2 Feb 2015
US being dragged down by overseas weakness? - ING
FXStreet (Guatemala) - Rob Carnell, analyst at ING noted the recent the recent soft data from the US.
Key Quotes:
"Just when you thought it was safe to predict a trough in Treasury yields, along comes another softish bit of US data, and takes them sharply lower. Last week, it was a decent, but marginally lower than consensus 4Q14 GDP figure, this week, it is also reasonable, though lower figures for the manufacturing ISM."
"The headline Mfg index level fell in January from 55.1 to 53.5, and the decline is fairly broad-based across components. The current production level declined only slightly to 56.5 – though still a very respectable level. But it was not the same story in terms of orders, where new orders dropped sharply to 52.9 from 57.8 and new export orders slipped into negative territory with a reading of only 49.5."
"For many of these indicators, you have to go back to January last year to see similar lows, which may well point to some issues with seasonal adjustment and an imminent bounce-back."
However, with weak activity indicators coming out of countries such as China, we now have to spend another month worrying that the US is being dragged down by overseas weakness in the hope that the data will stage a pick up later this spring."
"With Friday’s payrolls data looming, and the employment index of the Mfg ISM dipping this month to only 54.1 from 56.0, we may also have to take a re-look at our current forecast for a 240K payrolls gain in January. Initial claims are dropping sharply though, and ISM indicators are not reliable gauges for the labour report at the best of times. Perhaps it is best to leave it alone..."
Key Quotes:
"Just when you thought it was safe to predict a trough in Treasury yields, along comes another softish bit of US data, and takes them sharply lower. Last week, it was a decent, but marginally lower than consensus 4Q14 GDP figure, this week, it is also reasonable, though lower figures for the manufacturing ISM."
"The headline Mfg index level fell in January from 55.1 to 53.5, and the decline is fairly broad-based across components. The current production level declined only slightly to 56.5 – though still a very respectable level. But it was not the same story in terms of orders, where new orders dropped sharply to 52.9 from 57.8 and new export orders slipped into negative territory with a reading of only 49.5."
"For many of these indicators, you have to go back to January last year to see similar lows, which may well point to some issues with seasonal adjustment and an imminent bounce-back."
However, with weak activity indicators coming out of countries such as China, we now have to spend another month worrying that the US is being dragged down by overseas weakness in the hope that the data will stage a pick up later this spring."
"With Friday’s payrolls data looming, and the employment index of the Mfg ISM dipping this month to only 54.1 from 56.0, we may also have to take a re-look at our current forecast for a 240K payrolls gain in January. Initial claims are dropping sharply though, and ISM indicators are not reliable gauges for the labour report at the best of times. Perhaps it is best to leave it alone..."