US-China agree to trade talks in October
US ADP show job market in good shape
US ISM Non-Manufacturing PMI surges in August
Jo Johnson resigns as MP
Is a resilient economy that portrayed by today's employment and non-manufacturing activity data. US ADP posts to 195,00 in August well above the 149,000, whereas Non-Manufacturing ISM PMI surges to 56.4 against the expected 54.0. The rebound in US numbers shows that the economy is hanging in there, even though the manufacturing sector is in a recession. On the top of that, the renewed US-China optimism revamps investors risk appetite sparking a slight correction in safe-heaven assets. On the other hand, I think the recent fundamental context remains unchanged. Global manufacturing activity remains in a recession - look at the latest German Industrial Activity numbers (-2.7% vs exp -1.5), Trade War has not been resolved yet (this is not the first time US and China agree on talks without significant progress) and the UK is still facing considerable uncertainty over its future in Europe. Talking Europe, Italy goes off the risk radar for now as Conte 2.0 government was sworn in this morning, with the latest of many others EU-friendly independent new finance Ministers as part of the new PD-M5S coalition cabinet.
Other than that, the upcoming central bank meeting, ECB (12th Sept) and FED (18th Sept) will be interesting in assessing wether more liquidity and accommodative measures are needed to sustain growth and shake up inflation expectations, with market participants having already priced in a FED and ECB rate cut in September, the focus will be on any hints about the possibility of re-starting QE 2 in Europe and opening doors for more cuts next year. On the data front, all eyes on tomorrow's Non-Farm Payrolls job report with particular attention to the inflation gauge figure.
If you missed the morning briefing from the desk click HERE