The shake is easing

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After the Euro Break up Index indicated a new danger for the Euro-Zone in May, the situation calms down for the second month in a row. The overall index for the Euro zone fell significantly by 3.9 percentage points from 12.3% to 8.4%. Concerns about Italy are also declining.

The sentix Euro Break-up Index fell significantly to 8.4 percentage points in July. The decline in the Italian subindex, which fell from 9.5 to 7.2 points, made a major contribution to this. Nevertheless, the refugee crisis, but also the political situation in Italy and Spain, remains a constant hot topic. At any time, a government crisis could flare up again in these countries and make a break-up of the euro zone more likely. It is striking that the stock market in Italy, but also the yields of Italian government bonds, do not yet in any way reflect the indicated calming in the EBI. Either a buying opportunity or the risk that the recent movement in the Euro Break-up Index was just an interim recovery and the next shock wave is imminent. We think the latter is more likely.

sentix Euro Break-up Index: Headline Index Euro area and Sub-index Italy

  sentix Euro Break-up Index: Headline Index Euro area and Sub-index Italy

 

Background

The sentix Euro Breakup Index is published on a monthly basis and was launched in June 2012. Its poll is running for two days around the fourth Friday of each month. Results are regularly published on the following Tuesday morning. Survey participants may choose up to three euro-zone member states of which they think they will quit the currency union within the next twelve months. Further details on the sentix Euro Breakup Index can be found on http://ebr.sentix.de.

This month’s reading of 8,4% means that currently, this percentage of all surveyed investors expect the euro to break up within the next twelve months. The EBI has reached its high at 73% in July 2012 and touched its low at 6.3% in April, 2018.

The current poll in which about 1.000 institutional and retail investors participated was conducted from July 26st to July 28rd, 2018.

 

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