The fallout from the trade wars has affected the eurozone’s economy, if figures released yesterday are anything to go by. There was a raft of purchasing managers indices from Markit and every single release came in below expectations. In Germany, manufacturing PMI for October fell to 52.3 from 53.7 the previous month, and is the slowest expansion for 29 months.
In the eurozone as a whole, composite, manufacturing and services PMI came in at 52.7, 52.1 and 53.3 respectively, against expectations of 53.9, 53 and 54.5. All in all, it was an extremely disappointing day for the eurozone and the euro tumbled against the dollar. It would have fallen further against sterling, were it not for continued Brexit uncertainty in the UK. It is unlikely that this is the last we will see of the trade war effects, which will certainly be of some concern to the markets and EU leaders.
Today we have the European Central Bank’s interest rate decision and, although rates will certainly be kept on hold this time around, we might just hear something interesting in the accompanying press conference. The bond-buying programme is set to end in December 2018 and we could see further indications of a normalisation of economic policy in the future.