European Periphery Macro Weekly 30/03/2020
30 de marzo de 2020
The COVID-19 outbreak means that uncertainty and caution remain the name of the game. In places like Spain and Italy, data appear to indicate that the outbreak may still have a few weeks to run before it peaks, but in other countries (the US), this peak may not be reached until late April.
As for this week’s data, the question is not whether data will be negative but how bad it will be: the first inflation figures for March in the Eurozone will be released with a c.0.4/0.5pp deceleration to be expected (to levels around 0.8% YoY for the EMU); confidence indicators (EC economic climate , PMIs) will also depict a rather negative scenario (the sharp drop in services indicators will combine with the already weak manufacturing component and push the composite reference to levels close to 30). In the US, a sharp drop in monthly payroll figures should also be expected
As positive as our reading of the latest market developments is (particularly regarding the periphery), we have to consider that the ECB support is focused on the “flow” side of the market (2020 being apparently “nailed down”) but it does not reverse the deterioration in the fiscal metrics (even more so when the focus for some core members is apparently more on the moral hazard consequences of any debt burden sharing, rather than the need for emergency joint action.
PLEASE SEE IMPORTANT DISCLOSURES ON THE LAST THREE PAGES OF THE REPORT.
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