Zew Metrics are Mixed in November

Zew metrics showed a weaker economic situation in the Euro-Area this month while Germany strengthened and the US weakened, a mixed picture across these regions. Economic expectations show a stronger Germany and a weaker US performance expected.

Inflation expectations showed stronger inflation expected in Germany and the Euro-Area. Weaker inflation is expected in the US. Short term rate expectations were weaker in the Euro-Area and weaker in the US as inflation has been coming in and showing signs of behaving. Long term rate expectations fell in both Germany and in the US. Stock expectations month-to-month improved in the Euro-Area in Germany and in the US.

Economic conditions continue to show rankings well below the 50% mark for the economic situation for Germany for the Euro-Area and for the US. Economic expectations are also well below the 50% level which would mark a neutral reading. Inflation expectations, however, are uniformly low as investors expect inflation to decline from its high level and so the expectations metrics have extremely low percentile standings. Short-term rate expectations are also low because investors basically assume that central banks have pretty much got interest rates where they want them and they look for any further rate changes to be more or less window dressing. This explains why long-term interest rates have exceedingly low percentile standings. Long rate expectations for Germany are at 4.4%, in the US they are at 0.3%. There are few expectations that rates are going rise at this point. And with that expectations have shifted to the stock market where the expectations are closer to or above the 50% mark and investors are beginning to think equities again for better or for worse. Things change...