PMI data in focus: Markets brace for a new test of global resilience

Global markets continued to move in largely technical trading dominated by short-term flows, while risk appetite remained muted. In equities, sectoral “rotation” persisted: technology-linked stocks underperformed (Nasdaq -0.63%), the Dow Jones managed a modest gain (+0.04%), while Europe’s Eurostoxx 50 fell by 0.20%. The moves highlight investors’ cautious switching between sectors in the absence of a clear directional trend.

In fixed income, U.S. Treasuries recovered slightly, with long-term yields easing by 1.5 bps on the 30-year note. This modest rebound was partly supported by the release of the Federal Reserve’s July meeting minutes, which revealed that most participants still see inflation risks as outweighing employment concerns. The Fed also flagged tariffs as a persistent driver of uncertainty for the outlook.

In Europe, German Bunds modestly outperformed U.S. Treasuries, with yields falling by 2.5 bps on 2-year maturities and 3.3 bps on the 10-year. ECB President Christine Lagarde noted in a speech that while recent trade agreements have reduced global uncertainty, they have by no means eliminated it, hinting at a possible slowdown in growth momentum in the current quarter.

Dollar shaken by political headlines

In FX markets, the U.S. dollar saw brief volatility after President Donald Trump urged Fed Governor Lisa Cook to resign over alleged mortgage-related issues. This reignited debate over political interference in Fed independence, though the impact on markets was short-lived. The U.S. Dollar Index (DXY) closed flat at 98.22, while EUR/USD settled near 1.165.

Sterling initially climbed following stronger-than-expected July inflation data, but later gave up gains as UK yields reversed lower. By session close, EUR/GBP traded at 0.866, compared with 0.863 previously.

PMI surveys take center stage

Attention today turns squarely to Purchasing Managers’ Index (PMI) releases in both the Eurozone and the U.S., which serve as leading indicators for growth momentum.

• The Eurozone composite PMI is expected to print at 50.6, hovering near the expansion/contraction threshold and reinforcing the narrative of subdued growth.
• In the U.S., PMI releases will coincide with the Philadelphia Fed business outlook survey and the weekly jobless claims report.

With Jerome Powell’s speech at Jackson Hole scheduled for tomorrow, markets are particularly sensitive to today’s data. Weaker-than-expected PMI figures could drive repositioning across FX and fixed income markets, reinforcing bets on rate cuts. Conversely, stronger prints may cap dovish expectations.

Asia-Pacific: Mixed but resilient signals

Earlier this morning, S&P Global released PMI surveys across Asia-Pacific, showing varied but generally positive signals:

• India posted a record high composite PMI of 65.2 (from 61.1), driven by robust growth in both manufacturing and services. However, inflationary pressures are building across sectors.
• Japan saw its composite PMI edge up to 51.9, the highest in six months, supported by domestic demand. Yet manufacturing sentiment remains soft, with new export orders still in decline under the weight of U.S. tariffs.
• Australia’s PMI rose to 54.9 (from 53.8), marking the strongest private-sector expansion since April 2022. Growth was supported by RBA rate cuts and improving local demand, alongside stronger hiring in services. Encouragingly, inflationary pressures appeared to ease, giving firms confidence to expand into 2026.

Conclusion

Markets enter today’s session finely balanced:

• PMI data in Europe and the U.S. will set the tone for near-term trading and shape expectations around Fed and ECB policy.
• Geopolitical and trade headlines—from U.S.-EU trade talks to ongoing uncertainty around tariffs—continue to cast a shadow.
• Above all, investors await Powell’s Jackson Hole speech, which could clarify whether the Fed will validate market pricing for a September rate cut.

In short, today’s PMI readings represent more than just monthly survey data—they are a litmus test for how fragile or resilient the global economy is heading into the fall. Any disappointment could trigger risk aversion, while resilience may spark a relief rally, at least temporarily.