Originally published by AxiTrader
Part of me talking about the relationship between global data flow and markets, especially the Trumponomics stock market rally, is that I have to keep readers updated with how the data is flowing.
Now all data isn't equal. So I'm not going to turn a blog on markets into an economics blog. But the reality is that there are some data points which are important in traders minds.
Naturally US non-farm payrolls, global inflation data, Chinese investment, GDP, retails sales, and investment data are all in the Pantheon of market moving statistics,
But so to is some so-called "soft data" - surveys rather than actual output.
At the very point of this spear of soft data are the global purchasing manager's indexes. Indeed you could argue that both the manufacturing and services PMI's have an outsized impact on investor sentiment toward the economy - at both an individual country level and across the globe.
Anyway. All this is by way of introduction to the latest read of global manufacturing PMI's.
Data released overnight showed that the Markit/JP Morgan aggregate global manufacturing PMI index held at a 69 month high of 53. That means that this global PMI has remained above the 50 demarcation between expansion and contraction for 13 months straight now.
No wonder the commodity cycle appears to have turned around a year ago.
In a press release IHS Markit and JP Morgan said;
"The expansion remained broad-based by product type, with PMI readings for the consumer, intermediate and investment goods sectors all signalling further solid growth. Intermediate goods registered the fastest rate of expansion and was the only category to see an acceleration compared to February."
They also noted that the Euro area was "a brighter spot within the global manufacturing sector" with its PMI rose to a near 6-year high while growth improved in the big three economies of Germany, France, and Italy.
This is important folks. If manufacturing stays strong it's like both a reflection of a stronger global economy, and an improved - higher - inflation environment.
That means stocks and other risk assets are likely to remain supported. But if, when, these elevated levels start to slip the pullback in manufacturing PMI's could be the canary in the global market coal mine.
Have a great day's trading.