Money market bets for ECB rate hikes this year have been scaled back a little, with ~160 bps worth of rate increases now priced in as compared to ~170 bps before the PMI readings today.

The data from France and Germany continues to suggest an ongoing slowdown as demand conditions weaken with inflation pressures continuing to constrict the economy. That isn't likely to abate any time soon and will draw recession risks closer and sooner rather than later in Europe. The ECB looks set to hike into that kind of environment but can they stick with their resolve throughout? We'll see.