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german zew

Getting a handle on the market reaction to the German Economic Sentiment Indicator by ZEW is notoriously complicated.

Often, the market will not react immediately following the data release. It tends to shift later in the day and analysts will attribute the move to the survey.

Because of the COVID situation, that issue has been exacerbated.

Here are some things to consider about potential market moves following the data.

The ZEW ESI Discrepancy

The key to the economic sentiment survey is to compare its two parts.

ZEW asks economists how they see the situation now, and how they expect things to be six months from now.

In the era of COVID, that six months is important. This is because it relates to the timing of expected vaccines and lockdown policies.

Usually, during periods of economic growth, the current situation is evaluated as “better” than the future situation,. This is simply because we have less certainty about the future.

However, in a recession, that inverts, and e...


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