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According to BCA Research’s European Investment Strategy service, the money sloshing around the financial system from pandemic-era stimulus measures disconnects near-term prospects for growth from risk asset prices. As a result, we are witnessing an odd…
Sentiment among German companies stalled in May, after having firmed for 3 consecutive months. The IFO Business Climate came in at 89.3, unchanged from April, disappointing expectations of further strengthening to 90.4. Although respondents’ assessment of…
Looking at economic activity, global monetary policy seems restrictive, however, the behavior of financial markets tells a different story. What gives?
UK retail sales plunged 2.3% m/m in April from a downwardly revised 0.2% m/m contraction in March, significantly undershooting expectations of a 0.5% m/m decline. Household goods as well as clothing and footwear stores led the shortfall. Retailers have…
Negotiated wages rose 4.7% y/y in Q1, from 4.5% y/y in Q4 in the Eurozone. Meanwhile, preliminary estimates for the Eurozone Composite PMI surprised to the upside in May. Although wage growth is the main driver of services inflation and Euro Area economic…
The UK CPI release surprised markets to the upside across the board on Wednesday. Headline CPI increased 2.3% year-on-year, above expectations of 2.1%. Core surprised to the upside as well, moderating from 4.2% to 3.9%y/y, less than the moderation embedded in…
The economic schism in the world economy, between the non-US developed economy in recession and the US in strong growth, is unprecedented during our lifetimes. Now the schism will continue in reverse, as the non-US developed economy rebounds while the US fades. There are important implications for rates, the dollar, and sector and regional equity allocation which we discuss. Plus: base metals are a tactical short.
According to BCA Research’s European Investment Strategy service, the domestic picture indicates that Bund yields will stay rangebound over the next few months due to the tug-of-war between bond bullish and bond bearish forces in Europe. For now, the…
Investor and business sentiment continues to improve in the Eurozone. The ZEW Expectations series for the Eurozone (+3.1 to 47 in May) and Germany (+4.2 to 47.1, above expectations) strengthened to 27-month highs. Moreover, the spread between the expectations…