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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

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interest rates

29 July 2022 EZ Monitor German core HICP inflation is still rising; it will peak in September

HICP core inflation in Germany rose further in July; it will peak in September, at just under 4%.

Energy inflation in Germany is now falling, but upside risks in gas and electricity are still substantial.

ESI sank in July, adding to the evidence of a significant slowdown in the EZ economy.

Claus Vistesen (Chief Eurozone Economist)Eurozone

15 July 2022 When will Swiss Inflation Start to Fall? August is a Good Bet

All signs point to a drop in Swiss imported inflation; weaker growth will weigh on domestic prices.

Calling the peak in the headline rate is fraught with difficulty; our best bet is August.

A snap election may still be avoided, despite Italy’s Prime Minister Draghi’s resignation.

Melanie Debono (Senior Eurozone Economist)Eurozone

14 July 2022 EZ Core Inflation is Peaking, but it will Remain High Throughout 2022

Core inflation in Germany was depressed by one-off fiscal measures in June; it will rebound in September.

French HICP core inflation likely peaked in June, but it is still rising sharply in Spain.

EZ industrial production surprised to the upside in May, but we still think it fell over Q2 as a whole.

Claus Vistesen (Chief Eurozone Economist)Eurozone

23 June 2022 Quo Vadis Bund Yields? Probably Not Much Further

Near-term risks to bund yields are tilted to the downside, after the +50bp leap in June.

But the macro trends, which have lifted bund yields above zero, aren’t going away anytime soon.

If we are right on the ECB’s terminal rate, bund yields have peaked; the curve should flatten further.

Claus Vistesen (Chief Eurozone Economist)Eurozone

17 June 2022 The SNB will Not Hike as Quickly as the ECB, CHF will Weaken

The SNB threw a bazooka yesterday, hiking interest rates and doing a U-turn on its approach to the CHF.

As a result, the franc saw its biggest intra-day jump vs. the euro since the Frankenshock of 2015.

We look for the Bank to hike rates again at each of this year’s two remaining meetings, before pausing.

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

EZ Datanote: Ad-Hoc ECB Meeting

In one line: The ECB draws a (thin) line in the sand. 

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

14 June 2022 What are the Neutral and Terminal Rates in the Eurozone

The neutral rate in the EZ is falling over time; it was likely negative immediately after the financial crisis.

We estimate the long-run neutral real rate to be 0.7% in the EZ, but the ECB policy rate won’t get that far.

We see the terminal ECB rate at 1.2-to-1.3%, 0.7-to- 0.6pp below current market-pricing.

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

EZ Datanote: ECB Press Conference, June 2022

In one line: 25bp in July, followed by 50bp in September, now seem a done deal.

Claus Vistesen (Chief Eurozone Economist)Eurozone

EZ Datanote: ECB Rate Decision, June

In one line: 75bp between now and September looks likely. 

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

7 June 2022 ECB Hikes Could Lift Mortgage Rates by 300bp Through 2023

Mortgage rates in the EZ tend to trend in line with the main ECB policy rates, so they will rise this year.

Around a fifth of mortgages incur a variable rate and so are sensitive to changes in ECB policy rates.

Households can withstand higher borrowing costs, but growth in house prices will slow significantly.

Melanie Debono (Senior 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

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