Europe Economics Update ECB’s dovish surprise to suppress bond yields The ECB’s statement that it expects the pace of its PEPP purchases to be “significantly higher” in the coming quarter suggests that it will, at a minimum, resist further upward pressure on bond yields... 11th March 2021 · 3 mins read
Europe Economics Update Assessing the slack in the euro-zone’s labour market The euro-zone’s labour market has held up much better than anybody had anticipated over the past year. But the amount of slack in the market is still greater than it was before the pandemic hit... 11th March 2021 · 3 mins read
Europe Economics Update German auto problems should be temporary January’s slump in auto production looks likely to be sustained throughout the first quarter and to knock around 0.5% points from German GDP. However, the impact on the euro-zone aggregate will be... 10th March 2021 · 2 mins read
Europe Economics Update Inflation expectations not a major concern for ECB Financial market-based measures of inflation expectations have returned to pre-pandemic levels, but consumers’ and firms’ expectations are generally more subdued, and the increase in industrial firms’... 9th March 2021 · 4 mins read
Europe Chart Pack Price pressures building Euro-zone inflation looks set to rise sharply in the coming months as energy inflation shoots up and core inflation edges higher. Indeed, the PMI surveys suggest that manufacturing input prices are... 4th March 2021 · 12 mins read
ECB Watch Hesitant ECB will probably step up bond purchases At next Thursday’s monetary policy meeting we expect the ECB to nudge up its forecast for inflation in 2021 and nudge down its forecast for GDP growth, but stress that inflation is still likely to... 4th March 2021 · 7 mins read
Europe Data Response Euro-zone Retail Sales (Jan.) & Unemp. Rate (Jan.) January’s data show that euro-zone retail sales fell very sharply at the start of this year, despite the strength of online sales. As lockdowns have been extended in many economies and daily virus... 4th March 2021 · 2 mins read
Europe Data Response Euro-zone Final PMIs (Feb.) The small upward revision to the euro-zone’s Composite PMI for February still leaves it consistent with another contraction in GDP in Q1. And while Italy’s PMI rose above the 50-mark, that is unlikely... 3rd March 2021 · 2 mins read
Europe Data Response Euro-zone HICP Inflation (Feb. 2021) After euro-zone inflation held steady in February, it looks set to rise over the rest of the year, taking it above the near-2% target. But this will be driven largely by temporary forces so we think... 2nd March 2021 · 2 mins read
Europe Economics Weekly Rising yields put pressure on ECB The surge in euro-zone government bond yields this week has ruffled the feathers of the doves at the ECB, who are keen to look through short-term upward forces on inflation. The still-high number of... 26th February 2021 · 8 mins read
Europe Economics Update How will the ECB respond to the rise in bond yields? The recent increases in real bond yields leave them still at low levels, but ECB policymakers nonetheless seem uncomfortable. Their verbal interventions have had little impact so far, so we think that... 26th February 2021 · 2 mins read
Europe Data Response EC Survey (Feb.) February’s renewed rise in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone still left it at a depressed level by pre-pandemic standards and supports our view that activity will remain... 25th February 2021 · 2 mins read
Europe Data Response Euro-zone Final HICP (Jan.) January’s jump in inflation is likely to be followed by further increases to over 2% later this year. But we think that much of this is temporary and expect it to fall back sharply in 2022. The upshot... 23rd February 2021 · 3 mins read
Europe Economics Weekly Rising bond yields, resilient manufacturing We doubt that the increase in sovereign bond yields this week is the beginning of sustained rise in borrowing costs, even if the headline inflation rate rises further. Meanwhile, we are looking... 19th February 2021 · 6 mins read
Europe Data Response Euro-zone Flash PMIs (February) February’s small increase in the Composite PMI left it still below 50 and consistent with our view that euro-zone GDP will probably edge down again in Q1. The survey also suggested that price... 19th February 2021 · 3 mins read
