ECB: Lagarde Stresses Need To Enhance Domestic Demand; No MonPol Signals
ECB President Lagarde's speech at the European Banking Congress is not focused on monetary policy. Rather it discusses pathways to enhance domestic demand as a driver of Eurozone growth performance. The title of the speech is "From resilience to strength: unleashing Europe’s domestic market". Worth noting that ECB speakers have recently been describing the economy as "resilient", even with downside risks still present.
Some highlights from the speech (emphasis MNI):
- "We embraced globalisation more than any other advanced economy"..."This deep integration brought significant benefits"...."But today, that same openness has become a vulnerability. Exports have become a far less reliable engine of growth, reflecting the changing global landscape."
- "Euro area residents now hold nearly 10% of their total equity investments in US stocks, totalling €6.5 trillion – about two times the amount they held at the end of 2015"...."This has been a rational response: US markets have delivered returns roughly five times higher than Europe’s since 2000. But it has created a vicious circle"...."As US markets channel European savings into high-productivity sectors, the performance gap between our economies widens – prompting yet more European savings to flow across the Atlantic."..."The result is stagnating productivity at home and growing dependence on others.
- "Finally, we now face a new form of vulnerability shared by all major economies: the weaponisation of dependencies on key raw materials and technologies."..."Recent supply shocks – for example, the shortage of automotive chips – have shown how a single chokepoint can stall entire sectors."
- "Three sources of domestic strength have helped cushion the impact of global shocks": A strong labour market, investment in AI and fiscal policy.
- The only reference to Monetary Policy: "The ECB is also playing its part by delivering price stability. "We have cut interest rates by 200 basis points from their peak, and this is increasingly feeding through into easier financing conditions, which is helpful to support demand"...."We will continue to adjust our policy as needed to ensure that inflation remains at our target."
Separately, Vice President de Guindos re-iterated that he views the current level of rates as appropriate, while expressing optimism around the development of services inflation. He noted that the ECB's updated economic outlook is unlikely to differ too much from the European Commission, which released its Autumn 2025 projection update earlier this week
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GERMAN AUCTION PREVIEW: 2.50% Nov-32 Bund
This morning, Germany will reopen its on-the-run 7-year 2.50% Nov-32 Bund (ISIN: DE000BU27014) for the second and final time this year.
- The launch auction of the line on August 27 was very soft with only E3.170bln of bids received for the intended E4.0bln transaction. However, ahead of the first reopening came the release of the Q4 issuance plan in which it was announced today's auction would be the sole auction of the quarter for the 7-year Bund with a smaller E3bln size. That probably helped the first re-open of the line fare a little better, with a 1.48x bid-to-cover / 1.13x bid-to-offer combination and the lowest accepted price at the auction coming in above the secondary market mid-prices.
- Domestically in Germany, Finance Minister Klingbeil is scheduled to update the government's tax projections tomorrow, with current revenues likely running a little ahead of the previous plan. For detailed considerations see our post at 08:19 BST.
- The next German auction will be E4bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059) on October 28.
- Timing: Results will be available shortly after the bidding window closes at 10:30BST / 11:30CEST.
EQUITIES: FTSE-100 Stands Out in Soft Europe Trade
The trend condition in S&P E-Minis remains bullish and the contract is trading above support at the 50-day EMA. The average, currently at 6627.92, has been pierced but remains intact - for now. Note that the Oct 10 low of 6540.25 marks the key short-term support. The trend direction in Eurostoxx 50 futures is up and This week’s gains reinforce this theme. The breach of 5689.00, the Oct 2 high and bull trigger, confirms a resumption of the uptrend.
- Japan's NIKKEI closed lower by 8.27 pts or -0.02% at 49307.79 and the TOPIX ended 16.93 pts higher or +0.52% at 3266.43.
- Elsewhere, in China the SHANGHAI closed lower by 2.574 pts or -0.07% at 3913.758 and the HANG SENG ended 245.78 pts lower or -0.94% at 25781.77.
- Across Europe, Germany's DAX trades lower by 64.63 pts or -0.27% at 24263.12, FTSE 100 higher by 60.69 pts or +0.64% at 9487.18, CAC 40 down 43.81 pts or -0.53% at 8214.14 and Euro Stoxx 50 down 22.8 pts or -0.4% at 5663.71.
- Dow Jones mini down 22 pts or -0.05% at 47120, S&P 500 mini up 0.5 pts or +0.01% at 6774.25, NASDAQ mini down 31.5 pts or -0.12% at 25265.75.
COMMODITIES: Gold Pullback Deemed Corrective
A sharp pullback in Gold yesterday appears corrective - for now. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. Support at the 20-day EMA, at $4031.4, has been pierced. A bearish theme in WTI futures remains intact and the move down last week reinforces current conditions. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend.
- WTI Crude up $0.97 or +1.69% at $58.21
- Natural Gas down $0.03 or -0.72% at $3.453
- Gold spot down $17.97 or -0.44% at $4106.71
- Copper up $0.7 or +0.14% at $497.15
- Silver down $0.03 or -0.07% at $48.6885
- Platinum down $16.74 or -1.08% at $1530.79
