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Frederik Ducrozet Profile picture
@fwred
Jan 21, 2020 • 3 tweets • 1 min read • Read on X
Best news from the ECB's Bank Lending Survey: TLTRO used largely to grant new loans to corporates, easing credit standards slightly. Image
Worst news from the ECB's Bank Lending Survey: demand for loans to enterprises declined for the first time in 6 years, mostly driven by developments in France and Spain. Image
Overall no clear sign that the ECB is getting closer to the reversal rate (compared with the previous BLS) but a few warning signs that, well, economic growth matters more than anything else. #BLS

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More from @fwred

Frederik Ducrozet Profile picture
Jul 1
🇫🇷 Is France heading to a hung parliament?
A thread with great charts and maps. 🧵
Importantly, French opinion polls have been broadly accurate once again. However, they usually fail to provide robust estimates for the second round of the legislative elections, and this time looks much more uncertain than usual.
As expected, participation surged in the first round to close to 67%, 20 points higher than in 2022, and the highest since 1997. Image
Read 12 tweets
Frederik Ducrozet Profile picture
Aug 28, 2023
🇪🇺 Euro area M3 money growth contracted in July, for the first time in 13 years. However, it's important to put things in perspective. 🧵 Image
M3 annual growth continues to be dragged lower by the narrow money aggregate M1 which contracted by a record amount in nominal and real terms. Image
The contraction of M1 has been driven by the decline in overnight deposits, down 10% YoY. However this has been the result of a shift from overnight to longer-term deposits starting in Q4 2022, with cash seeking higher yields. The money is not 'moving out' of the system. Image
Read 6 tweets
Frederik Ducrozet Profile picture
Aug 23, 2023
🇪🇺 Four takeaways from euro area PMIs.
1. Services sector contraction led by Germany, with early signs of labour market weakening. A sign that monetary policy transmission is working. Image
2. Early signs of stabilisation in the manufacturing sector, but external demand remains subdued. Image
3. Price pressures have increased somewhat in the German services sector, but no sign of broad-based acceleration in prices. The ECB can be patient. Image
Read 4 tweets
Frederik Ducrozet Profile picture
May 2, 2023
🇪🇺 Chartstorm on euro area bank lending data (March M3, credit and Bank Lending Survey).
In short: more tightening than expected and "persistent weakening" of loan dynamics.
Likely to cement the case for a step-down to 25bp ECB rate hike(s). 🧵 Image
The ECB's Bank Lending Survey was conducted between 22 March and 6 April, taking into account recent events.
Banks tightened further "substantially" their credit standards for loans to enterprises in Q1 (the largest such tightening since the sovereign debt crisis). Image
While banks expect a more moderate tightening going forward, demand for loans "decreased strongly" in Q1, with the main drags coming from higher interest rates and weaker investment prospects. Image
Read 9 tweets
Frederik Ducrozet Profile picture
Mar 27, 2023
🇪🇺 Euro area money supply growth is declining faster than expected (*before* the recent events).
M1 growth, including currency and overnight deposits, contracted by a record 2.7% in February.
Credit growth remained weak overall. 🧵
In real terms, M1 growth is now down 10% YoY, consistent with a collapse in economic growth. 😱
Now given the starting point for monetary policy and money supply, the old relationships may not hold. A key focus should be on the asset side of the banks' balance sheet.
Bank credit remained weak in February, down for loans to households and stabilising for loans to corporates. That was before the recent events, and the direction of travel looks clear. Question is much banks will tighten eventually (Bank Lending Survey out on 2 May will be key).
Read 5 tweets
Frederik Ducrozet Profile picture
Feb 2, 2023
🇪🇺 Yes, the ECB is going to hike rates by 50bp today, more than the Fed.
Yes, there's room for markets to re-price the terminal rate higher, above 3.50%.
But will it be a hawkish fireworks? Not so sure. 🧵
The hawkish reality check came in December, when the ECB committed to raising rates "significantly at a steady pace to reach levels that are sufficiently restrictive". The sentence should be adjusted as the ECB gets closer to peak rates.
The ECB is very likely to hint at another 50bp hike in March, but not beyond. There's a case to shift from a "steady pace" to a more moderate pace of tightening beyond March. @lagarde is likely to repeat that future decisions will be data-dependent (staff projections).
Read 7 tweets

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