Global Economy Briefing — March 11, 2026

Germany’s January trade balance headline looked strong on paper — a €21.2 billion surplus against a €15.4 billion consensus — but analysts were quick to look past the beat. Exports fell 2.3% MoM against a −2.0% consensus, while imports crashed 5.9%, far below the prior month’s +1.3%. The surplus widened because Germany bought dramatically less from abroad, not because it sold more. ING’s Carsten Brzeski described the picture as showing the “entire German economy had a very weak start to the new year,” and noted that analysts’ optimism about Germany’s 2026 recovery has “taken a hit.”

The composition of German trade adds further texture. Exports to China fell 13.2%, extending a structural deterioration in one of Germany’s most important markets. Consequently, the US became the top destination for German exports in January, with shipments rising 11.7% to €13.2 billion — though the EU-Washington 15% tariff deal and Trump’s repeated threats of new levies mean that trade corridor remains fragile. Furthermore, Pantheon Macroeconomics noted that a surplus built on import collapse reflects economic retrenchment, not vitality, and carries limited positive read-through for GDP.

France offered a more constructive picture, with the trade balance narrowing sharply to −€1.8 billion in January versus a −€5.2 billion consensus and −€4.3 billion prior. Imports fell to €55.3 billion from €57.3 billion, while exports held steady at €53.4 billion. The French current account also improved significantly to €2.10 billion from €0.10 billion previously, indicating a broad improvement in France’s external position. Italy’s January PPI data showed modest pipeline building, rising 1.5% MoM from −0.7% prior, though the YoY reading remained deflationary at −1.6%.

The German 2-year Schatz auction cleared at 2.270%, a meaningful step up from the prior 2.020%, reflecting short-end repricing as the ECB confronts stagflationary pressures. The ECOFIN meeting convened in Brussels, with energy contingency planning and fiscal coordination under the Iran conflict scenario expected to dominate. The ECB faces an increasingly uncomfortable position — German demand is weakening, yet energy-driven inflation prevents aggressive easing — making forward guidance exceptionally difficult to calibrate heading into the spring.

Verdict

Germany’s headline surplus beat is a statistical mirage — import collapse driven by demand weakness is not a growth story. France’s external improvement is genuine. The ECB is caught between slowing growth and energy inflation, making the March policy meeting a pivotal test of its credibility.

Existing home sales delivered Tuesday’s strongest US data point, climbing to an annualised 4.09 million in February — 200,000 above the 3.89 million consensus and up 1.7% MoM, reversing January’s −5.9% decline. The National Association of Realtors attributed the rebound to modest improvements in affordability and some easing of the “lock-in effect” that has kept potential sellers sidelined. The report predates the Iran war oil shock, meaning the March housing data will be critical to assess whether rising gasoline prices at $3.54 per gallon — the highest since mid-2024 — are dampening consumer appetite for large purchases.

NFIB Small Business Optimism slipped to 98.8 in February, missing the 99.6 consensus and declining from 99.3 prior. The miss signals growing uncertainty among small business owners, likely reflecting energy cost concerns and labor market softness following the −92,000 February payroll print. Furthermore, Redbook retail sales growth eased to 6.2% YoY from 7.0%, consistent with a modest deceleration in consumer spending momentum that predates the oil shock. The ADP weekly employment change ticked up to 15.5K from 12.8K, though the series is too volatile to draw strong conclusions.

The API crude oil inventory report was a market-moving surprise: stockpiles fell 1.700 million barrels versus an expected build of 1.400 million, a dramatic reversal from the prior week’s +5.600 million build. This bullish inventory signal partially counteracted the IEA’s announcement that member countries would coordinate a strategic reserve release to offset Iran war supply disruptions. WTI crude swung wildly on Tuesday — falling as much as 18% to near $70 intraday on a since-deleted tweet by Energy Secretary Chris Wright claiming the US Navy had escorted a tanker through the Strait of Hormuz, before recovering to close near $83.86 after the White House denied the claim.

The 3-year Note auction cleared at 3.579%, up from 3.518% prior, the first major Treasury auction since the war began. Demand was solid enough to avoid a tail, suggesting that despite inflation fears, there remains appetite for US government debt at current yield levels. The IEA’s emergency stockpile release coordination adds a policy backstop to energy markets, though the physical reality of Hormuz disruptions means the oil price floor remains elevated. Wednesday’s CPI report is now the dominant event risk for both rates and equities.

Verdict

Housing’s beat is a genuine bright spot but reflects pre-war data. NFIB’s miss and softening Redbook signal the consumer was already under pressure before gas prices surged. The oil inventory draw tightens the near-term supply picture. Wednesday’s CPI is the week’s decisive data point — a hot print will pressure equities hard.

Japan’s February PPI came in softer than expected at 2.0% YoY, missing the 2.2% consensus and easing from 2.3% prior. On a monthly basis, PPI fell 0.1% against a 0.1% consensus gain, suggesting some moderation in upstream price pressures despite global energy market volatility. This is a nuanced signal for the Bank of Japan: lower-than-expected producer inflation reduces the urgency of further rate hikes, but the oil shock driven by the Iran conflict is likely to feed through into March and April PPI readings, potentially reversing this month’s softness.

Japan’s machine tool orders surged 24.2% YoY in February, slightly below the 25.3% consensus but representing a dramatic acceleration from October’s +10.6% prior reading. The outsized year-on-year gain reflects both genuine capex expansion — consistent with Monday’s Q4 GDP capital expenditure beat — and some base effect from a weak February 2025 comparison. Furthermore, the 5-year JGB auction cleared at 1.633%, marginally below the 1.640% prior, indicating that Japanese government bond demand remains firm even as global yields drift higher on inflation concerns.

Regional sentiment across Asia-Pacific was shaped primarily by the oil market’s whipsaw. Energy-importing economies including Japan, South Korea, and several Southeast Asian nations face a complex trade-off: lower oil on ceasefire hopes reduces inflation risk, but continued Hormuz uncertainty keeps the threat of renewed spikes alive. Japan’s energy import bill remains particularly sensitive given its near-total reliance on imported hydrocarbons. Consequently, the yen remained under mild pressure as markets weighed whether the BoJ would need to pause its normalization path if the energy shock persists into Q2.

Looking regionally, Monday’s strong Japan GDP print and Tuesday’s machine tool beat confirm that Japan’s industrial capex cycle is accelerating — a structural positive for the Nikkei and for BoJ hawkish credibility. Chip-related names in Japan, South Korea, and Taiwan also benefited from US semiconductor strength on Tuesday, with TSMC’s strong sales data lifting Micron (+3.5%) and Intel (+2.6%) in New York trade and carrying positive sentiment into Asian overnight sessions.

Verdict

Japan’s PPI softness gives the BoJ room to pause but the energy shock is the wildcard. Machine tool momentum confirms the capex recovery narrative from Monday’s GDP beat. JGB auction stability is reassuring. The region’s key risk remains an oil relapse if Hormuz diplomacy fails.

South Africa’s Q4 2025 GDP expanded 0.4% annualised QoQ — a mild deceleration from the 0.5% prior reading, and the first data print from the African continent in this week’s calendar. On a year-on-year basis, growth slowed more sharply to 0.8%, down from 2.1% in Q3, reflecting a broad softening in mining output, consumer spending, and private investment. The reading is below the South African Reserve Bank’s target trajectory, though no consensus estimate was available to benchmark the miss against.

For the broader Latin America and Africa region, Tuesday’s most significant development was geopolitical rather than data-driven: the IEA‘s emergency member meeting to coordinate a strategic petroleum reserve release. Oil-importing emerging markets including several African economies face the most acute near-term pain from the Hormuz disruption, as energy subsidies strain fiscal balances and pass-through to inflation accelerates. Conversely, net oil exporters such as Angola, Nigeria, and several Gulf-adjacent African producers benefit from elevated prices — further widening the divergence within the continent.

In Latin America, the previous day’s hot Mexican CPI data continued to frame the regional narrative. With headline inflation at 4.02% YoY and the oil shock adding upward pressure to energy prices, Banxico’s rate path has become more constrained. Furthermore, Brazil’s BCB Focus Readout provided no fresh signals, with market consensus remaining anchored on a cautious Selic path. The Brazilian real and Mexican peso both faced pressure during oil’s volatile session, as dollar strength on safe-haven flows compounded energy inflation fears.

Chile’s copper export figures from Monday — at $4.70 billion for February — provided mild support for the LatAm commodity story, though the broader Chilean trade surplus narrowed to $2.79 billion from $3.81 billion. Oil’s sharp intraday swings on Tuesday created significant noise for copper and other industrial metals, as traders tried to disentangle genuine demand signals from war-premium volatility. Consequently, EM assets in the region remained in a defensive posture, with most currencies and local bond markets awaiting clearer signals from Wednesday’s US CPI print.

Verdict

South Africa’s deceleration is meaningful but not alarming in isolation. The region’s key risk is the oil pass-through into inflation for energy importers. The IEA stockpile release provides some relief, but Mexico, Brazil, and most African economies remain exposed to a sustained Hormuz disruption. Wednesday’s US CPI is the macro pivot point for EM risk appetite.