Intesa Sanpaolo : ECB : net purchases under the PEPP will be significantly higher in the next quarter.
Weekly Economic Monitor – 12. March 2021
Intesa Sanpaolo – Research Department
However, the ECB has linked future developments to the forecast scenario. As the downside risks to the outlook are easing, as staff forecasts show, purchases will decline again in the third quarter.
United States: Turbo-charged growth, Fed in stand-by (for now). Despite the new fiscal stimulus package and the progress made towards the control of the pandemic, the FOMC should confirm a dovish stance, stating that the economy is still far away from the Fed’s goals, and higher yields are not concerning. But a discussion on tapering should begin in the autumn.
The week’s market movers
In the euro area , only few macroeconomic indicators will be released this week. The most important will be the German ZEW, that will include the first confidence index for March, and is expected to outline a further recovery of expectations, after the progress observed over the prior three months. The second readings of February inflation will also be released: in France, the index should confirm a slowdown to 0.7% from 0.8%, with the Italian index changing to 1% from 0.7%, and the average Eurozone rate remaining stable at 0.9%.
This week, numerous data releases are lined up in the United States , although focus will be on the FOMC meeting, that will bring updated macroeconomic and interest rate projections. The Committee should confirm a dovish stance, with expectations for strong growth in 2021, while at the same time maintaining a neutral position towards the rise in yields. For what concerns data releases, the initial set of March manufacturing survey data should prove positive. In February, output is expected moderately higher, whereas retail sales and housing starts should prove weak, albeit with no compromise to forecasts for solid growth in coming quarters.
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