CZECHIA: Wage Growth Eyed As Another Key Signal Ahead Of Next CNB Meeting
The CZSO is set to publish wage data for 4Q24 at the top of the hour (08:00GMT/09:00CET), with Bloomberg consensus looking for an average real wage growth of +3.8% Y/Y versus +4.6% in the previous quarter. Average nominal wage growth was +7.0% Y/Y in 3Q24. According to the figures pencilled in by the Czech National Bank (CNB) in its Winter Forecast, nominal wage growth is expected to have stayed at +7.0% Y/Y, with real wage growth expected at +4.0% Y/Y.
- ING write that "wage growth likely decelerated in both nominal and real terms towards year-end, with the malaise in the manufacturing sector possibly leading to a reduced willingness to continue with lofty wage hikes." In their view, the spike in consumer inflation probably weighed on real wages in the last quarter of 2024, although real wage growth may have "remained solid enough to enable households to carry on spending."
- Komercni banka see average nominal wage growth at +7.2% Y/Y, which would be a slight acceleration from +7.0% in the previous quarter and would represent a slight pro-inflationary surprise relative to the CNB's forecast. On a sequential basis, they expect a marginal acceleration to +1.8% Q/Q from +1.7% prior. However, in the light of the previous decline, this would mean that the "average real wage was still only close to the level from end-2018." Overall, they think that given the solid productivity growth (+0.8% Q/Q), the data will not show any excessive inflationary pressure.
Preliminary data from the CZSO yesterday showed that headline inflation edged lower to +2.7% Y/Y in February from +2.8% prior, which was in line with expectations and marginally above the CNB projection. Today's wage data is another key input to the discussion ahead of the CNB's monetary policy meeting scheduled for March 26, with most analysts currently expecting a pause in the easing cycle. Some admit that it is a close call, however, and notable surprises in incoming data might persuade them to reconsider their view.
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GOLD TECHS: Northbound
- RES 4: $2917.5 - 1.764 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 3: $2900.0 - Round number resistance
- RES 2: $2867.5 - 1.50 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2845.2 - 1.382 proj of the Nov 14 - Dec 12 - 19 price swing
- PRICE: $2811.1@ 07:23 GMT Feb 4
- SUP 1: $2736.4/2692.6 - 20- and 50-day EMA values
- SUP 2: $2656.9 - Low Jan 13
- SUP 3: $2614.8 - Low Jan 6
- SUP 4: $2583.6 - Low Dec 19 and a key support
A bull cycle in Gold remains in play. Last week’s extension higher and Monday’s gains confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2845.2 next, a Fibonacci projection. The first key support to watch is $2692.6, the 50-day EMA. The 20-day EMA is at $2736.4.
OAT: SocGen Remain Cautious
Societe Generale note that “while our economists do not expect the French government to collapse at this stage, more challenges lie ahead.”
- They go on to suggest that “although investors' risk aversion towards OATs has diminished, we believe it is prudent to be defensive and consider re-entering OAT shorts if the OAT-Bund spread decreases to 70bp.”
- Looking ahead, they believe that “additional supply pressure and the potential for credit rating downgrades in H225 should counterbalance still relatively strong domestic and offshore demand for OATs.”
BUNDS: A busy overnight session
- Tariff Risks continue to drive multi cross assets overnight, the German Bund initially gapped lower, after gapping higher on Monday, in another busy early session.
- Risks remains tilted to the upside for the contract on growth concerns in Europe, and while some will look at 133.58, Yesterday's high for the next resistance, better will now be eyed at the 2.30% level in Yield, which is just below the January low of 2.309%.
- Support comes at Monday's opening gap, down to 132.34.
- There's no Tier 1 Data out of Europe, focus will be on the US Today with US JOLTS, Factory orders, and final Durable Goods.
- SUPPLY: UK £4.25bn 2025 (Equates to ~20.8k Gilt) Could somewhat weigh.
- SPEAKERS: ECB Villeroy, Fed Bostic, Daly.
