PMIs and Politics
- China's manufacturing PMI of business sentiment superficially disappointed, but with proper seasonal and lunar new year adjustment it actually strengthened. Markets may look for a steer from the remaining PMI data today, but we see no surprises (Euro contracting, UK and US expanding).
- Sequestration has started in the United States, not that the tolling of the bell at midnight last night makes much of an immediate difference. Popular pressure on politicians to do something is only likely to grow when the general population outside Washington is affected.
- US personal income will drop because of dividend payments and the payroll tax, but we expect the US consumer to keep bravely battling their way through to the shopping mall to consume. Michigan consumer sentiment is not expected to change much from the preliminary reading.
- UK politics may get some attention with an anti-European party coming in second in a by-election. This is unlikely to be a shake up of the UK political landscape (that has not happened in roughly a century) but it might lead to investor concerns about mainstream parties becoming more hostile to Europe.
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