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Dubious data day

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  • The divergence of global central bank policy having been firmly established, market attention turns to economic data. Unfortunately today's data is all about manufacturing sentiment surveys, which have shown an inclination to overreact to underlying economic activity.
  • In the Euro area the headline survey for the whole of the Euro bloc is likely to be subordinated to concerns about France and Italy. The French survey has consistently pointed to contraction in recent months (the reality has been a stagnation, not a contraction)
  • China's PMI fell from 51.1 to 50.8 - a point that is being treated by the financial media as if it were meaningful information. Clearly it is not meaningful information. China's economy is shifting structurally to a lower trend rate of growth. This data is just noise.
  • The US manufacturing ISM is expected to pick up slightly, based on regional data. There are a couple of Fed speakers, but perhaps the most important data could be the potential (not confirmed) release of the US Federal Reserve Senior Loan Officers' survey of credit conditions.

Listen to the audio version of this briefing.