Before we get going we have to stretch that this month’s number comes with a yuuuge caveat, namely that of the German Constitutional Court’s decision from 1 and a half weeks ago. The court decided to block the funds intended by the German government to subsidize electricity prices for both households and companies and since the decision was taken on the 15th of this month we strongly suspect that some submissions were sent before the ruling. That would of course mean that the companies would have had a lot more bullish outlooks before the 15th. 

We have reached out to the Ifo Institut wrt. to the survey and they have explained to us that they have received ¼ of their questionnaires after the decision meaning that ¾ have answered with the belief that they were going to get subsidies. Ifo tells us that they believe that the answers from the survey haven’t been affected that much given the uncertainty surrounding the law and they believe that once the dust settles we’ll truly see how they react. 

We highly anticipate the December numbers from Ifo now to see if we can get a clearer picture, but of course, they can also be driven by dynamics in politics, just see the latest developments from today. The worst-case scenario is that ¾ of German companies have been caught with their pants down and the survey tilts too bullish.  

With that in mind let’s have a look at some of the data points. We start with price expectations in manufacturing. What looked like a bottom in last month’s print turned out to be a head fake as this month’s print headed lower again. Based on this we continue to like our long European duration bet.