The Bloomberg US Economic Surprise index is about the most negative since 2019. DB's Jim Reid: Yesterday's ISM manufacturing report "was definitely one that dampened optimism about the state of the US economy right now. And it follows a run of weaker US data over recent days."
Deflation is coming. Core inflation in Japan (red) just fell below 2% and the Euro zone (yellow) isn't far behind. Both Japan and the Euro zone had borderline deflation prior to COVID and that's what we're going back to. There never was demand-led inflation in either place...
...you'd be surprised how quickly market narratives can change. From inflation worry, pretty soon deflation would be the concern. Tonight's US durables data and factory orders (in 2 hours) would be key to possible reinforcement of the recession narrative. Lets see how that goes.
