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Sentiment dragged out again

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  • Sentiment data dominates the rather sparse calendar today. Euro area manufacturing PMI sentiment has been subject to the same sort of overreaction as other sentiment numbers, but will doubtless draw some attention in the absence of other news.
  • Investors are likely to look for two things from today's number. First the degree of divergence amongst the components of the Euro area (which has implications for Euro politics). Second, markets seem minded to react disproportionately to negative surprises.
  • China's sentiment data is also due (from the manufacturing sector). The government has seemed very keen to support the economy through stimulus, but the stimulus has been focused on job supporting measures rather than manufacturing supporting measures per se.
  • UK credit conditions data is due from the Bank of England, and will be helpful in shaping expectations of the speed of monetary policy tightening. The BoE's Miles was hinting at "normalisation" of policy within a year.

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