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Last week’s developments bolstered hopes that the euro-zone has finally reached a “turning point”. Indeed, given the further falls in peripheral government bond yields, some optimists even questioned whether the ECB will actually need to use its Outright …
17th September 2012
July’s rise in euro-zone industrial production has not altered our view that the economy as a whole is now in a technical recession. … Euro-zone Industrial Production …
12th September 2012
The German Court’s decision to allow the ESM to be ratified, together with the ECB’s earlier promise to meet ESM bond purchases with unlimited purchases of its own, suggests that a substantial firewall is now in place to prevent a Spanish or Italian …
The ECB’s willingness to make “unlimited” government bond purchases in order to calm the situation in Spain could potentially have large positive repercussions for Greece too. But on balance, we doubt that the ECB’s actions will prevent Greece from …
10th September 2012
While the very positive response to the ECB’s plans to undertake “Outright Monetary Transactions” (OMTs) is not entirely without foundation, it at least looks over the top. On close inspection, the plans look like a restricted version of the previously …
7th September 2012
July’s German industrial production and trade figures suggest that the economy made a good start to the third quarter despite falling demand elsewhere in the euro-zone. … German Industrial Production & Trade …
We doubt that the latest interest rate reduction by the Riksbank will be the last in the cycle. If the euro-zone debt crisis intensifies as we expect, interest rates may eventually fall well below 1%. … Swedish rate cut unlikely to be the …
6th September 2012
The confirmation that the ECB is prepared to buy “unlimited” quantities of peripheral government bonds looks encouraging at face value. But the details reveal that the Bank has not upped its policy support by as much as it might seem and we doubt that …
The second euro-zone GDP release for Q2 revealed that last quarter’s contraction was down to a decline in domestic spending. With the timelier data consistent with sharper declines in activity ahead, the region looks set to fall deeper into recession. … …
Q2’s fall in Swiss GDP could mark the start of a new recession. While Switzerland’s domestic outlook is far better than that of the euro-zone, the open economy will suffer from a strong currency and weakening global demand. … Swiss GDP (Q2 …
4th September 2012
Recent indicators have supported the view that the euro-zone is now firmly in recession. GDP fell by 0.2% in Q2 after stagnating in Q1 and falling by 0.3% in Q4. And the business surveys so far point to a second consecutive contraction in Q3. Despite …
Q2’s fall in Swiss GDP could mark the start of a new recession. While Switzerland’s domestic outlook is far better than that of the euro-zone, the open economy will suffer from a strong currency and weakening global demand. … Swiss GDP …
The latest fiscal data suggest that most of the peripheral economies will struggle to meet their budget deficit targets for 2012 without implementing further austerity measures. … Euro-zone Fiscal Monitor …
3rd September 2012
Data published last week did nothing to alter the picture of a rapidly worsening outlook for domestic spending throughout the euro-zone. Consumer sentiment in the periphery is now only a touch above its record low and while core sentiment is rather …
31st August 2012
The rise in euro-zone unemployment in July, coupled with the pick-up in inflation in August, supports the view that the downturn in household spending will intensify in the second half of this year. … Euro-zone Unemployment (Jul.) & Flash CPI …
We expect the ECB to disappoint markets this week with its plans for peripheral government bond purchases. President Mario Draghi is likely to state that such purchases will be limited and that they will not begin until after the EFSF or ESM have bought …
30th August 2012
August’s weaker than expected EC business and consumer surveys provided further signs that the euro-zone is in a broad-based recession. This will add to the pressure on the ECB to come up with more policy support next week and beyond. … Euro-zone EC …
The latest monetary data confirm that the ECB’s earlier liquidity operations have yet to boost lending to the private sector, which will add to the pressure on the Bank to do more. As well as buying more government bonds as promised, the ECB should …
28th August 2012
Given the number of “crunch times”, “end-games” and “abysses” that Greece has faced over the last two years, it would be easy to dismiss the latest speculation that the tragedy is about to reach its “final act” as yet another false dusk. But with no sign …
24th August 2012
Q2’s Norwegian GDP data provided further signs that the economy is shrugging off the euro-zone debt crisis. But although Norway is likely to remain one of Europe’s best performers over the coming quarters, growth looks set to slow. … Norwegian GDP (Q2 …
23rd August 2012
Q2’s Norwegian GDP data provided further signs that the economy is shrugging off the euro-zone debt crisis. But although Norway is likely to remain one of Europe’s best performers over the coming quarters, growth looks set to slow. … Norwegian GDP …
August’s flash euro-zone purchasing managers’ index (PMI) did nothing to challenge the notion that the single currency area is now firmly in recession. … Euro-zone Flash PMIs …
The most surprising element of last week’s Q2 GDP figures was the robustness of exports from France and Germany. Previously strong demand from Asia and the US appears to have been the key, while the depreciation of the euro may have helped too. But with …
17th August 2012
The euro-zone economy probably entered recession in Q2. And the troubled peripheral economies saw sharp falls in GDP, hindering their fiscal consolidation efforts and deepening the region’s debt crisis. … Euro-zone GDP (Q2) & German ZEW …
14th August 2012
Two weeks after Mario Draghi’s pledge to do whatever it takes to save the euro, his words have still not been followed by actions. Indeed, an impasse appears to have ensued in which the major players in the crisis are all waiting on each other to act …
10th August 2012
The Greek Government’s inability to agree on how to cut public spending highlights the ongoing fragility of the situation there. And with euro-zone policymakers still unwilling to concede any ground, we still see Greece leaving the euro-zone, perhaps even …
8th August 2012
June’s industrial production figures did little to reduce the danger that the German economy tipped into recession in the second quarter. … German Industrial Production …
The sharp fall in GDP in Q2 highlights the huge economic and fiscal problems that Italy faces. Although the pressure from the markets has recently eased, we still think that it is only a matter of time before Italy is forced to seek a sovereign bail-out. …
7th August 2012
The ECB’s statement last week that it might buy Spanish bonds if the government first applies for EFSF support has left many questions unanswered, which we address in this Update. In short, it seems likely that Spain will apply for and receive support …
6th August 2012
The ECB’s statement last week that it might buy more peripheral government bonds if countries first apply to the EFSF for support was a step forward. But Spain and Italy are not yet willing to accept the harsh reform and austerity conditions that would be …
3rd August 2012
President Draghi’s comments at today’s ECB press conference were a blow to hopes that the Bank might quickly make huge bond purchases to address the euro-zone’s escalating debt crisis. While the Bank might buy more bonds in future, the region’s …
2nd August 2012
Despite the fact that Latvia’s economy has returned to growth, it is still far from clear that it has undergone the necessary “internal devaluation” required to fully restore competitiveness. What’s more, even if Latvia does complete its adjustment, there …
1st August 2012
Recent data from the external sector have confirmed that export growth has continued to slow. Indeed, the annual growth rate of export values fell to its lowest level in two and a half years in May. Admittedly, the recent fall in the euro should help …
31st July 2012
Recent fiscal data suggest that a large number of peripheral and core economies are struggling to make inroads into their budget deficits. And with the growth outlook continuing to deteriorate, many governments will struggle to get their fiscal plans back …
With euro-zone inflation unchanged at 2.4% in July and unemployment at a record high in June, households’ incomes are under growing downward pressure. … Euro-zone Unemployment (Jun.) & Flash CPI …
The Swedish GDP figures for Q2 confirmed that the economy is continuing to weather the storm from the euro-zone far better than most of its neighbours. … Swedish GDP (Q2 …
30th July 2012
July’s deterioration in EC economic sentiment added to the evidence that the euro-zone is heading deeper into recession, suggesting that not only the periphery but also the previously resilient core economies are in need of extra policy support. … …
The Swedish GDP figures for Q2 confirmed that the economy is continuing to weather the storm from the euro-zone far better than most of its neighbours. … Swedish GDP …
The markets got very excited about three little words at the end of last week. Spanish and Italian bond yields plunged, and the euro and euro-zone stock markets rose sharply, in response to ECB President Mario Draghi’s pledge to do “whatever it takes” to …
27th July 2012
Despite President Mario Draghi’s pledge to do “whatever it takes” to preserve the euro, the ECB appears unlikely to follow up July’s interest rate cut with further significant policy announcements at its Governing Council meeting on 2nd August. While the …
The latest monetary data provide no indication that the ECB’s earlier liquidity measures are prompting banks to lend more to the wider economy. … Euro-zone Monetary Indicators Monitor …
26th July 2012
We think that some of the peripheral euro-zone economies may need their real exchange rates to fall by as much as 40% to regain competitiveness and kick start a period of export driven growth. Accordingly, it may take years, if not decades, of depression …
25th July 2012
While the depreciation of the euro exchange rate is a helpful development for the euro-zone economy, suggestions that it alone can save the currency union look very hopeful. … Weaker currency won't save the …
July’s Ifo index will add to the growing concerns over the health of the German economy and the outlook for the country’s credit rating. … German Ifo Survey …
A Spanish sovereign bail-out would leave little left in the pot to provide further assistance to Portugal and Ireland and, much more crucially, to deal with serious problems in Italy. … Spanish bail-out will leave little in the …
24th July 2012
July’s euro-zone PMI survey supports the view that the region as a whole is in the midst of a pretty deep recession. … Euro-zone Flash PMIs …
The formation of a ‘pro bail-out’ government may have recently shifted the markets’ spotlight away from Greece. But the Troika’s visit to Athens, which begins tomorrow, looks set to prompt renewed concerns over the country’s future in the euro-zone. … Is …
23rd July 2012
Developments last week confirmed that support for the periphery from the region’s core governments will be slow in coming. Some attention has turned back to the ECB for policy support, but it has very little left in its armoury. Its recent interest rate …
20th July 2012
Finland’s continued hardline stance on the provision of support to the peripheral economies increases the risk that the euro-zone will not implement the measures needed to maintain the existing membership of the single currency. … Could Finland be the …
19th July 2012
