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EZ risks turmoil even if governments stay responsible

While we don’t expect euro-zone governments to engage in UK-style large discretionary fiscal loosening, Italy’s weak public finances and/or the ECB’s likely reluctance to intervene in government bond markets may well turn out to be the source of turmoil in the region’s markets before long. Meanwhile, we expect data released next week to add to the evidence that activity in the euro-zone weakened sharply in Q3. The ECB will also release the minutes of its September meeting.

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