The recently released IFO survey indicates that Europe’s largest economy, Germany, has continued to weaken after entering a technical recession in the second half of 2023. The headline measure sank in February, with businesses reporting worsening in both current conditions and expectations in relation to future sales. At face value, this implies that the economy has continued to contract throughout the first quarter, albeit at a slower rate than was seen in the second half of 2023. Some of the headwinds the German economy faced last year have abated. Headline inflation dropped from 8.7% in January 2023 to 2.9% in

Last week’s signals from the Federal Reserve and European Central Bank that their rate-hiking cycles are set to continue in July was not sufficient to end a three-month rally in US equities, nor to prompt a material rise in implied volatility. Economies have proved far more resilient to rate hikes than many had anticipated, with even a mini-banking crisis in March failing to light the recessionary touchpaper. This resilience has caused the VIX Index, the leading indicator of market uncertainty, to fall to its lowest level in three years and well below its average since 1990 of 19.6. Equity markets

2018 was a great year — 2019 should be even better. How did Fathom do in terms of predictions for 2018? Here is a summary of our best and worst calls. Fathom’s best calls of 2018 In the first quarter, we called for heightened volatility in equity markets — a call that came through in spades. Equity volatility will remain high through 2019 too. Refresh the chart in your browser | Edit chart in Datastream We correctly predicted four fed hikes throughout 2018, a strongly out-of-consensus call. We expect two or three further hikes during 2019 — which is strongly out-of-consensus again,