In one line: Decent headline, but rising unemployment fears is a red flag.
Claus Vistesen (Chief Eurozone Economist)Eurozone
RISKS TO OUR HAWKISH ECB CALL ARE FOR LESS EASING...
- ...ASSUMING ONLY SMALL US TRADE TARIFF INCREASES
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stung by plunge in net exports; consumption is now growing, but weakly.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The failure of FDP and BSW to reach 5% paves the way for a CDU/CSU and SPD coalition in Germany.
- Germany’s new government has its work cut out; fiscal reform and defence are at the top of the list.
- EZ inflation rose in January, but a sharp fall in energy inflation will pull the headline down in February.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A local high, but still no perfect landing at 2%.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Ugly crash in the services PMI is a fluke, we hope
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The upturn in the EZ PMIs stalled in February, due to a plunge in the French services index.
- Near-term outlook for services output is still decent, and the PMIs signal green shoots in industry, again.
- ECB hawks will focus on rebounding services prices; doves will note weak French labour-market data.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Europe will need to raise annual defence spending by €250B-to-450B over the next eight years.
- A joint EU financing programme for defence is coming; it could be a big package, close to €1T.
- Inflation and a low multiplier will eat up most of the boost to real GDP from rising defence spending.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Revisions in healthcare lifts CPI inflation from initial estimate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Political uncertainty is soaring in Europe, but EZ equities have never felt better; what’s up?
- We think markets are betting on another Hamiltonian moment in Europe, this time on defence policy.
- Europe will rise to the challenges it faces, but have markets bought into the hype too strongly?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A peace deal or ceasefire in Ukraine is unlikely to drive near-term relief in Eurozone energy prices.
- The EZ GDP growth slowdown in Q4 was smaller than previously thought...
- ...And EZ productivity growth picked up; or did it? Our ECB call is unchanged either way.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft in CPI, but the core HICP is sticky, and selling prices are rebounding.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Bunds have hovered close to fair value since the beginning of the year, according to our models.
- US Treasuries and Schatz point to upside risks to Bund yields, but fundamentals pull the other way.
- Near-term risks to Bund yields are tilted to the downside, before bear-steepening in H2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but also behind the Trump-curve.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- US tariffs on steel and aluminium would have only a minimal direct impact on EZ exports and GDP…
- …But the constant threat of tariffs is raising uncertainty for firms, adding to downside risks for capex.
- The CDU/CSU remains in pole position in Germany, but it is ceding ground to the AFD.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Output stung by falling auto production; exports finish 2024 on a strong note.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Attempts by the ECB to persuade markets to give up focusing on the neutral rate are laudable, but futile.
- The ECB’s own forecasts suggest that the policy rate should stabilise at neutral, wherever that is.
- EZ industrial production fell sharply in December, but we look for a solid rebound in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Signs of underlying strength, despite boost from major orders.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Poor, but output likely rebounded in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Bonds rallied yesterday on dovish headlines in the ECB’s wage tracker, but the details beg to differ.
- The EU is ready to strike back at US tariffs, but we still see a low risk of a prolonged tariff spat.
- ‘Habemus budget’ in France; industrial output fell in December, but it will rebound in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
