An Asian PMI indicator comes in better than expected
- The markets have been worried by the weakening of a Chinese PMI of manufacturing sentiment. This concern seems to overlook the quality of sentiment data, and indeed of Chinese data. We do expect more Chinese stimulus in the future but it is as well to remember that China is transitioning to a more consumer (service) focused economy.
- A Japanese PMI of manufacturing sentiment outperformed expectations overnight. This is not a closely watched indicator, but it is interesting that the media attention is all on the "below expectations" Chinese data not the "better than expected" Japanese data.
- European sentiment (it is a big day for sentiment) is also due. The question for markets is whether the Greco-German crisis has had an impact. ECB President Draghi exhibited a blasé attitude to the risk at the recent press conference, and it is possible that there may be some substance behind Mr Draghi's spin.
- US existing home sales data is due. Household formation seems biased towards renting rather than purchasing property, but home sales have some bearing via household wealth effects. However US markets are now in thrall to next week's FOMC meeting and hints of the tightening to come.