- Germany, Italy, Spain, Ireland, Finland and Portugal are most exposed to US tariffs on Eurozone exports.
- An increase in tariffs on all products to 20% would drive a 5-to-10% fall in EZ export revenue.
- The devil is in the detail, however, and targeted tariffs could make a much bigger impact on EZ exports.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Eurozone negotiated wage growth jumped in Q3, boosted by one-off payments in Germany.
- The Q3 leap in wage growth won’t faze the ECB, but it helps our call for a “small” 25bp cut in December.
- The EZ construction industry remains under the weather, despite some improvement in the surveys.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Hanging on, but we still think the headline will come down soon.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Eurozone headline inflation rebounded in October, and in November it will rise again a touch, to 2.3%.
- We see little in the EZ inflation data to justify a 50bp rate cut in December; we still look for 25bp.
- The ECB will soon need to answer questions about the neutral rate and the net effect of Trump tariffs.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Subdued, but both the headline and core will rise in November.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss GDP slowed in Q3, in line with expectations; the report is unlikely to worry the SNB.
- Intensifying deflation pressures, however, are an issue for the Bank; more cuts are coming.
- We doubt the SNB will lower rates below zero; it has other tools, but their effectiveness is patchy.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Core firmer; upside risks to electricity tariffs?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German inflation rebounded in October, lifted by rising energy, food and services inflation.
- Energy inflation will climb further in November and December; spot electricity prices are soaring.
- Core HICP inflation should fall fractionally in November, but the national rate should be stable.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Germany could head to the polls as soon as January, if enough paper can be found to print the ballots.
- Polls point to a grand coalition between the SPD and CDU/CSU as the most likely outcome.
- We still think new elections in Germany will pave the way for a more pro-growth fiscal policy.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A raft of ECB speeches got lost amid the furore that followed the US election and Berlin’s political crisis.
- Comments support our view of slow easing from here, and fewer cuts than markets have priced in.
- National industrial data imply this week’s EZ read will be ugly; industry still escaped recession in Q3, just.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Early elections are coming in Germany; will they pave the way for looser fiscal policy in 2025? We think so.
- The addition of Germany to EZ retail sales data led to upward revisions to most months back to April…
- ...Further strength is likely in Q4, but the recession in industry rumbles on, and headwinds are mounting.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Fiscal stimulus in Germany? — Manufacturing and net trade stumbled at the end of Q3.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A Trump presidency is more of an inflation threat to the EZ economy than a growth threat.
- We’re sticking with our call for the ECB to ease by less than markets expect next year.
- Will EZ export orders jump in the final stretch of Q4 as foreign firms scramble to beat potential tariffs?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Punchy, but major orders were a key driver.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A Trump presidency is more of an inflation threat to the EZ economy than a growth threat.
- We’re sticking with our call for the ECB to ease by less than markets expect next year.
- Will EZ export orders jump in the final stretch of Q4 as foreign firms scramble to beat potential tariffs?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Poor, and it will get worse at the start of Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Sell EURUSD and bonds if you’re convinced that Mr. Trump will win Tuesday’s US election.
- Leading indicators for EZ investment are downbeat, but growth still has room to rebound, a touch.
- Capacity utilisation rates point to robust growth in services capex, and the inventory cycle is turning.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation surprised to the downside in October, falling to a 40-month low of just 0.6%.
- The headline will likely be further below the SNB’s call in Q4, so we now look for even more easing.
- A floor exists, however; the SNB is heading towards the zero lower bound.
Claus Vistesen (Chief Eurozone Economist)Eurozone
ECB DOVES HAVE THE UPPER HAND
- BUT THEY WILL STRUGGLE TO PUSH THROUGH 50BP IN DECEMBER
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A big blow to hopes of a 50bp cut in December.
Claus Vistesen (Chief Eurozone Economist)Global
