Eurozone: No signs of stabilisation in momentum – Nordea Markets

Analysts at Nordea Markets point out that the Euro-area manufacturing momentum continues to lose pace and both French and German Manufacturing PMIs now read below 50, but the slowdown is not isolated to the manufacturing sector as the service sector PMI trend is comparable. 

Key Quotes

“In our forward-looking models it is still hard to see signs of stabilisation around the corner.”

“Even though the ECB clearly acknowledged the increased downside risks and even addressed “recession risks” verbally, Mario Draghi keeps relatively upbeat assumptions intact.”

“Even though it is mostly old news for markets that ECB assumptions (on growth) are too upbeat, it seems like the ECB stubbornly rejects to acknowledge that fully.”

“The already dovish pricing of ECB compared to the ECB’s forward guidance limits the scope for EUR (and EUR rates) negative surprises from the ECB (remember the very subdued Euro-area surprise index).”