Europe Macro – January 7, 2022

| January 7th, 2022

Inflation continues to be a pressing subject as euro zone inflation accelerated to an all-time high of 5.0%. Meanwhile, economic expectations have peaked due to significant consumer and services weakness. Additionally, the EU is seeing the first signs of deindustrialisation due to its failed energy policies.


1.1 Inflation in the euro zone rises to 5.0 per cent in December – Handelsblatt

Consumer prices in the Eurozone rose by 5.0 percent in December compared to the previous year, the European statistics authority Eurostat announced on Friday morning on the basis of a preliminary estimate. In November, the inflation rate was already at 4.9 per cent – and thus at the highest level since the beginning of the monetary union.

This is above the target of two per cent that the European Central Bank (ECB) is aiming for in the medium term for the euro area. The central bank recently raised its inflation forecast for this year significantly. However, it continues to assume that the current price surge is a temporary phenomenon that is mainly related to special factors caused by the pandemic. For example, with the rise in oil prices after the Corona shock, supply bottlenecks and the withdrawal of the VAT cut from the second half of 2020. Critics, on the other hand, warn of the dangers of inflation and call for a faster tightening of monetary policy.

Comment: Even adjusted for food and energy (core inflation), prices were up 2.6%, or 60 basis points above the ECB target.

The ECB recently raised its inflation forecast for the new year to 3.2 percent, almost doubling it. Warnings of a prolonged period of high inflation have recently been voiced in the ranks of the monetary watchdogs. The ECB forecast, according to which the inflation rate will fall below two percent again in 2023, could be a little too rosy, said Dutch central bank chief Klaas Knot.

Meanwhile, the euro area economic sentiment indicator, published by the European Commission, dropped to 115.3. That’s down from 117.6 in November. It’s still at elevated levels, but it does indicate that growth is slowing – inflation on the other hand, is not.

What this means can be seen below. Only industrial and construction sentiment were able to keep the European sentiment indicator from dropping further as consumer and services sentiment is diving towards its long-term average. These sectors are now being impacted by the upswing in COVID cases and higher inflation, which is hurting the consumer. If industrial sentiment starts to weaken due to prolonged supply chain issues, the EU economy is in for further slowing down the road.

And, for what it’s worth, the populist BILD newspaper, Germany’s most-read news source published an op-ed telling Christine Lagarde to finally raise rates:

“The US Federal Reserve has long since recognised the problem – and reacted. It wants to raise interest rates and thus put an end to the spook. And Europe’s top monetary watchdog Christine Lagarde? She still seems to be on her Christmas holidays. Yesterday, the Frenchwoman did not utter a word in response to the latest horror figures.

Even worse: Lagarde has been saying for months that the price explosion is not worth worrying about.

But this MUST stop now!

The price explosion hits the poorest citizens the hardest – and Lagarde must finally say how she wants to defuse this crisis.”

It’s a great proxy of the German stance on the ECB. Germans feel that its economy is at risk, and with inflation at an EU all-time high, most are dealing with problems they haven’t faced before. For example, an implosion in real yields. Bear in mind, that less than 17% of Germans own stocks, and most rent their homes/apartments.

1.2 Prepare for higher prices, retailers warn shoppers – The Times

A trio of British retailers have warned shoppers that the price of goods ranging from suits to sausage rolls will rise this year as they seek to pass on higher wage bills and transport and energy costs to their customers.

Next, Greggs and B&M European Value Retail all cautioned that the combination of higher commodity, energy, labour and freight costs could not be fully absorbed and would result in more expensive goods for consumers. The cost of living has become one of the biggest political issues in the UK, with soaring energy bills predicted for the spring as well as a hike in national insurance deductions.

Roger Whiteside, the retiring boss of Greggs, said the baker had already increased prices by 5p or 10p on some of its products and the business would review whether further rises were needed in the second half of the year. Whiteside said that staff wages, which he called the biggest “lump of costs” for the business, had already risen by 6.5 per cent in the past year while Greggs was also facing higher ingredient costs.

[…] Lord Wolfson of Aspley Guise, chief executive of Next, said that he expected its shop prices to rise by 3.7 per cent for its spring and summer collections and up to 6 per cent by autumn and winter, mainly as a result of wage inflation.

Wolfson told The Times that retailers were “receivers and givers” when it came to wage inflation because while it had higher staff bills it would mean that its customers may have more income to spend. Next said it expected shoppers to respond by buying fewer but more expensive items. He cautioned that the rising cost of essentials would dampen discretionary spending.

Separately B&M Bargains warned that this year would bring further supply chain and inflationary pressures despite raising its profit forecasts. Simon Arora, boss of the discount retailer, has previously said B&M gains market share when household budgets are squeezed as shoppers switch to its cheaper ranges.

Official UK inflation is running at 5.2 per cent, more than double the Bank of England’s 2 per cent target. The latest figures, for December, are due on January 19.

Comment: 2021’s motto was “inflation is here”. 2022’s motto is shaping up to be “inflation is here to stay”. Companies are preparing their clients for significant price hikes in 2022 as a result of ongoing supply chain issues, energy prices, and higher labour costs. That’s exactly the kind of inflation spiral central banks fear most. On top of that, inflation has long shifted from manufacturing to services – the core of most western economies. This is what IHS Markit reported with regard to price developments in UK services:

“Similarly, average prices charged by service sector companies increased rapidly in December but the speed of inflation decelerated for the first time since August.”

This deceleration might be short lived according to the same report, which states that:

“The inflation outlook appeared to improve as input prices increased at the slowest pace for three months. Survey respondents again commented on considerable pressure from energy, fuel and staff costs. Output charge inflation eased only slightly from November’s record high, however, as many businesses cited the need to pass on escalating costs to clients over the course of 2022.”

1.3 Blended fuel – With the bio-blend, motorists are threatened with a 60-cent price shock – WELT

Petrol and diesel are constantly getting more expensive these weeks – and both fuels fluctuate more and more violently in price with differences of ten cents and more in the course of the day. Since the beginning of the year, in addition to the increased CO2 tax, there has been another and largely unknown influence on petrol station prices: the admixture of biofuel.

In January, the German government increased the relevant greenhouse gas reduction quota (GHG) by law from six to seven percent. Because the eligible bio-components are currently scarce and expensive, this change has a strong impact on filling station prices.

Diesel and petrol have been “stretched” in Germany for a decade and a half. At that time, a law was passed requiring the admixture of sustainable bio-components in fossil fuels such as petrol and diesel. This is supposed to contribute to the reduction of CO2 emissions in transport. Now this admixture must be implemented with higher-quality bio-components.

What exactly will be blended into petrol and diesel is currently changing and is subject to further restrictions. Conventional biofuels as an admixture will be limited from the previous 6.5 percent to 4.4 percent. In addition, a limit of no more than 1.9 percent will be introduced for animal fats and oils as waste products. For substances such as palm oil, this value is reduced to a maximum of 0.9 percent. However, these are precisely the biofuels that, according to oil traders, are available on the market in relatively large quantities at moderate prices.

Alternatives must be found. These include next-generation biofuels. Since January 2022, they must be blended at a minimum of 0.2 per cent. Oil traders are now complaining that these components are currently hard to come by and are also expensive. If the blending quotas prescribed by the legislator are not met, the petrol station chains have to pay a penalty. And it is precisely these penalties that the legislator tripled at the beginning of the year.

Comment: Greenflation, death by a thousand cuts. That’s what German consumers are facing who own petrol or diesel cars. The German government has hiked the required percentages of biofuels in fuels. Not only are these more expensive, not following guidelines comes with high penalties, which are then resulting in higher prices at gas stations. In this case, companies do not want to pay penalties, but they have to due to supply chain issues. There’s not enough biofuel supply…

“The situation is problematic. “Ultimately, it boils down to the fact that the companies can no longer meet the blending quotas, even though they want to,” says Wenck. Ultimately, the traders would not have sufficient quantities of the organic components that are now permitted. The consequence would be penalty payments to the state. “And these are passed on to the customers through the fuel price,” says Wenck.”

Market leader Aral even gives a figure. “The two levies on the greenhouse gas reduction quota and the Fuel Emissions Trading Act led to a price increase at Aral of an average of six cents per litre of petrol and diesel at the beginning of the year,” the petrol station group says.”

And on top of that, drivers are being hit by the requirement of producers to purchase expensive emission rights.

Going into this year, the average price of petrol rose to 2012 levels of roughly EUR 1.60. This could rise to EUR 1.90 this year as a result of high oil prices, carbon emission taxes, and new biofuel rules.


2.1 Green steel – demand is growing faster than supply – Frankfurter Allgemeine

A brand new steelworks in Europe? And in the middle of a greenfield site? A few years ago, when the steel industry was groaning under a flood of cheap imports from China and calls for consolidation were making the rounds everywhere, investors would probably have been laughed at for this idea. Now, however, financiers and partners are rushing to their door. And customers are queuing up, even though the factory planned in the far north of Sweden is not due to go into operation until 2025.

H2GS is the name of the courageous start-up. The name stands for hydrogen and green steel – the climate-friendly future of the steel industry. It is a tempting project. The German car industry is right at the forefront. Mercedes-Benz has taken a direct stake, Volkswagen is indirectly on board via the Swedish truck manufacturer Scania. Others, such as BMW and the automotive supplier Schaeffler, have contractually secured large supply volumes.

One of the biggest customers so far is the Duisburg-based materials and steel trader Klöckner & Co, which plans to purchase at least 250,000 tonnes of climate-neutral Swedish steel annually. The demand from Klöckner’s customers is huge, as CEO Guido Kerkhoff recently experienced at the Blech-Expo in Stuttgart: “We could have sold that quantity there several times over.” Whether in the automotive industry, kitchen appliances or interior design: Without green primary products, it will not be possible to meet the climate protection targets. Thus, the contract with H2GS is a “first important step” for Schaeffler to make its supply chain climate-neutral from 2040.

Faster than many expected, CO2 content is already becoming an important differentiation criterion for steelmakers and their customers. More and more particularly environmentally conscious consumers are paying attention not only to energy consumption but also to the ecological footprint in manufacturing. “It won’t be long before every premium manufacturer wants to have a label ‘produced CO2-free'”, predicts Klöckner boss Kerkhoff. At Arcelor-Mittal , the largest steel producer in Europe, sales director Jochen Grünewald observes the German-speaking market. The group is talking to all car manufacturers about green steel, and all well-known household appliance manufacturers are also preparing for the changeover, he told the F.A.Z. “The demand for CO2-reduced and green steel is growing faster than the available supply.

[…] Steel plays a key role in climate protection. Around one third of all industrial carbon dioxide emissions in Germany come from steel production. With its smoking chimneys and sparking molten iron, the industry almost symbolises the dirty side of the economy. Even the most modern blast furnace produces about two tonnes of carbon dioxide per tonne of steel, because huge amounts of coke and coal are needed to dissolve the oxygen from the iron ore. The clean alternative is direct reduction. The iron ore is processed into sponge iron with the help of hydrogen, which is then liquefied in an electric arc furnace and can then be processed into steel.

Comment: Carbon prices are rising, steel demand is high, and companies are increasingly focused on climate-neutral products. That’s why investments in climate-friendly steel production are rising. Germany, which is a key steel producer in Europe is currently seeing the start of deindustrialisation. Its car production peaked three years prior to the pandemic, its supply chains are broken, and its energy transition is a total mess. That’s why Germany is now at risk of falling behind when other countries switch to “green” steel production. It simply lacks the infrastructure to keep up according to Frankfurter Allgemeine:

“The big question is where the new ingredients for steel production are to come from. For climate-neutral production, vast amounts of green electricity are needed or, for most German climate protectors, unthinkable: CO2-free nuclear power. This can then be used to produce clean hydrogen by electrolysis and to operate the smelting furnaces. But Germany lacks almost everything: enough wind turbines and power lines to transport the electricity, as well as electrolysis plants and hydrogen pipelines.

Most of the hydrogen will have to be imported anyway, but little progress has been made in this regard either. “For the transition, it won’t work without natural gas,” surmises Hans Jürgen Kerkhoff, President of the German Steel Federation. Even this change of technology already promises huge CO2 savings. The process has been tried and tested. Arcelor-Mittal, for example, has been operating a direct reduction system based on natural gas at its Hamburg plant for decades.”

Deindustrialisation is a key risk facing Germany and it needs to act now in order to avoid losing jobs and wealth in its industrial sector. 

2.2 Europe’s power crunch sparks aluminium smelter meltdown – Reuters

It’s turning into a winter of discontent for Europe’s aluminium smelters as they struggle to cope with rocketing power prices across the region.

Four operators have announced curtailments totalling over half a million tonnes of annual production capacity, with others flexing output to mitigate power-load price spikes. European aluminium consumers are already paying the price. Physical premiums have surged, the CME’s duty-paid spot contract jumping from $290 per tonne at the start of December to a current $423.

That’s over and above the London Metal Exchange (LME) aluminium price , which has also opened 2022 with a bang, hitting a two-month high of $2,938.50 per tonne on Wednesday.

Aluminium was the second best performer among the core LME industrial metals last year as the market priced in power-related curtailments in China. The market’s power problems have now spread to Europe.

“Exorbitant energy prices” were cited by U.S producer Alcoa (AA.N) as the reason for a two-year curtailment of its 228,000-tonne per year San Ciprian smelter in Spain. The plant will be out of action by the end of this month, returning in January 2024 with renewable power contracts.

Another casualty is the KAP smelter in Montenegro, which began powering down its 120,000 tonnes of annual capacity in the middle of December. The plant’s owner Uniprom was facing a jump in its power bill from 45 euros ($50.89) to 120 euros per megawatt hour at the start of 2022.

The “exceptional situation on the energy and gas markets” is why Romanian producer Alro is reducing output from five to two potlines at its Slatina smelter, it said. The 265,000-tonne-per-year plant will be operating at around one-third capacity until further notice.

Norway’s Hydro has also doubled down on the amount of capacity it is idling at its Slovalco smelter in Slovakia, citing “very high energy prices (which) show no sign of improvement in the short term”. Production will be reduced to 60% of the plant’s annual capacity of 175,000 tonnes per year.

Comment: This article goes well with the one discussing green steel. While one covers a secular trend, this article shows how ill-prepared Europe is when it comes to protecting its industries against higher natural gas prices. For one, it’s because climate targets make it impossible to boost energy investments (in general), which is now giving Russia all the leverage it needs to push up European natural gas prices. The result is significant supply chain damage, which is set to last well into 2023 without structural changes. 

London-based aluminium prices have more than doubled since 2020 and are set to make new highs this year – unless energy prices or demand take a deep dive. 

Immediate action is needed. The green taxonomy, which will soon include nuclear and natural gas is an important step. Additionally, the Dutch government is now admitting that it needs to increase natural gas production in Groningen to satisfy demand in a low-inventory situation. European politicians are slowly waking up to the fact that:

1. Inflation is not transitory and

2. The EU is risking deindustrialisation on a much larger scale than previously expected.

2.3 Change to e-mobility: supplier industry becomes a two-tier system – Handelsblatt

Where the trend in the automotive supply industry is heading was summed up in one sentence by ZF CEO Martin Fischer at the start of the world’s largest electronics trade fair, CES: “Software is everything, everything is going electronic.” The transformation from supplier of mechanical components to software and electronics supplier is now clear. The industry leaders around Bosch and Continental are no longer vying for orders for turbochargers or gearboxes, but for central computers and car operating systems.

The major corporations in the German automotive supply industry began their transformation years ago. And in all likelihood they are strong enough to survive the paradigm shift. Last year, they won orders worth billions for central on-board computers, driver assistance systems and electric powertrains.

Both Bosch and ZF had therefore declared 2021 as the year of decision. ZF manager Fischer now adds: “We are bullish. 2022 will again be a decisive year.” Also because e-mobility is taking hold faster than experts expected two years ago.

The major automotive suppliers are now hoarding as many orders as possible in the transition to at least partially compensate for the loss of orders for the much more labour-intensive combustion technology and the resulting threat of job cuts. Bosch, ZF and Vitesco, the newly spun-off drive unit from Continental, each already have electric orders in the double-digit billions – and the trend is rising sharply.

[…] The increased use of software and electronics in cars is also changing competition: the car industry is becoming increasingly attractive for tech companies. Last year, for example, the US chip manufacturer Qualcomm took over the Swedish supplier Veoneer, which specialises in driver assistance systems. The company outbid the traditional supplier Magna by around one billion dollars.

Comment: While it will hit Germany more than its European peers, the time is now to prepare for a massively changing automotive industry. EV engines are vastly different from ICE engines as they have just 18 moving parts. ICE engines have more than 2,000 moving parts, including transmissions, driveshafts, clutches, valves, gears, and much more. 

While ICE cars aren’t dying over the next 2-3 decades, most manufacturers are slowly phasing out their ICE models in Europe and North America.

This means suppliers will start reducing employment in the years ahead.

“Investment banker Zintl perceives a similar development. “We are currently observing that combustion engine businesses, which are currently still highly profitable but no longer have a future in the course of technological change, are difficult to sell,” says the banker.

Instead, Zintl’s colleague Niklas Lerche sees a trend for larger suppliers like Vitesco to consolidate the corresponding business units on their own. “That means they work off their orders and phase out the business without selling it first.””

This matters because in 2016 (the year before German automotive production peaked) the country employed more than 800,000 people in automotive-related industries. 


3.1 Gas supply in Germany: Only a state rescue operation secures network operation – Handelsblatt

The high gas price level brought the security of gas supply to the brink of a crisis in December at short notice: The special purpose vehicle Trading Hub Europe GmbH (THE), which is held by the long-distance gas network operators, was dependent on the help of the state development bank KfW because it could no longer pay for the gas it had to procure from its own resources to maintain network operations.   

Industry insiders report that THE had to ask the Federal Ministry of Economics and Technology (BMWi) for “very short-term assistance” so as not to jeopardise the stability of the gas supply. The BMWi had instructed KfW to provide a “substantial financial injection”. The amounts involved are in the three-digit millions.

THE plays a key role in the German gas market. The company is responsible for the market area for the whole of Germany and must ensure that natural gas supply and demand are continuously balanced.

The company’s tasks are laid down in the Energy Industry Act (EnWG). The company does not make a profit; it is financed by the network fees paid by gas consumers. THE’s shareholders are companies such as Open Grid Europe (OGE), Gasunie Deutschland or Thyssengas.

In order to balance the quantities of natural gas that are fed into and out of the grid, THE itself buys a considerable amount of gas on a daily basis, the so-called “balancing energy”. The differences between injection and withdrawal can be considerable. The traders feed in according to forecast consumption, but the actual consumption is sometimes much higher, for example during a cold spell. THE fills the gap with balancing energy.

[…] According to the information, in some cases THE had to spend 60 million euros a day on the purchase of gas alone. To secure the transactions, THE – like all other exchange customers – has to deposit so-called margins, which roughly correspond to a deposit and exceed the actual purchase price.

Together with the purchase price, this resulted in amounts in the three-digit millions – for a single day. As a result, liquidity was “considerably strained”. The situation was “completely crazy”, said another industry insider.

Other companies are struggling with similar problems. For example, the energy company Uniper had announced on Tuesday evening that it was extending the financial security of its energy businesses by up to 11.8 billion euros.

But unlike Uniper and the many other energy traders who are struggling with significant liquidity problems, THE has to guarantee system security. Under the current circumstances, this is a particularly big challenge. It is also not impossible that exacerbations like the one in December will repeat themselves this winter. THE might then have to call on help again. 

Comment: Governments are playing with fire. The German natural gas network was under heavy duress during the natural gas spike prior to the Holidays when Dutch TTF futures reached EUR 180. In the United Kingdom, natural gas providers are collapsing because of price caps according to The Telegraph. Note that the article highlights “green” initiatives that created this mess, in the first place.

“The recent collapse of multiple retail suppliers is a direct consequence of the energy price cap. The cap was a panic response to the last gas price crisis, which itself was caused by the over-regulation of fracking and North Sea oil. As a consequence, we now find ourselves relying on LNG ships from the US to relieve prices by sending us precisely the same stuff that is under our feet. A win for American capitalism over British eco-socialism.”


“Boris Johnson has made the problem far worse by treating climate change as the only thing that matters. His eco-activist agenda displays contempt for the Red Wall voters who helped him into Number 10, and who will end up paying for it. Expecting public cheers for leading the world in Glasgow, he is now looking forward to angry jeers as the bills land on mats in April. This is a failure of politics and economics.

The Government needs to get past this, revisit the review and rediscover a love of capitalism. Short-term price relief is required now, while the long-term strategy must include a radical reshaping of energy markets.”

This problem goes obviously well beyond Boris Johnson. But what it shows is that we’re creating a dire situation that is not only causing consumers to feel the side effects of high energy inflation, but it also turns into a national security situation when prices are so high that government supported is needed to keep on the lights.

Additionally, bear in mind that the decline in European natural gas prices was mainly caused by above-average temperatures, which supported inventories. As prices are back at EUR 100, the situation continues to be very tricky according to Reuters’ John Kemp:

“More than half of the winter heating season still lies ahead but the risk of inventories falling to critically low levels by its end and creating shortages has reduced sharply. If there is a sustained spell of cold weather later in January or February, prices and spreads are likely to spike higher.”


4.1 German production shrinks unexpectedly – but exports increase – Handelsblatt

The German economy, plagued by persistent material bottlenecks, surprisingly curbed its production in November. Industry, construction and energy suppliers together produced 0.2 per cent less than in the previous month, the Federal Ministry of Economics announced on Friday.

Economists polled by Reuters had expected a 1.0 per cent increase. In October, production had still risen by 2.4 per cent. It is currently still 7.0 per cent lower than in February 2020, the month before the Corona pandemic restrictions began in Germany.

Since the industry was able to increase its production by 0.2 per cent in November alone, the ministry sees reason for optimism. Admittedly, the impairments due to supply bottlenecks are likely to continue for a few months. “After they have been resolved, dynamic growth can be expected – in view of full order books,” the ministry said.

Construction output fell by 0.8 per cent, while energy production was down by as much as 4.4 per cent.

Exports, which benefited from the increased demand for goods “Made in Germany” from the USA and the European Union, did surprisingly well. These increased by 1.7 per cent in November compared to the previous month, as reported by the Federal Statistical Office. Economists had expected a minus of 0.2 per cent.

Comment: Optimism is slowly dying. In the last few months of 2021, economists over and over mentioned easing supply chain problems. While new orders were slowing, production was up as companies had easier access to supplies. That isn’t happening as expected. German production in November was down 0.2%. Economists had expected an increase of no less than 1%. The problem is that supply chains continue to suffer. The new surge in COVID cases isn’t helping. Especially not because China maintains a zero-COVID policy. That’s the worst strategy possible against a highly transmittable virus like omicron. 

“Nevertheless, Commerzbank chief economist Jörg Krämer does not see any reason to sound the all-clear. “The new Corona wave is likely to bring deliveries from China to a standstill again and put a severe brake on the service sector in this country,” he warned.”

Since the problems are likely to continue for a while, the upswing this year will be weaker than previously assumed, according to forecasts by leading institutes. The Kiel Institute for the World Economy (IfW), for example, lowered its forecast for German GDP growth in 2022 from 5.1 to 4.0%.


5.1 Italy to raise 7 billion euros from 30-year bond as presidential vote looms – Reuters

Italy received more than 55 billion euros of demand for a new 30-year bond on Wednesday, according to a lead manager memo seen by Reuters, launching the euro zone’s first major debt sale of the year weeks ahead of a potentially disruptive presidential election.

The new bond, which will raise 7 billion euros and matures on Sept. 1, 2052, was priced to yield 2.162%, Italy’s Treasury said in a note.

Italy launched the bond just weeks before its parliament will convene on Jan. 24 to elect a new president.

Prime Minister Mario Draghi has signalled he would be willing to become head of state, and investors are trying to assess what his potential departure to the generally less powerful presidency – which could trigger an early parliamentary election – might mean for Italian debt.

The political uncertainty only adds to market jitters following the European Central Bank’s decision to end is pandemic emergency bond purchase programme in March, Italy being a key beneficiary.

Comment: Not only Italian politicians are shoring themselves up in case there are any unpleasant after-effects of the upcoming Italian presidential election. The treasury decided to issue EUR 7 billion worth of 30-year bonds at a yield of 2.162%. The demand was high, more than EUR 55 billion, showing that there’s still a healthy appetite for long-term Italian debt.

That’s the good news. The bad news is that when we look deeper, there is a shift in risk perception. In October of 2020 (the last time the country issued 30-year euro-denominated bonds) it received EUR 90 billion in orders for an EUR 8 billion issuance.

Moreover, the 10-year BTP-Bund spread is creeping up again. It’s up to 136 basis points from the lows of 100 basis points in September. As the graph below shows, that’s not a lot. However, what matters most is that uncertainty regarding the presidential election is enough to lower debt demand and increase the yield spread. This can quickly escalate if uncertainty regarding Italy’s political future increases and/or if the ECB ends PEPP in March.