Because of the Thanksgiving holiday, U.S. stocks have only three full trading days this week, so there is not much economic data to focus on. In addition to the regular weekly jobless claims advanced to Wednesday night, investors can also pay attention to the Markit manufacturing PMI in November.
The preliminary PMI figures for November's Markit manufacturing sector were released at 22:45 on Wednesday night, which may provide more evidence on whether the economy is heading towards recession.
Markit Manufacturing PMI refers to a survey conducted by Markit, a US market research company, of about 600 managers, including respondents' assessments of employment, output, new orders, prices, inventory, etc.
This data will reflect the comprehensive development of the manufacturing industry in the United States, which accounts for a large proportion of the GDP of the United States, so this index is also an important indicator to evaluate the overall economic situation of the United States.
The PMI index often takes 50 as the cut-off point: when the index is higher than 50, the economy is considered to be expanding; on the contrary, when the index is below 50, the economy is likely to fall into recession.
Is the US economy in recession?
The last time the US Markit manufacturing PMI in October was 49.9, the lowest since June 2020, the index below 50 also indicates that the US recession signal has returned after two years.
This time, Wall Street generally expects the index to be 50.4, and if the figure is lower than 50 or lower than expected, there is a good chance that the US economy has turned to recession.
In fact, the U. S. bond market has already reflected recession signals--$U.S. 2-Year Treasury Notes Yield (US2Y.BD)$和$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$The upside-down of the curve deepened to its highest level in 40 years.In general, important yield curve reversals like these have proved to be reliable indicators of recession.
As the chart below shows, it is rare for the spread between 10-year and 2-year Treasury yields to turn negative and is almost always accompanied by recessions, including the bursting of the dotcom bubble, the Great Depression and the recession caused by the epidemic.
How to understand the upside-down of US bond yields?
Generally speaking, short-term bonds have relatively high prices and relatively low yields because of their low risk; on the contrary, long-term bonds have higher prices and higher yields because of higher long-term uncertainty.
The so-called yield upside down means that long-term bond yields are lower than short-term bond yields, reflecting market concerns about short-term risks rather than long-term uncertainty. In other words, the market fears that major economic risks may be imminent.
With the shadow of recession hanging over it, does the Fed have a chance to turn?
Chris Williamson, chief business economist of S&P Global Inc. Market Intelligence, also forecast the US economic situation in the fourth quarter, saying that the risk of recession in the US economy will intensify in the fourth quarter, but inflationary pressures remain high.
The Fed has been raising interest rates to curb high inflation, and on Tuesday, two Fed officials, Mestre and George, both sent a relatively "hawkish" signal to raise interest rates.
Mestre said that the current high inflation shows that restoring price stability remains a top priority for the Fed. George mentioned that there is a surplus of household savings in the United States, which means high consumer demand. The Fed may need to raise interest rates to higher levels and maintain them for longer to curb inflation and demand.
Tonight (3: 00 a.m. on November 24, Beijing time), the minutes of the Fed's November monetary policy meeting will be released.At present, the market is expected to raise interest rates by 50 basis points at the December meeting, and the latest minutes may reveal whether some of the Fed will reduce the intensity of the rate hike in the future and reveal whether the Fed is worried about the impact of raising interest rates on the US economy. Investors should pay close attention, because once any signs of loosening tightening are sent, there is a good chance that US stocks will be boosted.
Some analysts point out thatThe current high inflation in the United States may not support the market speculation of "dove" expectations.Because while the probability of a rate hike in December is slower than before, it is not a "hawk" peak, and the rate hike is likely to continue in a slower but longer cycle.
What do you think of the minutes of tonight's meeting?
Do you think the US economy is in a state of recession?
Edit / Viola