Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
There is a significant risk that recent banking-related developments, which have now spread across the Atlantic to Europe, could result in a more severe slowdown in growth. March estimates of the probability of a euro area recession 6-months ahead are up 16pp from February but it still remains very low at 36% and well below the 50% signal point. Assumptions had to be made for March and so this estimate is just a very early indication that recent events are likely to increase the risk of a recession, especially if they are sustained, but at the current level of severity are unlikely to result in a slump.
- In terms of the effect of recent moves, the lower exchange rate and oil prices reduce the probability of a recession, whereas the expected March 16 rate hike and fall in equities add to it.
- Given it is only mid-March we had to make some assumptions. We used the monthly average for market variables such as equities, OIS market pricing for the ECB rate, and then used previous monthly changes/levels for non-market variables.
Euro area recession probability estimation
Source: MNI - Market News/Refinitiv/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.