ECB Hawkish Pause & German Fiscal Boost (with Lizzy Burton, Anna Edwards)

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Pictet Wealth Management 5.9
Wealth Manager $600.00B
Sabrina Khanniche 7.0

ECB Hawkish Pause & German Fiscal Boost (with Lizzy Burton, Anna Edwards)

yields

We think that the ECB has ended its cutting cycle in June. And amid this resilient economic activity... we do expect the next move to be a rate hike. Expectation of a future ECB rate hike implies upward pressure on Eurozone yields over the longer term.

12/8/2025 2:37:40 PM	medium term cautious up	20 days later	-1.67%	-0.84%

Introduces Sabrina Khanniche to reflect on the ECB decision.

Lizzy Burton
Sabrina Khanniche

The ECB has ended its cutting cycle in June. The next move will be a rate hike.

Data came in hawkish: Q3 GDP surprised on upside, and services inflation is sticky at 3.5% reflecting wage growth.
Sabrina Khanniche

The timing of the hike depends on the implementation of the German fiscal plan, which is the main engine of growth for next year.

The 2026 budget includes 127 billion euros in investment spending. Net impact on German and Eurozone growth could be significant (0.7 ppt in 2026).
Sabrina Khanniche

Expects a rotation from services to manufacturing sector growth in 2026.

Positive drivers: higher demand for capex (especially from German fiscal plan), consumer demand from elevated savings, and easing monetary conditions.
Sabrina Khanniche

AI is impacting investment positively, but productivity gains will take time.

Early evidence in Q3 investment data; expects a J-curve effect with intangible investment first.

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