BNY’s Geoff Yu notes that Eurozone assets remain supported by steady composite PMI readings and improving signs in German demand, while speculation over ECB leadership succession grows. He highlights Friedrich Merz’s upcoming meeting with ECB officials and questions surrounding Christine Lagarde’s tenure and a possible German candidate for the presidency.
Leadership questions meet steady PMIs
“German Chancellor Friedrich Merz will meet ECB officials next week ahead of the bank’s rate decision, with markets expecting a 25bp hike to 2.50%. The meeting gives Merz an opportunity to discuss Germany’s improving economic outlook, but it also comes amid growing speculation over the ECB’s leadership succession.”
“President Christine Lagarde may not complete her term, due to run until October 2027, while Berlin is weighing whether to back Bundesbank President Joachim Nagel as a potential successor. Germany has never held the ECB presidency, although securing the role could prove difficult given that German officials already occupy several senior European posts.”
“Euro area composite PMI for August held at 52.0 points, unchanged from July’s eight-month high and signaling another solid month of private sector growth. The services PMI eased slightly to 51.6 from 51.7, while manufacturing momentum strengthened, helping keep overall activity firm.”
“Germany’s services PMI for August edged down to 49.7 points from 49.8 in July, remaining just below the 50-point threshold and signaling another marginal contraction in activity. Underlying demand improved, however, with new business rising for a second month and export orders increasing for the first time since February, at the strongest pace since May 2023.”
“Price pressures were broadly stable and still elevated vs. pre-Iran war levels, while business confidence held steady.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
