Head of Macro Analysis
Summary: In this edition, we focus on the euro area outlook.
As widely expected, the latest German data released this morning confirms the risk of Germany’s manufacturing recession. August factory orders are still deeply in contraction, falling 6.7% YoY, which marks the 15th consecutive month of YoY decline.
The euro area growth momentum has sharply weakened since the beginning of 2018 on the back of the downturn in global trade and China’s lower imports.
The EuroCoin growth indicator, which tracks the evolution of economic activity in the euro area in real-time free from measurement errors and seasonal fluctuations, is supporting the case for further slowdown. It is currently pointing down at 0.16, close to its lowest points since 2014.
Our proprietary leading indicator credit impulse is also in the lower bound, standing at 0.6% YoY in Q2 this year.
A noticeable bright spot is the recent pick up in narrow money M1 at 8.5% YoY in August, the highest level since Autumn 2017. However, we are skeptical that it will be able to revive the business cycle. It has largely been interpreted by market participants as a bullish sign for growth. But, as a word of caution, we should remember that a similar pattern appeared in 2015 at the start of the ECB QE and it did not translate into a pick-up in economic activity.
We fear the same will happen again as the relaunch of QE without coordinated fiscal push at the EU level is unlikely to shore up eurozone growth.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
