Euro-Zone Economic Confidence Slips to Record Low, Sentiment Deteriorates Across the Board

Euro-Zone EUC economic sentiment dropped 80.4 from 87.5 in September, the sharpest decline since the start of the survey. Our median was 85.8 and the much lower than expected reading will add to arguments for another 50 bp cut from the ECB next week, especially as inflation is coming down quicker than hoped for. The breakdown shows the reading for industrial sentiment down at just -18, versus -12 in September. Consumer confidence dropped to -24 from -19 and services sentiment fell to -6 from 0. Construction and retail sentiment was also sharply lower and data points to a deterioration in sentiment across the board. Interestingly, the reading for expected inflation in the consumer confidence number actually rose to 19 from 17, despite slowing energy prices. which is something the ECB will have to keep an eye on.