While the PMIs in Europe did not undershoot expectations quite as much as they did in the US, the number was nevertheless disappointing.
The composite index came in at just 50.2, down from 50.5 and breaking a four-month improvement streak. This remains consistent with economic expansion, but only just, and the data will do nothing to dispel concerns over another prolonged period of stagnation, particularly given that Trump’s tariffs loom large in the background.
So far, the euro has proven resilient to the jolt to European security arrangements brought about by Trump's apparent pivot to Russia, but this adds to long-term concerns. As always, the key question is how much of this is already priced in by the levels of the dollar - we think that practically all of it is.
The fallout from the German election results could also be important for the common currency - the euro has received a small boost so far, as it looks as though the CDU/CSU will be able to form a coalition with the SPD without support of a third party.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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