German inflation fell to 10.0% year-on-year in November, preliminary estimates showed on Tuesday, down from October’s all-time high of 10.4%. The decline was mainly driven by easing energy prices over the past month (38.4% vs 43.0%); however, there was no let-up in the increase of food prices, which ticked up to 21% from 20.3%.
The drop also breaks a 12-month streak of fresh record highs for the CPI. Still, the rate remains uncomfortably high and well above the European Central Bank’s target of about 2%, suggesting that further monetary tightening to combat high inflation is likely.
The ECB has increased interest rates by 200 basis points to 1.5% over the past three months in its fight against inflation. ECB president Christine Lagarde has repeatedly said that taming inflation is one of her priorities and has hinted that policymakers will continue to raise interest rates to a level that would actively slow the economy, as pent-up demand has percolated through the economy since COVID-19 restrictions have been lifted.
Lagarde warned that inflation might not have peaked yet and left open the possibility of further aggressive interest rate increases. She also pointed to the bank’s intention to decide on the key principles for reducing its balance sheet when its governing council next meets in December.
Lagarde also warned governments against being too generous in their efforts to support the economy through what is likely to be a difficult winter, with sky-high energy prices and rising unemployment. Fiscal support, she argued, “should therefore be targeted, tailored and temporary. It should be targeted, so that the size of the fiscal impulse is limited and benefits those who need it most”.
Several ECB officials have indicated that the next interest rate hike may be smaller than the previous two consecutive increases of 75 basis points. The slowdown in the Eurozone has raised the risk that the central bank could tip the economy into a recession by overtightening, despite the ECB having some of the lowest interest rates in the world.
The German economy grew 0.4% in the July-September period compared with the previous quarter supported by robust consumer spending. However, GDP is expected to shrink in Q4 2022 as well as Q1 2023.
Data released on Monday by the ECB showed new lending to households and businesses fell in October, while household deposits rose at their slowest rate since the start of the pandemic. This clearly shows that consumers save less as red-hot inflation bites.
Despite all the talk of a recession, multi decades high inflation and tough winter ahead, the DAX 40 index staged an impressive rally from its September’s low, surging almost 23%. However, we cannot ignore the fact that the rally stalled over the past few weeks and the market has been consolidating in a mildly upward sloping trading range. The daily RSI indicator has reached strongly overbought territory suggesting that a pull back to unwind the overbought momentum conditions might unfold soon. The index is facing a band of overhead resistance between 14,700 and 14,925 therefore near-term upside from here is likely to be limited. Over the medium-term, we are of the view that downside risks prevail as we are not convinced a new bull market has started yet.
Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.
Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.
Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.
Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.
Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.
È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.
Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.