EZ HICP Review: Core Rate Spikes as Upside Inflation Risks Return

March 3, 2026 10:35 AM UTC

Having dropped to 1.7% in the January data, thereby matching expectations and the short-lived Sep 24 outcome, it is likely especially in view of the Middle East conflict that the headline HICP rate may not be any lower through this year and into next.  Indeed, we headline rate rose 0.2 ppt to 1.9%

Continuum Economics Calendar March 2026

February 26, 2026 1:00 PM UTC

Data and Events Calendar March 2026.

EZ HICP Preview (Mar 3): ECB Too Focused on Services Inflation as Goods May Soon Take Core Below Target

February 25, 2026 1:54 PM UTC

Having dropped to 1.7% in the January data, thereby matching expectations and the short-lived Sep 24 outcome, it is possible that the headline HICP rate may not be any lower through this year and into next.  Indeed, we see the headline rate edging up to 1.8% in the February flash mainly due to ener

EUR/USD: Europe’s Counter Threats to Trump

February 10, 2026 11:05 AM UTC

·       Europe is highly unlikely to weaponize its existing portfolio holdings or new flows into the U.S., as Europe is dependent on the U.S. nuclear umbrella and as EZ/EU decision making is slow and modest in action.  Such a move would be strongly opposed by EZ/European investors. Even so,

ECB: Papering Over the Cracks

February 5, 2026 2:51 PM UTC

·       As widely expected the ECB kept the policy rate unchanged at the February meeting.  The broad message remains that the ECB Council is comfortable with current policy rates, which provides short-term forward guidance of no change in rates.  This message came from the ECB statement an

U.S. Inflows: Portfolio Dominates

February 4, 2026 12:05 PM UTC

·        Portfolio flows have dominated U.S. C/A financing looking at the breakdown of the balance of payment data (BOP), with no material slowdown in 2025 from foreign investors. U.S. investors did accelerate buying of overseas equities but this was counterbalanced by slower U.S. buying of

EZ HICP Review: Services Inflation Less Resilient as Core Hits Cycle-Low

February 4, 2026 11:19 AM UTC

Having been range bound for some 5-6 months between 2.0% and 2.2% until November but after a fall to 1.9% in December headline HICP inflation dropped to 1.7% in the flash January data, thereby matching expectations and the short-lived Sep 24 outcome.  The drop came in spite of higher food inflation

EZ HICP Preview (Feb 4): Services Inflation Less Resilient as Headline to Slip Further

February 2, 2026 12:07 PM UTC

HICP inflation had been range bound for some 5-6 months between 2.0% and 2.2% with the November and October numbers in the middle of that range. And it seemingly stayed in that range falling to 2.0% in the December flash numbers, only to be revised down a further notch to 1.9% in the final HICP figu

Markets: Profit-Taking or More?

February 2, 2026 9:22 AM UTC

•    For now we see some further profit-taking on risky positions in gold/silver/copper/equities and short USD positions.  However, a bigger macro catalyst is required to produce a deep correction in equities and major risk off.  The nomination of Kevin Warsh for Fed chair is unlikely to be

ECB Preview: After GDP and Before Feb Meeting

January 30, 2026 10:05 AM UTC

·       Most on the ECB council appear to be comfortable with steady policy in H1 2026, after a cumulative 200bps of cuts.  This will likely be the overall message from the February 5 ECB meeting. This will paper over differences for 2027 among ECB council members. However, we agree with the

Continuum Economics Calendar February 2026

January 29, 2026 4:00 PM UTC

Data and Events Calendar February 2026.

USD Hurt by Hedging More than Asset Outflows

January 27, 2026 10:53 AM UTC

The Greenland drama  and fears of BOJ/Fed Intervention on USDJPY has put the USD under renewed downward pressure against DM Currencies.  What happens next?  Overall, we see scope for further USD decline versus DM currencies in 2026 on more currency hedging; some diversification away from the U.S.

ECB Steady Signals, But

January 19, 2026 8:55 AM UTC

•    We remain of the view that financial conditions and lending rates are worse than the current ECB depo rate level suggest and means that 2026 EZ growth does not really pick-up.  Combined with a mild undershoot in inflation, this can build the case for the ECB to deliver two 25bps cuts.  

DM Government Debt: 2026 Supply & Voters’ Resistance To Fiscal Consolidation

January 14, 2026 11:55 AM UTC

·        We see the most persistent issue being supply (budget deficit + QT) in 2026, which should lessen into 2027 with a slowdown in ECB/BOE QT and a partial U turn by the BOJ.  However, governments are also struggling with electorates that are resistant to higher taxes or lower governmen

EZ HICP Review: Services Inflation Still Resilient But Core Goods Soften Further

January 7, 2026 10:44 AM UTC

HICP inflation has been range bound for the last 5-6 months between 2.0% and 2.2% with the November and October numbers in the middle of that range. And it stayed in that range falling to 2.0% in the December flash numbers, albeit where adverse rounding pre vented a fall to 1.9%.  We see this as th

German HICP Review: Headline and Core Down Afresh

January 6, 2026 4:25 PM UTC

Germany’s disinflation process resumed with a bang as December saw a larger-than-expected fall in both headline and core inflation.  Indeed, the headline HICP fell 0.6 ppt to a five-month low of 2.0%.  This was largely food and energy driven but still with some fall in core at least according to

Markets 2026

January 6, 2026 9:58 AM UTC

•    For financial markets, the muddle through for global economics and policy provides support for risk assets, combined with solid earnings prospects from some of the magnificent 7.  However, U.S. equities are once again significantly overvalued and we look for a 5-10% correction in 2026, b

December Outlook: Turbulent Times

January 2, 2026 8:10 AM UTC

Our December Outlook is now published and please see all our economic and policy chapters below.  

December Outlook: Turbulent Times

December 22, 2025 8:10 AM UTC

Our December Outlook is now published and please see all our economic and policy chapters below.  

Continuum Economics Calendar January 2026

December 19, 2025 12:00 PM UTC

Data and Events Calendar January 2026.

EZ HICP Preview (Jan 7): Is Services Inflation Problematic?

December 19, 2025 11:10 AM UTC

HICP inflation has been range bound for the last 5-6 months between 2.0% and 2.2% with the November and October numbers in the middle of that range. But we see the headline rate falling out of that range in December to 1.9%, this preceding what may be a short-lived fall toward 1.5% in H1 2026.  Som

ECB Review: On Hold Message to Convert to Easing on Disinflation

December 18, 2025 3:09 PM UTC

·       The ECB increased its 2026 GDP and inflation forecast and appears happy with current policy rate levels.  However, still tight financial conditions, plus easing wage growth, point to disinflation and growth disappointment.  We see this switch the ECB from an on hold message to easin

DM FX Outlook: Scope for USD decline against JPY, AUD and NOK

December 18, 2025 2:31 PM UTC

·       Bottom Line: We expect some modest USD losses across the board over the next couple of years, but there is much more scope for losses against the JPY, AUD and NOK than the other G10 currencies, as yield spreads have moved dramatically in favour of these currencies, and the currencies

DM Rates Outlook: 2026 Yield Curve Steepening Before 2027 Flattening

December 17, 2025 9:21 AM UTC

·       Multi quarter, we still look for 50bps of further Fed easing by end 2026, which will likely initially bring 2yr yields down to 3.35%.  However, once the Fed Funds rate get closer to 3.0-3.25% and the assumed slowdown turns into a soft landing, the 2yr will likely move to a premium ve

Outlook Overview: Turbulent Times

December 17, 2025 7:44 AM UTC

·        The U.S. slowdown remains in focus as the lagged effects of President Trump’s tariff increases continues to feedthrough, though our baseline is for a 2026 soft-landing.  The Supreme court will likely rule against part of Trump’s reciprocal tariffs, which will create short-term

Equities Outlook: Choppy Up For 2026 and Down for 2027?

December 12, 2025 8:05 AM UTC

·        The U.S. equity market is underpinned by the bullish AI/tech story and a soft economic landing into 2026.  However, overvaluation is clear and this leaves the market vulnerable to a 5-10% correction on moderate bad news e.g. economic data.  We see the S&P500 having a choppy year a

Eurozone Outlook: Running to Keep Fiscally Still?

December 11, 2025 10:09 AM UTC

·       Amid what may still be tightening financial conditions and likely protracted trade uncertainty, we retain our below consensus activity forecast for 2026 but see a fiscally driven pick-up into 2027. However, the picture this year appears to be slightly better but the economy has actual

Americas First: New National Security Strategy

December 9, 2025 8:40 AM UTC

·       The new NSS at one level reads like a Trump/MAGA current list of topics and desires, that may not translate into policy or a major shift of military assets.  Trump has blown hot and cold on Europe and China over the past 12 months and could shift again.  Nevertheless, the NSS does r

ECB Preview (Dec 18): Still in Good Place – or Even Better?

December 9, 2025 7:52 AM UTC

A fourth successive stable policy decision will be the almost inevitable outcome of the ECB Council meeting verdict on Dec 18, with the discount rate left at 2.0%.  The likely unanimous vote will mask splits about whether policy has troughed or not, this mainly a result of differences within the Co

December 2, 2025 10:51 AM UTC

With what were previously unfavourable energy-related base effects reversing, EZ inflation edged down 0.1 ppt to 2.1% in October, largely in line with consensus thinking, but with the main core rate stable at 2.4%.  This reversed in the flash November numbers in what was an outcome a notch above bo

Continuum Economics Calendar December 2025

November 28, 2025 12:00 PM UTC

Data and Events Calendar December 2025.

Eurozone: Tighter Corporate Credit Standards Continues and More Loans Applications Rejected

November 27, 2025 1:36 PM UTC

Given the early January timing of the survey, which far from fully embraced the added uncertainty caused by President Trump’s trade threats, it was still hardly a surprise despite that the reported net tightening credit standards merely accentuates trends in the three previous Bank Lending Surveys

November 24, 2025 2:19 PM UTC

The HICP inflation picture has clouded somewhat of late at least to some. With what were previously unfavourable energy-related base effects reversing, EZ inflation edged down 0.1 ppt to 2.1% in October, largely in line with consensus thinking, but with the main core rate stable at 2.4%.  The latte

Japan Aging: Consumption Lessons for Eurozone/China?

November 24, 2025 10:55 AM UTC

·       China will likely suffer slowing consumption from population aging in the coming years, as consumption per head falls for over 55’s and large scale immigration is not a likelihood. China’s household wealth is also heavily concentrated in falling illiquid residential property. Chin

German HICP Preview (Nov 28): Headline and Core To Edge Down Further?

November 24, 2025 9:00 AM UTC

Germany’s disinflation process hit a further and more-than-expected hurdle in September, as the HICP measure rose 0.3 ppt for a second successive month, thereby even more clearly up from July’s 1.8% y/y, that having been a 10-mth low.  But a notch of this rise was reversed in the October number

U.S. Asset Inflows After April’s Trump Tariffs

November 21, 2025 8:00 AM UTC

·       Net foreign portfolio inflows have not been hurt by Trump’s April tariff drama, with the AI and tech boom attracting new equity inflows.  Flows could become more volatile with a U.S. equity bear market or recession, but these are modest risk alternative scenarios rather than high r

Markets 2026

November 18, 2025 10:30 AM UTC

·        The Fed, ECB and BOE will likely drive further 10-2yr government bond yield curve steepening, with 10yr Bund yields rising due to ECB QT and German fiscal expansion. 10yr JGB yields are set to surge through 2%, as BOJ QT remains excessive and underestimated.  The BOJ could partiall

Financial Stability Risks: Vulnerable To A Recession

November 17, 2025 1:00 PM UTC

The November Fed financial stability review highlights continued concern over hedge funds and insurance company leverage, while the IMF GSFR is concerned about U.S. equity market overvaluation and growing links between banks and non-bank financial intermediaries.  However, the main adverse shock wo

ECB – In a Good Place or Just Complacent?

November 14, 2025 11:55 AM UTC

The ECB is of the view that downside growth risks have dissipated somewhat, this possibly helped by its recent actions which it suggests leave its current policy stance in a good place.  However, amid a hint of what we think is a complacent upgrade about the EZ’s alleged resilience, we think, the

EZ Rates: 2026 ECB Easing But 2027 French Crisis?

November 11, 2025 9:45 AM UTC

·       Financial conditions are tighter than suggested by a 2% ECB depo rate, which will both dampen an EZ economic pick-up and cause further disinflation.  We see the ECB delivering two further 25bps cuts to a 1.5% ECB depo rate, which can mean a further decline in 2yr Bund yields.  Howev

EZ HICP Review: Services Inflation Problematic?

October 31, 2025 10:39 AM UTC

With what were previously unfavourable energy-related base effects reversing, EZ inflation edged down 0.1 ppt to 2.1% in October, largely in line with consensus thinking, but with the main core rate stable at 2.4%.  The latter reflected a slight pick-up in services (up 0.2 ppt to a six-mth high of

Continuum Economics Calendar November 2025

October 31, 2025 10:00 AM UTC

Data and Events Calendar November 2025.

ECB Review: Hedging its Bets, Hoping to Stay in a Good Place

October 30, 2025 3:23 PM UTC

There ie nothing tangible in the ECB update today to suggest that a further easing is likely at the next meeting on Dec 17-18.  However, amid a hint of what we think is a complacent upgrade about the EZ’s resilience alongside a perceived reduction in global risks, the easing window has not been c

October 30, 2025 10:25 AM UTC

 It continues to be the case that, for an economy that has seen repeated upside surprises and apparently above trend growth, now some 1.3% in the year to Q3, GDP data do not seem to have had much impact is shaping, let alone dominating, ECB policy thinking save to encourage a Council view of EZ eco

Eurozone: Tighter Credit Standards By EZ Banks Confirmed

October 28, 2025 9:44 AM UTC

Hardly a surprise despite the ECB suggestions to the contrary as the reported net tightening credit standards merely accentuates trends in the two previous Bank Lending Surveys (BLS).  This updated BLS therefore echoes what we have seen in other ECB surveys and in actual credit dynamics and thus un

ECB Monetary Worries Emerging as Corporate Credit Dynamics Weaken More Clearly

October 27, 2025 10:36 AM UTC

As a foretaste of the Bank Lending Survey BLS) due tomorrow, the ECB released two associated pieces of data today, both corroborating and continuing an ever worrying pattern, namely weakness in corporate credit. The data showed growth in later has fallen to its lowest in almost two years (Figure 1).

EZ HICP Preview (Oct 31): No Halloween Horror from HICP Update

October 23, 2025 12:09 PM UTC

Mainly due to unfavourable base effects, EZ inflation has edged up in the last few months, but we think that this is temporary and that a fresh fall, possible to below the 2% target may occur in the October flash numbers – with a formal forecast of a 0.3 ppt drop to 1.9% and the core falling almos

Eurozone Flash GDP Preview (Oct 30): Resilience in the Dock?

October 22, 2025 9:11 AM UTC

As we highlighted repeatedly of late, for an economy that has seen repeated upside surprises and apparently above trend growth, now some 1.4% in the year to Q2, GDP data do not seem to have had much impact is shaping, let alone dominating, ECB policy thinking. But we think this may shift as the ECB

October 21, 2025 12:55 PM UTC

As with recent Council meetings, what is important when the ECB gives its next (almost certain) stable verdict on Oct 30, is not what it says.  Instead, in particular, it is how much the impression is left that the easing window has not closed. The ECB is clearly split about whether policy has trou