GDP contraction? Recession likely in Q2. Leading indicators are down. Households remain concerned. Price indices are rising. The ECB is taking a tougher stance. Mixed outlook for the euro. Stocks likely to consolidate over the summer.

Key points

• Eurozone GDP contracted by –0.2% in Q1
• Growing risks of a technical recession as early as Q2
• Leading indicators point to weakness
• Household confidence marked by uncertainty
• Inflationary spiral driven by rising PPI
• The ECB raises rates by 0.25% and adopts a harder tone
• Rising bond yields and risk premiums
• The euro strengthens against the Swiss franc but weakens against the dollar
• Positive reaction in the securitized real estate market
• Equities likely to consolidate over the summer
• Equities likely to consolidate over the summer

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