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In America, Goldilocks. In Europe, Slowcession
The fortunes of America's services providers and factories diverged markedly in July, according to preliminary PMIs released on Wednesday.
Services activity expanded at the briskest pace in 28 months, S&P Global's gauge showed. At 56, the headline easily topped estimates and showed a marginal acceleration from June's pace, which was solid on its own.
By contrast, US factory activity contracted early this month. 49.5 was the first sub-50 reading of 2024 on S&P global's gauge.
The spr
Both the ECB and FOMC need to ease. The Fed would be smart to end QT in July and signal upcoming rate cuts. The ECB clearly needs to cut asap.
Manufacturing is only about 11% of the US economy. It represents more of the S&P 500, but on a broad economy level, 56 Svc PMI + 49.5 Mfg PMI = 55-ish whole PMI, at least conceptually.
Regardless, a global rate cut cycle has started. Barring upside inflation surprise, in September the Fed will start cutting rates into a 55-ish PMI, 2.6%-ish GDPNow economy.
The gimlet-eyed among us know that rate cuts presage bad things. However, we can be wrong before we’re right. Ref the yield curve inversion.