Evidence of a slowdown in China in 2017 is increasing as PMIs have decreased sharply, commodity prices have lost momentum and financial stress is rising.
China slowing in 2017 points to a weaker global cycle, less tailwind to risk assets, downward pressure on bond yields and headwinds for emerging market assets.
Although euro business cycle indicators have not yet shown the same signs of a peak as in the US and China, we do not think euro area PMIs can continue to decouple from the US and Chinese PMIs.
