US manufacturing slides, keeping the Fed on course to cut next month, but Fed speakers see only gradual falls. Those comments drove Treasury yields up and stocks down this morning. PMIs in Australia and Japan have picked up.
In our bonus deep dive interview, ANZ Head of FX Research Mahjabeen Zaman looks ahead to key speeches today by the heads of the US and Japan central banks.
5 things to know:
US manufacturing contracted in August at its fastest pace this year, bedding in expectations the Fed can cut from next month. But Fed speakers overnight were wary of fast cuts, which drove US bond yields up 7-8 basis points and saw US stocks fall between half a percent to almost 2% for the Nasdaq. ANZ Head of G3 Economists Brian Martin says the latest US data indicates a soft landing is likely.
Australia’s Composite PMI rose back into expansionary territory in August to a three month high. ANZ Economist Maddy Dunk says a key reading was that employment indicators picked up, particularly in the services industries.
Japan’s composite PMI edged up to a 15-month high of 53 in August. ANZ FX Analyst Felix Ryan says while the output price measure fell slightly, input prices rose to their highest level since April 2023.
The Bank of Korea held its policy rate at 3.5%, but turned more dovish as a majority of decision makers said they were open to a rate cut in the next three months, says ANZ Economist Krystal Tan.
Malaysia’s annual CPI inflation was unchanged at 2% in July, with core inflation staying at 1.9%, says ANZ Economist Arindam Chakraborty.
Cheers
Bernard
PS: Catch you next week with the key messages from those central bank speeches.
