Eurozone Sentix rises to -3.6, window for ECB rate cut limited

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Eurozone Sentix Investor Confidence rose from -5.9 to -3.6 in May, above expectation of -4.8. This marks the seventh consecutive increase and the highest level since February 2022. Additionally, Current Situation Index climbed from -16.3 to -14.3, marking seven consecutive increases and reaching its highest point since May 2023. Expectations Index also saw growth, rising from 5.0 to 7.8, marking eight consecutive increases and reaching its highest level since February 2022.

Sentix noted that while the data presents an encouraging picture, indicating a gradual recovery from the economic challenges of the past two years, underlying weaknesses in momentum persist. The rise in expectations, though positive, is described as “very sluggish” and has yet to substantially impact the situation values.

As for ECB, Sentix said the window for cutting interest rate “does not appear to be very large”. Despite improvements in the economy, a deteriorating inflation environment adds pressure to bond markets.

Full Eurozone Sentix release here.

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