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Eurozone inflation expectations fall sharply

Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Jeanne Claire Walters - Senior Economist
Published Date: 07 June 2023


The April Eurozone consumer inflation expectations survey points to a sharp drop in expectations on the month. Household expectations for the next 12 months fell from 5% in March to 4.1% in April, while 3-year ahead inflation expectations declined to 2.5% from 2.9%. While lower expectations, together with recent declines in inflation itself will provide some comfort to officials, recent hawkish comments from ECB governing council members suggest rates are nonetheless likely to rise further.

Eurozone household consumption remained subdued in April, with the volume of retail sales unchanged from March levels, and below expectations for a 0.2% m/m gain. The aggregate figure was weighed down by continued declines in food, drinks and tobacco sales, while non-food item sales fared better. 

German factory orders fell a further 0.4% m/m in April, after a sizeable decline of 10.9% the month prior. The April outturn was significantly below consensus expectations for a 2.8% m/m gain and was driven by a decline in large-scale orders. Weak manufacturing in the second quarter will further dim prospects for the Eurozone’s largest economy, after officially entering a recession in Q1.

Egypt’s net international reserves ticked up slightly in May, rising to USD 34.7bn according to data from the Central Bank of Egypt, from USD 34.6bn in April. This marked the highest level since May 2022, with reserves rising incrementally over the past nine months.

The PGA Tour and Saudi-funded Liv Golf announced yesterday that they would merge parts of their operations and bring to an end current litigation. Under the deal the PGA Tour and the Saudi Public Investment Fund will create a new entity for their commercial operations which is to be managed jointly.

Today’s Economic Data and Events

  • 10:00 German industrial production, Apr. Forecast: 0.6% m/m
  • 15:00 US MBA mortgage applications, w/e June 2
  • 16:30 US trade balance, Apr. Forecast: -$75.8bn
  • 18:00 Bank of Canada rate decision. Forecast 4.5%

Fixed Income

  • US Treasuries traded in a choppy pattern for much of the day with yields on the 2yr UST moving around 10bps from bottom to top. Yields ultimately closed higher by about 1bps at 4.4786%. The 10yr UST showed a similar range of movement but pushed higher by the end of the day with yields down around 2bps.
  • Bond markets generally closed higher overnight with an index of EM USD bonds adding about 0.1% while high yield bonds also rallied.
  • S&P affirmed their ‘AA-‘ rating on FAB with a stable outlook.


  • The dollar pitched higher against majors last night with markets continuing to adjust to the idea of potentially higher rates in the US. EURUSD dropped about 0.2% to 1.0693 while GBPUSD fell 0.1% to 1.2424. USDJPY closed the day near flat.
  • Commodity currencies had a stronger day with USDCAD down 0.3% to the favour of the loonie, settling at 1.3403. AUDUSD rallied a strong 0.8% to 0.6671 while NZDUSD added 0.1% to 0.6078.


  • Asian equities were mixed yesterday as the Hang Seng dropped 0.1% and the Shanghai Composite ended the day 1.2% lower, while Japanese indices were positive with the Nikkei adding 0.9% and the Topix 0.7%. This morning has started with the invers, however, with Chinese indices on the front foot and Japanese stocks selling off.
  • After trailing to begin with, European equity markets picked up later in the session, and the CAC, DAX, and FTSE 100 added 0.1%, 0.2%, and 0.4% respectively. In the US, the NASDAQ was the chief gainer as it added 0.4%, with the S&P 500 closing 0.2% higher and the Dow Jones ending the day broadly flat.
  • Locally, the DFM closed 0.7% higher while the DFM dropped 0.2%. Saudi Arabia’s Tadawul ended the day up 0.2% while Turkey’s Borsa Istanbul gained 0.3%.


  • Oil prices endured some selling pressure early in the day only to recover and end the day slightly lower. Brent futures fell 0.6% to USD 76.29/b while WTI dropped by 0.6% to USD 71.74/b. Data from the API reported a 1.7m bbl decline in stockpiles last week while both gasoline and distillate stockpiles increased.