The eurozone HCOB Composite PMI for March came in above expectations. The forecast was 50.5, while the actual reading was 50.7.<\/p>\n
A PMI reading above 50 indicates expansion compared with the previous month. A reading below 50 indicates contraction.<\/p>\n
The Eurozone composite PMI for March came in at 50.7, beating expectations and marking the second consecutive month of expansion. This suggests the economic slowdown we observed throughout much of 2025 may finally be bottoming out. We see this as an early signal that the consensus view for the region might be too pessimistic.<\/p>\n
With core inflation recently holding steady at 2.6% in March, this unexpected economic strength complicates the European Central Bank’s path forward. The market has been pricing in nearly 75 basis points of rate cuts this year, a view that now looks increasingly aggressive. We are therefore considering positions that bet against further declines in short-term interest rates, potentially by selling futures on German Bunds.<\/p>\n
This economic resilience is a positive catalyst for European equities, which could lead to upward revisions in earnings forecasts. We believe buying call options on the Euro Stoxx 50 index offers a good way to gain exposure to this potential upside in the coming weeks. A less dovish ECB also lends support to the Euro, making long positions in EUR\/USD futures or options more attractive.<\/p>\n
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