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The recent run of disappointing news from Ireland means that public debt is looking increasingly likely to reach Greek proportions, suggesting that the Irish Government may eventually be left with little choice but to restructure its debts. … Is Ireland …
28th September 2010
September’s rise in German HICP inflation appears to have reflected temporary energy and food effects. Core inflation remains extremely subdued and we still see the headline rate coming close to zero next year as energy inflation falls. … German Flash CPI …
The further rise in euro-zone annual broad money and credit growth is certainly an encouraging sign. But given the very low starting point and the fact that many peripheral banks are still struggling to gain finance, the ECB will continue to remove its …
27th September 2010
Last week was another rollercoaster ride for the euro-zone’s periphery. Disappointing Irish and Portuguese data provided a timely reminder of the task that both governments face to put their public finances back on an even keel. And the rise in the euro …
September’s small rise in the German Ifo brings hope that the euro-zone’s largest economy is faring very well for now. But with export growth already slowing, we expect the index to follow the PMI down before long. … German Ifo Survey …
24th September 2010
September’s plunge in the euro-zone PMI is the strongest sign yet that the eurozone recovery is rapidly losing momentum and that parts of the region may already have fallen back into recession. … Euro-zone Flash PMIs …
23rd September 2010
Ireland’s disappointing GDP figures for Q2 support our view that the economy is a long way from staging a sustained recovery and will do nothing to ease markets’ fears about the health of the Irish public finances. … Ireland GDP …
Despite the markets growing more pessimistic about the prospects for Ireland and Portugal, bond yields in Spain have remained relatively stable, suggesting that concerns about its public finances have begun to ebb. But while we think Spain should be able …
22nd September 2010
Last week’s data brought further evidence of persistent weakness in euro-zone labour markets, with employment stagnating in Q2 and annual wage growth slowing. Admittedly, while pay cuts continued in much of the periphery, there were some signs of rising …
20th September 2010
Fears that domestic price pressures might prompt the Swiss National Bank to tighten monetary policy proved unfounded today as it left its interest rate target at 0.25%. The Bank’s tone was gloomier than expected and its low inflation forecast supports our …
16th September 2010
July’s fall in euro-zone exports is another sign that GDP growth will weaken in Q3 after Q2’s strong expansion. And with exports set to slow further in the months ahead, a consumer revival would be needed to ensure a continued recovery. … Euro-zone Trade …
The recent pick-up in ECB bond purchases has been very small when compared to earlier acquisitions or to the size of the euro-zone economy. Meanwhile, its lending to commercial banks in the region as a whole has continued to ease. Nonetheless, both …
September’s slump in German ZEW investor sentiment was a worrying sign that the recovery is already faltering. Admittedly, it is a less reliable indicator of German GDP than business surveys like the PMI. But it has been a reasonable predictor of turning …
15th September 2010
The drop in German ZEW economic sentiment in September and July’s stagnation in euro-zone industrial production confirm that the euro-zone recovery is slowing again after Q2’s strong expansion. … German ZEW (Sep.), EZ Ind. Prod'n (Jul.) & Labour Costs …
14th September 2010
The recent slide in the euro and rise in peripheral bond yields appears to reflect renewed concerns about the health of the region’s banks. These concerns may only subside once the peripheral economies have embarked on a sustained recovery, unemployment …
13th September 2010
Q2’s Italian GDP figures confirmed that Italy continued to expand at a pretty healthy pace last quarter. But we think that the recovery may already have run its course and that there is a strong chance Italy falls back in recession in the second half of …
10th September 2010
Recent developments are not easing the concerns that we have previously raised over Belgium being the Greece of the North. While the Belgian economy is growing healthily, the current political crisis has reached a new high and risks to the fiscal outlook …
8th September 2010
With Greece likely to receive its second tranche of loans from the euro-zone and IMF next week, the Government will be able to meet its financing needs for the next few months. But Q2’s dreadful GDP figures confirm that Greece’s problems are far from …
The latest German industrial and trade data add to evidence that the recoveries in these sectors are beginning to lose momentum. Nonetheless, Germany looks set to remain the euro-zone’s main engine of growth. … German Industrial Production & Trade & …
Last week, the IMF published a note outlining why it believes that a government default in the advanced world is “unnecessary, undesirable and unlikely”. While the note makes several valid points, we think that the IMF is being too sanguine. Indeed, in …
6th September 2010
The Swedish Riksbank’s decision to raise interest rates for a second meeting running reflects concerns that domestic imbalances may be building. Further hikes seem likely in the near term, but the pace of monetary tightening should ease next year as the …
2nd September 2010
While the ECB struck a slightly more upbeat tone towards the economy at today’s press conference, it nonetheless maintained its support for the region’s banking sector and remains a long way from implementing any form of conventional policy tightening. … …
The second release relating to Q2 euro-zone GDP gives a fairly encouraging picture, but does not alter our view that the recovery will soon falter. … Euro-zone GDP …
Q2’s GDP release confirmed that the Swiss economy is still performing very well. However, the breakdown of growth cast doubts over whether the recent pace of expansion can be maintained over the coming quarters. … Swiss GDP …
Q2’s 1.0% quarterly rise in euro-zone GDP confirmed that the region as a whole performed well by international standards last quarter. But Q2’s growth surge was largely down to a huge 2.2% quarterly gain in Germany. Growth in the periphery was …
1st September 2010
August’s small fall in euro-zone CPI inflation confirmed that price pressures in the region are very subdued. And although unemployment has continued to edge down, this is unlikely to prompt any meaningful pick-up in wage growth. … Euro-zone Flash CPI …
31st August 2010
Deteriorating global growth prospects and increased risk aversion have prompted a further fall in German 10-year government bond yields to a post-reunification low of around 2.1%. While fears have grown that bubbles may be forming in government bond …
30th August 2010
August’s fall in German HICP inflation confirmed the absence of price pressures in the euro-zone’s largest economy. Indeed, we still see the headline rate there falling to near zero next year. … German CPI (1st Est. …
27th August 2010
The ECB is likely to maintain a very dovish stance at the forthcoming meeting. Admittedly, recent positive data might have led the Bank to revise up its growth forecast for 2010. But the slowdown in global demand is a very worrying sign for the future. As …
26th August 2010
The latest money figures add to evidence that annual credit growth is picking up. But with credit conditions still tight and many peripheral banks still looking vulnerable, the ECB will need to maintain its unconventional policy support for a good while …
The latest Spanish GDP figures confirmed that the economy continued its modest revival in Q2. But with the full effects of the fiscal squeeze yet to be felt and global demand set to slow, the recovery will splutter to a halt in the second half of 2010. … …
Markets may have become more confident that Spain can get its public finances under control. But if Spain is to restore external balance within the euro-zone, it may have to accept a decade of deflation, stagnation and sky-high unemployment. … Can Spain …
25th August 2010
August’s rise in the German Ifo is good news after falls in some of the other surveys lately. But the slight decline in expectations highlights concerns for the future. … German Ifo Survey …
The euro-zone’s relative resilience has prompted some optimism lately, but note that the region’s business cycle typically lags behind that of the US. Euro-zone growth will almost certainly follow that in the US down very soon and the region looks set to …
24th August 2010
The breakdown of Q2’s German GDP data looks very encouraging, with the 2.2% quarterly surge in activity driven by both exports and domestic spending. But we doubt that the strength of either is sustainable. … German GDP …
August’s fall in the euro-zone composite PMI suggests that the recovery is now beginning to slow alongside those of other major economies. But the index points to pretty strong GDP growth for the time being. … Euro-zone Flash PMIs …
23rd August 2010
Recent encouraging news on the euro-zone has prompted us to revise up our 2010 GDP growth forecast from 1.0% to 1.5%. But the recovery is still heavily reliant on German exporters and the outlook for the periphery remains grim. And further evidence that …
Q2’s GDP figures add to evidence that Norway is on track for a modest recovery, suggesting that the Norges Bank will continue to tread cautiously. … Norwegian GDP …
19th August 2010
Q2’s GDP figures highlighted huge divergences within the euro-zone. We have revised up our growth forecast for this year, but this is entirely down to a better performance by Germany. And with consumer spending in the region as a whole still very weak, …
17th August 2010
August’s drop in the German ZEW index will dent any hopes that the strength of the recovery in Q2 could continue. Although the economy should post a strong annual gain of 3% or more this year as a whole, growth is probably slowing already. … German ZEW …
The news that euro-zone GDP rose by 1.0% in Q2 confirmed that the economy is performing very well, both by its own and international standards. But this might not last. The recovery is still heavily reliant on German exports, which will probably slow with …
16th August 2010
Q2’s GDP figures confirm that the euro-zone performed surprisingly well, both by its own and international standards. But the recovery remains dependent on exports from the core economies, which look set to slow before long. … Euro-zone GDP …
13th August 2010
Recent news has confirmed that the Greek central government is meeting its ambitious deficit reduction goals, adding to evidence that it will receive its second tranche of euro-zone and IMF funds in September without a hitch. But Q2’s GDP figures showed …
12th August 2010
Despite a small drop in production in June, the industrial sector remains the eurozone’s main engine of growth. But there remain stark divergences in industrial performance within the region. … Euro-zone Industrial Production …
A sharp drop in the euro exchange rate might seem like the answer to all of the currency unions problems. But while it might boost the core economies exports, it would do little to help the troubled periphery and could even increase the risk that the …
11th August 2010
The recent surge in German imports has brought hope that the recovery there is starting to benefit the rest of the world. But Germany is still running a very large trade surplus and the persistent weakness of domestic spending suggests that the strength …
10th August 2010
On the whole, the news on the euro-zone was fairly good again last week. Industrial figures from Germany confirmed that Q2 was a very good quarter and the final release of July’s euro-zone PMI surveys suggested that the recovery might since have gained …
9th August 2010
Since Italy has already put in place measures to reduce its budget deficit over the next couple of years, the current political uncertainties do not pose a major risk to the near-term outlook for the public finances. But its huge public debt certainly …
German industrial production data and GDP estimates from Italy and Spain confirm that the euro-zone recovery gained pace in Q2, with Germany far in the lead despite June’s small fall in production. … German Industrial Production (Jun.) & Italian GDP …
6th August 2010
