While at first blush today's US PMI release reads positive, particularly for manufacturing, the weeds essentially support the stagflationary story we've been telling.
"S&P PMIs. Flash US PMIs from S&P Global were stronger than their international peers today, especially in the manufacturing sector which hit a new cycle high. Services was more muted but little-changed and remains weak versus recent history. That said, “rising war-related supply constraints and steep energy cost increases, were not only cited as causing lower sales but also contributed to steepening job losses and a further rise in selling price inflation to its highest since August 2022”. Furthermore, the “marked influx of new orders for goods in part again reflected precautionary stock building by clients”. Neither of those observations is one that reflects well on the economic trajectory even if the headline indices reflect a more sanguine picture. And it confirms that the risk of second-round inflation is real even if the FOMC doesn’t expect it as the baseline outcome." -- Bespoke Investment Group
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