- Relief in the PMIs today? We hope so, but the overall message from the survey will remain negative.
- Germany’s exports slumped in October, likely due in part to port strikes in the US.
- EZ manufacturing should remain on the back foot in Q4, while France gets a new Prime Minister.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB eases by 25bp, with the SNB delivering a 50bp cut; bang in line with our expectations.
- Yesterday marks the start of a new regime for the ECB, but where is that neutral rate again?
- We think the SNB will ease again in March, by 25bp, which will be the final cut in this cycle.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Dovish, but staying open on the path in 2025 and the level of the neutral rate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: As expected; no longer need for a restrictive policy rate. Where is neutral?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- This year our EZ GDP growth forecasts were decent; we were close to the final outcome 50% of the time.
- Our forecasts on inflation were on the money, mostly, notwithstanding a wobble at the start of the year.
- Our ECB calls have been correct at each meeting, and our SNB forecasts were right 75% of the time.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Two-year yields will stay pinned close to 2% at the start of the year, before rising gradually…
- …But we expect the 2s10s Bund curve to start bearsteepening early next year.
- We think the early 2000s represent a good playbook for the ECB’s next moves on interest rates.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: That’s more like it, but Q3 details flatter to deceive.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Improving, but net trade in services will be a drag on growth in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stung by a plunge in energy production; core manufacturing fell slightly.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- In France, Mr. Macron must go back to the drawing board as his government is ousted.
- German orders and French industrial production show industry was still on the back foot in October…
- ...Clouds continue to form on the horizon, even if some boost will come from pre-tariff US orders.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The government falls; industrial production on track for a fall in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will cut its main policy rates by 25bp this week; listen closely for references to the neutral rate.
- Ms. Lagarde will struggle to meet dovish market expectations this week; expect hawkish re-pricing.
- EZ domestic demand jumped in Q3, but growth is set to come down sharply in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Our energy inflation forecasts have shifted higher in recent weeks, as 2025 gas prices have firmed.
- Barring a big shift in oil prices, inflation in liquid fuels will trough in Q2 and then rise for most of H2 2025.
- Wholesale gas prices now point to positive inflation in the electricity and gas HICP for most of 2025.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation edged up but remains low enough for the SNB to cut its key policy rate by 50bp next week...
- ...New Chairman Martin Schlegel’s recent comments support our call for a bigger-than-consensus cut.
- French budget woes are pulling the OAT-Bund spread up towards the 100bp mark.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Detailed data show a jump in consumers’ spending prevented a fall in Italian GDP in Q3.
- Consumers will continue to lead the way, and we are revising up our call for Q4 growth.
- But GDP will still likely rise by just 0.5% this year, half of the government’s latest forecast.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: German joblessness is still rising; rise in inflation expectations a lagged effect of rebounding inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: French inflation signals EZ HICP in line with the consensus.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: French inflation signals EZ HICP in line with the consensus.
Claus Vistesen (Chief Eurozone Economist)Eurozone
