Quiet start to the year

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The euro zone is experiencing a quiet start to the new year. Although investors are worried about the global and Eu-ro-Zone economic outlook, this is not having a negative impact on their perception of Euro-Zone stability. The Euro Break-up Index fell slightly from 9.9 to 8.8 points. Perhaps this is also due to the relative calm on the Italian govern-ment debt front, where the sub-index for Italy is also falling.

Another reason for the comparatively positive development of the sentix Euro Break-up Index is probably the Brexit. The more chaos and inability to make decisions become visible in the United Kingdom, the stronger the will of the remaining EU states to avoid a repetition seems to be. It is questionable, however, whether such a consideration is really effective and whether it will last long after the Brexit is completed on 29 March. After all, with the European elec-tions in May there is another date on the agenda which offers all EU states an incentive to avoid unpleasant discussions. But issues such as the budget dispute in Italy or a monetary policy in the event of a sustained economic down-turn are by no means solved forever.

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

At 33.5%, the sentix index for the risk of contagion is by no means as low as the overall index might suggest. The traffic light for the euro zone is not red, not green when it comes to contagion effects. She stays on yellow.

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 8.8% 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 more than 1.000 institutional and retail investors participated was conducted from January 24th to January 26th, 2019.

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