Macro Themes At Play
Theme 1 - Flash PMI's continue to improve
Theme 2 - Buy the dip?
Theme 3 - BoE in play? Sunak hopes so...
Further reading and listening of note
Theme 1 - Flash PMI's continue to improve
Positive prints globally as CB's run their economies hot and signal the possibility of pending easing. Consumers/corporates are enjoying the accelerating momentum of higher wages / earnings and as a result, there is simply a lot of money sloshing around the system. The UK saw the fastest expansion of output since May 2023, but cost pressures have intensified in the economy whilst a German rebound headlined a positive European data set. The trend is refreshing but soft data has been a red-herring for investors in the post covid world. With companies and households weathering the storm of high real rates, the sole focus of the market is on inflation returning to target and allowing CB's to cut as soon as they've promised. As a result, there has been limited reaction in the fixed income space to the better data set (US10s @ 4.59%, UK10s 4.24%, France 3%, Germany 2.5%).
Bloomberg - German Rebound Drives Euro-Zone Private Sector to 11-Month High
ABN Amro - Eurozone PMIs show economy moving above neutral mark at start of Q2
Morningstar - Strong Services Drive Eurozone Expansion
S&P Global - S&P Global Flash UK PMI
Bloomberg - UK Recovery From Recession Gains Pace as PMI Beats Forecast