Market “turmoil” not a big concern for euro-zone

The brief period of turmoil in global markets which continued earlier this week should not have a lasting impact on the euro-zone. Most of the market moves were small and have already been largely reversed. And despite the fall in investors’ expectations for policy rates, we still think the ECB will proceed cautiously with its easing cycle, cutting its deposit rate by only a further 50bp this year. Next week we expect to learn that euro-zone employment rose by 0.3% q/q in Q2 and industrial production edged up in June while Swiss GDP rose by 0.4% q/q in Q2.