In one line: Soft in CPI, but the core HICP is sticky, and selling prices are rebounding.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation fell in January, and has been within the SNB’s target range for 20 straight months.
- The decline, and a further probable fall in February, solidifies the need for another rate cut.
- March’s cut will likely be the last in the current easing cycle, as inflation rises above SNB estimates in H2.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Only around 40% of EU Resilience & Recovery Facility cash has been disbursed to member states.
- Bureaucracy, rising costs and supply-chain issues are holding back the pace of fund absorption.
- A lot needs to be done by August 2026 to mobilise remaining funds; not everyone will get there.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Bunds have hovered close to fair value since the beginning of the year, according to our models.
- US Treasuries and Schatz point to upside risks to Bund yields, but fundamentals pull the other way.
- Near-term risks to Bund yields are tilted to the downside, before bear-steepening in H2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but also behind the Trump-curve.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- US tariffs on steel and aluminium would have only a minimal direct impact on EZ exports and GDP…
- …But the constant threat of tariffs is raising uncertainty for firms, adding to downside risks for capex.
- The CDU/CSU remains in pole position in Germany, but it is ceding ground to the AFD.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Snapping back, but strength unlikely to continue.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Output stung by falling auto production; exports finish 2024 on a strong note.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Attempts by the ECB to persuade markets to give up focusing on the neutral rate are laudable, but futile.
- The ECB’s own forecasts suggest that the policy rate should stabilise at neutral, wherever that is.
- EZ industrial production fell sharply in December, but we look for a solid rebound in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Retail sales still rose in Q4, and further increases are likely.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still pointing to underlying weakness in construction.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Signs of underlying strength, despite boost from major orders.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- House prices rose by around 3.5% in 2024, much stronger than we were anticipating…
- …A recovery in demand and still-subdued supply point to a further pick-up, supporting consumption.
- German industry ended 2024 on a better note than we expected, according to advance turnover data.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Poor, but output likely rebounded in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Bonds rallied yesterday on dovish headlines in the ECB’s wage tracker, but the details beg to differ.
- The EU is ready to strike back at US tariffs, but we still see a low risk of a prolonged tariff spat.
- ‘Habemus budget’ in France; industrial output fell in December, but it will rebound in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss GDP likely rose by 0.9% in 2024, much better than the 0.2% decline in neighbouring Germany.
- The US has not said it will raise tariffs on Swiss imports, but an EU-US trade tiff will still hurt slightly.
- We continue to think the SNB easing cycle will end in March, though risks are tilted towards further easing.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Hot, but all eyes on tariffs this morning.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Likely underestimating Swiss GDP growth still, and pointing to weaker inflation.
Melanie Debono (Senior Eurozone Economist)Eurozone
- President Trump will soon impose tariffs on imports from the EU, but the details are still up in the air.
- A 10pp increase in tariffs on EU goods is all but fully factored in by the drop in EURUSD since Q3.
- EZ headline and core inflation beat the consensus in January; still no perfect landing at 2% in sight.
Claus Vistesen (Chief Eurozone Economist)Eurozone
