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Soppy with sentiment (and payrolls too)

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The Japanese Tankan came in somewhat weaker than expected, with weaker capital spending part of the picture. Whether this reflects weaker investment intentions in Japan or overseas is not necessarily evident (Japanese "Hollowing out" having been a trend in recent years).
  • Chinese business sentiment improved with the PMI indicator for manufacturing over 50. No doubt there will be partying on the streets of Western Australia. It is possible that the sentiment data will be over-interpreted – the move is noise as much as anything.
  • Euro area PMI business sentiment also comes out, but it it the US ISM equivalent that may attract more attention, as this is likely to offer upside surprises (going on where the regional data has been heading). With inflation concerns creeping higher, look to the prices data in the ISM.
  • This overindulgence of sentiment comes alongside the release of the US employment report which we also think may surprise to the upside. The combined tone of the US data, if it comes as we expect, may counter some of Fed Chair Yellen's earlier dovishness perhaps.