Both the French and German PMI data showed a contrast between the manufacturing sector and services sector, with the former slowing while the latter i
Both the French and German PMI data showed a contrast between the manufacturing sector and services sector, with the former slowing while the latter is seen improving. And on the balance of things, it points to a return to growth in both key economies in the euro area in February. I would say, that’s possibly the more important takeaway at this juncture.
We can go into the details to argue about how demand conditions remain impacted, as seen by new orders in manufacturing, and how inflation pressures are still persistent. But let’s save that for another time. For now, markets are seeing the data as being one that should keep the ECB tightening cycle on track as European bond yields are holding higher:
10-year German yields are up nearly 4 bps to just above 2.49% while 10-year French yields are also up about 4 bps to above 2.96% at the moment.
That is keeping stocks pinned lower as the data would afford the ECB with more flexibility to continue their tightening cycle beyond March.
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