European Markets with Peter Schaffrik: Germany's fiscal boost and tariff tensions

In this edition, Peter examines the recent fiscal changes in Germany, what it means for European growth rates, the ECB and, by extension, markets.

By Peter Schaffrik, RBC Capital Markets
Published March 21, 2025 | 1 min read

Key points

With the geopolitical landscape shifting, Germany and Europe are expected to increase fiscal spending to allow higher defense spending.
The European Central Bank (ECB) rate expectations have been adjusted, with forecasts now suggesting a terminal rate of 3.25%, indicating one more rate hike than the market is current pricing.
The bond market remains cautious, with a preference for short-duration investments and spread exposure, while risky assets could still perform well despite tariff-related uncertainties.

Peter Schaffrik

Chief European Macro Strategist, RBC Capital Markets