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Sentiment, sentiment, everywhere

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  • China's manufacturing sentiment data has prompted joy in the Asian markets. Economists sit dourly on the sidelines, refusing to join the equity conga, and pointing out that the Chinese economy was always going to grow and data like this is hardly new information.
  • Japan's Tankan business sentiment survey gave a solid performance on the large business headline numbers (if a little below consensus). Capital spending plans were strong (though the destination of capex is not specified). The small business sector was less robust.
  • European manufacturing sector sentiment has been anticipated by flash estimates; the concern of the markets lies with the extent of divergence. UK manufacturing sentiment is also due, with the ONS already saying it will be revising GDP again to reflect less of a recession.
  • The US ISM should be strong and relatively steady. At a forecast 55.5 the figures will show recovery from Q1 (inevitably). The issues around healthcare spending are unlikely to impinge on manufacturing sentiment.

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