With a long weekend ahead of US traders and a Greek disaster averted, albeit temporarily, this should allow for markets to calm a bit as traders will now turn their attention to the economic data in order to build on this past week’s rally. Though questions remain given the compromises that are required to bridge the German and French rollover plans as well as the opinions of the ECB and the rating agencies. The European debt crisis is also heating up in other areas given the fiscal difficulties Italy faces combined with the threat of a ratings downgrade of major Italian banks.
Economic data should turn to the forefront as the US jobs report will be highlight of the week. Today’s sub-par PMI releases from the UK, EU and China should be a note of concern for increased growth prospects. Weak Chinese manufacturing PMI data slid under the radar today while inflationary pressures in China continue to make headlines following Chinese Premier Wen’s comments to target 4% inflation despite continued readings above 5%. More drastic approaches may be needed in order to win the fight against inflation and the risk of a hard landing in China has broader implications for the global economy that depends on Chinese growth.
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