In one line: Exaggerated by an Irish drop, but still not good news.
Melanie Debono (Senior Eurozone Economist)Eurozone
- German manufacturing faces a host of challenges, but the country isn’t de-industrialising, yet.
- Politics are at odds with economic objectives in Germany; the latter will drive the former, eventually.
- Employment and investment in machinery are the key manufacturing variables to watch in 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The BTP-Bund spread is currently around 175bp, but we think it will fall to 100bp by end-2024...
- ..In line with the current spread between Spanish government-bond yields and Bund yields...
- ...Faster QT than we anticipate risks preventing the spread from falling to 100bp.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A big decline; base effects in energy point to a snap-back in December.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will keep rates and the pace of QT unchanged this week; all eyes on the new forecasts.
- We think the ECB will lower its 2024 inflation forecast by 0.5pp, to 2.7%, and we look for 2.0% in 2026.
- The consensus now expects the first ECB rate cut in June next year; we still believe March is a good bet.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Hit by falling inventories; productivity fell further.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Confirming that output fell in each of the big four in October.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Not enough to convince us that net trade was a boost to GDP in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still struggling at the start of Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ GDP growth was stung by falling inventories in Q3, offsetting a rise in public and private spending.
- The slowdown in investment is intensifying, but the outlook for household consumption is brightening.
- We now think EZ GDP will rise by 0.5% this year, and next year too; no upward inflation pressures here.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Italian GDP increased in Q3 rather than flat-lined, as the advance release had suggested...
- ...It is still more likely to fall than rise in Q4, and we are lowering our forecasts for H1 2024.
- BTPs are rallying, and we look for further gains; we see yields falling to just over 3% by mid 2024.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Early days, but it looks like a decline in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- An ECB pivot is underway; it will be confirmed at next week’s policy meeting, and by the new forecasts.
- The January HICP report and wage data remain risks to our call for a first rate cut in March.
- Early data from France and Spain suggest euro area manufacturing slowed further at the start of Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation fell in November and has now been in line with the SNB’s target for six months...
- ...It will likely slide further in H1 next year, after a probable small base-effects driven rise in December.
- Coupled with weak growth, the stars should align for the SNB to start cutting its key rate by March.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A modest rise, but still consistent with upside risks for the PMI.
Claus Vistesen (Chief Eurozone Economist)Eurozone
