Consumer sentiment deteriorated at the start of the quarter. At minus 37, October's unadjusted headline index was down 3 points versus September and at a 5-month low. However, it was still some 16 points stronger than a year ago and also well above its minus 40 long-run average.

The monthly drop was largely due to a markedly worse economic outlook (minus 30 after minus 19) although at least in part the decline here was probably seasonal. Spending intentions (minus 32 after minus 29) were also softer but most other areas of the survey showed little change. Of note for the SNB, 1-year ahead inflation expectations (99 after 95) moved off the previous period's record low.

Today's report leaves a fairly flat underlying trend in consumer confidence, potentially pointing to a modest increase in spending this quarter and should not deter the SNB from easing again next month. To this end, the October update trims the Swiss RPI to minus 31 and the RPI-P to minus 25 showing recent overall economic activity falling short of market forecasts.

The sentiment index is expected to retain its recent flat profile, improving just a point to minus 33.

The State Secretariat for Economic Affairs (SECO) compiles a quarterly survey of consumer attitudes on present and expected economic and financial conditions. The survey covers around 1,200 Swiss households and results are synthesised into a single summary consumer climate index that attempts to measure consumer sentiment.

The pattern in consumer attitudes and spending is often a major influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Consumer spending accounts for a major portion of the Swiss economy, so investors want to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. An increasing important element of the survey is the question concerning current buying intentions.