Construction cooling, fiscal rules and pivots

We think euro-zone financial markets are getting ahead of themselves if they are sensing an imminent “pivot” by the ECB following the lower-than-expected US CPI number released yesterday. Indeed, we think the ECB has more tightening to do than the Fed in the current cycle, and that it will not begin cutting rates until later than the Fed. Meanwhile, data released this week underscore that the construction sector is heading for a downturn.