The US economy is probably accelerating. The ISM PMI defied weak seasonality and the orders to inventories. Will the NFP defy seasonality gravity today as well?
The USD weakness has been striking over the past trading week. Markets have extrapolated the softness in the US CPI from October, but is it fair? US data could perform strongly until New Year’s due to seasonality.
Most of the signals from our models hint that the weakness through October was a data glimpse and that 2023 will end on a strong seasonal note before a weak 2024. Either we are right or else recession is looming.
We are well under way in our Services Week with our focus on Services and in this note we wanted to highlight the issues central banks could face in a scenario in which manufacturing outpaces services.
Our services week is hot and running, where we share our take on the rebound in manufacturing amidst a weakening in the services sector. Today we will share some of the takes we have looked at, as well as what lies ahead
We have run the numbers on historical correlations between the US PMI spread and various asset classes to find out what you should buy if manufacturing rebounds while services weaken.
The EURUSD reversal on the back of hot inflation in Europe was a surprising move, but one we fancy. The Chinese stabilization is walking a tightrope despite efforts from the authorities to prop up CNY asset values.
Our indicators suggest that ISM Manufacturing may suddenly accelerate faster than thought possible… A cyclical upswing on the cards in the US? Watch out tomorrow.
There are admittedly early signs that the Manufacturing sector rebounds in the US with the Dallas Fed PMI confirming the stabilization narrative. We tend to agree on the direction of travel in Manufacturing, but here is everything you need to watch outside of that sector.
If the service industry starts to fade relative to the Manufacturing sector, it may be exactly what central banks use as the excuse to pause (and eventually pivot) but markets are much more sensitive to Manufacturing PMIs.
Nikkei at 33-year highs again this morning as the melt-up continues. Falling inflation outpaces mediocre liquidity -and growth outlooks, which goes to show how a rapid disinflation can be seen as manna from heaven initially.
Was it too early to burry the Chinese rebound? Manufacturing is now showing signs of life. Meanwhile, the FDIC sounds worried about the health of the US banking system in their quarterly report. Expect a stinker in the ISM Manufacturing report today.
As long as “nothing happens” it is bond bearish as it alleviates fears of an immediate recession. Recent data is not bad enough to prompt further bond buying as of now.
The ISM Manufacturing was the worst possible cocktail on the surface but remember the time-lags from the survey to actual activity. Inflation is likely to rebound later in the year, but not for now.