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Manufactured sentiment shifts

  • China's manufacturing sentiment improved marginally, offering some comfort to those that fret about where China's economy is heading. We are less inclined to be concerned overall - and as long as the labour market is stable, the government seems happy.
  • Euro area manufacturing sentiment may generate scenes of joy on the streets of Brussels - the market expects things to get worse at a slightly slower rate than the pace of deterioration hitherto. That counts as a checkmark in the "win" column of the Euro area.
  • Anglo-Saxon sentiment has been inclined to overreact to the underlying economic data recently, lessening the value of the information it provides. However, the market is looking for the UK PMI to move into expansion territory. We forecast the US ISM to show a strong 52.5.
  • Markets have been inclined to take good economic news as a signal to weaken, on fears that this will lead the Federal Reserve to tighten monetary policy. Of course, this may also just reflect more realism about economic fundamentals, in which case the market price moves are to be welcomed.

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