Summary: Euro-zone households more pessimistic in January; slightly below consensus expectation; still below long-term average; major euro-zone bond yields up.
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 of sorts began in May. More recent readings have generally stagnated at below-average levels.
The January survey conducted by the European Commission indicated its Consumer Confidence index declined to -15.5. The reading was slightly less than the -15.0 which had been expected and lower than December’s figure of -13.8. The average reading since the beginning of 1985 has been -11.7.
Sovereign bond yields increased in major European bond markets as they digested comments made by ECB chief Christine Lagarde after the ECB’s latest policy meeting. By the end of the day, the German 10-year bund yield had gained 3bps to -0.50% while the French 10-year OAT bond yield finished 4bps higher at -0.27%.