In the text "Global Strategy 2Q 2023" by Erste Group, the main theme is the likelihood of an end to the interest rate hike cycle due to recent financial turbulence involving SVB and Credit Suisse. The author discusses the impact
The European banking sector remains stable and covered bonds continue to be a reliable investment option. With close to EUR 30bn of benchmark issuance in the first three weeks of January, it's clear that investors are turning to covered bonds
High inflation and increased interest rates should lead to only weak GDP growth. Central banks have not yet completed the cycle of interest rate hikes and geopolitical uncertainty could lead to increased volatility in financial markets for some time. We
Persistently high inflation rates and a significant increase in interest rates are weighing on economic momentum and pushing up volatility on the financial markets. In addition, geopolitical tensions are in place that favour safe-haven flows. We regard the medium and
Ongoing geopolitical tensions and supply-side shortages are leading to high inflation rates and a weaker economic outlook. In this tension field, central banks are tightening monetary policy. Weaker economic data could cause interest rate expectations to fall by the end
The uncertainty caused by the war in Ukraine, the sharp increase in commodity prices, and the deterioration of supply chain issues are dampening the economic outlook. At the same time, the inflation risks have increased drastically. The Fed has promised
Strongly rising numbers of new COVID-19 infections, higher energy prices, and persistent bottlenecks in supply chains are dampening the short-term growth outlook. Beyond that horizon, the economic recovery should continue. The central banks will continue to reduce their purchase programmes.
Week Ahead Focus: US labor market report, FOMC meeting, EZ GDP forecast, AT GDP forecast Expectations for the labor market in May were grossly misjudged, even considering the extreme environment. The unemployment rate was reported at 13.3%. This is 1.4
Special Report | CEE | Economy The CEE labor market may seem barely affected by the virus if compared with a dramatic increase, first, in US jobless claims, and then the unemployment rate within a very short period of time.
Week Ahead Focus: ECB Council meeting, EU Recovery Fund The ECB’s Governing Council is to meet next week. We expect the PEPP purchasing program to be increased by EUR 500bn. While the Governing …
CEE Market Insights This week, we will continue with releases of the GDP structure in Czechia and Slovakia. We also get to see the first estimate of Serbian 1Q20 GDP. Serbia is likely to be the sweet spot in the
Forex News US dollar, Japanese yen, Swiss franc The euro has recently gained some ground and for the first time since the end of March, it reached values above USD 1.10. Fundamentally, there is some justification for this move, as
CEE Market Insights At the end of this week, CEE countries will start to release their detailed GDP data for 1Q20. Croatia and Slovenia will publish their 1Q growth rates for the first time. We expect that Croatia’s economy grew
CEE Forex News | CEE | FX After the first wave of the new coronavirus, FX markets in the region have calmed down. Things are far from being back to normal, however. Due to …
The GDP data of the EU countries for 1Q developed very differently. Interestingly, there is no clear correlation between the duration of the quarantine measures taken and the economic damage caused. It is noticeable that countries such as Austria, Germany,
Credit Markets Weekly Sovereign Austria, Sub-Sovereigns & Agencies, Financials & Covered Bonds, Corporate Bonds Earnings season demonstrates impact of COVID-19 pandemic The European reporting season is drawing to a close: More than 80% of the …
Preferred Sectors: Health Care and Consumer Staples
Week Ahead Focus: Eurozone PMI data, Eurozone inflation Looking ahead to next week (May 21), a first flash estimate of PMI data for the manufacturing and service sectors in the Eurozone, Germany and France for May will be released. In
CEE Market Insights Due Friday, economic growth in the first quarter in Czechia, Hungary, Poland, Romania and Slovakia will be the highlight of the week. Czechia and Slovakia are expected to contract 3.1% y/y and 3.9% y/y, respectively. Hungary, Poland
Week Ahead Focus: German Federal Constitutional Court ruling, US Labor Market Report, Eurozone public debt This week, the German Federal Constitutional Court ruled on a lawsuit against the purchase of government bonds by the ECB and thus the Bundesbank under
Once the turmoil caused by COVID-19 subsides, there will be a need for reflection and strategic decisions on how to move forward and be prepared for the next challenges to be faced. The vast majority of EU member countries opted
CEE Market Insights This week, the central bank meetings in Czechia and Serbia should be the key events in the region. While stability of rates is broadly expected in Serbia, the Czech National Bank is, in our view, about to
Short Note US Fed As had been widely expected, the FOMC, the decisive body of the US Fed, left monetary policy and thus also interest rates unchanged at the meeting that ended yesterday. The latter will not change anytime soon,
Short Note ECB ECB Council Meeting At its meeting which ended today, the Governing Council decided on two further measures aimed primarily at ensuring that banks had sufficient liquidity at low interest rates. The ultimate goal is to keep lending
Week Ahead: Focus: Italy’s rating, EC spring forecast, US deficits The corona crisis is particularly distressing for Italy, which had significant competitiveness deficits combined with a high public debt ratio even before the crisis erupted. For the rating agency Fitch,
Corona-Virus weighs on Eurozone economy All countries in the Eurozone have gradually begun to impose significant restrictions on public life from mid-March onwards in order to stem the spread of the coronavirus. We are therefore lowering our GDP forecast for
The EURUSD continued its sideways movement in April, although the range narrowed significantly. The outlook for both economic areas remains bleak and highly uncertain, both of which point to a sustained sideways trend. In this environment, long-term investments in either
Week Ahead Focus: ECB, Eurozone Q1GDP and Inflation, US Fed and Q1 GDP In the current environment, central banks are not waiting for scheduled meetings to make decisions, which reduces the importance of these meetings. For example, since the last
Corona-Virus weighs on Eurozone economy All countries in the Eurozone have gradually begun to impose significant restrictions on public life from mid-March onwards in order to stem the spread of the coronavirus. We are therefore lowering our GDP forecast for
Week Ahead In view of the extension of quarantine measures in Italy and especially in France, we are lowering our GDP forecast for the Eurozone for 2020 from the previous -3.5% to -4.7%. In 2021, there should then be a
CEE Bond Market Report | CEE | Fixed Income The coronavirus pandemic has hit CEE hard. Governments in most countries have come out with substantial stimulus packages, but the deterioration of tax revenues will also hit budgets. An inevitable consequence
Corona-Virus weighs on Eurozone economy All countries in the Eurozone have gradually begun to impose significant restrictions on public life from mid-March onwards in order to stem the spread of the coronavirus. We are therefore lowering our GDP forecast for
The week after Easter brings inflation releases across the region. For all of the countries, we expect to see easing inflation numbers in March. Such a development is mostly the outcome of the low oil price. On the other hand,
Global Strategy Q2 2020 For the time being, the corona pandemic has largely led to a standstill of economic activity. We expect recessions in the US and Europe as well as rising unemployment rates. Governments and central banks have taken
CEE Market Insights Determining the probable impact of the coronavirus on the economy is the main news topic at the moment. Over the weekend, Hungary announced the fiscal package and more details should be delivered at the beginning of the
Week Ahead: Focus: Labor markets: Eurozone, Austria and the US, US labor market report March Eurozone – trade and tourism most affected In the labor market data of large Eurozone countries published so far for the month of March, traces of
For the time being, the corona pandemic has largely led to a standstill of economic activity. We expect recessions in the US and Europe as well as rising unemployment rates. Governments and central banks have taken comprehensive measures in order
US dollar, Japanese yen, Swiss franc The EURUSD is currently extremely volatile. While the euro was able to make significant gains for the time being due to the sharply reduced interest rate differential between the US and the Eurozone, a
CEE Market Insights This week in CEE Market sentiment data will be in focus this week – and the only question is by how much sentiment has worsened in March. Due to the dynamically changing situation, the February retail sales
Growth in CEE to dive deeper into negative territory Recent developments have deprived us of optimism and we revise our CEE growth forecast down to -4.7% this year. March PMI indices in Germany and the Eurozone plunged, dragged down by
Focus: Markets, stimulus packages, Eurozone inflation This week brought massive gains on the stock markets and yield premiums on the interest rate markets fell for the riskier investments. Spreads on Italian government bonds also fell. The markets have thus reacted
Corona-Virus weighs on Eurozone economy All countries in the Eurozone have gradually begun to impose significant restrictions on public life from mid-March onwards in order to stem the spread of the coronavirus. We are therefore lowering our GDP forecast for
Eurozone in recession, CEE as well The spread of coronavirus to Europe and exponentially rising number of infected people forced the introduction of preventive measures to reduce its speed. CEE countries have done so at a relatively early stage, but
Global Equity Ratings
Focus: ECB and US Fed measures, Eurozone PMIs he measures taken by central banks to counteract the economic downturn have been gathering considerable momentum for a good week now. We have listed the individual measures below. In summary, the central
ECB Council Meeting he meeting of the Governing Council brought some measures that had been expected, but also some that came as a surprise. The surprise was on the interest side. Not only did the central bank leave all key
CEE Market Insights This week, we will see the inflation rate in Croatia as well as labor market data. In Poland, retail sales and industrial growth in February will be published; however, the impact of the coronavirus is still likely
Short Note | Major Markets | US Fed Yesterday evening, and thus only three days before the end of the next regular meeting, the US Federal Reserve lowered the range for the key interest rate by 100 basis points to
Special | Financials & Covered Bonds | Eurozone In conjunction with the announcement by the Governing Council of additional liquidity support and increased asset purchases (see ECB Short Note of 12 March 2020), the ECB Banking Supervision announced a number
To mitigate its shrinking working age population, CEE has a hidden reserves in low female labor participation, low effective retirement age, as well as more active migration and family policies. There is no quick way to escape aging as the
