Macro Brief: A good Eurozone print to start the week

The EZ Sentix investor sentiment index is not the most commented of indicators. However, considering the lack of data today, it is worth a look. The latest print for May is out and it is rather positive, at 5.3 vs prior minus 0.3. Looking at expectations, the data is also positive at minus 0.3 vs prior minus 4.3.

The spread between current situation and expectations is also narrowing compared to the peak reached in mid-2018, currently at minus 11.25. We also have a strong improvement in sentiment in Germany as the index is out at 7.9 vs prior 2.1.

All of that tends to confirm that the low point of growth for the Eurozone this year is certainly behind us. Germany, which was facing headwinds both from Turkey and China, is slowing recovering but obviously remains subject to new negative trends in global trade resulting from trade wars. But despite the recent tweets of President Trump threatening China, we remain confident that a trade agreement will be reached between the two countries in coming months. This, along with China’s economic stimulus programme, will help to revive growth.