Sentiment, media influence and real versus nominal
- Today we get manufacturing sentiment data as ever prone to problems. Sentiment tends to overreact to underlying data, perhaps because the media has a disproportionate influence on sentiment. Further, although sentiment is theoretically about real activity, it tends to correlate better to nominal activity.
- China's private sector calculated PMI, surveying a handful of firms in the economy, fell. The decline was expected, the scale a little more than expected – provoking exaggerated expressions of woe in Asian financial markets.
- The market consensus expects Euro area sentiment to be broadly static. There may be some interest in the possibility of further divergence in the data. Draghi of the ECB is speaking, with markets eager for his latest iterations on possibly extending quantitative policy.
- There is no call tomorrow, owing to the travel schedule. Tomorrow is a key day in the #FreeTheFed campaign, as Fed Chair Yellen speaks on inflation dynamics. Unusually we have already had four Fed speakers advocating rate hikes, very soon after the FOMC meeting.