In one line: Downtrend in jobless claims won’t last long.
Melanie Debono (Senior Eurozone Economist)Eurozone
- HICP inflation held steady in France in July, but dipped in Germany and Italy.
- The month-to-month changes in HICP prices point to EZ headline inflation staying at 2.0% in July.
- EZ unemployment was unchanged at a record low in June; we still expect a small rise by year-end.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: EZ GDP growth slows from tariff front-running boost in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Another big increase in Spanish GDP.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Spanish GDP rose by a whopping 0.7% quarter-to-quarter in Q2, after 0.6% in Q1.
- Growth in the Iberian country will now likely slow, but not as much as we previously thought.
- The Spanish and Belgian data—released yesterday—are still consistent with 0.2% growth in the EZ in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still on track for a final rate cut in September.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Nothing in here to suggest an ECB rate cut today.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The German economy was barely growing in July.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Supply and demand analysis on BTPs would suggest a lower yield over the coming years…
- ...But more accurate spread analysis implies it will fall only slightly from current levels out to 2027.
- We expect the BTP-Bund spread to fall to 50bp by year-end and to 30bp by Q1 next year.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Lending standards still tight while demand for loans is rising.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Lending standards for firms were left unchanged in Q2, so they remain tight…
- ...Meanwhile, banks made it harder for households to borrow money, and rejection rates jumped…
- ...Q2’s bank lending survey is one for ECB doves, but only slightly; it won’t prompt a cut this week.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Down, but big revision to the April data suggests Q2 was good.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A 30% US tariff on EU exports would send the EZ economy into recession in the second half of 2025.
- Markets don’t believe Mr. Trump’s tariff threats, but a US-EU escalation cycle is still a big near-term risk.
- The ECB will hold fire in July unless it is absolutely certain a 30% tariff is coming over the summer.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A third of Swiss pharma exports go to the US; a 200% tariff could pull GDP down 4% at the extreme.
- Offsetting factors remain and, in the near term, tariff front-running poses upside risks to our forecasts.
- The maximum direct hit to EZ GDP of a 200% US tariff on pharma is 1%.
Melanie Debono (Senior Eurozone Economist)Eurozone
