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Eurozone Publications

Below is a list of our Eurozone Publications for the last 6 months. If you are looking for reports older than 6 months please email, or contact your account rep

Please use the filters on the right to search for a specific date or topic.

governing council

28 Sept 2022 Eurozone Monitor If We are Right on Inflation, the ECB will Hike by 75bp Next Month

  • We detect no push-back from ECB policymakers against the idea of a 75bp rate hike next month.
  • The ECB is clear in its message; higher rates are needed to reduce demand in line with supply.
  • Quantitative tightening makes little sense in the EZ, but the discussion has started, all the same.

Claus Vistesen (Chief Eurozone Economist)Eurozone

13 Sept 2022 Eurozone Monitor The ECB is Playing a Risky Game, but it has no Choice

  • No one knows how the EZ economy will respond to a 250-to-300bp increase in interest rates.
  • But the ECB is not necessarily making a policy mistake; the surge in inflation can’t be ignored.
  • Sustained fiscal stimulus and a resilient labour market offer hope that the ECB will get away with it.

Claus Vistesen (Chief Eurozone Economist)Eurozone

9 Sept 2022 Eurozone Monitor The ECB is Taking no Prisoners; We see Another 75bp in October

  • The ECB goes big with a 75bp rate hike, and we are inclined to look for another 75bp in October.
  • We think the ECB wants to get its main policy rates to 2-to-2.5%, between now and Q1 next year.
  • The ECB now sees the EZ economy stalling in H2-22, but rates will continue to increase.

Claus Vistesen (Chief Eurozone Economist)Eurozone

7 Sept 2022 Eurozone Monitor We Think the ECB will go Big This Week, but It's a Close Call

  • We look for a 75bp hike from the ECB this week, but the consensus is evenly split between this and 50bp.
  • Ms. Lagarde will be asked about the terminal and neutral rates; will she get pinned down on a number?
  • Factory orders in Germany fell further in July, and turnover points to a decline in production.

Claus Vistesen (Chief Eurozone Economist)Eurozone

6 Sept 2022 Eurozone Monitor The End of Russian Gas Flows is Pushing the EZ into Recession

  • The surge in gas prices adds to our conviction that inflation will remain high, despite a hit to EZ activity.
  • A probable EZ recession is weighing heavily on the outlook for Switzerland’s economy in H2.
  • EZ investor sentiment tumbled in September; it will sour further as the ECB continues to hike.

Melanie Debono (Senior Eurozone Economist)Eurozone

2 Sept 2022 Eurozone Monitor No Help for ECB Doves Looking Beyond the CPI Data for Support

  • ECB doves have little to pin their hope on for next
    week, despite soft survey data in manufacturing.
  • The EZ labour market was resilient at the start of Q3, but spending, ex-services, was mixed.
  • EZ manufacturing is now likely in recession, but this is not enough to stay the ECB's hand.

Claus Vistesen (Chief Eurozone Economist)Eurozone

12 Aug 2022 EZ Monitor The ECB will Flexibly Reinvest PEPP Redemptions through H2

We think the ECB will continue to buy peripheral bonds using redemptions from core countries...

...This should, we think, mean that the TPI can remain in the shadows this year.

We still believe the ECB will hike by 100bp more this year; the bund 2s10s will invert in Q1-23.

Claus Vistesen (Chief Eurozone Economist)Eurozone

22 July 2022 EZ Monitor The ECB goes big on rates, and Italy heads for elections

The ECB ends forward guidance with a surprise 50bp hike; we see 25bp in September and October.

The new anti-fragmentation tool sounds like a bazooka, but after reading the details, we are not sure.

Italy will head to the polls in September; the far-right is polling highest.

Claus Vistesen (Chief Eurozone Economist)Eurozone

6 July 2022 How Much Flexibility Does the ECB Have on PEPP Reinvestments?

The ECB did not use its entire PEPP envelope and diverged from the capital key also in the APP.

Reinvestments will be used flexibly to cap spreads; rumours suggest cross-country purchases started.

Our estimates point to a maximum of €10B worth of PEPP reinvestments for BTPs; that’s not enough.

Melanie Debono (Senior Eurozone Economist)Eurozone

16 June 2022 The ECB Draws a Line in the Sand, No Change at the SNB in 2022?

The ECB responds to market fragmentation, but it still needs to deliver something concrete, eventually.

If the SNB raises its inflation forecast to 2% or above for 2023 and 2024, hikes are coming.

An unwinding of favourable bank deposit tiering levels or softer language on the CHF, imply the same.

Claus Vistesen (Chief Eurozone Economist)Eurozone

15 June 2022 What Degree of Fragmentation is Too Much for the ECB?

We think the ECB’s pain threshold for BTP spreads is 300-to-350bp, much higher than in the past.

An explicit commitment to an active use of PEPP reinvestments is the most likely initial response.

BTP spreads will rise further in the near term, but Italian 10-year bonds are attractive in their own right

Claus Vistesen (Chief Eurozone Economist)Eurozone

10 June 2022 The ECB will Lift Rates by 150bp Between Now and February

The ECB will lift its deposit rate by 25bp in July, and follow up with a 50bp hike in September.

Beyond September, we now pencil-in three 25bp hikes; in October, December and February.

The bloodbath in Italian bond markets will soon be a problem for the ECB; new tools are needed.

Claus Vistesen (Chief Eurozone Economist)Eurozone

9 June 2022 A New Era Dawns, the First ECB Rate Hike Since 2011 is on the Way

The ECB will cross the Rubicon today, priming markets for the first rate hikes since 2011.

We still think the deposit rate will be zero by July, probably via a 50bp rate hike next month.

The ECB’s new forecasts will be stagflationary; the 2024 baseline for inflation will increase to 2%.

Claus Vistesen (Chief Eurozone Economist)Eurozone

1 June 2022 We Now Think the ECB's Deposit Rate will be at Zero in July

The EU finally agrees on a Russian oil embargo, but pipeline oil to Eastern Europe will keep flowing.

We now see a real risk of panic at the ECB; the deposit rate will be at zero by July.

Revised data show that Italy’s economy actually grew in Q1 while Swiss GDP beat expectations.

Claus Vistesen (Chief Eurozone Economist)Eurozone

24 May 2022 The ECB is Clear as Rain; the First Rate Hike will Come in July

The ECB is nailing its colours to the mast; the deposit rate will be hiked in July and September.

The euro is a decent predictor for import price inflation in some goods, but not for the core HICP.

Soaring PPI inflation points to sustained upside risks for core consumer goods inflation in Q2.

Claus Vistesen (Chief Eurozone Economist)Eurozone

20 May 2022 The BTP Sell-Off has Further to Run; Spread to Bund will Stay High

BTP yields have risen further than their counterparts in recent months, as ECB tightening edges closer.

More issuance and the end to QE point to a further increase in long-term bond yields in Italy.

The BTP yield curve will steepen further, despite higher ECB policy rates driving up short rates.

Melanie Debono (Senior Eurozone Economist)Eurozone

19 May 2022 EZ Core Inflation will Remain Above 3% Through 2023

EZ headline inflation will remain above 7% through Q2, mainly due to higher core and food inflation.

We now see EZ core inflation above 3% through 2022, adding to our conviction of a rate hike in July.

Inflation expectations are rising in the euro area, but we see little evidence of a wage-price spiral.

Claus Vistesen (Chief Eurozone Economist)Eurozone

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