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Euro-area bond auctions sent a mixed rates signal. France’s 10-year OAT cleared at 3.38%, down from 3.53% previously pointing to improved demand and slightly easier long-end funding conditions. Spain was steadier: the 10-year Obligación printed 3.223% (vs 3.199% prior, a small uptick), while the 7-year eased to 2.905% (vs 2.938% prior) and the 3-year Bonos was essentially flat at 2.341% (vs 2.342% prior). Net: France saw a clearer yield drop, while Spain’s curve was largely stable with only minor moves.

Eurozone retail spending softened in December. Retail sales fell -0.5% MoM (vs -0.2% expected, +0.1% prior), pointing to a weaker end to 2025 consumption momentum. On the year, sales rose 1.3% YoY (vs 1.6% expected, 2.4% prior), showing growth slowed materially. The takeaway is a demand cooling signal for the euro area—mildly negative for the EUR growth narrative and supportive of a more cautious policy outlook if similar weakness persists.

The European Central Bank left policy settings unchanged in February, keeping the deposit facility rate at 2.00% (2.00% expected/previous), the main rate at 2.15% (2.15% expected/previous), and the marginal lending facility at 2.40% (2.40% expected). The steady decision reinforces a “wait-and-see” stance as markets gauge how quickly disinflation feeds through and whether growth momentum stabilizes across the euro area.

Germany’s January car registrations dropped 6.6% year-on-year, a sharp swing from the prior +9.7% pace. The reversal points to a weaker start to the year for auto demand—an important cyclical signal for Germany’s manufacturing-heavy economy and a mild negative for broader euro-area growth optics if the softness persists.

Italy’s January inflation data stayed subdued. CPI came in at 1.0% YoY (in line with 1.0% expected, down from 1.2% prior), while CPI rose 0.4% MoM (matching 0.4% expected, up from 0.2% prior). On the harmonised measure, HICP fell -1.0% MoM (in line with -1.0% expected, vs +0.2% prior), and HICP was 1.0% YoY (vs 0.9% expected, 1.2% prior). Takeaway: annual inflation eased, and the sharp monthly HICP drop signals a notable start-of-year price pullback on the EU-comparable measure—supportive of a softer euro-area inflation backdrop.

Eurozone CPI slowed to 1.7% YoY in January (1.7% expected, 2.0% prior), while core CPI eased to 2.2% YoY (2.3% expected, 2.3% prior), reinforcing the disinflation trend. On the month, headline prices fell -0.5% MoM (vs +0.2% prior) and the CPI index slipped to 100.08 (from 100.63). Producer prices remained negative: PPI -2.1% YoY in December (vs -2.3% expected, -1.4% prior) and -0.3% MoM (in line with -0.3% expected, down from +0.7% prior). The complication is in the short-run “underlying” momentum you reported: HICP ex energy & food +2.2% YoY (2.3% prior), but core CPI +2.3% MoM (vs 0.3% prior) and HICP ex energy & food +2.3% MoM (vs 0.2% prior), suggesting a jump in monthly underlying pressure even as the YoY core rate cooled.

The euro area’s January HCOB PMIs stayed in growth territory but softened. Services PMI slipped to 51.6 (vs 51.9 expected, 52.4 prior), signaling slower expansion in the region’s main growth engine. The Composite PMI eased to 51.3 (vs 51.5 expected/prior), a small dip that still indicates overall private-sector activity is expanding, just at a slightly weaker pace. For the EUR, the data lean mildly dovish on the margin: growth is holding up, but momentum is cooling—keeping focus on whether the slowdown broadens or stabilizes in the coming months.

Germany’s January HCOB PMIs kept the economy in expansion even as services softened. The Services PMI eased to 52.4 (vs 53.3 expected, 52.7 prior), still comfortably above 50 but a downside miss that signals slower momentum in services. The Composite PMI rose to 52.1 (vs 52.5 expected, 51.3 prior), indicating broader private-sector growth strengthened versus December, likely helped by a better manufacturing contribution. Net: Germany remains a relatively bright spot for euro-area activity despite some cooling in services.

France’s January HCOB PMIs highlight renewed weakness in the services-heavy economy. The Services PMI fell to 48.4 (vs 47.9 expected, 50.1 prior), dropping below 50 and signaling contraction after last month’s expansion. The Composite PMI slipped to 49.1 (vs 48.6 expected, 50.0 prior), also below 50, implying overall private-sector activity moved back into contraction territory. For the EUR macro picture, France’s softness partially offsets stronger prints elsewhere and keeps the “uneven recovery” narrative in place.

Italy’s January HCOB PMI data pointed to a firmer services-led backdrop. The Services PMI rose to 52.9 (vs 51.3 expected, 51.5 prior), a clear upside surprise that signals faster expansion. The Composite PMI improved to 51.4 (vs 50.3 prior), moving further above the 50 line and suggesting broader private-sector growth is strengthening—an incremental positive for euro-area activity sentiment.

Spain’s HCOB Services PMI dropped to 53.5 in January (vs 56.6 expected, 57.1 prior). The index remains above 50, so the sector is still expanding, but the sharp downside miss signals a clear loss of momentum at the start of the year—raising questions about whether domestic demand is cooling after a strong late-2025 run. For the EUR backdrop, the print is mildly negative on growth optics: it doesn’t imply contraction yet, but it weakens the “Eurozone re-acceleration” narrative unless other countries’ services data offset the slowdown.

Spain’s latest Letras auctions cleared a touch lower: the 12-month Letras yield printed 2.028% (vs 2.032% prior, ~-0.4 bps), and the 6-month Letras came at 1.973% (vs 1.981% prior, ~-0.8 bps). The small decline suggests steady demand and marginally easier short-term funding conditions, even as front-end rates remain relatively elevated.