Futures continue exhibiting a very surprising and ever brighter shade of
ungreen as the morning session progresses, starting with the 5th consecutive
contractionary Chinese PMI data, going through disappointing European
Manufacturing and Services PMIs which came below expectations (47.7 vs Est. 49.5
for Mfg; 48.7 vs Est. 49.2 for Services), with an emphasis on French and German
PMIs, both of which were bad (German Mfg PMI 48.1, Est 51, prior 50.2; Services
PMI 51.8, Est. 53.1, Prior 52.8), and concluding with UK sales which printed at
-0.8% on expectations of -0.5%. And just like that Europe is "unfixed",
prompting economists such as IHS' Howard Archer to speculate that following
"worrying and disappointing" Euro PMI data, the ECB may cut rates to 0.75%, as
Europe is finding it hard to return to growth after the Q4 contraction. And with
that the beneficial impact of the €1 trillion LTROs is now gone, as Spain spread
over Bunds has just risen to the widest in over 5 weeks, and the beneficial
market inflection point passes - prepare for LTRO 3 demands any minute now.
European PMI chart from Reuters:
Sentiment summary from Bloomberg:
European PMI chart from Reuters:
Sentiment summary from Bloomberg:
- First Word Cross Asset Dashboard shows sentiment down significantly on disappointing economic data from China to the U.K., with EU equities, risk FX significantly lower, Bloomberg analyst TJ Marta writes in following note:
- Most Asian equity indexes up moderately despite more contraction in Chinese PMI
- EU markets reacted significantly to disappointing GE, FR, EU PMI’s, as well as worse than expected decline in U.K. retail sales
- EU equity indexes down 1+ std. devs., led by CAC -1.5%; U.S. futures down ~1 std. devs., ~0.5%
- Bund, Treasury yields, curves down moderately to significantly
- JPY, USD outperforming on risk aversion
- Commodities lower, led by WTI -1.2%, copper -1.6%
- In sign that EU debt concerns continue, most EU sovereign yield to Bund spreads wider, with significant moves for Spain, Italy
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