Financial markets rattled and warnings of asset bubbles; eurozone data underwhelming
U.S. Review
Moving On Up
Most of this week's economic data came in at or above expectations, contributing to growing anxiety about how the Fed will unwind the extraordinary stimulus it put in place.
The ISM manufacturing survey rose 2.1 points to 60.8, with the new orders series jumping 3.7 points to 64.8 and the price paid series spiking to 86.0, which is the highest it has been since 2008.
The ISM services survey came in below expectations, falling 3.4 points to a still perfectly sound 55.3. Both new orders and employment declined during the month, while order backlogs lengthened and the number of firms reporting paying higher prices for key inputs jumped 7.6 points to 71.8.
Nonfarm employment rose by 379,000 in February, and the net revisions for the prior two months is 38,000 jobs to the plus-side. The unemployment rate fell 0.1 percentage points to 6.2%.
Global Review
Financial Markets Rattled and Warnings of Asset Bubbles; Eurozone Data Underwhelming
Elevated government bond yields continued to disrupt global financial markets this week. Equity markets rolled over and foreign currencies came under pressure. Foreign central banks have recently become more vocal and active in their effort to contain bond yields.
Contributing to the sell-off in financial markets was a warning from China's financial regulator regarding prevalent asset bubbles. Chinese PMI data slipped again in February, as local lockdowns outside of Beijing remain in place. As of now, we do not see a major threat to China's economy.
Eurozone retail sales data missed consensus expectations by a wide margin. We can point to new COVID-related restrictions as rationale for weak data; however, softer data further complicates growth prospects in the Eurozone for the beginning of this year.
Author
Wells Fargo Research Team
Wells Fargo
