US TSYS: Post-UofM Sentiment React

The German GDP growth forecasts of a research institute collective published today were downwardly revised for 2024 versus the projections made in September (-1.2pp to +0.1%).

• But the revision was to be expected as some of the individual institutes had previously published their new estimates (and the new forecast was noted in a sources report from Handelsblatt earlier this week).
• For 2025, the forecast (by the 'Gemeinschaftsdiagnose' group consisting of 5 leading German economic research institutes including IFO) was largely unchanged (-0.1pp to 1.4%); however, the level of nominal GDP in 2025 will be over E30bln lower vs the pre-revision baseline.
• The collective forecasts - which now broadly match the individual institutes' estimates - show that the group is clearly pessimistic on short-term German economic conditions, which they see driven by an overlap of cyclical and structural factors, but at the same time they do not see the economy in freefall. The group projects a recovery to slowly start this spring but see overall momentum failing to going forward.
• Private sector consensus for German real GDP growth broadly mirrors the institutes' assessment and stands at +0.1% for 2024 and +1.1% for 2025 as of now. It was also downwardly revised by -0.1pp since the February survey, for both years, respectively. The German government projects growth at 0.2% in 2024.

Reuters reporting that Israeli Prime Minister Benjamin Netanyahu has stated, during a meeting in Tel Aviv today with US Senator Rick Scott (R-FL), that his decision to cancel an Israeli security delegation to Washington DC this week was a message to Hamas that, "international pressure on Israel will not work."

• Recent press conferences from Biden administration officials have suggested that, despite ruptures between the governments of Israel and the US over a potential IDF operation in Rafah, the US remains outwardly unwilling to use any additional tools to apply pressure on Israel to change policy.
• State Department spokesperson Matthew Miller told reporters yesterday that Israel is operating in compliance with US laws on the use of US military hardware in combat.
• White House National Security Council spox John Kirby told reporters on two occasions this week that he's, "not going to get into hypotheticals and — and speculate about that one way or the other," about attaching conditions on aid to Israel - broadly seen as the most effective mechanism to pressure Israel on Rafah.
• Miller said on conditioning aid: "Let’s take this one step at a time... We believe that there is a better way for them to accomplish a legitimate security imperative. And I don’t want to preview any possible actions if it goes a different way."
• Kann reports that Israeli Defence Minister Yoav Gallant requested additional long range offensive weapons and approval of the purchase of additional F-35 fighter planes in a meeting with US Def Sec Austin yesterday.