Filtered by Region: Europe Use setting Europe
PMIs suggest that growth has slowed in Q3 September’s fall in the euro-zone Composite PMI supports our view that economic growth in the currency union has slowed in Q3. And with no sign that core inflation is rising, and the ECB’s latest action unlikely …
23rd September 2019
Executive Summary – Our new forecasts reflect Scandinavian prime office yields falling in 2020 and into 2021, on the back of our lower bond yield profile. But retail property in the region faces slight yield rises as risk premia rise. In emerging Europe, …
20th September 2019
Lots of chatter from the Riksbank If a week is a long time in politics, two weeks is an eternity in Swedish economics! The clear deterioration in the economic data since the September policy meeting just a couple of weeks ago – not least the further rise …
Dutch policymakers heed ECB’s call for action … The ECB’s appeal last week for fiscal policy to become the “main instrument” supporting the euro-zone economy appears not to have fallen entirely on deaf ears. The Dutch government this week announced a …
The changes to the SNB’s tiering system, announced yesterday, are even more generous to domestic banks than they initially appear, and will help to ‘sugar the pill’ ahead of a probable rate cut. The main point of interest at yesterday’s SNB meeting was a …
This morning’s decision by the Norges Bank to raise its key policy rate by 25bps, to 1.50%, was is in stark contrast to the rate cuts delivered by the Fed and the ECB over the past week. Nonetheless, given the dovish shift in the Bank’s tone, we agree …
19th September 2019
Given that the Swiss National Bank last changed its policy stance in January 2015, this morning’s decision to leave its policy rate on hold at -0.75% came as no surprise to us. But its tweak to make its tiering system more generous to banks lends further …
While far from certain, there is a growing chance that the German government announces a fiscal stimulus in the coming weeks or months. However, even if it does, we think any boost to demand would be too small to make much difference to short-term growth …
The euro-zone’s manufacturing downturn has dragged services growth lower this year. And with both employment and wage growth weakening, services will probably slow a little further next year. While the euro-zone slowdown has been concentrated in the …
17th September 2019
Over to you, SNB! The recent pick-up in investor risk appetite has given the SNB a little breathing space ahead of its policy meeting next Thursday. Weekly data indicate that the Bank paused its FX interventions to weaken the franc at the end of August …
13th September 2019
Labour cost growth still likely to slow in coming quarters The increase in nominal hourly labour cost growth to 2.7% in Q2 masks significant differences between countries and is partly due to a reduction in hours worked, rather than higher wages. We …
Having mirrored the ECB’s 10bp interest rate cut this afternoon, we now expect the Danish Nationalbank to reduce its Certificates of Deposit rate again by the end of the year. Meanwhile, although the SNB is likely to stick with FX interventions for a …
12th September 2019
With today’s policy decision, Mario Draghi appears to have locked the ECB into QE for several years beyond his time in office. While the move was initially welcomed by financial markets, we doubt that it will be enough to re-invigorate the euro-zone …
Euro-zone underperforming ECB forecasts The latest data are consistent with our view that the euro-zone economy will remain sluggish. National accounts data published earlier today confirmed that the currency union’s GDP grew by just 0.2% in Q2. (See here …
6th September 2019
The formation of a coalition between the Five Star Movement and the Democratic Party reduces the risk of a renewed clash with the EU over fiscal policy, but it does not dramatically alter the economic outlook. We think that the economy will continue to …
4th September 2019
Under any plausible growth scenario Greece’s credit rating is likely to remain well below investment grade over the coming years. Among other things, this means that Greek bonds will not be included in any fresh round of ECB QE, even if, as we suspect, it …
PMIs suggest Italy’s troubles rumbling on The small upward revision to August’s euro-zone PMI leaves it still pointing to slow GDP growth at the start of H2. And the fall in retail sales in July suggests that consumption started Q3 on weak footing. The …
August PMIs are no game changers The manufacturing PMIs from August indicate that the Swiss industrial sector is still feeling the pinch from the deep downturn in its German counterpart and the stronger franc, and add to the evidence that the Swedish …
2nd September 2019
Bond market rally complicates life for ECB More policy loosening is on the way in the euro-zone, but it will not be supported by all of the ECB Governing Council. After holding his tongue for several months, Bundesbank boss, Jens Weidmann, said this week …
30th August 2019
Unchanged inflation supports case for more ECB loosening With headline and core inflation unchanged in August, at 1.0% and 0.9% respectively, and unemployment also unchanged at 7.5% in July, the scene is set for the ECB to loosen policy further. After …
GDP growth in Finland and Denmark set to slow in H2 Although today’s release of GDP data for Finland and Denmark shows that both economies grew solidly in Q2, we suspect that quarterly growth will slow in both in the coming quarters. Meanwhile, the Swiss …
Q2 GDP growth may be as good as it gets for Norway This morning’s release of Q2 GDP data from Norway confirms that the economy remains a bright spot in the Nordics. But given that oil prices are now in line with our end-year forecast of $60pb, we think …
29th August 2019
Germany could have taken the UK’s departure from the EU in its stride a couple of years ago but it will be hit quite badly if a no-deal Brexit occurs in two months’ time. There is still enormous uncertainty about how and whether the UK will leave the EU, …
28th August 2019
Plummeting bond yields in 2019 have dramatically improved property valuations, supporting the outlook for property prices. Indeed, we now think that euro-zone prime office yields can extend their falls over the next few years, taking the total shift in …
A second consecutive quarter of sharp falls in bond yields has driven improved valuations in 90 of the 93 markets that we cover. As a result, less than a third of all markets look overvalued, the lowest proportion since the end of 2017. With bond yields …
23rd August 2019
Italy heading for caretaker government? The fall of another Italian government comes as no surprise, given that their average lifespan over the past few decades has been just over a year. But it is a bit surprising that Italian government bonds rallied …
Uptick in Composite PMI won’t stop ECB easing next month The trivial increase in the euro-zone Composite PMI in August still leaves it consistent with feeble GDP growth this quarter and won’t put the ECB off easing policy next month. The rise in the …
22nd August 2019
Slower growth in both developed and emerging economies has started to filter through into property occupier markets, with office demand generally lower than a year ago and fewer cities registering rental value increases in the retail and industrial …
19th August 2019
German yield curve not a good guide to recessions With all the talk of inverted yields curves predicting a recession in the US, it is worth taking a closer look at what yield curves are telling us in the euro-zone. The most obvious place to start is …
16th August 2019
No end in sight to the downturn in Sweden The latest data releases for June from Sweden show that the flash estimate of a contraction in the economy in Q2 was no rogue reading. We learned on Tuesday morning that private sector production fell for the …
9th August 2019
Bigger budget deficits on the way Italy now looks set for an early election. Relations between the two coalition partners have broken down, and the leader of the junior partner has called for a vote of confidence in the government. That said, even if it …
The risk to the euro-zone from the US-China trade war is rising. And it seems increasingly likely that the US will raise tariffs on auto imports from the EU, which could tip Germany into recession. There is also a chance that higher auto tariffs would be …
8th August 2019
Norges Bank to raise rates in September, but this will be the end of the tightening cycle. It is now a question of when, not if, the SNB cuts rates further into negative territory. Expected dovish shift by the Riksbank will ensure that the krona stays the …
The recent sell-off in global equity markets has hit the euro-zone harder than the US, but we doubt that this will continue. Equities in Germany have performed particularly poorly, which is unsurprising given that the economy is struggling – with GDP …
7th August 2019
The latest data for German offices suggest a better-than-expected start to 2019, as a result of solid employment growth and tightening supply. This has led us to revisit our office forecasts for the top cities, though we still expect a slowdown of …
5th August 2019
July surveys point to continued weak growth The slowdown in euro-zone GDP growth from 0.4% q/q in Q1 to 0.2% in Q2 was in line with our forecast and the ECB’s. (See here .) We don’t yet have an expenditure breakdown for the euro-zone as a whole, but the …
2nd August 2019
Retail sales growth likely to slow further The jump in retail sales in June follows a fairly sharp contraction in May and feeble growth in April, and means that retail sales growth slowed in Q2 overall. With the boost from falling inflation now behind us …
Fall in Swiss inflation adds to pressure on the SNB The unexpected fall in Swiss inflation in July, and signs of a deepening downturn in the industrial sector, will only strengthen the resolve of the SNB to resist the rising franc. There is a growing …
Commercial property investment activity looks likely to drop back slightly from the highs seen last year. But, rather than pointing to a downturn in pricing, we believe that this reflects investors re-evaluating the implications of the softer …
1st August 2019
In this Update we are launching our coverage of the European TTF natural gas price. In short, we think that surging global supply of liquefied natural gas will keep EU markets amply supplied over the next few years. As such, we expect only a modest rise …
Losing pace into Q3 The sharp fall in Norway’s manufacturing PMI in July adds to signs that the economy is losing momentum and lends support to our view that the Norges Bank will hike rates by less than investors expect this year. Meanwhile, the weak PMI …
Another weak survey supports the case for an ECB rate cut in September July’s decline in the euro-zone Economic Sentiment Indicator (ESI) is consistent with our view that, after probably slowing to 0.2% q/q in Q2, GDP growth in the currency union will …
30th July 2019
The decline in Swedish GDP in Q2 will make it harder for the Riksbank to sit on the fence. With the economy unlikely to find much support in H2, the rising prospect of a recession lends further support to our forecast that the krona will fall sharply by …
Dovish ECB to make life difficult for the SNB Having seen the Swiss franc post multiple fresh two-year highs against the euro early in the week, the SNB will have welcomed the drop in the currency after the ECB meeting on Thursday. The fall was mirrored …
26th July 2019
At Thursday’s press conference, the ECB laid the groundwork for policy easing in September. The change to its forward guidance suggests that a rate cut is pretty much a done deal. But the Bank also “tasked the relevant committees” with looking into other …
The apparent confirmation this afternoon that the ECB is inching towards loosening policy lends further support to our view that more rate cuts are on the cards in Denmark and Switzerland too. As we had expected, the ECB left its policy settings unchanged …
25th July 2019
The market reaction to today’s ECB press conference suggests that President Draghi was not as dovish as some investors had hoped for. But the big picture is that it seems clear that policy loosening is coming. We expect the Bank to cut its deposit rate in …
Fall in Ifo adds to evidence of prolonged economic weakness July’s decline in the Ifo Business Climate Index is consistent with the message from the PMI that the German economy made a very slow start to Q3. We still suspect that the ECB will wait until …
Survey won’t change the ECB’s mind about loosening policy The latest ECB Bank Lending Survey adds to the evidence that the euro-zone economy will remain sluggish. The euro-zone does not seem to be on the brink of recession, but continued slow growth …
23rd July 2019
Since last July, the development pipeline in Brussels has grown and prospects for economic growth and thus, occupier demand have nudged lower. While the low availability of Grade A stock will support prime office rental values, Brussels has lost its …
22nd July 2019
