In one line: Overall confidence is improving, but still subdued.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The jump in investor sentiment points to a higher EZ Composite PMI in March.
- Current account data suggest services trade may be a drag on EZ GDP in Q1; inventories may offset it.
- The INSEE survey shows improving, but still subdued, business confidence in France.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Construction kept going at the start of 2025.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Headline inflation in the Eurozone fell to 2.3% in February, which is as good as it will get this year.
- Non-energy goods is a wild card for inflation in March; base effects point to a big jump.
- A blanket and sustained EU retaliatory tariff would lift inflation, but we doubt this is on the cards.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Up and away; let’s hope the fiscal stimulus package passes today.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Germany needs a budget deficit of 4% of GDP over three years to lift defence spending quickly to 3.5%.
- Defence and infrastructure spending require more Bunds; €100B per year over the next decade?
- Rising uncertainty will weigh on Bund yields in Q2, but they’re right to fear the new fiscal plans.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation has fallen thus far in Q1, so the SNB will trim rates this week...
- ...But another jumbo 50bp cut is highly unlikely; we look for a 25bp cut, taking the policy rate to 0.25%.
- The Swiss monetary easing cycle likely ends there, with inflation set to rise over the coming months.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ manufacturing is on track for a strong Q1, but trade uncertainty looms over the rest of the year.
- The EU’s retaliation against US metals tariffs still leaves a small overall share of trade directly affected.
- EU import tariffs point to upside risk to consumer price inflation in core goods, in theory.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Solid rise in industrial output, but net trade remains subdued.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The range of economic outcomes in the Eurozone is widening; be ready for whiplash in the surveys.
- High-stakes negotiations between the EU and the US in Q2, on tariffs, Ukraine, NATO and Greenland.
- Mixed economic data in Germany; is industrial production finally rebounding?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stung by plunge in major orders; core orders should rise in coming months.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Domestic demand drove growth in the Eurozone in the second half of 2024; can it continue?
- Inventories and net trade will be important swing factors for growth in the first half of 2025.
- Our new forecasts put us well above the ECB; trade policy uncertainty is the dark horse.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Another data point in favour of ECB hawks.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Germany has fired a fiscal bazooka, which won’t go unnoticed by the ECB today.
- Swiss inflation fell further in February, to 0.3%; we think this is a trough, for now.
- We expect the SNB to cut by 25bp later this month, marking the final reduction in this easing cycle.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EU’s first defence package contains only a small element of joint loans; more will be needed soon.
- EZ unemployment remains pinned at a record low, though we think it will start rising soon, slowly.
- Markets see tariff risks as dovish for ECB policy, but the economic data are pulling in the other direction.
Claus Vistesen (Chief Eurozone Economist)Eurozone
