ChartBrief #26 Euroboom

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ChartBrief #26 Euroboom

A relatively obscure survey was just released by the European Central Bank.  While there’s a raft of useful information in the ECB’s quarterly bank lending survey, one particularly interesting statistic is expected demand for loans by businesses – it turns out this indicator provides a lead on Eurozone GDP growth…

Play Quizzes 4

1. Lending survey leading indicator

The expected net change in firms demand for credit remains consistent with GDP growth around 2%, implying perhaps some scope for better GDP data.  The grey lining to this silver cloud is the fact that it peaked back in the June quarter last year and has been slowing since – but reassuringly, with no major drop-off just yet.

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2. Real money supply leading indicator

Another leading indicator for Eurozone GDP growth; real money supply growth (M1 money supply deflated by CPI), had been pointing to growth north of 4%. While that was never going to happen it did confirm the recovery in growth and is still consistent with GDP growth of 2% or more.  But again, this indicator has rolled over back to more sensible levels after peaking in the September quarter last year.

Bottom Line: Two leading indicators for Eurozone GDP growth continue to point to growth of around 2% or more; this tends to justify a mildly positive view on European growth assets and a bearish bias on European bonds.

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Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.
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