EconoTicker

The euro area’s external position improved in December as the current account surplus rose to €14.6B (vs €9.8B expected; prior €8.9B). The non-seasonally adjusted current account printed €34.6B (prior €12.9B), underscoring a stronger external surplus into year-end.

Source: European Central Bank (ECB).

Switzerland’s trade balance widened sharply in January to CHF 3.818B (prior CHF 0.934B), pointing to a stronger net-export contribution at the start of the year. But the industrial backdrop softened: Industrial Production (YoY) fell -0.70% in Q4 (prior +2.00%), signaling contraction in output even as external trade improved.

Source: Swiss Federal Office for Customs and Border Security (trade balance); Swiss Federal Statistical Office (industrial production).

Germany’s 10-year Bund auction cleared at 2.730%, down from 2.850% previously—signaling a lower yield stop-out and steadier demand at the long end.

Market lens: A softer auction yield can support the broader “rates easing” tone in core Europe, with spillovers into EUR rate spreads.

A Financial Times report said ECB President Christine Lagarde is expected to consider stepping down before her non-renewable term ends in October 2027, potentially ahead of France’s April 2027 election, which could shape the political timing of her successor’s selection.

But ECB officials moved quickly to cool the story: ECB Executive Board member Piero Cipollone said he has no indication Lagarde plans an early resignation, while an ECB spokesperson said she is focused on her mission and no decision has been taken.

France’s January inflation data reinforced a very soft price backdrop, with both CPI and HICP declining m/m and annual inflation remaining near zero.

• French CPI (MoM, Jan): -0.3% (in line; prior +0.1%)
• French HICP (MoM, Jan): -0.4% (in line; prior +0.1%)
• French CPI (YoY, Jan): 0.3% (in line; prior 0.8%)
• French HICP (YoY, Jan): 0.4% (in line; prior 0.7%)
• Inflation ex-tobacco (YoY, Jan): 0.3% (prior 0.7%)

Market lens: With inflation well below typical ECB comfort levels, the data keeps the disinflation narrative intact and supports expectations for a policy path that remains growth-sensitive.

The February ZEW survey signaled softer confidence. Eurozone ZEW Economic Sentiment fell to 39.4 versus 45.7 expected (prior 40.8). In Germany, ZEW Economic Sentiment eased to 58.3 versus 65.8 expected (prior 59.6). The bright spot was German Current Conditions, which improved to -65.9 (vs -65.7 expected; prior -72.7), suggesting conditions are still weak but less bad than before.

Market lens: A sentiment miss can weigh on the EUR narrative unless hard data (production, PMIs) confirms a stronger rebound.

Italy’s December trade figures showed a stronger overall surplus, with the Trade Balance at +€6.037B versus +€4.750B expected (prior +€5.056B). But the Trade Balance with the EU remained in deficit at -€2.45B (prior -€1.98B), highlighting that the surplus is still being driven more by non-EU flows than intra-EU trade.

Germany’s January inflation readings came in exactly as expected, keeping the disinflation narrative intact but not accelerating. CPI rose 0.1% MoM (vs 0.1% expected; prior 0.0%), while CPI held at 2.1% YoY (vs 2.1% expected; prior 1.8%). On the harmonized measure, HICP fell -0.1% MoM (vs -0.1% expected; prior 0.2%) and HICP printed 2.1% YoY (vs 2.1% expected; prior 2.0%).

Market lens: With inflation meeting forecasts and the monthly HICP turning negative, pressure for a near-term hawkish repricing looks limited—keeping attention on growth and ECB guidance.

France’s short-term funding costs stayed stable: 12-month BTF at 2.040% (prior 2.038%), 3-month at 2.004% (unchanged), and 6-month at 2.026% (prior 2.031%), showing minimal movement across the curve.

Germany’s 12-month Bubill auction cleared at 1.985%, slightly below the prior 2.004%—a modest pullback in short-end yields.

Eurozone industrial production fell -1.4% MoM in December, slightly less negative than expected (-1.5%), but still a clear monthly contraction (prior +0.3%). On a yearly basis, output rose +1.2% YoY, matching expectations, though down from the prior +2.2%.

Market lens: The data keeps the manufacturing backdrop choppy—a softer monthly print offsets some optimism from positive YoY growth, leaving the outlook sensitive to demand and energy-cost dynamics.

Switzerland’s economy returned to growth in Q4, with GDP (QoQ) at +0.2%, reversing the prior quarter’s contraction (-0.5%).

Market lens: A positive print can modestly support the “soft-landing” narrative for Switzerland, though attention typically shifts to how broad-based the rebound is across consumption, exports, and investment.