- We look for EZ GDP growth at 0.3% quarter-to-quarter in Q3, slightly above the consensus, 0.2%.
- Today’s early-October inflation data in Germany and Spain will point to a rebound in the EZ HICP.
- An upward revision to EZ unemployment is the main dovish risk to rates this week.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Donald Trump has threatened a 10% tariff on goods imported to the US, if he becomes president.
- Our analysis suggests the hit to EZ GDP from a blanket 10% tariff would be limited…
- ...The GDP hit would be smaller if the EU retaliates but bigger if a US-China trade war escalates.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Supporting our view Germany will avoid recession this year but pointing to downside risks in Italy.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Money supply and lending growth picked up further at the end of Q3, a good sign for EZ GDP growth.
- ECB surveyed inflation expectations dropped in September but will likely rebound in Q4.
- The IFO survey in Germany improved marginally in October, but the IESI in Italy stumbled.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Barely budging fuelling market expectations for faster ECB rate cuts.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Down, in line with our call that French GDP will slow again in Q4 after an Olympics boost in Q3.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The EZ PMI barely budged in October and is consistent with slower GDP growth in Q4…
- ...But we think growth will remain solid despite agreeing with the PMI about a slowdown in France.
- Markets are trying to pull the ECB towards a 50bp rate cut in December; we still see 25bp.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The dovish shift in expectations for ECB policy and interest rates continues apace.
- Soft PMIs will add to the conviction in markets that an accelerated easing cycle is underway…
- …But next week’s calendar will likely be more challenging for dovish EZ rate expectations.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Italy’s MTFS plan suggests it is doing everything right, complying with new EU rules in quick order…
- ...This is because Rome is assuming potential growth of almost 1%, a dream scenario for Italy…
- ...What’s more, this year’s budget will be bigger than Rome thinks, making 2025 more difficult.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EURUSD won’t make it to 1.15 by year-end, but we still think it will get there, eventually, in H1 2025.
- Our inflation, interest rate and GDP forecasts signal upside risks for EURUSD from its current level…
- …But the trend in political uncertainty points to downside risk to this call.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Construction went back into recession in Q3.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: An inevitable correction; further softness ahead.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB's Bank Lending Survey points to looser lending standards and rising demand for credit...
- ...supporting our view that growth in investment and household consumption will turn a corner soon.
- Nowcast models for Q3 GDP point to downside risks to growth; we think they're misleadingly negative.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Growth indicators are rising in importance for policymakers.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The first big win for ECB doves in a long time.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: EZ trade balance pulled lower by rising imports, again.
Melanie Debono (Senior Eurozone Economist)Eurozone
