- The US-EU trade deal is a decent outcome for the EZ economy, but it will sting politically in Brussels.
- A relatively small 1% fall in Irish Q2 GDP points to upside risk to this week’s EZ GDP growth print.
- The probability of a September rate cut will increase this week if our July inflation forecasts prove right.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Temporary slowdown in M1, we hope, resilient IFO and ISTAT surveys.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Unemployment fears fall slightly, but saving intentions rise further.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ money supply growth slowed in June, but the trend is solid and the credit impulse improved again.
- IFO expectations in Germany are rising across almost all sectors; is a cyclical upturn underway?
- French consumer confidence rose marginally in July, but Italy’s IESI was held back by services weakness.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Not much to see; near-term downside risks persist.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Not much to see; near-term downside risks persist.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Income expectations are firming, but so are saving intentions.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB stood pat, as expected; Ms. Lagarde turned hawkish during the press conference.
- We still think inflation below 2% over the summer will be enough for a 25bp rate cut in September.
- EZ PMIs for July point to resilience, but also continued fragile growth in the core economies.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will keep its powder dry this week, waiting for the September forecasts to decide its next move.
- The range of forecasts for the ECB’s policy rate next year has widened significantly.
We still see the deposit rate falling below 2% this year, setting up hikes by the end of 2026.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still on track to hand the ECB a 25bp rate cut in September.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Still on track to hand the ECB a 25bp rate cut in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- We’re lowering our Q2 GDP growth forecast for France, but lifting it for Spain and Italy…
- …We now think EZ GDP rose by 0.2% quarter-to-quarter, with the risk tilted to the upside.
- Near-term risks are balanced as we prepare to be marked-to-market on our H2 slowdown call.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Headline and core inflation remain on track to support a 25bp ECB rate cut by September.
- The key difference between our and the ECB’s latest forecast is that we see inflation rebounding in Q4.
- The outlook for the ECB is bi-modal; the Bank will stay at 2.0% in 2026 if it holds fire in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ goods trade surplus rose in May, but only because imports fell further than exports.
- Our Nowcast model points to upside risks to our forecast for Q2 growth, but it excludes net trade.
- We will update our Q2 growth forecasts on Friday with the EZ construction data for May.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Industrial production in the Eurozone slowed in Q2 after a breakneck Q1; what awaits in Q3?
- Leading indicators for manufacturing are mixed; the output PMI has been the best so far this year.
- A reversal of tariff front-running will weigh on output in H2, regardless of what tariffs the EU ends up with.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Solid rebound, even factoring-in jump in Ireland.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Isabel Schnabel draws another line in the sand for the ECB’s policy rate to stay at 2.0%…
- …but we still think she and other hawks will lose out as dovish data tee up a 25bp cut in September.
- Fair value models point to Bund yields at 2.5%, but fiscal policy and Dutch pension selling say otherwise.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: At target, and risks tilted to the downside over the summer.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Net trade in goods was a drag on growth in Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
