Filtered by Region: Europe Use setting Europe
Developments this week make us more confident in our view that the ECB will change its forward guidance at its meeting on 27 th July, before cutting its deposit rate in September and announcing in October that it will re-launch QE. The first of these …
5th July 2019
The latest economic data, together with the nomination of Christine Lagarde for ECB president, make us more confident in our view that the ECB will cut interest rates and re-launch QE before the year is out. All of the activity data point to a slowdown in …
4th July 2019
Paris office take-up is likely to drop back a little this year, but with economic growth staying steady, it’s unlikely to fall off a cliff. A fairly restricted supply outlook means that vacancy can stay close to current lows over the next few years, …
June surveys round off a disappointing Q2 While the Composite PMIs for June were flat for Spain and edged up for Italy, the overall picture remains one of weak economic growth in the second quarter. And with price pressures remaining weak, there is every …
3rd July 2019
Yesterday’s announcement that Christine Lagarde will succeed Mario Draghi leaves us even more confident that the ECB will loosen monetary policy in the coming months. We think the Bank is likely to cut its deposit rate in September and re-launch QE before …
The jump in euro-zone core inflation in June seems to have largely reflected temporary factors. More generally, a range of measures of underlying inflation suggest that price pressures remain subdued. This should encourage the ECB to loosen policy sooner …
2nd July 2019
The preliminary trade deal between Mercosur (Brazil, Argentina, Uruguay and Paraguay) and the EU, if implemented in full, would boost potential growth in the bloc, perhaps by as much as 0.75-1.0%-pt. But with a lengthy phase-in period for some measures, …
1st July 2019
Economy lost momentum in Q2 Business surveys released this week provided more evidence that the economy slowed again in Q2. The German Ifo Business Climate Index, released on Monday, fell to a 55-month low, and was followed on Thursday by the euro-zone …
28th June 2019
Following Mario Draghi’s more dovish comments earlier in the month, we now think the Governing Council is more willing to loosen policy further and have revised our already more-dovish-than-consensus interest rate and QE forecasts. Next week, the European …
14th June 2019
Investors are now even more dovish that we have long been about the outlook for monetary policy in the US. As such, we doubt that Treasury yields will drop further. However, we don’t expect looser monetary policy to avert a drop in global stock markets. … …
President Draghi’s comments at this week’s press conference were consistent with our view that the ECB will eventually re-start its QE programme. Meanwhile, Italy looks set for another collision with the EU, which we expect to push bond yields higher. … …
7th June 2019
We do not think that the valuations of equities are unsustainably high. Nonetheless, we still expect that stock markets in the US and in the rest of the developed world will slump later this year. This is because we anticipate earnings to come under …
Concerns about rental growth prospects appear to be behind rising prime shopping centre yields. While we anticipate high street yields to rise also, a smaller correction will see the yield spread widen further. … Shopping centre yield spread over high …
5th June 2019
This week saw a fresh escalation of the tensions between Italy and the European Commission, and the publication of some fairly downbeat survey data. Combined with the very low inflation data we expect to be published next Tuesday, this will add to the …
31st May 2019
Lower government bond and equity dividend yields improved the relative valuation of commercial property assets in Q1. Indeed, less than half of the 93 property markets now appear overvalued, with the office sector recording the largest improvement. With …
29th May 2019
The small increase in the euro-zone’s Economic Sentiment Indicator (ESI) is a welcome bit of good news. But it is not enough to fully reverse its fall in April, and does not change our view that economic growth probably dropped back to around 0.2% q/q in …
28th May 2019
Projections of the results of the European elections confirm that pro-European parties will continue to have a clear majority in the European Parliament (EP) itself, so little will change at EU level. But there will be some fallout for national politics, …
27th May 2019
This week saw the release of another set of underwhelming business surveys, suggesting that the pick-up in GDP growth in Q1 will not be sustained, and some further evidence that price pressures remain very weak. The stage is therefore set for a dovish …
24th May 2019
Occupier demand is strong in all three sectors, with solid economic growth supporting expansion, although we expect this to slow through the course of the year, dampening rental growth in all sectors. Retailers are facing pressures on costs and, with …
Car sales in the world’s largest markets have slumped since mid-2018. In this Metals Watch we explain our forecast for sales to begin recovering later this year. … Recent drags on car sales are set to …
22nd May 2019
We suspect that the European Parliament (EP) elections will not cause much reaction on bond markets, even if populist parties perform even better than expected. Recent elections in the EU suggest that politics trigger sell-offs only when those parties …
20th May 2019
Developments this week suggest that Italy’s government is on another collision course with the European Commission. Meanwhile, the risk of US car tariffs has eased, but it has not disappeared. Finally, German Bund yields have continued to decline, partly …
17th May 2019
Although equities in the euro-zone have fallen sharply in the past week as the US-China trade dispute has flared up again, they are still much higher than they were at the start of the year. This suggests that a lot of good news about trade is still …
15th May 2019
This week saw further signs that the German economy regained some momentum at the end of Q1, as industrial production rose and exports picked up in March. But with the business surveys for March and April still looking grim, we doubt that the improvement …
10th May 2019
The rebound in euro-zone GDP growth to a respectable 0.4% q/q in the first quarter of this year has been greeted by many as proof that the economy is back on track. But we suspect that the expansion will slow again in the coming months, given that Q1 was …
3rd May 2019
A surge in support for populist parties in European parliamentary elections later this month should have little bearing on economic policy in the near term. After all, moderate parties are still likely to control a majority of seats, and parliament’s …
We doubt that bond markets will be negatively affected by the European Parliament (EP) elections this month, as the rise of anti-EU parties is already widely anticipated and would not necessarily complicate EU policymaking. In fact, a strong showing by …
2nd May 2019
Western European office rents grew by 5.3% p.a. in 2016-18. We expect them to grow by little more than that over the next three years combined , as occupier demand slows and development completions pick up. This will see the sector’s rental growth …
April’s decline in the euro-zone’s Economic Sentiment Indicator adds to the evidence from other surveys that the economy got off to a slow start to Q2. So even if GDP data for Q1, published tomorrow, show a pick-up in growth as we expect, this seems …
29th April 2019
Following this weekend’s election, we suspect that Spain’s next government will tighten fiscal policy slightly, contributing to slower GDP growth over the coming years. But the country still looks set to grow more quickly than the euro-zone as a whole. … …
Spain’s economy is performing well in the run-up to Sunday’s general election, but we expect growth there to slow. Meanwhile, although we have revised up our oil price forecasts, energy inflation still looks set to drag the headline rate down below 1% …
26th April 2019
GDP growth in the euro-zone is likely to be only slightly stronger this year than in the second half of 2018. Hopes for a sharp rebound in export demand will probably be disappointed, meaning that the manufacturing sector will not turn the corner for a …
17th April 2019
The ECB struck a moderately dovish tone at its policy meeting this week, but with economic growth still fairly slow it will need to follow its words with actions. Meanwhile, industrial production data suggest that Italy’s recession might have come to an …
12th April 2019
The slight pick-up in Swiss inflation in March does not change our view that the headline rate will fall back into negative territory in mid-2019 and that core price pressures will remain extremely weak. … Swiss Consumer Prices …
2nd April 2019
Growing safe-haven flows in 2019 and the ECB re-starting its net asset purchases in 2020 may mean that the yields of “core” European government bonds (EGBs) fall further over the next two years. … The 10-year Bund yield may be heading to …
20th March 2019
We don’t think the increase in euro-zone industrial production in January marks a turning point for the economy, given that the business surveys for February were weak and global demand is still sluggish. Indeed, with growth and inflation likely to remain …
15th March 2019
Near zero low risk-free rates will support Western European office and industrial pricing, despite a softer rental growth outlook. In contrast, with the retail sector also dealing with structural headwinds, we think that a poorer outlook for income …
The recent poor performance of “average” retail property will persist over the next few years as investors shy away from risky cash flows. However, we also expect prime high streets to underperform the other sectors, as a handful of markets see softening …
13th March 2019
We are more dovish than investors about the outlook for monetary policy in most developed markets. If we are right, “core” government bond yields are likely to fall, or remain very low, this year. … Monetary policy likely to keep “core” bond yields …
6th March 2019
Italy’s economy is unlikely to come out of recession in the first half of this year. Several temporary factors might lead to a small expansion in the second half of the year, but even if this happens we still think that the economy is likely to contract …
5th March 2019
The continued lack of price pressures in Switzerland will reaffirm the SNB’s dovish stance. Meanwhile, private sector activity data from Sweden for January suggest that the economy made a weak start to 2019. … Swiss CPI (Feb.19) & Sweden Priv. Sec. Prod. …
In light of the changes to our valuation weightings this quarter, many markets are closer to fair value than in our last Valuation Monitor . That said, the majority of property markets (51 out of 93) are still overvalued, with valuations against equities …
1st March 2019
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 as soon as this year, we doubt that this would have a …
28th February 2019
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 risks are skewed to the downside, with slower global …
27th February 2019
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 the index consistent with quarterly GDP growth of …
22nd February 2019
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 economic data don’t improve. … China and Germany, another …
15th February 2019
We doubt that German and Swiss government bond yields will drop much further. But if they do fall deep into negative territory, there probably won’t be much that the ECB or the SNB will be willing or able to do. … ECB and SNB unlikely to put a floor under …
13th February 2019
The publication of macroeconomic forecasts by the European Commission is not normally a market-moving event. But the extent of the downward revisions to its GDP forecasts seemed to take the financial markets by surprise when they were published on …
8th February 2019
Economic activity finished last year on a weak note and most business surveys suggest that things did not improve in January. Italy went back into recession in the second half of 2018 and the evidence suggests that economic activity there has continued to …
6th February 2019
