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Bond yields in most Nordic and Swiss markets fell in August, matching global trends. Currencies recorded mixed performances against the euro, with the Swiss franc depreciating while the Swedish krona rose. As Sweden’s Riksbank is likely to tighten policy …
1st September 2017
Italy’s economy is improving steadily, but is likely to continue growing more slowly than the euro-zone as a whole. This leaves it vulnerable to losses of confidence, perhaps sparked by concerns about the banks or the forthcoming general election. … …
August’s manufacturing PMIs pointed to continued recoveries in Switzerland and Norway, but the Swedish index weakened significantly. That said, with other indicators suggesting that the Swedish economy is still performing well, we doubt that the PMI will …
The appreciation of the single currency since the ECB’s last meeting has strengthened the case to delay the formal announcement of asset purchase tapering until October. But with growth strong and inflation edging up, President Draghi is likely to hint …
31st August 2017
Economic growth and inflation have been stronger than expected since the Riksbank last met. Despite these developments, policymaker’s concerns about a sharp rise in the krona suggest that the Bank will hold off from altering its forward guidance at next …
The latest euro-zone inflation and unemployment data broadly support the case for the ECB to taper its asset purchases next year, but the Bank seems unlikely to announce its plan until its October policy meeting. … Euro-zone Flash CPI (Aug.) & …
The Danish economy notched up yet another decent quarter in Q2, with growth driven by domestic demand. We expect the economy to continue to perform well and have raised our 2017 GDP forecast to 2.5%. … Danish GDP …
August’s increases in German and Spanish HICP inflation point to an increase in eurozone inflation to about 1.5%. But the relatively subdued rates of core inflation in both economies support the ECB’s inclination to reduce its policy support only …
30th August 2017
The rise in the EC’s measure of euro-zone economic sentiment in August left the index pointing to stronger GDP growth ahead and will do little to take the pressure off the euro exchange rate. But with inflation expectations low, we suspect that interest …
Although surveys of overall economic sentiment in both Switzerland and Sweden fell in August, they still point to a healthy pace of GDP growth in both countries. But with inflation much stronger in Sweden than in Switzerland, we see the Riksbank starting …
July’s euro-zone money and credit data are consistent with limited inflationary pressure in the region. Coupled with the renewed rise in the euro to above $1.20, this strengthens the case for the ECB to take a very cautious approach to reducing its policy …
29th August 2017
Although the euro’s strength does not appear to have had an adverse impact on the euro-zone economy so far, this may not last. After all, unless the currency’s recent appreciation is reversed, it seems unlikely that euro-zone export growth will maintain …
25th August 2017
Despite August’s small fall, German Ifo business sentiment remains buoyant and points to strong growth ahead. … German Ifo (Aug.) & GDP Breakdown …
Norway’s mainland economy recorded another strong expansion in Q2 and forward-looking indicators suggest that the recovery will continue to gain pace. But with inflation set to fall further, we doubt that this will alter the stance of monetary policy. … …
24th August 2017
The second release of Spanish GDP confirmed that quarterly growth edged up in Q2 due to stronger net trade. While we expect growth to slow in the coming quarters, Spain is still set to be one of the euro-zone’s top performers. … Spanish GDP Breakdown …
While the Central Bank of Iceland (CBI) left rates unchanged today, our expectation that the króna will appreciate in the coming months means we expect one more rate cut this year, in November. … Central Bank of Iceland nearing the end of its loosening …
23rd August 2017
August’s small rise in the euro-zone Composite PMI suggests that economic growth maintained its pace in Q3. With the recovery healthy, we think that the ECB will proceed with tapering its asset purchases from January. … Euro-zone Flash PMIs …
In recent months Swedish inflation has been artificially boosted by a new method for calculating package holiday prices. While the Riksbank will look through this particular effect, it is nevertheless clear that underlying inflation has risen and that …
22nd August 2017
August’s fall in German investor sentiment probably reflects the euro’s continued rise and recent falls in equity prices. But we do not think that it is a sign of an economic slowdown to come. … German ZEW Survey …
After 100 days in office, French President Emmanuel Macron has already begun to reform the labour market. But a decline in his approval rating and a darker fiscal outlook will make it difficult for him to tackle the more controversial reforms that lie …
21st August 2017
The euro-zone’s economic growth is unusually synchronised across the region. Economies in the core continue to do well, while previously-struggling countries like Italy and Portugal are growing again. This makes it less likely that a crisis will erupt in …
18th August 2017
The decline in Swiss unemployment in Q2 shows that improving economic conditions are continuing to feed through to the labour market. While we expect unemployment to fall further, we doubt that this will translate into stronger wage growth any time soon. …
17th August 2017
With Angela Merkel’s party far ahead in the polls and pledging to pay off debt and cut taxes rather than increase investment, it looks set to be more of the same in Germany after September’s election. But the vote could act as a catalyst for renewed …
16th August 2017
At its last meeting in June, when it cut interest rates for the second time this year, the Central Bank of Iceland (CBI) left the door open to further rate cuts. But given that the króna has slumped since then, it now seems more likely that the CBI will …
The second estimate of euro-zone Q2 GDP confirmed that the recovery gathered pace. And with surveys suggesting that the economy continued to expand at a healthy rate at the start of Q3, the outlook remains bright. … Euro-zone, Italy & Netherlands GDP (Q2, …
July’s jump in Swedish inflation is partly due to a methodological change in the way that package holiday prices are tracked. Yet even excluding this effect, underlying inflation has picked up and looks set to rise further. … Swedish Consumer Prices …
15th August 2017
The German economy put in a strong performance in the first half of the year. While growth in Q2 was slightly slower than expected, meaning that euro-zone GDP growth might be revised down, surveys suggest that the economy should continue to do well. … …
Italy’s banking sector has seen signs of improvement this year. But it is a long way from full health, so the country’s lenders are unlikely to contribute significantly to the economic recovery any time soon. … Are Italy’s banks ready to support the …
14th August 2017
Despite June’s decline in euro-zone industrial production, the sector’s contribution to GDP growth probably picked up in Q2. And surveys suggest that industry put in a decent performance at the start of Q3. … Euro-zone Industrial Production …
The Swiss franc has had a rocky ride over the past month. In late July, it depreciated sharply to SFr1.15 to the euro, its lowest level since January 2015 when the Swiss National Bank abandoned its exchange rate ceiling. The decline followed SNB Chairman …
11th August 2017
Ten years ago this week marked the start of the global financial crisis and a challenging time for the euro-zone economy. In many respects, the euro-zone finally appears to be out of the woods. Growth has picked up strongly in recent quarters, …
The Swedish industrial and services sectors have been performing well of late and the outlook is positive. With the Swedish economy firing on all cylinders, it won’t be long until the Riksbank changes course and tightens monetary policy. … Swedish …
10th August 2017
Although French industrial production fell sharply in June, the sector fared better in Q2 than it did in Q1. And the continued strength of the surveys suggests that June’s decline does not mark the start of a more sustained slowdown. … French Industrial …
Inflation in Norway continued on its downward trend in July, and it is likely to fall a little further over the rest of the year. We think that it will remain well below target over the next few years, so interest rate hikes are a very long way off. … …
Although German and French exporters struggled in June, the outlook for trade in both countries remains fairly bright amid strong growth in global demand and, despite its recent appreciation, the still low level of the euro exchange rate. … German & …
8th August 2017
The latest Eurobarometer survey suggested that Italy is one of the most eurosceptic members of the single currency. While there are reasons why an Italian exit from the euro over the next few years is unlikely, we think that the risk of an exit will hit …
7th August 2017
The Swiss National Bank (SNB) will be disappointed that July’s small rise in core inflation was driven by imported rather than domestically-produced products. As inflation expectations are consistent with core inflation remaining close to zero, the Bank …
Despite the decline in German industrial production in June, the sector performed well in Q2 as a whole. So we still think that the German economy gathered pace in the second quarter. And surveys point to continued strong growth to come. … German …
In the first half of this year, GDP in the euro-zone expanded at a faster pace than that in either the US or the UK. But while we remain very positive on the outlook for the euro-zone economy, the region’s low rate of potential growth means that we doubt …
4th August 2017
The euro has risen sharply over the past month and in early August reached its highest level against the US dollar since early 2015. Strikingly, the rise has occurred against a backdrop of broadly unchanged expectations for interest rates between the US …
3rd August 2017
June’s rise in euro-zone retail sales capped a strong quarter and suggests that household spending growth picked up in Q2. Although July’s final euro-zone Composite PMI implies that broader economic growth may have softened a touch at the start of Q3, it …
The Swiss franc was the worst performing major currency last month. While the franc’s depreciation has been stronger than we had anticipated, we still see it depreciating a little further against the euro over the next couple of years as very subdued …
The euro-zone’s efforts to put its public finances in order continued in Q1, with the region’s budget deficit shrinking to its lowest level since mid-2007. And timelier central government fiscal data suggest that most of the peripheral countries continued …
1st August 2017
Euro-zone GDP in the first half of the year was a little weaker than expected. But the Q2 outturn may yet be revised up, and with surveys pointing to continued fairly strong growth at the start of Q3, we remain optimistic about the economic outlook. … …
July’s Swedish and Norwegian manufacturing PMIs point to a continued pick-up in industrial output growth in both countries. But the Swedish survey’s price index implies some downside risks to inflation in the near term. … Swedish & Norwegian Manufacturing …
After last week’s political scandal, Sweden’s Government needs to boost its popularity. So the Government seems likely to row back from planned tax hikes ahead of next year’s general election. … Swedish political scandal lowers chance of tax …
31st July 2017
While June’s unemployment data painted a positive picture of the euro-zone labour market, July’s CPI release confirmed that this strength is putting only modest upward pressure on underlying inflation. … Euro-zone Unemployment (Jun.) & Flash CPI …
This week, the euro reached its highest level against the US dollar since before QE began. It would probably take a much larger appreciation to knock the economic recovery completely off course. But a further rise would weigh on inflation, and could …
28th July 2017
July’s unchanged reading for HICP inflation in Germany suggests that euro-zone inflation probably remained at 1.3% in July. German core inflation is set to creep higher over the rest of the year, but it will remain below the ECB’s near-2% target. … German …
July’s EC survey points to a sharp acceleration in euro-zone GDP growth. But we doubt that the economy will perform quite as well as the survey suggests. And with inflation expectations low, tighter monetary policy is a long way off. … EC Business & …
