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Research
The House View: Snapshot
Days where decades happen
Deutsche Bank
Macro views
World United States
❑ We expect global growth at 2.9% in 2025 and 3.0% in ❑ 2025 growth forecast cut to 0.9% (q4/q4), due to tariffs,
2026. trade policy uncertainty, and tighter financial conditions.
❑ Rationale: Tariff shock impact and downgrades to US, ❑ Labor market still resilient, but cracks are emerging;
China, and EU economies. unemployment to rise to 4.6% this year.
❑ Key risks: (i) further escalation of the trade war; (ii) ❑ Tariffs expected to fuel inflationary pressures this year. Core
individual growth shocks exacerbating countries’ PCE inflation now projected ~3.75% by end 2025 (~1pp
fiscal and sustainability issues; and (iii) worsening above prior view), with upside risks.
geopolitical conflicts in Europe, the Middle East and ❑ Outlook hinges on restoring confidence in policymaking,
Taiwan. leading to more fiscal flexibility.
Europe Germany
❑ Economic growth of 0.3% expected in 2025, with heightened
❑ 2025 growth forecasts reduced to 0.50% (from 0.8%) risks of stagnation or technical recession under US tariffs.
under the tariff environment. GDP expected to increase ❑ 2026 forecast of 1.5% growth, based on a gradual ramp-up in
to 1% in 2026, supported by EU defense spending. public spending, could be pulled forward in response to tariffs.
❑ Unemployment expected to increase to 6.8% in 2025 and
❑ Key risk: Diverted Chinese trade under US tariffs could
6.9% in 2026.
pressure German exporters through increased competition.
❑ Fiscal balance -3.5% in 2025 and 2026.
❑ Industrial production at -1.5% in 2025, before improving to
❑ Government debt 90.9% in 2025 and 91.8% in 2026. 1.1% in 2026.
❑ Unemployment rate at 2.5% in 2025 and 3.4% in 2026.
China Asia
❑ GDP growth projected at 4.5% in 2025 (vs. 4.8% ❑ India: 6.5% growth projected for 2025-26, though US
previously) and 4.3% in 2026 (vs 4.6% previously). tariff spillovers could push GDP toward or slightly below
❑ If tariffs persist, China's exports to the US could fall from 6%. A further 50bps of rate cuts would be warranted
(cumulative 100bps in this cycle) to prevent growth from
3% of GDP in 2024 to 1.5% or lower by end-2026. slipping below 6%.
❑ China’s optimal policy response is to pivot to ❑ ASEAN + Developed Asian economies: Face the largest
homegrown demand. We anticipate additional policy hit from US-China decoupling (ASEAN: $177bn imports
stimulus to be announced before mid-year, as Beijing from China; Developed Asia: $153bn exports to China).
strives to meet its 5% 2025 growth target. Expect reciprocal tariffs to fall through negotiations, but
with a hard minimum of 10%. Key risk: sharp CNY
❑ We expect the PBOC to cut policy rate by 20bps in April, depreciation prompting central banks to postpone rate
and another 20bps in Q3, to cushion the US tariffs cuts until FX stability returns.
shock.
Distributed on: 16/04/2025 10:27:10 GMT
Key H Trade war. The US reciprocal tariff reprieve is set to expire in July. Trump has indicated plans to reintroduce
tariffs on semiconductors, electronics and pharmaceutical within a month. The escalating US (+145%) and
China (+125%) tariff war could render trade flows economically unviable.
downside M Growth shock. Limited fiscal space, coupled with rising tariffs, poses a risk to global growth. A sustained trade
shock could reduce GDP by up to 1.4% in exposed countries.
risks M Geopolitics. Critical minerals and semiconductors are increasingly weaponised, used as leverage in geopolitical
conflicts (e.g., Russia-Ukraine) and as strategic assets in tech sovereignty battles (e.g. China’s export controls).
This amplifies risks from the ongoing US-China tech war.
marion.laboure@db.com camilla.siazon@db.com jim.reid@db.com April 2025
thehouseview@list.db.com http://houseview.research.db.com
Deutsche Bank AG/London
The views expressed above accurately reflect the personal views of the authors. The authors have not and will not receive any compensation for providing a specific recommendation or view. Investors
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The House View: Snapshot (continued)
April 2025
Market views
❑ US tariffs led to historic financial market instability.
Market ❑ Although US equity markets continue to recover from Liberation Day and its aftermath, sovereign bond
Sentiment markets remain cautious. Slower US growth will continue to lead to negative knock-on effects globally,
heightening recession risks across economies.
❑ S&P 500 Y/E 2025 expected 7000. STOXX 600 Y/E expected 590.
Equities ❑ Near term, equites to remain in a wide range (4600-5600), underscoring market volatility.
❑ US earnings growth to turn slightly negative (-5%) in 2025, as companies bear most of the tariff cost.
% Rates
❑ Forecast a peak of ~4.75% for the 10-year UST yield and ~3.00% for the 10-year German Bund yield.
❑ We expect US policies to raise the nominal neutral rate to c.4% and lead the Fed to stay above neutral for
longer. The ECB will likely bear the brunt of the policy easing in response to US tariffs.
❑ 3M outlook: $IG between 130 & 155bps, $HY spreads between 450 & 575bps. €IG spreads between 125 &
150bps, while €HY spreads between 430 & 555bps.
Credit ❑ We remain underweight $-Credit vs €-Credit – and still too early to buy the dip with the negative macro
feedback loop in motion.
❑ EUR/USD to 1.15by Q4 2025.
❑ Long EUR/USD, thanks to potential for upside growth from Germany fiscal expansion and undermining of
FX USD stability. A faster US climbdown on aggressive trade policy and a more growth-supportive US budget
bill can slow the dollar downtrend.
❑ Y/E forecast of brent at USD 60/bbl.
Oil ❑ Brent crude down -13.6% between April 2 – April 11. Weakening global oil demand + 3x monthly increase in
OPEC+ May production continues to weigh on prices.
❑ Fed: 75 bps of cuts (Dec, Jan, Mar), bringing fed funds rate into 3.5-3.75% range.
Monetary ❑ ECB: 25bp cuts in Apr, Jun, Sep and Dec. Terminal rate: 1.5% end-2025.
❑ BoJ: 25bps hikes every six months to 1.25% by July 2026.
Policy
❑ BoE: Four 25bps cuts in 2025 to 3.50% by year-end; 3.25% by Dec 2026.
❑ PBoC: Further gradual cuts; terminal rate at 1.10% end 2025.
Key macro & markets forecasts
GDP growth (%) Central bank policy rate (%) Key market forecasts
2025F 2026F Current Jun-25F Dec-25F Current Jun-25F Dec-25F
Global 2.9 3.0 US: Federal Funds Rate 4.375 4.375 4.125 US 10Y yield (%) 4.28 4.75 4.65
US 1.7 1.2 Eurozone: Deposit Facility Rate 2.65 2.00 1.50 EUR 10Y yield (%) 2.48 3.00 3.00
Eurozone 0.5 1.0 Japan: Policy Balance Rate 0.50 0.50 0.75 S&P 500 5397 6600 6800
Germany 0.3 1.5 UK: Bank Rate 4.50 4.25 3.50 Oil WTI (USD/bbl) 61 70 66
Japan 1.6 1.0 China: 7d OMO Rate 1.50 1.30 1.10 Oil Brent (USD/bbl) 64 74 70
UK 0.8 1.2 EURUSD 1.13 1.14 1.15
China 4.5 4.3
2025 Macro events calendar
May June July
01 JN Bank of Japan Decision 05 EZ ECB Decision 01 EU Denmark assumes European Council Presidency
04 RO Romania Presidential election (1st round) 15-17 G7 Summit 24 EZ ECB Decision
06 GE Chancellor Merz election 17 JN Bank of Japan Decision 27 JN House of Councillors election
07 US Federal Reserve Decision 18 US Federal Reserve Decision 30 US Federal Reserve Decision
08 UK Bank of England Decision 19 UK Bank of England Decision 31 JN Bank of Japan Decision
— Days where decades happen, 15 April 2025
Recent
— Navigating Trump 2.025, 02 December 2024
editions — Ongoing Resilience, 01 October 2024
Analyst Certification
The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition, the undersigned lead analyst(s) has not and will not
receive any compensation for providing a specific recommendation or view in this report. Marion Laboure / Camilla Siazon / Jim Reid.
