Macro and Markets: Appalling Alternatives

Nordea analyzes the ECB's tilt toward a June rate hike despite signs of weakening Euro-area growth and shifting Middle East geopolitics. US tariff threats and divergent Nordic monetary policies add further layers of market uncertainty.

Key Takeaways

• 1.The ECB is signaling a 25bp interest rate hike for the June meeting, prioritizing inflation risks over weakening growth signals.
• 2.Middle East peace prospects have introduced market volatility, leading to sharp temporary drops in oil prices and interest rates.
• 3.US trade policy remains aggressive with Trump setting a July 4th deadline for an EU trade deal, despite legal setbacks to global tariffs.

Table of Contents

• Macro & Markets: Appalling alternatives
• Interest rates still moved in tandem with the oil price
• Intensified upside inflation and downside growth risks
• Euro-area sentiment data has started to come under pressure
• Loan demand outlook weakening
• Pace of wage increases has been on a downtrend
• Selling price expectations have seen broad-based increases
• Some movement in also longer-term inflation expectations
• The mean point of consumers' expectations already surpassed the highs of 2022

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