Marching on

PMIs, Inflation and much more

Overnight Asian markets rallied (Hang Seng +4.2%; CSI +1.4%) on strong beats in Chinese manufacturing PMI data (for newbies, it means manufacturers are more optimistic than the market expected). At the time of print- futures are showing S&P 500 wiping out the 15pt overnight gains and opening 6pts lower than yesterday, near the key technical level of 3,970pts. Higher than expected German and the wider Eurozone inflation data once again reminded investors about the stickiness of inflation and resulting Central Bank tightening in the coming months. ECB's Visco at 10:00 ET will have an opportunity to comment after hawkish ECB members overnight (Villeroy and Nagel) supported higher ECB terminal rate pricing.

The US watches for further moderation in ISM manufacturing at 10:00.  The print should rise slightly towards consensus 47.8 vs 47.4 prior. However, we will not be surprised to see stronger beats given resilient US PMI data. ISM services on Friday will be more important and will consolidate the growth outlook.