Relaxation is the order of the day

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The excitement of some investors about the stability of the Eurozone, which was visible in EBI index values in recent months due to the Corona crisis and the ruling of the Federal Constitutional Court on ECB policy, has subsided again. The Euro Break-up Index fell significantly to 7.7% in June.

Two pieces of good news have reached the Euro-Zone in recent weeks: first, the corona crisis has eased at least in terms of infection numbers. The pandemic is largely under control in all EU countries. Travel restrictions have now been eased. This is particularly beneficial for the economically hard-hit countries of the Mediterranean region. On the other hand, a solution is emerging as to how the ECB will react to the ruling of the Federal Constitutional Court. A harsh confrontation can probably be avoided. Together, these two factors make investors more optimistic about the stability of the eurozone. The euro break-up overall index falls sharply to 7.7%. And the sub-index for Italy also falls to 5.8%.

sentix Euro Break-up Index: Euro area Overall index and sub-index Italy 

sentix Euro Break-up Index: Euro area Overall index and sub-index Italy

Does this mean that the euro zone is in calm waters for the next few months? We do not think so. Because the next complaints about the ECB's euro rescue policy are on the horizon, the 750 billion euro economic programme of the EU Commission is meeting with resistance and the recession in Euroland is by no means over, even if expectations for the economy are currently rising. The volatile trend of the last three years is likely to remain with us.

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 https://ebi.sentix.de

This month’s reading of 7.7% 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 5.205% in November, 2019.

The current poll in which more than 1.000 institutional and retail investors participated was conducted from June 25th to June 27th, 2020.

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