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Intesa Sanpaolo : Focus on the EU Council meeting on Thursday

Intesa Sanpaolo : Euro Area . A few more considerations on the impact of the pandemic crisis on public accounts in Europe and on the adequacy of the supportive measures adopted.

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Weekly Economic Monitor – 17. April 2020

Intesa Sanpaolo – Research Department


Government estimates of borrowing levels are starting to adequately reflect the consequences of the lockdown. The supportive measures seem adequate for 2020, but only if the next waves of the contagion are managed taken a radically different approach, preventing activity levels from plunging as heavily as they have in the present phase.

United States. The Fed’s balance sheet and the federal deficit are on unprecedented upward paths, linked in part as a result of the interaction between fiscal and monetary policy in the present time of non-conventional interventions.

The week’s market movers

In the euro area , focus will be on the EU Council meeting on Thursday. The round of April confidence surveys will provide fresh indications on how the economy is reacting to the pandemic containment measures put in place throughout Europe.

The European Commission’s ESI index is expected to drop further, to -20 in our estimation from -11.6 previously, approaching the levels reached during the financial crisis of 2009.

The PMI surveys could outline a decline of the composite index to 26.5 from 29.7, and of the manufacturing index to 39.5 from 44.5, while the services index could fall at 24.2 from 26.4.

In France, business sentiment in the manufacturing sector is expected to plunge to 80 form 98 previously, whereas the Bank of Belgium’s BNB index is forecast at -17 from -10.2.

Data due for release in the United States this week are expected to draw a uniformly negative picture.

As has become usual, focus will be on new jobless claims. Data will be referred to the week ending on 18 April and will coincide with the collection of April Employment Report data.

April data will include the Markit PMI flash estimates, expected to drop further across the board, with consumer confidence also correcting further. March data, largely dated already, will include new and existing home sales, as well as durable goods orders, forecast to drop sharply.


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