SPAIN DATA: Strong Spanish March IP Driven By Energy
The 0.9% rise in Spanish March IP (vs four analyst estimates ranging between 0.0-0.2%) still leaves 3m/3m growth negative at -0.3% (vs -0.2% prior). This is consistent with waning momentum in the manufacturing PMI, but we note that industry value added was 1.1% Q/Q in Q1, according to the flash national accounts.
- Energy drove the increase in March, rising 3.2% M/M and 3.4% on a 3m/3m basis (vs 2.4% prior).
- Meanwhile, consumer, capital and intermediate goods also saw positive sequential monthly readings.
- April data will be more interesting, as the direct and indirect impact of US tariffs and asssociated uncertainty begins to be captured.
- CaixaBank wrote in December that Spanish "exports of goods to the US accounted for 4.9% of total exports in 2023 and 1.25% of GDP" and although "Spain’s exposure to the United States is relatively low overall, although there are significant disparities between sectors".
- They wrote that: "Overall, the estimated direct impact of the raising of tariffs to 10% would amount to around 1.388 billion euros, equivalent to 0.1% of GDP. In a scenario with a raising of tariffs to 20%, the impact would amount to 3.181 billion euros, or 0.2% of GDP. It should be noted that these estimates only take into account direct exports from Spain to the US. There are other channels that would make the final impact greater, especially the indirect impact of value added by Spain on exports of other countries to the US".
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STIR: SONIA Whites Outperform On Dovish Ex-MPC Speak
The front-end of the SONIA strip outperforms Euribor counterparts, whites +1.0 to +6.5 ticks versus yesterday’s settlement levels and reds +4.0 to +5.5 ticks. U5 futures outperform, but remain short of yesterday’s fleeting session high (current 96.205 vs a high of 96.355 yesterday).
- Front-end outperformance appears in part be due to dovish comments from former BOE officials Bean and Blanchflower. Bean suggested the BOE should deliver a 50bp cut in May, while Blanchflower argued for an aggressive inter-meeting cut (see here).
- BOE-dated OIS price 27bps of easing through the May decision, 3bps more dovish than yesterday’s close. Meanwhile, there are now 77bps of cuts priced through year-end (versus a dovish extreme of over 90bps yesterday morning).
- BOE’s Lombardelli speaks at 1700GMT today. She is considered close to the centre of the MPC, and hence any comments they make that deviate from the “gradual and careful” language would be deemed to be important. And of course any discussion of the impact of tariffs on the UK will be watched closely.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-25 | 4.187 | -26.8 |
| Jun-25 | 4.087 | -36.9 |
| Aug-25 | 3.911 | -54.5 |
| Sep-25 | 3.833 | -62.3 |
| Nov-25 | 3.727 | -72.8 |
| Dec-25 | 3.682 | -77.3 |
| Feb-26 | 3.614 | -84.1 |
| Apr-26 | 3.599 | -85.7 |
| Source: MNI/Bloomberg |
EGB OPTIONS: Bund call spread seller
RXK5 130.50/134.00cs sold at 74.5 in 3k.
SILVER TECHS: Impulsive Reversal Wave
- RES 4: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 3: $32.947/34.590 - 20-day EMA / High Mar 28
- RES 2: $32.491 - 50-day EMA
- RES 1: $30.815 - Low Feb 28
- PRICE: $30.172 @ 08:12 BST Apr 8
- SUP 1: $28.351 - Low Apr
- SUP 2: $27.686 - Low Sep 6 ‘24
- SUP 3: $27.180 - Low Aug 14 ‘24
- SUP 4: $26.451 - Low Aug 8 ‘24 and a key support
Silver continues to trade in a volatile manner. Last week’s sell-off confirmed a clear reversal of its recent uptrend. The metal yesterday traded through support at $28.748, the Dec 19 low. A clear break of this level would signal scope for a continued sell-off, towards $27.686, the Sep 6 ‘24 low. Initial resistance to watch is $30.815, the Feb 28 low. The contract is oversold, gains would allow this set-up to unwind.
