Powell, and offers of a good deal for China on any potential trade talks.
- Yesterday's low in Bund is still holding right now, but downside traction will Open to 130.87, the 17th April low.
GERMAN DATA: Apr Flash PMI: Tariff-related Impacts Apparent Across Sectors
The German April flash services PMI was weaker than expected at 48.8 (vs 50.2 cons, 50.9 prior). This was the first contractionary reading since November 2023, and the lowest since February 2024. Taken alongside the soft French services reading, the Eurozone-wide print is set to miss expectations of 50.5. The manufacturing index softened a touch to 48.0 (vs 47.6 cons, 48.3 prior), implying a slightly contractionary composite reading of 49.7 (vs 50.5 cons, 51.3 prior).
Tariff-related impacts are apparent, with services firms suffering from heightened uncertainty and manufacturers citing order frontloading and stock building.
Key notes from the release:
- "Service providers commented on the influence of concerns over tariffs and related uncertainty, with some clients reportedly delaying decision-making and reining in spending amid worries about the economic and political outlook".
- "Goods producers meanwhile noted a second straight monthly rise in new orders, supported by a first increase in export sales in over three years"..."there was evidence from panellists of the increases being partly driven by the frontloading of orders and related stockbuilding".
- "Both manufacturers and services firms revised down their growth expectations for the coming year, with the latter seeing sentiment deteriorate particularly sharply to the weakest since September 2023".
- "The decline in German private sector employment extended to an eleventh straight month in April"..."Further retrenchment in the manufacturing sector contrasted with sustained job creation in the service sector".
- "A slight uptick in the rate of inflation in average prices charged for goods and services"..."Manufacturers raised charges despite reporting a steep and accelerated reduction in input costs in April....Services firms, on the other hand, recorded a sharp and slightly quicker increase in operating expenses".
- "Data were collected 9-22 April".
SWAPS: German ASWs Narrow As Sentiment Recovers
Front end of the German ASW curve leads this morning’s move lower, driven by broader risk-on price action largely derived from President Trump pushing back against the idea that he is looking to fire Fed Chair Powell and some comments pointing to a potential moderation in the Sino-U.S. trade war.
- Spreads vs. 3-month Euribor 1.2-3.0bp lower on the day.
- No meaningful reaction to the flash PMI data, Bunds incrementally weaker in the time since.
