German April ZEW jumped to 13.0 from -3.5 in March. This was much stronger than our median of 3.0 and the first time since July 2007 that the reading is in positive territory, thus indicating that optimists outnumber pessimists. The current conditions indicator continued to decline, in line with expectations, with the reading falling to -91.6 from -89.4. This means data are consistent with at least two more quarters of negative growth, but also confirm that confidence has bottomed out and support expectations for a gradual stabilization of overall growth ahead. Weak growth is likely to lead to another rate cut in May, but as confidence indicators start to improve it will also prompt council members to start thinking beyond the current crisis and data support those at the ECB arguing for a modest 25 bp move combined with a signal that the refi rate has bottomed at 1.00%.
Al Bawaba
