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The Riksbank’s third round of government bond buying got underway today. But we doubt that the programme will be enough to prevent the krona from appreciating and thereby depressing inflation. … Riksbank policy easing will need to be more …
21st May 2015
The minutes (or “account”) of the ECB’s monetary policy meeting on 14th and 15th April underscored the message already given by Mario Draghi and colleagues, in the press conference after the meeting and in subsequent speeches, that the Governing Council …
China’s flash PMI remains subdued but the index rose for the first time since February, suggesting that recent policy stimulus could be starting to have an effect. Meanwhile, the uptick in the euro-zone manufacturing PMI could be positive for industrial …
May’s flash euro-zone PMI survey echoed the message from other recent business surveys that growth in the currency union appears to have slowed again after the slight pick-up seen earlier in the year. … Euro-zone Flash PMIs …
While a deal to address Greece’s near-term financing needs might soon emerge, this will be merely a stop-gap. The main challenge of finding a lasting solution to Greece’s debt problems lies ahead. … A Greek deal might be coming, but it’s only a …
20th May 2015
Economic growth appears to have slowed in much of non-euro Western Europe in Q1, but maintained a solid pace in Emerging Europe, with the major exception of Russia. Russia’s troubles are also evident in property investment volumes. The sharp drop in …
On the face of it, the recent drop in German unemployment points to a sharp rise in wages that might make ultra-loose ECB policy difficult to justify. But there is more slack in the labour market than the headline figures imply and we suspect that pay …
Q1’s GDP data showed that the decline in oil prices hit the economy fairly hard. While policymakers have the tools to prevent a more severe downturn, growth is likely to remain slow by past standards. … Norwegian GDP …
Q1’s GDP data showed that the decline in oil prices hit the economy fairly hard. While policymakers have the tools to prevent a more severe downturn, growth is likely to remain slow by past standards. … Norwegian GDP (Q1 …
The ECB Governing Council has a right to be cautiously optimistic about the first ten weeks of QE. But we share its view that this does not mean that QE should end early. On the contrary, we think that it is more likely that the programme will be …
19th May 2015
May’s fall in German ZEW investor sentiment suggests that growing fears over Greece together with the recent rise in bond yields and appreciation of the euro exchange rate have damaged the economic outlook. … German ZEW …
March’s euro-zone trade data suggest that the weakness of the euro has still had little impact on net exports, and therefore provided only modest support to the recovery. … Euro-zone Trade (Mar.) & Consumer Prices …
A public referendum could help to break the current deadlock between Greece and its creditors. But it might only be a short-term solution and much could depend on its precise purpose and phrasing. … Would a referendum end the Greek …
18th May 2015
Despite euro-zone all-property rents recording their strongest rise since 2007, it’s too soon to say that rental values have finally lifted off. Rather, with economic and employment growth set to remain relatively subdued, over the coming years we expect …
The Greek crisis has intensified, with last week’s Eurogroup meeting offering little hope of near-term financial support and the Government resorting to reserves held at the IMF to make a loan repayment to the Fund itself. Meanwhile, data for Q1 …
15th May 2015
With a bailout payment still not forthcoming, the Greek Government might have to resort to IOUs to pay public sector workers. While they could serve as a brief stop-gap, they would not solve Greece’s fundamental problems, which require an exit from the …
14th May 2015
The pace of euro-zone all-property yield compression picked up in Q1, driven mostly by the office and industrial sectors. At the all-property level euro-zone rental values rose by 1.2%q/q, but that was generally the result of strong rises in a few key …
Iceland’s healthy economic recovery after its financial collapse in 2008 highlights the attractions of currency depreciation, if necessary accompanied by capital controls. Such a path has its economic costs, but Greek policymakers might consider them a …
13th May 2015
Although Iceland’s central bank left its main interest rates on hold today, it adopted a much more hawkish tone, signalling that it was likely to start hiking rates as early as next month. … Sedlabanki holds, but interest rates to rise …
Q1’s euro-zone GDP figures confirmed that the currency union outgrew both the US and UK in the first quarter. But with signs that the Greek crisis is starting to constrain the recovery, the euro-zone’s outperformance is likely to be short-lived. … …
The renewed fall in Sweden’s headline inflation rate in April suggests that the Riksbank’s policy easing so far has eradicated the threat that deflation becomes entrenched. Accordingly, further measures will be needed. … Swedish Consumer Prices …
12th May 2015
The renewed fall in Sweden’s headline inflation rate in April suggests that the Riksbank’s policy easing so far has not eradicated the threat that deflation becomes entrenched. Accordingly, further measures will be needed. … Swedish Consumer Prices (Apr. …
Although it has still been one of the best-performing developed world stock markets this year, the DAX index has come off the boil over the past month. We do not expect its recent weakness to continue, and expect the DAX to rise again before year end. … …
8th May 2015
The new coalition government is likely to impose significant budget cuts that would drag on Finland’s already ailing economy. But there are reasons to think that fiscal consolidation might be less of a constraint on growth than it has been over the past …
The sharp rise in euro-zone bond yields and further appreciation of the euro last week might look like a response to the recent improvement in the euro-zone’s economic performance. But the renewed rise in oil prices is perhaps a more likely driver, with …
Amidst a slowly improving economic backdrop, prime euro-zone office rents have risen in recent quarters. We expect further gradual increases in occupier demand, coupled with constrained supply, to drive office rental growth of 1.7% in 2015 and 2.6% in …
March’s German industrial production and trade data offer some signs that the weaker euro is providing a boost to the economy, but seem to confirm that GDP growth slowed in Q1 compared to Q4. … German Industrial Production & Trade …
While euro-zone officials appear increasingly resigned to some form of Greek sovereign debt default, we doubt that this alone would revive the economy and secure the country’s membership of the euro. … Could a debt default revive the Greek …
7th May 2015
The Norges Bank left its policy rate unchanged at 1.25% today, but we suspect that a weakening labour market and faltering economic growth will prompt a rate cut at its next meeting in June. … Policy unchanged in Norway, but rate cut still on the …
Although March’s French industrial production figures were a little disappointing, the sector has fared well at the start of 2015 and appears to have made a decent contribution to GDP growth in the first quarter. … French Industrial Production …
The negative effects of the Swiss franc appreciation on economic growth and employment suggest that the recent stabilisation of Geneva and Zurich office rents is unlikely to last. Rather, with vacancy rates set to rise further as new supply enters the …
The euro-zone economy looks likely to have outgrown both those of the US and UK in the first quarter of the year, for the first time since Q1 2011. But the outperformance looks set to be short-lived. Not only are the slowdowns in the US and UK likely to …
6th May 2015
March’s euro-zone retail sales data suggested that overall household spending registered a fairly strong increase in Q1. But the decline in April’s composite PMI implied that the economy might have slowed a touch at the start of Q2. … Euro-zone Retail …
The latest euro-zone fiscal data showed that only Italy and Ireland made any improvement in their budgetary positions in Q1. And the latest data from Greece are far from encouraging. … Euro-zone Fiscal Monitor …
1st May 2015
April’s rise in euro-zone CPI inflation to zero left the latest bout of falling prices shorter, at four months, than that seen back in 2009. But with fundamental forces still bearing down on inflation, it is too soon to declare that the dangers of …
The strength of Ireland’s recovery has been overstated due to a number of statistical distortions to GDP. But the economy does still seem to be on the mend. And the conditions are in place for Ireland to be one of the euro-zone’s strongest performers over …
30th April 2015
While the recent bout of falling prices in the euro-zone ended in April, the threat of deflation in the currency union has certainly not lifted altogether. … Euro-zone Flash CPI (Apr.) & Unemployment …
While Spain’s economic recovery gathered further pace in the first quarter, the large amount of spare capacity left in the economy is sustaining deflationary pressures. … Spanish GDP (Q1 est.) & CPI …
Sweden’s Riksbank stepped up its fight against deflation by more than doubling the size of its government bond purchase programme and reiterating its willingness to make monetary policy even more expansionary. We still think that the Riksbank will have to …
29th April 2015
Commercial property investment recorded another strong performance in Q1. In annual terms, impressive rises in Belgium, Italy and Spain offset declines in a number of other markets. Encouragingly, the results of the latest RICS Commercial Property Monitor …
April’s slightly bigger-than-expected rise in German HICP inflation will reinforce hopes that recent price declines were a temporary phenomenon that will have positive effects on the economy. But with core inflation still low, there remains a risk of a …
France’s economic outlook appears particularly uncertain at the moment, with the business surveys painting a mixed picture. But even the most positive of these surveys still points to fairly sluggish GDP growth by past standards, suggesting that a strong …
The European Commission’s monthly Business and Consumer survey for April echoed the message from some other recent surveys that the crisis in Greece might be starting to constrain the euro-zone recovery. … EC Business & Consumer Survey …
March’s euro-zone monetary data suggest that economic growth might pick up in the coming months. But the continued wrangling over Greece’s fiscal situation presents a significant risk to the country’s banking sector. … Euro-zone Monetary Indicators …
Rising expectations of a Greek exit from the euro-zone are still not prompting contagion effects or more general concerns about the euro-zone economy. We fear that the markets are too relaxed. … Why are the markets still so relaxed about a …
28th April 2015
