Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Mixed Signals From Global Manufacturing PMIs

Published 09/23/2018, 12:12 AM
Updated 07/09/2023, 06:31 AM

The September flash manufacturing PMIs from Markit brought with them some mixed signals on the path of developed economies. The composite flash PMI (calculated by us) was up +0.1 to 54.4, which came as a result of US rebounding +0.9pts to 55.6 and Japan up +0.4pts to 52.9, but Europe continuing its decline, -1.3pts to 53.3.

The uptick in US and Japan is promising from a global macroeconomic cycle outlook, but the softening in Europe is a concern, and probably goes some way to explaining some of the performance differentials in global risk assets.

DM Manufacturing PMIs

Looking again at the DM composite PMI vs US 10-year bond yield chart (this was a key chart in picking the surge in bond yields because a gap had previously opened between price and fundamentals)... At this point the 10 year Treasury yield has moved beyond where the DM composite PMI suggests it "should" be (although you get different answers on that if you use the ISM vs Markit PMIs). But I wonder if at this point maybe this time it's the bond market that has it right... in other words, the rise in Treasury yields could be reflecting greater optimism on the growth/inflation outlook.

DM PMI Vs Bond Yield

Anyway, the main takeaways from the latest round of flash manufacturing PMIs are: 1. Global growth is not collapsing (Japan + US rebounding); 2. Global growth appears to be becoming less synchronized, and divergent/asynchronous cyclical signals are becoming more apparent; .3. Overall it still justifies a bias to be long risk assets and short/underweight bonds.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.