EU PMIs stabilises. German Manufacturing activity remains in contraction
US Manufacturing PMI tops estimates but "business conditions remain subdued"
ECB Lagarde calls Government Help in first major ECB speech
The trading week concludes with the release of PMIs out of Europe and USA. Looking at the country breakdown, French Manufacturing PMI rebounds in October to 51.6 (exp 50.9 prev. 50.7), French Service activity also stabilises at 52.9 (exp 53.0, prev 52.9) showing signs of consolidation in activity since the bottom reached last December. German Manufacturing activity remains in contraction at 43.8 (exp 42.9, prev 42.1) but in slight recovery from the September lows. Although the recent round of PMI out of Europe shows somehow signs of stabilisation ("the worse is behind" kind of stabilisation) it does not evidence a material improvement of the Manufacturing outlook in the Euro Area. As some analysts from Nordea suggest, only 16% of the OECD's leading indicators of economic activity in Europe are up since last month. Further noticing that usually such weak leading indicator corresponds to a weakening manufacturing sentiment. If this pattern persist then there is a good chance that November is the "peak" of this small rebound. Moreover, last round of data since September have not reversed the persistent downtrend in manufacturing activity.
Slightly brighter picture out of the US with the October Manufacturing activity jumping to 52.2 (exp 51.5, prev 51.3) printing the highest pick up in activity since May 2019. However, the PMI report that "Although improving, the picture of current business conditions remains subdued by standards seen over the past decade and the business mood sobre in relation to prospect for the year ahead".
The resulting market action saw strength in the US Dollar, which sustained the break lower in its EUR and GBP counterparts, with the single currency heading toward fresh weekly lows at the close after a range bound week. The situation remains relatively mixed on the Equity and safe heaven space. SP500 does not seem bothered by recent trade confusion and good (bad) PMIs number. Recent trade in US Equities has been manly technical with some wriggle of headline volatility every now and then. Gold pulls back to were we started the week but still very elevated despite USD strength and the resilience in equities,
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