Eurozone: Still accumulating foreign assets – SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that the Eurozone’s current account surplus has flattened out at around EUR 370bn per annum, a little above 3%, but these data are for March, providing therefore a glimpse of life in the run-up to the French election rather than anything more recent.

Key Quotes

“European investors bought EUR840bn of foreign assets in the last year, and foreigners reciprocated with EUR197bn in flows into Europe. In bonds, Europeans bought EUR335bn in foreign bonds and foreigners sold EUR291bn in European bonds. Perhaps that’s the number that worries me most. A flurry of European corporate bond issues has demonstrated the strong demand since President Macron was elected. If that translates into capital inflows, the balance of payments will become very euro-supportive, and the risk that this triggers a sharp euro rally, even if it’s only temporary, remains significant. Time will tell, but these flows bear watching.”