Europe Economics Update ECB growth forecasts to remain too optimistic Philip Lane, who is due to take over as the ECB’s Chief Economist in May, acknowledged last week that Q1 2019 will probably be the third successive quarter of below-potential GDP growth. We agree with... 4th March 2019 · 1 min read
Europe Economics Weekly Euro-zone growing slowly, Italy and Germany risks The survey evidence continues to suggest that the euro-zone economy is growing, but that it is doing so only slowly, with the services sector doing all of the heavy lifting. The industrial sector... 1st March 2019 · 1 min read
Europe Data Response Euro-zone Flash CPI (Feb.), Final Mfg PMIs (Feb.) The increase in the euro-zone’s headline inflation rate, to 1.5% in February, will be of little comfort to the ECB given that it masks a small reduction in the core rate to just 1.0%. Moreover, the... 1st March 2019 · 1 min read
ECB Watch ECB to cut macro forecasts, leave policy unchanged The ECB is likely to reduce its forecasts for economic growth at its meeting next week and to again stress that it has the necessary tools to respond if the recent slowdown worsens. But we think it... 28th February 2019 · 1 min read
DM Valuations Monitor End of QT unlikely to affect bond valuations much In his semi-annual testimony to Congress, Jerome Powell reiterated that the Fed is deciding how and when to end its balance sheet rundown. Although some officials have indicated that it could finish... 28th February 2019 · 1 min read
Europe Data Response EC Business and Consumer Survey (Feb.) February’s euro-zone Economic Sentiment Indicator (ESI) confirmed the message from other surveys that despite weakness in the industrial sector, the overall economy is still growing. That said, the... 27th February 2019 · 1 min read
Europe Economics Update Another look at the slowdown in the euro-zone The slowdown in euro-zone GDP growth in the second half of last year resulted from weaker exports and domestic demand, about half of which was due to problems in the car industry. But more recently... 26th February 2019 · 1 min read
Europe Economics Weekly Manufacturing recession, auto tariff threat The small rise in the composite PMI for the euro-zone, from 51.0 in January to 51.4 in February, came as a bit of a relief – especially as this was the first increase in six months. However, it leaves... 22nd February 2019 · 1 min read
Europe Commercial Property Focus Expect no change in euro-zone office yields until 2022 The slowdown in euro-zone growth means that rental growth will be weaker and that bond yields are likely to be lower. The net effect of these factors is a downward revision to our forecasts for office... 22nd February 2019 · 1 min read
Europe Data Response Euro-zone Flash PMIs (Feb.) February’s Composite PMI provides some reassurance that the euro-zone economy as a whole is still growing. But industrial output is falling, and with the global economy slowing and trade tensions... 21st February 2019 · 1 min read
Global Markets Update BTPs to underperform other peripheral bonds We think that safe-haven flows will keep government bond yields across the euro-zone’s “core” low this year. And, we wouldn’t be surprised if yields in Germany even turned negative as they did in 2016... 21st February 2019 · 1 min read
Europe Economics Weekly China and Germany, another Spanish election With Germany having narrowly avoided recession and Italy’s downturn dragging on, policymakers at the ECB will soon have to provide more clarity about which tools they are willing to use if the... 15th February 2019 · 1 min read
Europe Commercial Property Chart Pack Tick-up in capital value growth to be short-lived Euro-zone property investment rose by 9% y/y last year to reach a new high of €183bn. But not all markets shared in the spoils, with Italy posting a 20% decline. At the all-property level, yields... 15th February 2019 · 1 min read
Global Economics Update Euro-zone/US divergence to narrow as US slows The recent contrast between a weakening euro-zone and resilient US seems to reflect the former’s higher exposure to world trade and the relative weakness of real disposable incomes growth there. We... 14th February 2019 · 1 min read
Europe Economics Update Leading indicators not (yet) pointing to recession Recent movements in most of the indicators which signalled the only two recessions in the euro-zone’s history suggest that the economic outlook has deteriorated sharply. They do not yet point... 14th February 2019 · 1 min read
Europe Data Response Euro-zone GDP (Q4) With Germany avoiding recession only by the skin of its teeth, and Italy actually in recession, the euro-zone eked out GDP growth of only 0.2% in Q4. For now we still expect growth to recover a bit... 14th February 2019 · 1 min read
