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Euro Area

The Euro And Global Growth
After US inflation slowed down markedly, EUR/USD broke out to 1.12, which constitutes a 16-month high. The euro is benefiting from the market expectation that the Fed will soon be done with its hikes while the ECB’s monetary tightening campaign remains more…
Daily Insights
How Large Can The Eurozone / US Divergence Get?

In recent months, the European and US economies have greatly diverged, with the Euro Area massively disappointing while the US has surprised to the upside. Can this dichotomy continue or is it Europe’s turn to shine?

European Investment Strategy by Mathieu Savary
Eurozone Investors Are (More) Pessimistic
On Monday, the Eurozone Sentix sent a pessimistic signal about investor confidence in the Eurozone economy. The headline index dropped from -17.0 to -22.5 in July, significantly below expectations of a more muted deterioration to -17.9. Both the Expectations…
Daily Insights
Eurozone Retail Sales Stabilize
Yesterday we highlighted that falling producer prices foreshadow lower CPI inflation in the Eurozone and argued that this dynamic is positive for the bloc’s consumption outlook. Easing price pressures will ultimately lift real wages, reducing the drag on…
Daily Insights
Declining Producer Prices Foreshadow Lower Eurozone CPI Inflation
Eurozone producer prices fell by more than anticipated in May. The -1.5% y/y decrease – which marked the first annual drop since December 2020 – was more pronounced than expectations of a -1.3% y/y decline and followed a downwardly revised 0.9% y/y increase…
Daily Insights
European Inflation Is Slowing, But Still Too High For The ECB's Liking
The preliminary inflation prints for June in the major euro area economies highlight a growing divergence in inflation outcomes. There was good news: headline CPI inflation in Italy fell to 6.7% in June from 8.0% in May, while Spanish headline inflation fell…
Daily Insights
The Inflation Expectations Time-Bomb
Our Counterpoint service argues that it is not enough that inflation stabilizes at 3 percent for inflation expectations to be anchored and central banks must make inflation undershoot 2 percent for some time to prevent a repeat of the 1970s. The team…
Daily Insights
Interpreting The Message From Inverted Yield Curves
Has the yield curve lost its ability to “predict” recessions? The widely-followed 2-year/10-year US Treasury curve now sits at -100bps, but it has been inverted since April 2022. Investors have seemingly been on “recession watch” ever since, even though the…
Daily Insights
Credit Cycle Checkup

This week’s Special Report updates our US default rate forecast and considers whether corporate bond spreads offer value given the trend in credit fundamentals. We also consider the relative value proposition between investment grade and high-yield credit and between European and US corporate bonds.

US Bond Strategy, Global Fixed Income Strategy by Ryan Swift
The ECB And BoJ Diverge: Implications For Markets

In this Insight, we discuss the currency and bond market implications of last week’s ECB and Bank of Japan policy meetings. The conclusion: the ECB is on a path to an overly hawkish policy mistake, while the Bank of Japan’s dovish stance is growing more unsustainable.

Global Fixed Income Strategy, Foreign Exchange Strategy by Chester Ntonifor

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