Eurozone Growth Resilient Amid Rising Rates

The eurozone's economic outlook remains robust despite rising energy prices and market rates. European Central Bank President Christine Lagarde acknowledged that long-term interest rates have increased, which would slow growth and reduce the pass-through of inflation effects. The ECB is taking a 'middle path' in responding to the larger energy shock, with Lagarde stating that wages are not yet showing a material response.

The one clear weakness in global sentiment data is consumer confidence, but consumption is not driving the upturn in economic growth. AI-related investments are the bigger theme, and their impact on consumers is unclear. Potential job losses from AI could weigh on consumer sentiment even as aggregate growth numbers paint a more positive picture.

Markets will be watching for signs of second-round inflation effects, but these are unlikely to appear in this week's data. The first country-level CPI releases and confidence data from the eurozone will provide insight into the broader global crosswinds.