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Sentiment not reality

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The Bank of Japan, a practiced master of the art of doing nothing, did nothing on policy. The Reserve Bank of Australia clearly did not want the Japanese to feel alone in this policy stance, so they also did nothing at their meeting today.
  • The day ahead is littered with manufacturing sentiment data. This cannot be stressed enough: a rise in sentiment is not a signal of improving manufacturing or better growth. It is a signal of improving sentiment. What improving sentiment signals nowadays is very debatable.
  • The Chinese manufacturing sentiment was stronger, which will doubtless lead to partying on the streets of Shenzhen. China's growth story is more domestically focused these days. Euro area sentiment data is likely to show divergent opinions within the monetary union.
  • UK export sentiment may be distorted by the significant move in sterling. Although export sentiment is supposed to be volume, it tends to correlate with value. In the US the release of the ISM is likely to be overshadowed by political noise.