- The BTP-Bund spread has fallen, in line with our call; we still believe it will hit 100bp by year-end.
- Will the attractive carry maintain foreign investor appetite for BTPs in 2024? We think so.
- Assuming no fiscal disasters, BTPs will continue to close the gap to their Spanish counterparts.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: GDP went nowhere last year; slowing wage growth supports June ECB rate cut.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still on a downtrend, but the outlook is getting brighter.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Quarter-to-quarter GDP growth in Italy will pick up pace this year, despite falling investment...
- ...But our forecasts still point to GDP rising by just 1.0% this year, the same as last year.
- The risks to our call are a bigger fall in capex than we expect, and a smaller increase in consumption.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: One for the hawks; slowdown easing quicker than previously thought and price intentions rise.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Swiss inflation edged down in February; it has been in line with the SNB’s target for eight months.
- It fell less than we expected; we are pushing out our forecast for the first SNB rate cut to June.
- The changing of the guard at the SNB in September won’t alter the outlook for monetary policy.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Investor sentiment remains a bright spot.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Falling output in France and Germany is holding back the recovery.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: German inflation likely fell a touch more than we thought in February.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Consumer inflation expectations still point to lower inflation, despite uptick in the ECB’s January survey.
- Firms’ surveyed expectations are still generally on a downtrend, and market measures have also fallen.
- We still think a downgrade in the ECB’s inflation forecasts next week will be enough for an April cut, just.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Money and credit data continue to signal a rise in savings and little in the way of new lending.
- We still think rising real income growth is now lifting spending, but the rebound will be lacklustre overall.
- Consumer confidence data remains subdued in Germany and France but should bounce back soon.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still pointing to downside risks to growth.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The inventory cycle in France likely bottomed out in Q4; total capital formation should rebound in H1...
- ...But surveys warn that growth in otherwise resilient services investment is now rolling over.
- A drop in auto sales will weigh on consumption in 2024, but rising real income growth will dominate.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Weakness in Germany holds back the recovery.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: On the up; we think it will continue.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Russia now accounts for just 15% of EZ gas imports, down from 45% before its invasion of Ukraine.
- Oil imports from Russia have slumped but are likely still entering Europe after being refined elsewhere.
- Non-energy trade has shrunk and will dissipate further this year, as the latest EU sanctions hit.
Melanie Debono (Senior Eurozone Economist)Eurozone