In one line: The core is on track for sub-2%, despite sticky services inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Inflation at 3% in Q2 likely will prevent ECB easing in June; a 50-to-75bp cut would need inflation at 2%.
- Sticky wage growth remains a risk to ECB cuts, but we think the Q1 numbers will play ball.
- It would require significant outliers in the non-HICP numbers for the ECB’s near-term path to change.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- European defence spending is ramping up and is set to double by 2026, in nominal terms.
- Europe needs to help Ukraine beat Russia, as well as rebuild its own military; the EU is here to help.
- Joint EU debt issuance to finance defence spending is coming; €100B-to-200B would be a good start.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The core is sticky, but will fall back soon; beware an incoming rebound in food inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Comments from ECB policymakers are keeping hopes of an April rate cut alive, but we still see June.
- The bar is high for the March HICP to deliver a down- side surprise big enough for the ECB to cut in April.
- We think bond yields will drift lower over the summer, before an inflection point in late Q3.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Likely the beginning of a more sustained softening in net exports.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Positive, but is it the start of a sustained pick-up?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ economy remained stuck in the mud in Q4; we think growth is now rebounding, slightly.
- A rise in consumers’ spending and a lift from inventories should be key drivers of growth in 2024.
- Industrial output in Germany and Spain rose in January, but a plunge in Ireland will drive the EZ headline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: See you in June, for the first rate cut.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: See you in June, for the first rate cut.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Virtually similar to January, which is now a hawkish line.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Virtually similar to January, which is now a hawkish line.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Ignore volatility in major orders; the trend in core orders is still down.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will cut its policy rate in June, barring a big upside surprise in the inflation numbers.
- Markets now see 100bp-worth of cuts this year; we think the ECB is happy with this picture.
- Factory orders in Germany crashed in January, but mostly due to volatility in major orders.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The leap in exports is not backed by the surveys.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft, but manufacturing likely will only be a small drag on Q1 GDP growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will open the door to a June rate cut this week, while emphasising the risk of sticky inflation.
- Staff projections will show a downgrade to the ECB’s headline inflation forecasts for 2024 and 2025.
- Utility margins in the Eurozone are soaring; this will soon become a hot potato for policymakers.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Is the door now shut on an April cut? Probably.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Is the door now shut on an April cut? Probably.
Claus Vistesen (Chief Eurozone Economist)Eurozone