ECB: Latest Wage Tracker Consistent With Softening Compensation Expectations
The ECB’s latest forward-looking wage tracker update (which includes agreements signed up to the first week of April) remains consistent with the Governing Council’s base case of easing compensation pressures through 2025.
- Compared to the March iteration, the latest wage tracker excluding one-off payments (which we think gives the best view of underlying compensation pressures) has a slightly lower profile in Q1/Q2 2025, but an unchanged terminal in Q4.
- Q4 2025 wage growth excluding one-offs still tracks at 3.02% Y/Y.
- The wage tracker with unsmoothed one-off payments tracks Q4 growth at 2.88% Y/Y (vs 2.85% in March), while the headline wage tracker has 1.62% Y/Y (vs 1.55% in March).
Definitions of the different metrics according to the ECB:
- The headline ECB wage tracker shows negotiated wage growth that includes collectively agreed one-off payments, such as those related to inflation compensation, bonuses or back- dated pay, which are smoothed over 12 months.
- The ECB wage tracker excluding one-off payments reflects the extent of structural (or permanent) negotiated wage increases.
- The ECB wage tracker with unsmoothed one-off payments is constructed using a methodology that, both in terms of data sources and statistical methodology, is conceptually similar to, but not necessarily the same as, the one used for the ECB indicator of negotiated wage growth.
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GILTS: Off Early Lows, Curve A Little Steeper
Gilts open lower given the broader risk-off price action on the back of reports pointing to narrower U.S. tariff focus come April 2.
- Futures trade as low as 91.23 before a recovery to 91.45.
- Initially support at the Mar13 low (91.07), with the bearish technical theme intact.
- Yields little changed to 1bp higher, curve a touch steeper.
- 2s10s and 5s30s continue to respect psychological resistance levels at 50bp & 100bp, respectively.
- Flash PMIs are due this morning.
- BoE Governor Bailey will speak later today, we provided more colour on that in our BoE review.
- Weekend headline flow reaffirmed familiar domestic fiscal themes ahead of the Spring Statement, with cost cutting in Whitehall eyed and Chancellor Reeves continuing to stress adherence to the fiscal rules.
- The Spring statement will be published on Wednesday, as will the latest CPI data and updated forecasts from the OBR. Slightly further out, Friday will bring monthly retail sales and final Q4 GDP data.
SILVER TECHS: Uptrend Remains Intact
- RES 4: $35.736 - 1.236 proj of the Feb 14 - Apr 12 - May 2 ‘24 swing
- RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 2: $34.548 - High Oct 29 ‘24
- RES 1: $34.233 - High Mar 18
- PRICE: $33.126@ 08:03 GMT Mar 24
- SUP 1: $32.665 - Low Mar 21
- SUP 2: $32.189/30.815 - 50-day EMA / Low Feb 28 and key support
- SUP 3: $29.704 - Low Jan 27
- SUP 4: $28.748 - Low Dec 19 and a bear trigger
Silver has pulled back from its recent highs. Short-term weakness is considered corrective and a bull cycle remains in play. The metal has recently breached a key resistance at $33.397, the Feb 14 high, confirming a resumption of the bull cycle that started Dec 19. This signals scope for a climb towards $34.903, the Oct 23 ‘24 high and a medium-term bull trigger. Key trend support has been defined at $30.814, the Feb 28 low.
USDCAD TECHS: Resistance Remains Exposed
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4332 @ 07:59 GMT Mar 24
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is unchanged and is trading closer to its recent lows. The bull cycle that started Feb 14 is intact and MA studies remain in a bull-mode position, highlighting a dominant uptrend. A near-term key support to watch lies at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
