Markit

US PMIs Tumble To 9-Month Lows, Catching Down To Collapse In 'Hard' Data

Following disappointment from China last week, and Europe this morning, US PMIs (both manufacturing and services) dropped and disappointed as it appears the lagged impact of China's slumping credit impulse are finally hitting the world's economies. With 'hard' data collapsing to 13 month lows, it is not surprising that 'soft' survey data is finally catching down with Manufacturing at 8-month lows.

Prepare For A Surge In Volume: Russell Rebalance Day Is Here

Welcome to the one year anniversary of the Brexit vote. Welcome also to the annual Russell rebalance, traditionally one of the busiest trading days of the year: last year's rebalance helped propel a near record turnover of over 15 billion shares. In fact, in four of the last five years, reconstitution day ranked in the 10 busiest trading sessions.

Key Events In The Coming Quiet Week: Brexit, Housing And Lots Of Fed Speakers

In an otherwise relatively quiet week in which the only upcoming US data is housing, current account and jobless claims, UK politics will again draw attention, one year (on Friday) after the Brexit referendum and as noted earlier, Brexit negotiations begin on Monday, despite lingering political uncertainty in the UK. Also no less than 9 FOMC members are scheduled to speak this week.

Services Surveys Indicate "Modest Pace Of Economic Growth" So Far In Q2 As New Orders Tumble

Despite disappointing expectations, May Final Services PMI rose for the second month in a row with job creation and new orders accelerating, but as Markit notes, "the PMI surveys for manufacturing and services collectively indicate only a modest pace of economic growth so far in the second quarter." While PMI popped a little, ISM also disappointed and fell back from its April rebound, with a big drop in prices paid (and surge in employment).

Key Events In The Coming Week: Thursday Turmoil Trifecta

This week will be all about rhe "Thursday Turmoil Trifecta" when the UK general election will be highlight of a busy week together with the ECB monetary policy meeting, while rounding off events in the US will be James Comey's first public testimony since he was fired by Donald Trump in which he is expected to testify that Trump pressured him to end the Russian probe into Mike Flynn.

Qatar Crashes In Escalating Gulf Crisis; Oil Fails To Rebound As Global Stocks Dip

S&P futures point to a slightly lower open ahead of today's US non-mfg ISM and Service PMI data. European shares fall, while Asian shares are little changed. Several European countries are closed for Whit Monday leading to subdued trading. Following the latest unexpected Gulf Crisis overnight, in which Gulf nations cut all diplomatic relations with Qatar amid stunning allegations of funding terrorism, oil spiked but has since pared almost all gains.

May Payrolls Preview: The Tiebreaker

After a poor March jobs report, followed by an April scorcher, the May payrolls report due at 8:30am on Friday will be the tiebreaker, not only for the current state of the economy where both soft and hard data have been deteriorating in recent weeks, but perhaps also for the June rate hike decision, which as the Fed noted in its May FOMC minutes, may not take place without "evidence" that the recent "transitory weakness" in the economy is over.

Global Stocks Rise As Oil Rebounds; Yuan Soars

S&P futures are little changed this morning, while Asian shares rise and European stocks (+0.5%) are poised to snap a five-day losing streak amid a broad-based rally. The pound declined as better-than-expected manufacturing data failed to offset political risk before the impending election, while crude oil gained.

China Manufacturing Contracts For The First Time In A Year: "The Economy Is Clearly On A Downward Trajectory"

“The Caixin China General Manufacturing PMI fell 0.7 points to 49.6 in May, marking its first contraction in 11 months. The subindices of output and new business stayed in expansionary territory, but both fell to their lowest levels since June last year. China’s manufacturing sector has come under greater pressure in May and the economy is clearly on a downward trajectory.”

Key Events In The Coming Busy Week: US Payrolls; Eurozone Inflation And Fed Speakers

Focus in this holiday-shortened week will turn to US data, especially NFP, Fed speakers and Eurozone inflation. UK PMIs will also draw attention as elections approach. We also get GDP data from Canada, Sweden and Switzerland. On Monday, Euro FX and bond markets will be on Mario Draghi alert on Monday as the ECB president speaks to the European parliament.