EUROPEAN INFLATION: Spain HICP Up Marginally From Flash, Supports Upward Trend
Dec-12 09:47
Spain HICP ticked up marginally from flash to 3.16% Y/Y (rounding to 3.2%, flash rounded to 3.1%). It was broadly unchanged from October (3.18% 2dp Oct), while the monthly rate was unrevised from flash at 0.0% M/M (vs 0.5% Oct). This continues the gradual upward trend since May.
- Broad COICOP categories mostly remained unchanged from flash and October, but the largest moves were in Housing, water, electricity, gas and fuels at 5.6% Y/Y (vs 7.5% Oct) - the fall driven mostly by energy - and Clothing and footwear 0.5% (vs -0.4% Oct).
- INE had noted in the flash release that a decrease in electricity prices relative to November 2024 contributed to lower energy inflation.
- Non-core categories (and also food) were generally more stable, still supporting an increase in core HICP (which we calculate at 2.74% Y/Y, vs 2.61% Oct). Like the headline rate, core inflation has been on a steady upward trend through most of 2025.
- The mixed transport category decreased to 2.5% Y/Y (vs 2.7% Oct), though INE noted monthly strength due to an "increase in fuel and lubricant prices for personal vehicles". Air fares were a large contributor to this category falling overall, they printed -5.4%Y/Y this year (+8.6%Y/Y last year) - this was a bigger slowdown than in October.
- Recreation and culture rose to 1.8% Y/Y (vs 0.4% Oct), though mainly due to package holidays at 2.5% Y/Y (vs -1.0% Oct). Still, the recreation and culture basket remains high relative to its pre-COVID average.
- Looking at inflation breadth, this print doesn't change the picture too much, but does continue to cement the higher inflationary trend, with a small uptick in HICP items above 1% and 3% Y/Y, coupled with a fall in items below 1%.
- Spain has seen relatively sustained strength in other economic indicators recently, including GDP, industrial production and consumer spending. This inflation reading is broadly consistent with trends in economic activity.
- Spain accounts for 12% of the Eurozone HICP basket.
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GILT SYNDICATION: 1.75% Sep-38 linker: Spread set
Nov-12 09:46
- Spread set at 1.125% Nov-37 linker (GB00B1L6W962) +10.50bps (guidance was +10.50 / +10.75bps)
- So this is the tight end of the guidance range
- Size: GBP Benchmark (MNI expects GBP GBP4.5-5.5bln)
- Books in excess of GBP66bln (inc JLM interest of GBP3.9bln)
- ISIN: GB00BMY62Z61
- Expected Settlement Date: 13-November-2025 (T+1)
- JLMs: GSIB (B&D/DM) / JPM / NOMURA / SANTANDER
- Timing: Booksto close at 10:00GMT, today’s business
Source: Market source and MNI colour
ITALY DATA: Underlying IP Momentum Sluggish, But Surveys Suggest Improvements
Nov-12 09:36
Italian industrial production rebounded in September, rising 2.8% M/M, well above the 1.5% consensus. August’s already weak reading was revised down to -2.7% (vs -2.4% initial). Stripping out the monthly volatility, which may be a function of seasonal factors, IP momentum remains sluggish. That said, sentiment data points towards a gradual recovery in the months ahead.
- On a 3m/3m SWDA basis, production was down 0.5% in September, after a 0.6% fall in August.
- The manufacturing PMI was essentially neutral in October, printing at 49.9 after 49.0 in September and 50.4 in August. Meanwhile, ISTAT’s manufacturing confidence series rose to a 17-month high of 88.3 in October.
- On a single-month basis, the manufacturing component of IP (which has a weight of around 90%) rose 1.4% M/M (vs -1.9% prior), with mining and quarrying (12.0% M/M) and electricity, gas, steam and air conditioning supply (8.3% M/M) seeing much larger sequential changes.
- Within manufacturing, rebounds were seen in all major categories other than textiles (-4.4% M/M vs 3.6% prior).
UK DATA: Unemployment on course to reach November MPR peak rate ahead of Dec MPC
Nov-12 09:34
- Just like AWE data, unemployment data is produced using the 3-month average of three single month prints – and each of these three months has a different cohort.
- For some time now the cohort seen in November 2024, February, May and August has consistently seen higher single month prints than the other two cohorts (which have seen broadly similar readings to each other).
- There was a significant 0.44ppt increase in the single month unemployment rate seen in the print released last month from 4.87% in May to 5.31% in August which led to the headline 3-month rate increasing from 4.66% to 4.83%.
- Expectations had been that the September single month print would see a smaller jump relative to June. As it turns out, however, a marginally larger 0.47ppt change was seen in this cohort’s single month print from 4.56% in June to 5.03% in September. This left the headline 3-month rate at 4.97% (around a tenth above consensus).
- To put this into context, the 4.97% print today is the Bank of England’s Q4 forecast and it has been reached a quarter earlier than expected (making last week’s MPR projections already look a bit stale).
- If we assume that we see a similar increase in the single month rate between July and October we would be left with a headline 3-month unemployment rate marginally above 5.1%. Indeed, to round up to a 5.1% print the next cohort only needs to see a 0.25ppt increase between October and July - so almost 2 tenths lower than seen in the other two cohorts.
- The latest MPR projections only see a 5.1% print reached by Q2-26 before falling back to 5.0% or lower through the rest of the forecast. This does therefore seem to be meaningful downside news.
- Note that if we do see this 5.1% print in the October data, the MPC would see this print on the Monday morning ahead of their December policy decision. Obviously we still have inflation data to come, but it does appear that the labour market data is doing its job to convince Governor Bailey that the soft print seen ahead of the November MPC meeting was not a one-off.
