2 May 2025 Eurozone Monitor Trade uncertainty is now weighing on Eurozone investment

• We now think EZ investment is falling, mainly due to sustained weakness in machinery and equipment. 
• Leading indicators for construction and services capex look solid, at least before the tariff shock. 
• Surveys point to downside risks for inventories in H1, but brace for significant volatility this year.

EZ Datanote: Advance GDP, EZ, Q1 2025

In one line: GDP growth pick up in Q1 will prove short-lived as trade uncertainty hits. 

EZ Datanote: State CPIs & Unemployment, Germany, April/March 2025

In one line: Germany CPI looks softer than we anticipated, but core inflation rose. 

EZ Datanote: Advance GDP, Italy & Germany, Q1 2025

In one line: Supporting our above-consensus EZ call. 

EZ Datanote: Advance Inflation, France, April 2025

In one line: HICP coming in hot. 

EZ Datanote: Retail Sales, Germany, March 2025

In one line: Growth slowed in Q1 after a strong H2-24. 

EZ Datanote: Advance GDP, France, Q1 2025

In one line: Barely growing, and trade uncertainty could well keep it that way in 2025. 

1 May 2025 Eurozone Monitor Eurozone in rude health on the eve of the tariff shock

• The Eurozone economy was stronger in the first quarter than both we and the ECB expected. 
• The pick-up in growth will prove short-lived, as trade uncertainty bites down on investment. 
• Country data point to EZ inflation at 2.1% in April; we still see a chunky upside surprise in the core.

EZ Datanote: ESI, EZ, April 2025

In one line: Down but pointing to higher inflation expectations.

EZ Datanote: ISTAT Confidence, Italy, April 2025

In one line: Business sentiment sours on pessimism in services.  

EZ Datanote: Money Supply & ECB Inflation Expectations, March 2025

In one line: EZ inflation expectations jumped on the eve of the tariff shock. 

EZ Datanote: Advance GDP, Spain, Q1 2025 & Advance Inflation, Spain, April 2025

In one line: Growth slowed but remained solid; Inflation comes in below expectations.

EZ Datanote: GfK Consumer Confidence, Germany, May 2025

In one line: What tariff shock?

30 April 2025 Eurozone Monitor Spanish GDP growth has further to slow after easing in Q1

• Spanish growth slowed in Q1 but still comfortably outperformed growth in the rest of the big four. 
• The SNB is easing policy without cutting rates, signalling a desire to steer clear of negative rates. 
• Money and credit data remain positive on outlook for the EZ economy but tariffs still threaten. 

April 2025 - EZ Economic Chartbook

UNCERTAINTY OVER GLOBAL TRADE WILL WEIGH ON GROWTH...

• ...A SHORT TECHNICAL RECESSION IN H2 IS NOW OUR BASELINE

29 April 2025 Eurozone Monitor Where are the Eurozone's key asset prices heading this year?

• Market expectations for the ECB’s deposit rate to stay below 2.0% next year are a sitting duck. 
• Bunds are fairly valued at 2.5%; fiscal policy poses upside risk, but trade wars pull in the other direction. 
• EURUSD is overshooting our models; EZ equities are set to struggle for a while longer.

EZ Datanote: Retail Sales, Spain, March 2025

In one line: In line with our view that consumer spending growth is now slowing.

EZ Datanote: INSEE Business Confidence, France, April

In one line: French industry intends to make hay while the sun is still shining.

28 April 2025 Eurozone Monitor Robust inflation and growth data to lift EZ bond yields this week

• Our forecasts for Q1 GDP and the April HICP imply upside risk for ECB rate expectations this week.
• Robust national business surveys point to upside risk to our Q2 forecasts for GDP in Germany and France.
• Tariff front-running seems to be just what the doctor ordered for manufacturing in France.