In one line: Disinflation will continue, despite stickiness in services.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Falling EZ inflation and our call for policy rate cuts mean we do not expect faster ECB QT...
- ...The Bank has pushed ahead with conflicting policies before, however, so the risk remain.
- If we are wrong, the most likely rate of faster ECB balance-sheet shrinkage is tiny, just €30B per month.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Italian GDP will probably fall in Q4, even if revisions don’t show it declined in the third quarter.
- Budget negotiations are heating up; BTP yields will stay high next year despite a likely fall in spreads.
- Spain may end the year with a government after all, but this won’t change the economic outlook.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The central message from ECB policymakers is still that interest rates won’t be lowered any time soon...
- ...but we still see a path to a first rate cut in March, as core inflation undershoots the ECB’s forecasts.
- Sticky wage growth and rising unit labour costs are the main threats to our forecasts for cuts in H1 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German industry was in recession in early H2, and we suspect it will remain so at least to year-end.
- Spanish industry ended Q3 on a high but was still also in recession.
- Construction will continue to struggle; risks to our call for EZ GDP to rebound are to the downside.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The PMIs warn that the slowdown in the EZ economy is becoming more broad-based...
- ...But they’re probably too pessimistic, and investor sentiment points to better headlines ahead.
- German factory orders edged higher in September, but the details show that overall weakness persists.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Pointing to better times ahead for the economic surveys.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The slowdown is becoming broad-based.
Claus Vistesen (Chief Eurozone Economist)Global
In one line: The slowdown is becoming broad-based.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Headline lifted by large orders, and revisions signal downside risks to the initial Q3 GDP estimate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Net exports in goods were virtually flat in Q3.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The increase in claims is accelerating; unemployment to rise further in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The rise in bund yields since summer is driven by a higher term premium, from a depressed level.
- Medium-term forecasts for the ECB’s policy rate suggest that the term premium could rise further.
- We still see a near-term fall in bond yields as core inflation undershoots the ECB’s expectations.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: EZ headline inflation will snap back in coming months; GDP is going nowhere.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation plunged in October, but energy inflation will snap back in November and December.
- We still see a much quicker fall in core inflation than the ECB between now and March.
- GDP in the Eurozone fell slightly in Q3, and we look for another poor quarter in Q4, with zero growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone