Europe Economics Update ECB QT would exacerbate bond market risks Reports that the ECB will soon start debating QT add to the risks facing euro-zone government bond markets. While the Bank could still expand its holdings of peripheral sovereign debt through the PEPP... 12th September 2022 · 3 mins read
Europe Economics Update Further aggressive ECB hikes to come The ECB is almost certain to follow today’s 75bp rate hike with further aggressive increases in the coming months. We doubt that even a recession would cause the Bank to halt rate hikes. Against that... 8th September 2022 · 3 mins read
Global Markets Update We think EZ peripheral spreads will rise further We continue to expect euro-zone “peripheral” spreads to rise over the remainder of the year, owing to a combination of deteriorating appetite for risk, higher policy rates, and ambiguity about the ECB... 5th September 2022 · 3 mins read
Europe Economics Update Nord Stream shut-off adds to risks facing Germany Gazprom’s decision to shut Nord Stream 1 indefinitely has added to the risks facing Germany’s economy, but the size of the economic damage is still highly uncertain. And the €65bn fiscal package... 5th September 2022 · 3 mins read
Europe Economics Update Euro-zone unemployment to rise, but not surge We expect the looming recession in the euro-zone to cause the region’s unemployment rate to rise to 7.5% by the middle of next year. But this would still be historically low and is unlikely to be... 1st September 2022 · 3 mins read
Europe Economics Update ECB as hawkish as Fed at Jackson Hole While attention has understandably focused on Fed Chair Jerome Powell’s Jackson Hole speech made last Friday, there were also important interventions over the weekend by ECB policymakers. These... 29th August 2022 · 5 mins read
Europe Economics Update Italy’s gas crisis The surge in natural gas prices is a key reason why we expect Italy to fall into recession soon. If Russia stopped exporting gas to Europe entirely, Italy would suffer more than most but less than... 26th August 2022 · 5 mins read
Europe Economics Update ECB account shows hawks in ascendancy The >10,000 word account of the ECB’s July meeting confirms that a large majority of policymakers favoured a 50bps rate hike and are focused more on their mandate to contain inflation than on trying... 25th August 2022 · 3 mins read
Global Markets Update German-Swiss bond yield spread may widen further We expect the spread between the yields of 10-year German and Swiss government bonds to widen further over the remainder of this year. In view of the wider interest, we are also sending this Global... 25th August 2022 · 3 mins read
Nordic & Swiss Economics Update Could cheap Norwegian gas fix Europe’s energy crisis? One left-field option for alleviating Europe’s gas crisis that has been doing the rounds is the potential for asking Norway to discount the price of its gas exports. This Update looks at eight key... 24th August 2022 · 6 mins read
Europe Economics Update Deeper recession, inflation to hit 10% The continued surge in European gas prices, and likelihood that they will remain extremely high, means that the euro-zone will probably suffer a deeper recession than we had previously anticipated. It... 24th August 2022 · 6 mins read
Europe Economics Update State bearing the cost of lower French energy bills France’s low energy inflation rate relative to those of its neighbours reflects government policies that have limited the increase in retail prices even as wholesale prices have risen. This will... 24th August 2022 · 4 mins read
Europe Economics Update Gas shock bigger than 1970s oil shocks For most major euro-zone countries the terms of trade shock from higher gas prices this year will be bigger than both the 1974 and 1979 oil shocks. How this plays out in the coming months depends on... 23rd August 2022 · 4 mins read
Europe Economics Update Shrinking construction sector adds to recession risk Materials and labour shortages are weighing on construction activity and, although those headwinds may ease over the rest of the year, tighter monetary policy is likely to cause activity to fall. The... 18th August 2022 · 4 mins read
Nordic & Swiss Economics Update 50 is the new 25 for the Norges Bank Following today’s decision by the Norges Bank to raise its policy rate by 50bp at the second consecutive meeting, we now expect the Bank to make it a hat-trick of 50bp hikes at the next meeting in... 18th August 2022 · 3 mins read
Europe Economics Update Rhine troubles add to pressure on German industry The fall in the Rhine’s water level is a small problem for German industry compared to the gas crisis, or indeed the recent shortage of semiconductors. But if it persists until December it could... 10th August 2022 · 3 mins read
