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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 info@pantheonmacro.com, or contact your account rep

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16 Aug 2022 Eurozone Monitor EZ Equities will Struggle to Build on their Recent Gains

Equities want to believe in a monetary policy pivot; we don’t share their optimism.

Valuations are now attractive for EZ equities, but we still think earnings have further to fall.

Eurostoxx 50 will fall 4% by year-end; we see gains of 10% and 13% in ’23 and ’24, respectively.

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

5 Aug 2022 EZ Monitor If polls are right, Italy will soon get a right-wing government

If polls are to be believed, the next Italian government will be formed of a right-wing coalition.

This does not change the near-term outlook for the Italian economy; it will be in recession by Q4.

Markets shouldn’t fear the right wing, but equally they should not forget its unpredictability.

Claus Vistesen (Chief Eurozone Economist)Eurozone

4 Aug 2022 EZ Monitor Swiss Inflation will Peak in August; will Spanish GDP Slow in Q3?

We think Swiss inflation will peak in August; the September reading will be accompanied by a fall in CHF.

Survey data suggest that the risks to our Q3 GDP call for Spain are to the downside...

...Industry won’t dodge the slowdown elsewhere, but our forecast will come down if tourism data turn.

Melanie Debono (Senior Eurozone Economist)Eurozone

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

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

21 July 2022 EZ Monitor Europe remains exposed to a quick end to Russian gas flows

Russian gas will soon flow to Europe again, but at a severely reduced rate; a full shutdown remains likely.

The IMF estimates that Europe will be short some 50bcm gas if Russian supplies are halted, at best.

Only demand compression, via higher prices and or rationing, solves this problem; it will sting.

Claus Vistesen (Chief Eurozone Economist)Eurozone

20 July 2022 The ECB will Lift its Depo Rate by 25bp this week...or Maybe 50bp

We think the ECB will raise its depo-rate by 25bp this week, to -0.25%; a 50bp hike would not be a shock.

The ECB’s new anti-fragmentation tool probably won’t be unveiled in full this week.

Output in euro area construction fell in Q2, but it was only a minor drag on GDP growth.

Claus Vistesen (Chief Eurozone Economist)Eurozone

19 July 2022 Fiscal Aid in Spain and Italy is Not Enough to Boost Consumption

Italy’s overall aid to offset rising living costs still trails that in Spain, despite new fiscal support.

The measures announced so far likely won’t fully offset the hit to real incomes from higher inflation.

Windfall taxes are not enough, and further debt issuance will keep a floor under debt servicing costs.

Melanie Debono (Senior 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

EZ Datanote: Final Inflation, Germany, June 2022

In one line: The core was depressed by fiscal measures; it will snap back in September. 

Claus Vistesen (Chief Eurozone Economist)Eurozone

11 July 2022 EURUSD is about to Hit Parity, and We See Little Reason to Buy

EURUSD is closing in on parity and it won’t stop falling there; don’t buy the dip yet.

We think French GDP rose by 0.4-to-0.5% q/q in Q2, better than the INSEE estimate...

...But we are less optimistic than the statistical office on H2; we see growth of just 0.1% in Q3 and Q4.

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

4 July 2022 Another Consensus-Beating CPI Print, But no 50bp Hike this Month

Headline inflation in the Eurozone hit a new record in June, and it will rise further still in Q3.

Falling rate expectations are easing the pressure on the ECB; we think it will stick to 25bp this month.

EZ manufacturing is still weakening; EURCHF will hover around parity through Q3.

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

22 June 2022 Brace for Further Russian Gas Flow Cuts and Higher Inflation

Gas prices are rising again, as the Kremlin cut flows to some EU countries and US supply hit snags.

This is laying the groundwork for government controls on energy usage by firms; rationing is here...

...Still further upside for gas prices is likely, keeping energy inflation and the headline rate elevated.

Melanie Debono (Senior Eurozone Economist)Eurozone

21 June 2022 A Trip Down Memory Lane; What Does QE Sterilisation Mean?

The ECB’s sterilisation of SMP purchases in 2010 wouldn’t make as much sense today.

We think purchases under the new anti-fragmenta- tion tool will include some form of sterilisation...

...But full neutralisation of asset purchases as part of a backstop for spreads is not credible.

Claus Vistesen (Chief Eurozone Economist)Eurozone

20 June 2022 No Relief for the ECB the EZ Inflation Data

The EZ core inflation rate will remain near 4% over the summer; it could even surpass 4% in July. 

A sustained cut in Russian gas flows to Europe would send energy prices and inflation soaring, again. 

Is the ECB edging towards an explicit cap on bond spreads? More QE will be needed if it is. 

Claus Vistesen (Chief Eurozone Economist)Eurozone

EZ Datanote: Final Inflation, EZ, May 2022

In one line: Hot, and we see no relief over the summer for the ECB.

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

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