The July round of flash manufacturing PMIs showed a slight but important rebound in the "global flash manufacturing PMI" (an indicator I put together based on the Markit readings). The global flash reading was up +0.4pts to 54.3 - the highest since February this year. While the move is not huge, it is important that the indicator is accelerating again after a period of consolidation. On the detail, it was driven by a stronger US: +1.2pts to 53.2 which offset falls in Europe (-0.6 to 56.8) and Japan (-0.2 to 52.2).
As for the market implications, the US 10-year bond yield has shown a habit to move in line with this indicator, and for now appears to be diverging to the downside. Either way this is a risk/opportunity because it means one of these two series is likely to move to close the gap.
For now at least it removes some of the doubt that the softer June reading brought, and lines up with our broadly constructive medium term view on global growth.
Callum is Head of Research at Topdown Charts. Topdown Charts is a chart-driven macro research house covering global Asset Allocation and Economics.