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Yields on French short-term government bills rose across the board at the latest BTF auctions, reflecting slightly tighter funding conditions and firmer rate expectations.

The 12-month BTF yield increased to 2.101%, up from 2.078% previously. The 3-month BTF also climbed to 2.069%, compared with 2.041%, while the 6-month BTF yield rose to 2.091% from 2.053%.

The uniform uptick suggests investors are pricing in reduced odds of near-term ECB rate cuts as inflation dynamics in the euro area remain uneven.

Market impact: Mildly bearish for EUR bonds; higher yields signal firmer short-term funding costs and cautious monetary policy expectations.

Eurozone auto demand softened notably in November. Car Registrations fell 2.70% month-on-month, reversing the strong 13.60% increase seen previously. On a yearly basis, registrations grew 12.90%, but this remained below the prior 15.90%, indicating moderating momentum in the region’s auto market. The slowdown reflects cautious consumer spending and lingering supply-chain normalization after earlier rebounds.

Market impact: Slightly bearish for EUR; softer auto demand signals cooling consumer activity and weaker industrial contribution.

Switzerland’s procure.ch Manufacturing PMI edged up to 48.6 in the latest reading, improving from the previous 48.2. The slight uptick suggests factory conditions are stabilizing, but the index remains below the 50 threshold, signalling ongoing contraction as demand remains soft and production pressures persist.

Market impact: Neutral to mildly bullish for CHF; modest improvement helps sentiment, though contraction limits upside.

The Eurozone’s November manufacturing data painted a mixed picture, with some countries improving while others softened. The headline Eurozone Manufacturing PMI came in at 49.6, slightly below expectations of 49.7 and down from the previous 50.0, keeping the sector in mild contraction.

Italy stood out positively, with its PMI rising to 50.6, beating expectations of 50.1 and improving from 49.9, signalling a return to expansion. Spain also remained in growth territory at 51.5, although lower than expectations (52.3) and the prior 52.1.

Germany’s Manufacturing PMI slipped to 48.2, below expectations of 48.4 and down from 49.6, highlighting continued weakness in Europe’s largest industrial economy. France remained steady at 47.8, matching expectations but below the previous 48.8, indicating sustained contraction.

Market impact: Mixed for EUR; pockets of strength in Italy and Spain are overshadowed by continued weakness in Germany and France, keeping growth momentum subdued.

Switzerland’s retail sector gained momentum in October, with sales rising 2.7% year-on-year—well above expectations of 1.2% and stronger than the previous 1.8% increase. The solid performance reflects resilient household demand despite a softening global backdrop, supported by stable employment conditions and easing inflation pressures.

Market impact: Mildly bullish for CHF; stronger consumer activity supports Switzerland’s growth outlook.

France’s consumer activity strengthened modestly in October:

• Consumer Spending (MoM): rose 0.4%, slightly above expectations of 0.3% and matching the previous month’s pace of 0.3%.

The increase suggests steady household demand, supported by easing inflation and stable labor market conditions.

Market impact: Mildly bullish for EUR; firmer consumption supports France’s growth outlook.

Germany’s import price data showed a slight monthly increase but continued deflation on an annual basis:

• Import Price Index (MoM): rose 0.2%, above expectations of 0.0% and matching the prior 0.2%, indicating modest upward pressure in imported costs.
• Import Price Index (YoY): fell 1.4%, slightly better than expectations of –1.6%, but deeper than the previous –1.0%, signaling persistent disinflation in external price pressures.

The figures suggest imported inflation remains subdued, reflecting weaker global commodity prices and a soft demand environment.

Market impact: Neutral for EUR; minor monthly gains overshadowed by ongoing annual deflation.

Germany’s retail sector weakened in October, with both monthly and annual figures undershooting expectations:

• Retail Sales (MoM): fell 0.3%, missing forecasts of +0.1% and down from +0.3% previously.
• Retail Sales (YoY): slowed sharply to 0.9%, well below the prior 3.4%, signaling softer consumer demand.

The data highlights persistent weakness in household spending, a key drag on Germany’s broader economic recovery.

Market impact: Bearish for EUR; softer retail data reinforces concerns over fragile domestic demand.

France’s latest price data showed stable consumer inflation but continued declines in producer prices:

• HICP (YoY, Nov): steady at 0.8%, matching the previous reading and above expectations of 0.1%, indicating subdued but stable consumer inflation.
• PPI (YoY, Oct): fell 0.80%, down from 0.10%, signaling ongoing deflation in producer prices amid softer industrial demand.

The combination points to muted inflation pressures, with upstream price weakness reinforcing a dovish medium-term outlook for the ECB.

Market impact: Mildly bearish for EUR; weak producer prices offset stable consumer inflation.

Switzerland’s latest data showed a slight strengthening in forward-looking economic momentum and a modest rise in foreign reserves:

• KOF Leading Indicator (Nov): rose to 101.7, above expectations of 100.9 and slightly higher than 101.5 previously, signaling mild improvement in the medium-term outlook.
• Official Reserve Assets (Oct): increased to CHF 844.8B, up from CHF 840.6B, reflecting continued reserve accumulation by the SNB.

The readings suggest stable macro conditions, with leading signals turning more positive despite recent GDP weakness.

Market impact: Mildly bullish for CHF; stronger KOF and higher reserves support underlying stability.

Spain’s retail activity moderated in October, with retail sales rising 3.8% YoY, down from 4.1% in the previous month.

The softer pace reflects a slight cooling in consumer spending as higher prices and tighter financial conditions weigh on households.

Market impact: Neutral for EUR; retail momentum remains positive but shows signs of easing.

Switzerland’s economy unexpectedly contracted in the third quarter, reflecting softer domestic and external demand:

• GDP (QoQ, Q3): –0.5%, below expectations of –0.4% and sharply weaker than 0.2% growth in the previous quarter.
• GDP (YoY, Q3): slowed to 0.5%, down from 1.3%, signaling a broad deceleration across sectors.

The data underscores mounting economic headwinds, including weak manufacturing activity and cooling consumer spending.

Market impact: Bearish for CHF; weaker growth increases expectations of a more accommodative SNB stance.