Caixin Manufacturing PMI Records Highest Reading since 2011


US stocks closed mixed on Monday albeit having had the strongest August performance in decades. The DOW shed 0.78% while the S&P was down 0.21%; the NASDAQ however gained 0.68%. The NASDAQ had its best monthly performance since 2000, while for the S&P and the DOW this August marked the best return since 1986 and 1984. Yield on 10Y USTs closed lower at 0.7097%.


Eurozone final manufacturing PMI reading for August came unchanged at 51.7 even as individual members showed a contrasting set of readings. Spain and France moved back into contraction while Germany and Italy maintained their expansion, albeit at a slightly lower pace for Germany. The euro continued firming against the dollar, trading as high as $1.1990 in the morning on Tuesday, having closed at $1.1936 on Monday.


Asian stocks were mixed on Tuesday as the Caixin manufacturing PMI came at a nearly decade-high 53.1. The CSI and HANG SENG rose 0.44% and 0.14% on the report. The NIKKEI was just lower at -0.01% while the ASX slid 1.77% as the CBA held the benchmark rate constant.


Turkey’s economy performed slightly better than analyst expectations in Q2 amid a stimulus and a credit push by the government. GDP shrank an annualised 9.9% with a Bloomberg survey having resulted in a median 10.7% contraction. The lira closed weaker at 7.3443 against the dollar however while TURKEY 30s were flat, trading in the mid 133s.


Argentine Economy Minister Martin Guzman announced that 99% of bondholders had accepted the deal proposed by the government to swap to new notes, in the process generating $38 billion in debt relief. The government also formally put in a request to the IMF to renegotiate its 2018 financing arrangement. Ecuador also announced a successful restructuring of its own foreign debt with 98.5% of bondholders having agreed to swap for new notes.


Russian manufacturing returned to growth after more than a year of contraction according to IHS Markit. The August reading came at 51.1, marking the first reading above 50 since April 2019. New orders also came in at 51.7, also the highest reading since April 2019. The ruble firmed as much as 73.5560 to the dollar Tuesday morning having closed at 74.0681 on Monday.


Kenya’s August inflation came unchanged amid a slow down in food costs. The 4.4% annual reading came as food costs slowed from July’s 6.6% rise to 5.4% in August following above-average rains which ensured a steady supply of agricultural produce to the market. The central bank expects inflation to stay within its target 2.5% to 7.5% band thus possibly providing some room to lower rates further at the September MPC meeting should the muted trend continue.