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Weekly Economic Insights - 28 January 2019

Macro Highlights - 1/29/2019

Highlights of the week

Economist insights: In the eurozone, PMIs continued to decrease and the ECB confirmed that it would remain dovish

Eurozone

  • The eurozone’s composite PMI recorded its fifth drop in a row in January…
  • … due to a deterioration in leading indicators in both the manufacturing and services sectors
  • This trend underpins our scenario of a deceleration in GDP growth in the eurozone from 1.8% to 1.5% in 2019

European Central Bank

  • The ECB has taken note of the deterioration in the eurozone’s economic indicators, stating that the risks surrounding the growth outlook have “moved to the downside”
  • Furthermore, M. Draghi suggested that new refinancing operations for banks were possible...
  • … and he did not seek to disclaim expectations that the ECB would not raise its rates in 2019, which confirms that the central bank intends to remain dovish, backing our scenario

Last-minute news: Temporary end to the partial shutdown in the US

  • On 25 January, funding for the federal departments that have been closed for the past 35 days was guaranteed up to 15 February
  • However, this does not mean that the federal budget has been voted, or that the Mexican border wall will be built
  • The shutdown may have limited consumer spending in Q1, but the final impact will depend on the outcome of the negotiations three weeks from now

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