- We look for a chunky decline in the April PMIs; falling new orders likely will bear the brunt of the hit.
- The euro’s rise is supported by strong portfolio inflows, which look set to continue in Q2.
- Is euro strength a sign of a more structural shift in FX reserve portfolios? Perhaps, but it’s too soon to say.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB is making a dovish shift, conditional on a benign tariff outcome for core inflation.
- Energy prices and the euro can be cruel mistresses for policymakers looking for signals on inflation.
- Markets are pricing in the tail-risk for ECB rates; we still think the Bank will be more conservative.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Easing, as economic uncertainty rises.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Falling oil prices and a stronger euro are gifts to ECB doves.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Falling oil prices and a stronger euro are gifts to ECB doves.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Downside risks are building for EZ inflation, due mainly to the accelerated decline in energy prices.
- Initial evidence points to a disinflationary tariff shock to EZ core goods inflation, but keep an open mind.
- Services inflation will snap back in April, due to Easter effects, but the trend is still downward.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft, but selling prices point to upside risks for the core.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Before the tariff shock; what happens next?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will cut its deposit rate by 25bp this week, in line with the consensus.
- Falling oil prices and a strengthening euro point to downside risk to the ECB’s June inflation forecasts.
- ‘Uncertainty’ will be a key word for Ms. Lagarde this week, but doves have the upper hand, for now.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The 90-day delay to US tariffs, excluding China, is a stay of execution only; uncertainty remains high.
- Italian Prime Minister Meloni is the first EU leader to announce support to exporters hit by US tariff hikes.
- Italian public debt issuance will remain high this year, keeping BTP yields elevated.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A fall in investment will be the main driver of the incoming recession in the Eurozone.
- Germany will bear the brunt of the slowdown, with a 0.6% fall in GDP across Q2 and Q3.
- Fiscal stimulus and trade diversion are the main upside risks to growth relative to our new baseline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ is now likely entering a technical recession; the ECB will cut its deposit rate to 2.00% by June.
- Markets are pricing-in too dovish an outcome for the ECB; the bank will struggle to push rates below 2%.
- The economy is facing the trade shock in decent shape and fiscal stimulus still pose upside risks.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: German industry likely had a great Q1, but what awaits in Q2?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Not enough to salvage Q1, but the 3m/3m trend is turning up.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Growth and the surveys were picking up, before Mr. Trump’s tariff hammer.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Look through the noise to see a relatively modest US tariff package for the EU, all things considered.
- An ECB rate cut later this month is now fully priced in, but we still think the Bank will hold fire.
- The SNB can hold off from further rate cuts for now, despite the likely hit to growth from the US tariff hike.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft enough for an April cut? We don’t think so.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Soft enough for an April cut? We don’t think so.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The euro area economy comes into ‘Liberation Day’ in a relatively good position.
- A 25% blanket tariff on EZ exports to the US would bring down our 2025 growth forecast by 0.4pp.
- EU retaliation could raise EZ core goods inflation, but it depends on the size and scope of import tariffs.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- We still think the data support the idea of an ECB pause in April, but what will happen on tariffs today?
- EZ core inflation fell nicely in March, but it will snap back in April as Easter effects reverse.
- Services activity in Switzerland is coming off the boil at the start of the year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
