Tag Archives: Macroview

The ECB is comfortable with current market expectations for rate hikes.At its latest meeting in December, the ECB turned more cautious, lowering its growth forecasts but showing no sign of panic regarding the loss in euro area economic momentum. Risks were considered as “broadly balanced”, but moving to the downside. Since the December monetary policy meeting, data (PMI and national surveys, industrial production) have deteriorated further, notably in France and Germany. While risks have...

Theresa May reaches out to find all-party agreement on Brexit.This week, the British Parliament rejected Theresa May’s divorce deal en masse. At the same time, she has kept enough support to stay in power, as a motion of no confidence was rejected.How the Brexit process unfolds from now remains highly uncertain. The recent turn of events means there is an increasing probability of the UK seeking an extension of the 29 March deadline (now our base case) as May reaches out to opposition...

Economic fundamentals should come back into focus, but politics still a factor. After a year when peripheral countries’ old demons made a reappearance, with, in particular, Italy’s public debt back in the spotlight, the focus should shift to economic fundamentals in 2019. Both the Spanish and Italian economies are set to slow down, although the situation is more serious in Italy. In both countries, the political...

Economic fundamentals should come back into focus, but politics still a factor.After a year when peripheral countries’ old demons made a reappearance, with, in particular, Italy’s public debt back in the spotlight, the focus should shift to economic fundamentals in 2019. Both the Spanish and Italian economies are set to slow down, although the situation is more serious in Italy. In both countries, the political equilibrium remains fragile, with a risk of snap elections in 2019.With the end...

The CIO office’s view of the week ahead.Economic data came in weaker than expected last week, especially in China and Europe, and we can anticipate messy forthcoming US data, given the ongoing US government shutdown. In China, manufacturing survey readings dropped into contraction territory, which together with hard data points toward continued growth deceleration in China’s imports and exports. At the same time, Germany, Europe’s manufacturing powerhouse, saw a continued fall in industrial...

Rome and Brussels reached a compromise on the Italian government’s budget plans last month. But there are plenty of reasons for thinking this will be a challenging year for Italy. After battling for more than two months over a 2019 budget plan defiantly non-compliant with the EU fiscal rules, Rome and Brussels struck a last-minute agreement in December that avoided opening an Excessive Deficit Procedure (EDP). To avoid...

Next week’s vote on the divorce deal is likely to be defeated, and there is precious little time for an alternative before the Brexit deadline in March. The British parliamentary vote on Theresa May’s EU divorce deal will be on 15 January. The deal is likely to be rejected, as there has been little progress since December, when a first vote was called off for lack of support. The problem is that there remains no...

Sagging industrial production and confidence figures point to weak Q4 GDP. German industrial production (including construction) fell by 1.9% month-on-month in November, extending the sector’s decline to five out the six last prints. Year on year, industrial production was down by 4.6%, the worst performance since November 2009. While some idiosyncratic factors were likely at play, such as below-average water levels on...

Rome and Brussels reached a compromise on the Italian government’s budget plans last month. But there are plenty of reasons for thinking this will be a challenging year for Italy.After battling for more than two months over a 2019 budget plan defiantly non-compliant with the EU fiscal rules, Rome and Brussels struck a last-minute agreement in December that avoided opening an Excessive Deficit Procedure (EDP). To avoid the EDP, Italy had to backtrack on parts its initial plans for fiscal...

Next week’s vote on the divorce deal is likely to be defeated, and there is precious little time for an alternative before the Brexit deadline in March.The British parliamentary vote on Theresa May’s EU divorce deal will be on 15 January. The deal is likely to be rejected, as there has been little progress since December, when a first vote was called off for lack of support.The problem is that there remains no majority for any alternative. If there is no plan voted by parliament before the...