Summary: Euro-zone household pessimism improves in July; consumer confidence index still noticeably below long-term average, just within lower bound of “normal” readings; euro-zone yields increase materially.
EU consumer confidence plunged during the GFC and again in 2011/12 during the European debt crisis. After bouncing back through 2013 and 2014, it fell back significantly in late 2018 but only to a level which corresponds to significant optimism among households. Following the plunge which took place in April 2020, a recovery began a month later, with household confidence returning to above-average levels from March 2021. However, readings subsequent to early 2022 were extremely low by historical standards until just recently.
Consumer confidence improved for a fourth consecutive month in July according to the latest survey conducted by the European Commission. Its Consumer Confidence Indicator recorded a reading of -15.1, above the generally expected figure of -15.8 as well as June’s -16.1. This latest reading is still noticeably below the long-term average of -10.4 and just inside the lower end of the range in which “normal” readings usually occur.
Sovereign bond yields in major euro-zone bond markets increased materially on the day. By the close of business, the German 10-year bund yield had gained 5bps to 2.45% while the French 10-year OAT yield finished 7bps higher at 3.02%.