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78f6c72b509229f3ef77a71224b9fc6b147da4ee04fe56b12377231eaa21e01d;;[{"layout":"detailed","uid":29325,"publicationDate":"01 Jun 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2023_185109.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJDQLt6bTCjyyP11GTYBhChY=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Eurozone consumers\u00b4 price expectations well behaved","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The European Commission\u00b4s (EC) survey of consumer opinion provides interesting insight into consumers\u00b4 inflation expectations by asking households to evaluate trends in consumer prices over the last 12 months and over the next 12 months. Our Chart of the Week shows that, in the euro area, the divergence between these two gauges continues to widen, hitting unprecedented levels. <\/li><li> More specifically, while the survey\u00b4s price assessment for the last 12 months remains very close to a record high (more than two standard deviations above the mean), that for the next 12 months continues to move south at a fast pace ' the size of the correction from its all-time high, reached in early 2022, is about five standard deviations, a big move.<\/li><li> While such an assessment reflects a qualitative perception of price trends and should, therefore, be taken with a pinch of salt, it does show that consumers think that currently high inflation will not persist. The ECB should take this as encouraging news, which confirms the message conveyed by a wide range of other indicators, that inflation expectations remain well behaved.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}],"hash":"78f6c72b509229f3ef77a71224b9fc6b147da4ee04fe56b12377231eaa21e01d","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"2","showcompanies":"2","showcountries":"2","showcurrencies":"2","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"5"}},{"layout":"detailed","uid":29280,"publicationDate":"19 May 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2023_185054.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHyBWK2HVX5BizyymMoK7Ao=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Eurozone food inflation at a turning point","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Food inflation in the euro area has peaked and a downward trend lies ahead. This week, Eurostat reported that processed-food inflation (excluding alcohol and tobacco) eased in April for the first time in almost two years, from 18.8% yoy to 17.1%. Our Chart of the Week shows that the slowdown still has a long way to go. <\/li><li> The chart plots the yearly percentage change in the price of processed food along with selling-price expectations of food manufacturers, as reported by the European Commission\u00b4s monthly business survey. The two series display a tight correlation, with the latter consistently leading the former by six months, hence providing important forward-looking information. <\/li><li> The significant decline in the gauge for selling-price expectations from record-high levels points to a clear slowdown in processed-food inflation ' to well below 10% before the end of the year, if the statistical relationship holds. This reflects reduced pipeline pressure as prices of food commodities and energy have declined. At this stage, however, it is not clear if margin compression in the food industry will also play a role. <\/li><li> It is important to consider that the food component of inflation includes both processed and unprocessed food. In the eurozone, the latter accounts for 25-30% of overall food inflation and displays much higher volatility than the former (it is actually one of the most volatile items in the whole HICP basket), as it tends to be meaningfully affected by weather conditions. Swings in unprocessed-food prices can lead to volatility in overall food inflation, but the trend for the latter clearly points south.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}]},{"layout":"detailed","uid":29221,"publicationDate":"02 May 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2023_184971.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJEMIeq_2xHJcHhIe_SdOhcw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Data Comment - ECB survey signals large drop in credit demand and tighter lending standards","titleDe":"","titleIt":"","product":"Data Comment","synopsis":"<ul class=\"ucrBullets\"><li> Today, the ECB published its bank lending survey (BLS) for the eurozone for 1Q23. The survey was conducted between 22 March (i.e. three days after the UBS-Credit Suisse deal) and 6 April. It shows a further clear tightening of lending standards and a substantial drop in demand, for both non-financial corporations (NFCs) and households. While the tightening of lending standards was broadly in line with our expectation, the scale and breadth of deterioration in demand stands out. Given that the April inflation data also showed that eurozone core inflation is finally starting to turn, we think there is enough for the ECB to downshift the pace of hiking to 25bp on Thursday.<\/li><li> Eurozone banks continued to tighten their lending standards for loans to NFCs significantly, with the pace of net tightening remaining at the highest level since the sovereign debt crisis in 2011. The tightening was stronger than banks had expected in the previous survey and mainly reflects banks\u00b4 heightened risk perception and risk aversion, while the impact of funding costs and balance-sheet constraints was still moderate. As a matter of fact, banks reported deteriorating access to retail and wholesale funding, but the extent of such worsening does not appear to be a major source of concern. Banks expect the tightening of lending standards for loans to NFCs to slow in 2Q23.<\/li><li> Banks also reported a further meaningful tightening of lending standards for mortgages, although the net tightening became less pronounced for consumer credit. Similarly to what was reported for lending to NFCs, the tightening was mainly driven by banks\u00b4 risk assessment. In 2Q23, banks expect ongoing tightening of lending standards for mortgages, albeit at a slower pace. <\/li><li> Loan demand was the real weak spot of the survey. NFCs\u00b4 net demand for loans fell strongly, at the fastest pace since 2008, dragged down mainly by the level of interest rates and weakness in fixed investment. Support from inventories and working capital faded, after several quarters of positive contribution. In 2Q23, banks expect demand for loans to NFCs to decline further, although at a more moderate pace.<\/li><li> Net demand for mortgages continued to decline strongly, at a pace similar to that recorded in 4Q22, which was the weakest point since the inception of the survey in 2003. Weakness continued to mainly reflect higher interest rates, the deteriorating outlook for the housing market and low consumer confidence. In 2Q23, banks expect the pace of demand contraction to slow substantially.<\/li><li> Overall, the BLS shows increasingly clear signs of strengthening transmission of monetary policy. Along with a turning point in core inflation, a subdued GDP reading for 1Q23 and weakness in surveys of industrial activity, it strengthens the case for a 25bp hike by the ECB on Thursday. Hawks in the Governing Council will probably point out the limited impact of funding costs on credit supply, and that actual lending data point to a gradual and orderly deceleration in lending aggregates. This is unlikely to be enough to tilt the balance towards a 50bp move, although we suspect that they will successfully push for a clear signal that more rate hikes will follow.In greater detail:The BLS shows that lending standards continued to tighten across the board. The pace of tightening for loans to NFCs remained the strongest since the sovereign debt crisis.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}]},{"layout":"detailed","uid":29208,"publicationDate":"27 Apr 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2023_184954.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJEMIeq_2xHJcOsTkK8LaI4E=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Broad easing of pipeline price pressure in the euro area","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Our Chart of the Week shows that pipeline price pressure in the euro area is weakening broadly. The business survey for April published by the European Commission (EC) this morning reveals that the downward trend in firms\u00b4 selling-price expectations is intensifying across sectors. Given that these expectations have good predictive power for PPI and CPI inflation (usually with a time lag ranging from one to six months), they signal that consumer-price increases should slow going forward, thereby adding to the disinflation currently triggered by falling energy prices. <\/li><li> The trend is particularly clear in industry, where the intermediate-goods sector is leading the way down amid reduced production costs, fading supply constraints and weak demand. Encouragingly, food producers seem to be increasingly willing to pass on to customers some of the benefits from falling energy bills and moderation in food commodity prices. The improvement is shallower in services and retail, probably due to rising wage pressure that is partly offsetting the decline in energy prices. However, the downward trend is accelerating here too. <\/li><li> This is good news for the ECB, which is looking for signs of turnaround in core inflation and compression of firms\u00b4 profit margins. All in all, it supports our view that the hiking cycle will slow to a 25bp pace next week, with a peak in the deposit rate at 3.75% by July.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}],"countries":[{"name":"Euroland","ticker":"","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=25&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=fd74dfc966e72d45ff2580813616e07a"}]},{"layout":"detailed","uid":29154,"publicationDate":"13 Apr 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2023_184887.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJtmvAqN5jK-Rjp5MldFNGY=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Eurozone firms yet to feel the impact of ECB tightening","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<p><ul class=\"ucrBullets\"><li>Non-financial corporations (NFCs) in the eurozone have yet to feel the impact of ECB rate hikes. Our Chart of the Week shows that their net interest expenditure (defined as interest paid less interest received) as a share of gross operating surplus continued to hover around record low levels at the end of last year, while the interest rate on new bank loans rose significantly. <\/li><li>This benign development reflects a combination of still-low interest spending, higher interest earned on interest-bearing assets and solid profitability. In turn, the sound financial position of NFCs helps explain the broader economy\u00b4s resilience amid tighter financing conditions, including ongoing strength in the labor market. <\/li><li>However, the transmission of monetary policy via the net-interest-expenditure channel is unlikely to have broken down. We think the bulk of this transmission is still in the pipeline and will materialize over time. Until now, NFCs have been able to contain their interest bills mainly thanks to strong cash positions and the fact that a measurable repricing of bank loans only really started last autumn, after yield curves had already shifted higher. Firms took advantage of this by replacing expensive bond issuance with comparatively cheaper loans.<\/li><li>However, this will no longer be possible this year after the recent strong increase in bank lending rates, which pushed the composite cost of new borrowing for NFCs up by about 200bp in the six months to February 2023 (the latest date for which data are available). As the cost of bank loans progressively rises while firms\u00b4 earnings dynamics weaken, monetary policy will start to bite more strongly.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}],"countries":[{"name":"Euroland","ticker":"","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=25&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=fd74dfc966e72d45ff2580813616e07a"}]}]


Marco Valli
Global Head of Research
Chief European Economist
UniCredit Bank AG, Milan
Piazza Gae Aulenti, 4 - Tower C
I-20154 Milan
+39 02 8862-0537

Marco Valli is Global Head of Research and Chief European Economist at UniCredit. Previously, he served as Chief Eurozone Economist and Chief Italian Economist. Before joining UniCredit in 200...

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