In one line: Dovish, but upside risks loom in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ GDP rose less than expected in Q2, mainly due to downward revisions to French and Irish GDP.
- Consumption and investment held back growth, while net trade did all the heavy lifting.
- Compensation-per-employee growth eased, in line with other measures of wage growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation fell to its lowest since July 2021 in August, marginally above the ECB’s target...
- ...The Bank will find it hard to justify its current restrictive stance, especially with wage growth easing.
- We think a September rate cut is more likely than not and keep our October cut in too, for now.
Claus Vistesen (Chief Eurozone Economist)Eurozone
THE ECB WILL CUT INTEREST RATES TWICE MORE THIS YEAR
- SEPTEMBER AND OCTOBER LOOK MOST LIKELY TO US
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Solid, but not enough to reverse the plunge in July.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Services boosted by the Olympics; manufacturing is sinking without a trace.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Energy inflation will back in August and September; the core will remain high.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A record high, but not sustainable; net portfolio flows are shifting.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The Eurozone’s trade surplus rebounded in June, but net trade in goods likely dragged on growth in Q2.
- We’re expecting this net trade drag on growth to continue for up to 12 months.
- The trend in import growth, however, remains much weaker than implied by our consumption forecasts.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Q2 GDP increase confirmed, despite another drag from industry.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The link between the ECB’s policy rate and the Taylor Rule, which broke after the GFC, is reasserting itself.
- A Taylor Rule with inflation expectations suggests the ECB is behind the curve on easing.
- The model also indicates that the policy rate won’t fall as much as the consensus expects.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Recessionary, but what’s happening in consumption?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Relief, but it will be short-lived.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A relief, but production likely fell back in July.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation held steady in July, but this means it was still in line with the SNB’s target.
- The headline inflation rate will creep lower in the coming months, allowing for further easing.
- EZ industry ended Q2 on a good note, enough to escape recession last quarter and boost GDP.
Claus Vistesen (Chief Eurozone Economist)Eurozone
