October, 14 2016 by lsr team

The euro area LI continues to put in an above consensus call. It is probably over predicting growth somewhat but its strength is fundamentally underpinned by the newly emerged German locomotive. While German demand often turns out to be derived from others, chiefly China, in this case it is genuine. In fact, this is highlighted by our below consensus Australia call. China’s stimulus has not fed through to a rebound in private demand, although easing PPI deflation is helping manufacturers.

August, 26 2016 by lsr team

Euro area GDP was a tad disappointing in Q2 but, overall, European data remain solid. We expect above-trend growth (1½%) over the next 12 months, although at a marginally slower pace. Spain has been outperforming the rest of the region while Italy remains the laggard, a trend that is likely to continue. To find out more, click above to watch the video or below for the full report.

September, 22 2015 by lsr team

In a recent note, we highlighted increasing EM political risk. Emerging markets constitute the ‘deflationary’ leg of our ‘deflationary boom’ forecast for the global economy. But heightened political risk is not just an emerging markets issue. Greece, for example, just held its third election in nine months. In Spain the rise of two new reformist parties, Podemos and Ciudadanos, effectively ensures that a coalition government will emerge from November’s election. Australia has had four prime ministers in 27 months whereas the previous four premi...

July, 21 2015 by lsr team

Despite the turbulence of the Greek crisis, the euro area government bond market has seemingly remained a haven of peace and contentment. Yields in southern Europe have remained low, the Spanish bonos, for instance, continue to yield over 40bp less than US Treasuries. While this suggests ECB’s temporary success in avoiding the Greek contagion, our analysis shows that contagion channels remain open in the case of Spain despite growth improving in the Spanish economy. With the upcoming general election in Spain later this year, political contagion could pose a bigger...