In one line: Decent, but not enough to prevent a Q2 decline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ private-sector balance sheets are healthy; this dulls the monetary policy transmission mechanism.
- The private sector’s interest-rate-sensitivity has almost halved compared to before the GFC.
- Strong private balance sheets, fiscal activism and labour-hoarding will keep ECB policy rates elevated.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The fall in Eurozone house prices eased for the second straight quarter in Q1…
- ...and we see signs that demand is picking up sooner than we thought amid falling interest rates.
- We now think house prices will be broadly flat in 2024 after they slid by 1.2% in 2023.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Marine Le Pen’s RN fell flat on its face in the French parliamentary elections. The centre (left) holds on.
- The path to a working government in France is unclear, but OAT-Bund spreads have likely peaked.
- Germany’s trade surplus jumped in May, due mainly to a crash in imports; the July Sentix dropped.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still consistent with a rebound in the PMI, despite falling.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Goods spending is not benefitting from the recovery in real incomes, yet.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A nasty plunge in manufacturing, but don’t forget rising services output.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Friday’s industrial production data for Germany, France and Spain made for difficult reading.
- The recovery in EZ manufacturing was still missing in Q2, but we look for better in H2.
- The trend in retail sales remains flat, but they still likely picked up in Q2, and services spending rose.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation edged lower, despite an uptick in services; a further, albeit marginal, fall is likely.
- We look for two more SNB rate cuts, taking the policy rate to 0.75% by year-end; markets see fewer cuts.
- The appointment of Martin Schlegel as the new SNB Chairman points to continuity in the rates outlook.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Upward revision doesn’t change picture of cooling output growth in June.
Melanie Debono (Senior Eurozone Economist)Eurozone
- ECB President Lagarde struck a somewhat hawkish tone in her Sintra speeches…
- ...But the main message from ECB speakers is that more rate cuts are on the way, data permitting.
- Overall, the Sintra conference left no mark on market-based and consensus rate expectations.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Virtually unchanged, but still on track for around 2% by August.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Headline inflation fell marginally in June, but the core was stable; no rate cut in July, but September is on.
- Rising global shipping costs present little upside threat to core goods inflation, for now.
- Services inflation will remain hot in the near term, but surveys point to widening downside risks.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Markets are rallying on the prospect of no RN majority in France, but it’s bit too soon to cheer.
- Eurozone inflation fell further in June, and risks are tilted towards a downside surprise.
- German core inflation is now on a near-straight path towards 2% by the end of the year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft, and further declines are likely over the summer.
Claus Vistesen (Chief Eurozone Economist)Eurozone
