DM Valuations Monitor Euro-zone risk premia could stay high for a while yet The valuations of euro-zone assets are now very low relative to those in the US, but we don’t think that’s a reason to expect the former to outperform the latter any time soon. UK Drop-In (20th July... 15th July 2022 · 7 mins read
ECB Watch Cautious lift-off, bigger hikes to come ECB policymakers are likely to follow through on their intention to raise rates by 25bp next week and signal that a bigger rise (probably 50bp) is coming in September. We suspect that the Bank will... 14th July 2022 · 7 mins read
Capital Daily Italian politics may cause more pain in peripheral bonds markets The latest political turmoil in Italy is a reminder that once Mario Draghi’s time as Prime Minister ends (presumably in Spring 2023 at the latest) Italian politics may become an even greater source of... 14th July 2022 · 8 mins read
Europe Economic Outlook Recession won’t stop aggressive ECB tightening The euro-zone looks on course to fall into a mild recession in the coming quarters. Real incomes are falling, business sentiment has plummeted and growth in the region’s export markets is slowing... 14th July 2022 · 29 mins read
Europe Economics Update Italian political drama complicates ECB debate If the return of political instability in Italy leads to an early election, government bond spreads are likely to widen, whether or not the ECB agrees the details of the Transmission Protection... 14th July 2022 · 3 mins read
Europe Commercial Property Update Weak euro unlikely to push overseas investment higher We doubt the fall in the euro will lead to a material increase in overseas investment this year. Rather, we think investor demand will be underpinned by the euro-zone’s economic and property... 13th July 2022 · 2 mins read
Europe Data Response Euro-zone Industrial Production (May) May’s 0.8% monthly increase in euro-zone industrial production was largely due to a huge rise in Ireland’s output. Excluding Ireland, production decreased slightly in May. Moreover, high-frequency... 13th July 2022 · 2 mins read
Capital Daily EUR/USD: To parity and beyond? While the euro’s rapid fall over the past couple of weeks means that a lot of bad news about the euro-zone economy now appears to be discounted, the trends driving the common currency lower may... 12th July 2022 · 7 mins read
Europe Economics Update Will the ECB be worrying about the euro? The euro hit parity against the US dollar today and we wouldn’t be surprised if it falls further. While we think it would take big moves in the trade-weighted exchange rate for the ECB to intervene in... 12th July 2022 · 3 mins read
Global Markets Update We think US and EZ corporate spreads will stay high While the largest increases in corporate spreads in the US and the euro-zone may now be behind us, we suspect that a challenging economic backdrop will keep spreads elevated in both places for some... 8th July 2022 · 4 mins read
Europe Economics Weekly Euro nears parity, energy effects erase German surplus The depreciation in the euro to its lowest level in almost two decades against the dollar this week in large part reflects investors’ view that the ECB will tighten less aggressively than the Fed. The... 8th July 2022 · 5 mins read
Capital Daily We think risks for the euro remain skewed to the downside Our base case is that the euro will weaken a bit further against the US dollar from here, but the balance of risks suggest to us that it could fall well below our current forecast for parity. 7th July 2022 · 7 mins read
Europe Economics Update German wage settlements likely to keep inflation high Very high inflation and low unemployment are driving German unions to seek big pay rises in this year’s collective negotiations. We think nominal pay growth will be in the region of 4-5% this year and... 7th July 2022 · 4 mins read
Europe Commercial Property Update Property yields could rise more quickly than expected Our updated yield model points to a quicker rise in property yields than our forecast suggests. While we still expect the correction to be mild, not least because of the lower share of property debt... 7th July 2022 · 3 mins read
Europe Data Response German Industrial Production (May) May’s small rise in industrial production in Germany was not big enough to change our view that output in the sector is likely to have declined in the second quarter. And with the timelier surveys... 7th July 2022 · 2 mins read
Europe Data Response German Industrial Production (May) May’s small rise in industrial production in Germany was not big enough to change our view that output in the sector is likely to have declined in the second quarter. And with the timelier surveys... 7th July 2022 · 2 mins read
