Germany

View:

July 12, 2024

...
EZ and UK Government Bonds: Decoupling From the U.S.?
Paying Article

July 12, 2024 9:37 AM UTC

Different economic and inflation dynamics, plus no constraint from trade weighted exchange rates, means that the ECB and BOE can cut irrespective of the Fed in the coming quarters.  This can see 2yr yields decline, though less so in Germany where a 2.5% ECB depo rate is already discounted.  10yr y

...
ECB Preview (Jul 18): Policy to Pause Amid Mixed Data
Freemium Article

July 12, 2024 9:36 AM UTC

ECB thinking comes backs onto the radar screen next Thursday.  Given the hints from Council members, all policy rates will be held this time around. But markets will be more focused on hints on the speed and timing of further moves, not least after what was one formal dissent last time, and amid wi

July 08, 2024

...
France Gets PPP - Protracted Policy Paralysis?
Freemium Article

July 8, 2024 6:46 AM UTC

French politics is getting used to surprises.  After the unexpected snap election that saw the far right poll the most in the first round of parliamentary results last week, Sunday’s second round surprisingly saw President Macron's centrist forces perform more strongly than expected by coming in

July 04, 2024

...
ECB: Council Policy Reservations Deeper Than Expected?
Freemium Article

July 4, 2024 12:23 PM UTC

The account of the June ECB Council meeting confirmed one dissent against the widely flagged 25 bp rate cut but also revealed perhaps clearer reservation among some other members about easing at that juncture.  Indeed, there seemed to be disagreement about interpreting data; what is the basis for a

July 03, 2024

...
EZ: Is the Labor Market Starting to Labor?
Freemium Article

July 3, 2024 10:51 AM UTC

With markets and policy makers very much focused on inflation, the EZ labor market continues to shine – apparently! Indeed, the EZ jobless rate has remains at a record-low of 6.4%, hinting at labor market tightness that will perturb ECB hawks wary of higher ensuing wage pressures.  But this appar

July 02, 2024

...
EZ HICP Review (Jul 2): Disinflation Resumes Amid Services Resilience – July Cut Off Table?
Freemium Article

July 2, 2024 9:33 AM UTC

The clear disinflation trend was still evident even after higher and higher-than-expected May numbers, where the headline moved up from 2.4% to a three-month high of 2.6%.  That trend looks more discernible after the partial drop back to 2.5% seen in the June flash HICP, albeit with some far from r

...
Webinar Recording June Outlook: Cyclical and Structural Forces
Paying Article

July 2, 2024 7:30 AM UTC

July 01, 2024

...
German Data Review (Jul 1): Inflation Moves Back Down
Freemium Article

July 1, 2024 12:28 PM UTC

Base effects have caused the German disinflation process not to be smooth and this was even more clearly the case in the May numbers where a second successive and slightly larger rise in the headline HICP rate occurred rising 0.4 ppt to 2.8%, albeit a rise half that size seen in the accompanying CPI

...
France: Heading for Policy Paralysis?
Freemium Article

July 1, 2024 6:45 AM UTC

After the largely expected first round of parliamentary results, in which the far right won the most votes, equally expected has been the fact that both the centrist and left parties have already called for tactical voting to stop the right winning an actual majority in run-offs on Jul 7.  It is st

June 28, 2024

...
Eurozone: Monetary Messages Gaining More Prominence?
Paying Article

June 28, 2024 11:11 AM UTC

Amid speculation about the size and durability of any EZ real economy recovery, one important thing is still lacking.  Indeed, monetary data remain weak; while money supply growth measures have turned positive what we think are the more important aspects, namely credit data remain feeble.  Data th

June 26, 2024

Continuum Economics Calendar July 2024
Paying Article

June 26, 2024 10:52 AM UTC

Data and Events Calendar July 2024.

...
EZ HICP Preview (Jul 2): Broad Disinflation Resumes? – A Round-Up of Recent Trends
Paying Article

June 26, 2024 10:29 AM UTC

The clear disinflation thrust of recent data (Figure 1) has obviously affected most ECB thinking.  Notably, the downward trend is still evident even after higher and higher-than-expected May numbers, where the headline moved up from 2.4% to a three-month high of 2.6%.  More notable perhaps was tha

...
June Outlook: Cyclical and Structural Forces
Paying Article

June 26, 2024 7:58 AM UTC

The 15 chapters of our June Outlook have now been published.  See the headlines and weblinks enclosed for links to the articles on economic, policy and markets for the 23 countries that we cover

June 25, 2024

...
Outlook Overview: Cyclical and Structural Forces
Paying Article

June 25, 2024 10:15 AM UTC

•    The global economy is showing signs of healing, as inflation comes back towards targets and growth recovers momentum in some economies. Nevertheless, the cyclical headwind of lagged monetary tightening remains in DM countries, and will likely be one of the forces slowing the U.S. economy

June 24, 2024

...
German Data Preview (Jul 1): Inflation Moves Back Down And Broadly So?
Paying Article

June 24, 2024 10:57 AM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings and the path down for inflation has not been smooth.  This was even more clearly the case in the May numbers where a second successive and slightly larger rise in the headline HICP rate occurred rising 0

...
DM Rates Outlook: Rate Cuts Arrive Except Japan
Paying Article

June 24, 2024 8:45 AM UTC

•    For U.S. Treasuries we see a steady easing process from the Fed from September, which can allow 2yr yields to fall consistently.  However, the decline in H2 2024 will be slower at the long-end from traditional yield curve steepening pressures and then we see fiscal stress in H1 2025 unde

...
DM FX Outlook: Politics rears its head
Paying Article

June 24, 2024 7:42 AM UTC

·       Bottom Line: The USD strength in Q2 on the back of a less dovish view of the Fed is unlikely to extend over the rest of the year. The JPY remains exceptionally cheap and has potential to recover sharply if risk appetite weakens. A slower JPY recovery is likely if lower inflation leads

June 19, 2024

...
Eurozone Outlook: The Last (Disinflation) Mile
Freemium Article

June 19, 2024 8:48 AM UTC

·       Our still soft EZ GDP outlook remains only a little below consensus and ECB thinking as we still suggest ECB 2022-23 policy has caused a clear increase in the cost of credit alongside a fall in supply of credit. The result is that while the economy is now growing afresh but is doing s

June 10, 2024

...
European Parliament Election Results: A Swing to the Centre Right But Further Right in France
Paying Article

June 10, 2024 8:52 AM UTC

This week-end’s European Parliament elections produced the widely expected swing to the right, albeit more an electoral rebuff for incumbent ruling parties as voters registered their protests against current governments.   Hard-right parties largely did well but there were clear exceptions (Belg

June 06, 2024

...
ECB Review: Clearly No Policy Pre-Commitment But Policy Entering New Phase
Paying Article

June 6, 2024 2:11 PM UTC

As has been the case with many recent ECB verdicts, markets are keener to hear what is being said by the Council rather than what has been done.  In regard to the latter, and given the almost unanimous hints from Council members, all policy rates were cut by the expected 25 bp, with the key deposit

June 04, 2024

...
European Parliament Election: A Swing to the Right?
Paying Article

June 4, 2024 9:09 AM UTC

This week-end (Jun 6-9 actually) sees fresh European Parliament elections, with it likely that that compared to the last (2019) result, there will be a clear swing to right-wing and/or populist parties.  However, polls do not suggest anything like enough of swing away from the current parliamentary

May 31, 2024

...
EZ HICP Review: Core Disinflation Unwinds as Services Resilience Persists?
Paying Article

May 31, 2024 9:42 AM UTC

Very much having affected ECB thinking, there has been repeated positive EZ news in the form of falling EZ HICP inflation and somewhat broadly so. This abated last month and even more so in these May numbers, with the headline moving up from the unchanged 2.4% reading to a three-month high of 2.6%,

May 30, 2024

...
ECB Preview (June 6): D-Day
Paying Article

May 30, 2024 10:44 AM UTC

Given the almost unanimous hints from Council members, something unexpected is needed to prevent the ECB from starting to cut its policy rates on June 6, most notably the key deposit rate currently at an unprecedented 4.0%. The question markets are considering is how/when this widely expected 25 bp

May 28, 2024

Continuum Economics Calendar June 2024
Paying Article

May 28, 2024 11:13 AM UTC

Data and Events Calendar June 2024.

May 23, 2024

...
Eurozone: PMIs Offer More Positive Gimmers – Still Too Good to be True?
Paying Article

May 23, 2024 9:19 AM UTC

The latest PMI data suggest the EZ economic recovery gained further momentum in May as the composite index rose to 52.3 in May from 51.7 in April, thereby implying positive private sector growth for the third consecutive month.  We remain wary about the messages from the data (see below and Figure

May 22, 2024

...
EZ HICP Preview (May 31): Core Disinflation Continues?
Paying Article

May 22, 2024 11:10 AM UTC

Very much having affected ECB thinking, there has been repeated positive EZ news in the form of falling EZ HICP inflation and somewhat broadly so. This abated in April, with the headline staying at 2.4% but with the core down a further 0.2 ppt to a 27-mth low of 2.7%, as higher fuel prices were offs

May 21, 2024

...
German Data Preview (May 29): Inflation to Rise Again Albeit Amid Soft Core Rate Trends?
Paying Article

May 21, 2024 2:08 PM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings and the path down for inflation has not been smooth.  This will be even more clearly the case in the looming May numbers where a second successive and slightly larger rise in the headline rate is on the

May 20, 2024

...
ECB: June Rate Cuts Too Trigger More Rate Cut Expectations for 2024/25
Paying Article

May 20, 2024 10:50 AM UTC

However much the Council will resist fueling discussion of possible easing path, confirmation of a 1 cut normally increases speculation over further easing in subsequent quarters and we see 25bps in June followed by 25bps in September and December.  The market could discount some more easing over t

May 15, 2024

...
Eurozone: Consumers - Still Missing?
Paying Article

May 15, 2024 10:34 AM UTC

Revised national account data confirmed the upside surprise in the preliminary data with EZ GDP rising 0.3% q/q.  The question is whether this emergence from the modest H2 2023 recession is the start of more sustained momentum.  We think not, mainly due to what are still weak consumer fundamentals

April 30, 2024

...
Eurozone Data Review: Less Weak But Soft Domestic Demand Taking Less Toll on Core Inflation?
Paying Article

April 30, 2024 9:29 AM UTC

According to revised official national accounts data, the EZ economy was in recession in H2 last year, albeit modestly so and against a backdrop of marked, if not increasing, national growth divergences. This geographical variation continued into Q1 (Figure 1) where the flash GDP reading exceeded ex

April 29, 2024

...
German Data Review: Inflation Edges up Amid Less Resilient Services and Core Rate?
Paying Article

April 29, 2024 12:38 PM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings, but the March data came in a notch below expectations for a third successive month.  Indeed, it fell from 2.7% to a 33-month low of 2.3% in the March HICP data, dominated by a clear fall in food inflati

April 26, 2024

...
Headwinds To Long-term Global Growth
Paying Article

April 26, 2024 9:30 AM UTC

Bottom line: While much focus is on the cyclical economic position to determine 2024 monetary policy prospects, the 2025-28 structural growth trajectory differs to the pre 2020 GDP trajectory for major economies.  While global fragmentation has a role to play, aging populations are already having a

April 24, 2024

...
Eurozone GDP Preview (Apr 30): Less Weak?
Paying Article

April 24, 2024 11:06 AM UTC

According to revised official national accounts data, the EZ economy was in recession in H2 last year, albeit modestly so and against a backdrop of marked, if not increasing, national growth divergences. This geographical variation is likely to have continued into Q1 (Figure 1) where we see a flat o

April 23, 2024

...
EZ HICP Preview (Apr 30): Core Disinflation Signs to Flatten Out Further?
Paying Article

April 23, 2024 9:43 AM UTC

Very much having affected ECB thinking, there has been repeated positive EZ news in the form of falling EZ HICP inflation and somewhat broadly so. This continued in the March HICP numbers, with the 0.2 ppt drops in both headline and core being a notch more sizeable than most anticipated. Regardless,

April 22, 2024

...
German Data Preview (Apr 29): Inflation Drop to Continue Amid Less Resilient Services?
Paying Article

April 22, 2024 12:58 PM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings, but the March data came in a notch below expectations for a third successive month.  Indeed, it fell from 2.7% to a 33-month low of 2.3% in the March HICP data, dominated by a clear fall in food inflati

April 11, 2024

...
ECB Review: ECB Hums Easing Tune for June
Paying Article

April 11, 2024 1:58 PM UTC

Surprising hardly anyone, the ECB is preparing to cut official rates, after what are now five successive stable policy decisions. It explicitly suggested that it could be appropriate to reduce the current level of monetary policy restriction, a policy hint backed up by dropping its previous rhetoric

April 09, 2024

...
Eurozone Banks See Company Loan Demand Slump as ECB Unconventional Tightening Bites Further
Paying Article

April 9, 2024 9:22 AM UTC

While there may be few positive straws in the wind in the latest (April) 2024 bank lending survey (BLS), the ECB should fund the balance of results still troubling.  Company credit demand slumped afresh amid rising interest rates and deferred capex plans.  Admittedly, credit supply to firms tighte

April 04, 2024

...
ECB Preview (Apr 11): Still the Focus on Words Not Deeds – For Now!
Paying Article

April 4, 2024 12:22 PM UTC

As has been the case for several times now, the ECB meeting verdict due next Thursday (Apr 11) will be notable not for what the Council does but rather what is said just as at the March meeting whose minutes were released today.  A fifth successive stable policy decision is very much expected, albe

April 03, 2024

...
EZ HICP Review: Core Disinflation Flattening Out?
Paying Article

April 3, 2024 9:34 AM UTC

Very much having affected ECB thinking, there has been repeated positive EZ news in the form of falling inflation and somewhat broadly so. This continued in the March HICP numbers, with the 0.2 ppt drops in both headline and core being a notch more sizeable than most anticipated. Regardless, the hea

April 02, 2024

...
German Data Review: Inflation Drop Continues But Amid Still Resilient Services
Paying Article

April 2, 2024 12:19 PM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings, but the March data came in a notch below expectations for a third successive month.  Indeed, it fell from 2.7% to a 33-month low of 2.3% in the March HICP data, dominated by a clear fall in food inflati

March 27, 2024

...
EZ HICP Preview (Apr 3): Core Disinflation Signs Start to Flatten Out?
Paying Article

March 27, 2024 1:25 PM UTC

Enough to have affected ECB thinking, there has been repeated positive EZ news in the form of plunging inflation. This continued in the February numbers, albeit with the 0.2 ppt drops in both headline and core being less that most anticipated. Regardless, the headline, at 2.6%, continued its recent

March 26, 2024

...
German Data Preview (Apr 2): Inflation Drop to Continue Amid Less Resilient Services?
Paying Article

March 26, 2024 10:58 AM UTC

As we have repeatedly underlined, base effects continue to distort the German HICP/CPI readings, but the January data came in a notch below expectations, and reversed half of the surge in the y/y rate seen in December.  And February data continued the downtrend, as the HICP rate fell from 3.1% to 2

March 25, 2024

...
Outlook Overview: Europe in Focus, Then Elections Around the World
Paying Article

March 25, 2024 11:15 AM UTC

March 22, 2024

Continuum Economics Calendar April 2024
Paying Article

March 22, 2024 4:19 PM UTC

Data and Events Calendar April2024.

...
Eurozone Outlook: ECB Finger on Easing Trigger?
Freemium Article

March 22, 2024 10:42 AM UTC

·        Our GDP outlook remains somewhat less below consensus and ECB thinking than envisaged three months ago, as other forecasters have reduced projections! Regardless, ECB policy has caused an increase in the cost of credit, alongside a fall in supply of credit. The result is that the ec