At Any Rate: The gas crunch and implications for European macro, rates and FX
Greg Fuzesi, Aditya Chordia and Meera Chandan from the J.P. Morgan economics, rates and FX team discuss the outlook for Eurozone in their baseline and stress scenarios. Downside growth risks over 2H22 are building owing to elevated gas prices and risks to supply. The ECB would likely focus on high inflation at first and low growth later. EUR/USD forecast has been marked down to 0.95 from parity. Enter long 5Y Germany vs. US and turn tactically underweight periphery via short 10Y Italy vs. Germany on expectation that the market would continue testing the ECB. This podcast was recorded on 12th July 2022. This communication is provided for information purposes only. Institutional clients can view the related reports at www.jpmm.com/research/content/GPS-4141167-0 , www.jpmm.com/research/content/GPS-4141656-0 , www.jpmm.com/research/content/GPS-4139679-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.