- Polls point to a parliament split down the middle in France, but the second-round vote is a wildcard.
- RN’s and NFP’s economic plans will anger bond markets and the EU; Mr. Macron will likely welcome this.
- Survey data so far point to only a modest hit to sentiment in France from rising political uncertainty.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Revisions show that Spanish GDP rose by 0.8% on the quarter in Q1, more than previously thought.
- More of the same is likely in coming quarters; survey and hard data are positive, especially in services.
- Spain’s GDP will likely leap by 2.8% this year, in contrast to 0.8% in the Eurozone as a whole.
Melanie Debono (Senior Eurozone Economist)Eurozone
- German surveys turned south in June, but don’t write off the idea of a rebound in growth just yet.
- Early hard data suggest GDP rose again in Q2, but a fall in construction will weigh on growth.
- Leading indicators tentatively hint at a bottom in German investment, but the rebound will be slow.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Slower but still decent growth and price pressures are easing.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Stung by renewed weakness in manufacturing.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Hit by political uncertainty, but no panic.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ PMI fell in June, but it rose solidly over Q2 as a whole; all eyes are now on the early Q3 data.
- A drop in the EZ manufacturing output PMI raises questions about the rebound in industry; a blip?
- The French PMIs were stung by political uncertainty; we think it will blow over by August.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still-rising; lifted by a strong labour market and firming real wage growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The SNB cut rates for the second straight meeting, and lowered its inflation forecasts...
- ...We look for another 50bp-worth of rate cuts this year, more than financial markets
- expect.
The Bank will have to match ECB cuts to prevent a significant appreciation of the CHF and deflation.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Q1 wasn’t as good as previously thought, and output will fall back in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Boosted by a rebound in the surpluses of goods and services.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The BTP-Bund spread has risen in line with French spreads; it will increase further but then fall to 100bp.
- France and Italy are in an EDP, no surprise here; any new French government has limited spending room.
- Political uncertainty will keep the EURUSD below 1.10 for now, but 1.18 by year-end is a decent bet.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Transport, hospitality and insurance are key drivers of sticky services inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Inflation in the Eurozone was uncomfortably hot in May, but 2% over the summer is still a good bet.
- Surveys signal downward risks for services inflation, but sports events are upside risks over the summer.
- We think the ECB will cut its policy rate by 25bp in September, December and March.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ hourly labour cost growth data were the final wage indicators to be published for Q1…
- ...The data confirm wage growth picked up in Q1, but mainly due to one-offs in Germany.
- Wage growth will slow in due course, but a July rate cut is off the table; September is not certain either.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Imports look to be on the rise again.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Swiss inflation held steady in May but is likely to fall in the coming months, to around just 1% by August.
- Weak growth will drag down domestic inflation, and gas & oil prices point to a falling imported rate.
- The SNB will probably cut its key policy rate again this week, by 25bp to 1.25%; more cuts are likely.
Claus Vistesen (Chief Eurozone Economist)Eurozone
