Is Europe Hawkish Compared to American Counterparts?

EU’s Road to Economic Recovery

Yesterday had little activity in the North American market due to the Martin Luther King holiday in the United States.  

In Europe, Industrial Production data was published, which fell more than expected, -6.8% vs. 5.9% expected, this shows that the economy's recovery is still far from starting.

Germany's initial GDP data indicates a slight decline of -0.30%. While Germany has narrowly avoided a technical recession, defined as two straight quarters of GDP decrease, its economic growth has been adversely affected. This is largely due to the economic slowdown in China, a key export market for Germany, and the significant impact of the conflict in Ukraine.

On a more positive side, the Eurozone Trade Balance data shot up with a surplus of 20.3 B vs. 11.4 the previous month, data that could be a sign of recovery.

Despite the challenges facing the European economy, some members of the European Central Bank's Governing Council, like Holzmann recently, have said that expectations for quick rate cuts in Europe are not realistic. They seem inclined to keep rates steady throughout the year, dampening hopes for rate reductions that were anticipated by the end of the first quarter.

A Prolong to Rate Cuts Affect Euro Index

As a result of the above, the Eurostoxx50 index fell 0.6% at closing, extending the losses suffered since the beginning of the year. Consumer goods and retail stocks led the decline after data showed Germany's economy contracted for the first time since the pandemic last year.