- 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
In one line: Still in recession; Q3 saw the sixth straight quarterly fall in output.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: No signs from these data that GDP will be revised.
Melanie Debono (Senior 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: German data included, EZ retail story rosier than previously thought
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Shallow recession in Spanish industry won’t last.
Melanie Debono (Senior 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: PMI-suggested stagnation unlikely but Trump win bodes ill for already-weak demand for manufactured goods.
Melanie Debono (Senior 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
- Floods mean the risk to our call for Spanish GDP to ease slightly in Q4, to 0.6%, is for a bigger slowdown.
- It would take a significant hit to GDP for Spain to underperform the rest of the big four though.
- French industry rose over Q3, despite the fall in September; it is unlikely to increase again in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Decent GDP data support investor sentiment but it remains subdued.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Little to suggest the rut in industry is ending, despite increase.
Melanie Debono (Senior 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
