ITALY DATA: Ita-coin Nowcast Negative For 9th Month
Feb-05 14:41
The Bank of Italy’s Ita-coin indicator (nowcast for IT trend growth) remained subdued in January, falling to -0.09 (vs -0.05 prior). The indicator has been below zero for nine consecutive months.
- The manufacturing sector has dragged on Italian activity over the past two years. The January PMIs saw the manufacturing PMI print in contractionary territory for the 10th month in a row (services just about remained above the neutral 50 level).
- Flash Q4 GDP was 0.0% Q/Q, a touch below the 0.1% expected. Current Bloomberg consensus is for sequential quarterly growth to be between 0.2-0.3% through 2025. Consumption is expected to drive this recovery, in part due to a resilient labour market and solid real wage growth.
- However, the December retail sales data (released this morning) pointed to continued consumer caution. Real 3m/3m sales were -0.2% (vs 0.3% prior), and rose just 0.1% Y/Y (vs -0.2% prior).
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SONIA: Put spread buyer
Jan-06 14:38
2NH5 95.30/94.80ps, bought for 1.5 in 5k.
GILTS: Marginal Outperformance Vs. Peers
Jan-06 14:37
Gilts unwilling to fade the London morning recovery at this stage, even as peers sell off again, leaving yields little changed to 1bp higher across the curve.
- Building $IG slate and Trump’s pushback against media reports pointing to a softer tariff approach helps Tsys away from highs, while Bunds are pressured by German CPI.
- 10-Year gilts 1bp tighter vs. Tsys on the day.
- Meanwhile, UK paper also outperforms Bunds by ~1bp, spread failed to break below 215bp on an earlier test, having not closed below that level since December 9.
- Futures -15 at 92.08, bearish technicals intact. Initial support and resistance 91.64/92.88.
- GBP725mln of medium-term APF sales due from the BoE in ~10 minutes.
CANADA DATA: Highest PMI Service Price Inflation Since May Despite Soft Demand
Jan-06 14:35
- The S&P Global Canada services PMI fell to 48.2 in December from 51.2 in Nov, implying its services economy contracted for the first time in three months.
- The press release shows a contrast between subdued demand and notably intensifying price pressures:
- "Canada’s services economy contracted for the first time in three months at the end of 2024. Market demand was reported to be subdued, with the downturn in the sector worsened by postal strikes. Firms nonetheless continued to fill long-held vacancies at their units, which meant that backlogs of work declined sharply. Cost pressures meanwhile intensified amid reports of higher wage bills. Output charges were raised in response to the greatest degree since May."
