Here’s the PMI story so far today:

• UK flash services PMI expected in July 51.5 vs 53.0
• Eurozone July flash services PMI expected 51.1 vs 51.5
• Germany July Fast Manufacturing PMI 38.8 vs. 41.0 expected
• France July flash services PMI 47.4 vs 48.4 expected
• Japan Jibun July Preliminary PMI: Manufacturing 49.4 (Prev 49.8) Services 53.9 (54.0)
• Australia preliminary PMI: Manufacturing 49.6 (prev 48.2) & Services 48.0 (prev 50.3)

The European numbers are bad and that has weighed on the euro and the pound so far today. I he spoke last week about the opportunity to sell the euro and it is because the economy is weakening and the ECB may not continue on the path. There’s a 99% implied chance they’ll go up this week, but it’s 50/50 for September. If the numbers continue to disappoint like this, the ECB is done for.

As for the Fed, it’s far less clear. Manufacturing is in the middle of a recession, but there are some green shoots that can really pick up next year, at least with the exception of autos (which, admittedly, is very important). The consensus on the manufacturing side is 46.2 today from 46.3 earlier. It would take a drop to something like 44.0 for the market to seriously fear a downside.

The services page is the more interesting place because it’s not clear where we are. Consumers continue to spend, which may be a savings from the pandemic, but it may also be a more permanent increase due to low 30-year fixed mortgage rates and confidence in the economy/jobs that looks sustainable or even improving through the end of the year.

Consensus on the services side is 54.0 from 54.4 previously.